Post-2008: The decline of the middle class in the G8

[neddy]

This Global Financial Crisis has taught us one important point.

Any countries that are following the US model will see the unsubstainability of wealth accumulation for the middle-class. What this results in will be decline of the middle class. We will return to the days of Dickenson economic where we have the very rich and the very poor.

Singapore is a good example of a follower of the US model.

1. Countries that depend on a large retail service sector -> Like what RedBull313 suggest - Things in USA are cheap.

2. Countries without social financial security safety net -> US has no universal public healthcare, Singapore has very limited crisis/unemployment financial assistance (Shockshiok called it socialism)
Strangely, both Singapore and US practice a very strong form of socialism - US Taxpayers paying for Wall St mistakes; Singapore's GLCs and nationalised utilities/communications sectors.

Utimately, bills have to be paid for. If Obama do not dare to raise taxes in the US, we will see the confidence in US Treasury Bills eroded and with that, the USD as the world's reserve currency. Should that happens, Americans will find its influence as the only superpower erodes.

Singapore will be in trouble if the US military leaves.

Countries like Australia and NZ need to form an economic bloc and be integrated into the Asian economies of Japan/Korea, China, India and the ASEAN countries.

 

[redbull313]

This Global Financial Crisis has taught us one important point.

Any countries that are following the US model will see the unsubstainability of wealth accumulation for the middle-class. What this results in will be decline of the middle class. We will return to the days of Dickenson economic where we have the very rich and the very poor.

Singapore is a good example of a follower of the US model.

1. Countries that depend on a large retail service sector -> Like what RedBull313 suggest - Things in USA are cheap.

2. Countries without social financial security safety net -> US has no universal public healthcare, Singapore has very limited crisis/unemployment financial assistance (Shockshiok called it socialism)
Strangely, both Singapore and US practice a very strong form of socialism - US Taxpayers paying for Wall St mistakes; Singapore's GLCs and nationalised utilities/communications sectors.

Utimately, bills have to be paid for. If Obama do not dare to raise taxes in the US, we will see the confidence in US Treasury Bills eroded and with that, the USD as the world's reserve currency. Should that happens, Americans will find its influence as the only superpower erodes.

Singapore will be in trouble if the US military leaves.

Countries like Australia and NZ need to form an economic bloc and be integrated into the Asian economies of Japan/Korea, China, India and the ASEAN countries.

Joshie Boy, are you saying Obama's election year promise was a lie? We wont get universal health care?

Are you saying I voted for him for no reason? The Obama: "Change You Can Believe" In sign on my front lawn was to to no avail?

You mean Daschle was nominated for nothing?

Wish you had our taxes and our benefits, huh?

Jealous, huh?

I know, Joshie, I know.

Australia has really taken you for a ride.

 

[neddy]

Also, refer to ...
http://www.sammyboy.com/showthread.php?t=14013

Thank goodness for an effective Australian Prudential Regulation Authority.---

http://www.iht.com/articles/2008/12/28/news/28goodman.php
USA: Printing money and its price
By Peter S. Goodman
Sunday, December 28, 2008

Borrowing and spending beyond ordinary limits largely explains how the United States got into such economic trouble. For decades, businesses and consumers feasted relentlessly, as if gravity, arithmetic and the tyranny of debt had been defanged by financial engineering.

Armed with credit cards and belief in a bountiful future, Americans brought home ceaseless volumes of iPods and cashmere sweaters, and never mind their declining incomes and winnowing savings. Banks lent staggering sums of money to homeowners with dubious credit, convinced that real estate prices could only go up. Government spent as it saw fit, secure that foreigners could always be counted on to finance U.S. debt.

So it may seem perverse that in this new era of reckoning; with consumers finally tapped out, government coffers lean and banks paralyzed by fear, many economists have concluded that the appropriate medicine is a fresh dose of the very course that delivered the disarray: Spend without limit. Print money today, fret about the consequences tomorrow. Otherwise, lost jobs and business failures could cripple the nation for years.

Such thinking carries the moment as President-elect Barack Obama puts together plans to spend more than $700 billion on projects like building roads and classrooms to put people back to work. It is the philosophy behind the Federal Reserve's decision to drop interest rates near zero, meaning that banks can essentially borrow money for free while lending directly to financial institutions. This is the mentality that has propelled the U.S. Treasury to promise up to $950 billion to aid Wall Street, Detroit and perhaps other recipients.

But where does all this money come from? And how can a country that got itself in peril by borrowing and spending without limit now borrow and spend its way back to safety?

In the case of the Fed, the money comes from its authority to print dollars from thin air. Since late August, the Fed has expanded its balance sheet from about $900 billion to more than $2.2 trillion, creating $1.3 trillion that did not exist to replace some of the trillions wiped out by falling house prices and vengeful stock markets. The Fed has taken troublesome assets off the hands of banks and simply credited them with having reserves they previously lacked.

In the case of the Treasury, the money comes from the same wellspring that has been financing U.S. debt for decades: Investors in the United States and around the world, not least, the central banks of China, Japan and Saudi Arabia, which have parked national savings in the safety of U.S. government bonds.

Americans have gotten accustomed to treating this well as bottomless, even as anxiety grows that it could one day run dry with potentially devastating consequences.

The value of outstanding U.S. Treasury bills now reaches $10.6 trillion, a number sure to increase as dollars are spent building bridges, saving auto jobs and preventing the collapse of government-backed mortgage giants. Worry centers on the possibility that foreigners could come to doubt the U.S. wherewithal to pay back such an extraordinary sum, prompting them to stop or at least slow their deposits of savings into the United States.

That could send the dollar plummeting, making imported goods more expensive for U.S. consumers and businesses. It would force the Treasury to pay higher returns to find takers for its debt, increasing interest rates for home- and auto-buyers, for businesses and credit-card holders.

"We got into this mess to a considerable extent by overborrowing," said Martin Baily, a chairman of the Council of Economic Advisers under President Bill Clinton and now a fellow at the Brookings Institution. "Now, we're saying, 'Well, O.K., let's just borrow a bunch more, and that will help us get out of this mess.' It's like a drunk who says, 'Give me a bottle of Scotch, and then I'll be O.K. and I won't have to drink anymore.' Eventually, we have to get off this binge of borrowing."

Some argue that the moment for sobriety is long overdue, and postponing it further only increases the ultimate costs. "Our government doesn't have enough spare cash to bail out a lemonade stand," declared Peter Schiff, president of Euro Pacific Capital, a Connecticut-based trading house. "Our standard of living must decline to reflect years of reckless consumption and the disintegration of our industrial base. Only by swallowing this tough medicine now will our sick economy ever recover."

But most economists cast such thinking as recklessly extreme, akin to putting an obese person on a painful diet in the name of long-term health just as they are fighting off a potentially lethal infection. In the dominant view, now is no time for austerity — not with paychecks disappearing from the economy and gyrating markets wiping out retirement savings. Not with the financial system in virtual lockdown, and much of the world in a similar state of retrenchment, shrinking demand for U.S. goods and services.

Since the Great Depression, the conventional prescription for such times is to have the government step in and create demand by cycling its dollars through the economy, generating jobs and business opportunities. That such dollars must be borrowed is hardly ideal, adding to the long-term strains on the nation. But the immediate risks of not spending them could be grave.

"This is a dangerous situation," Baily says, essentially arguing that the drunk must be kept in Scotch a while longer, lest he burn down the neighborhood in the midst of a crisis. "The risks of things actually getting worse and us going into a really severe recession are high. We need to get more money out there now."
....

 

[shockshiok]

Joshie Boy, are you saying Obama's election year promise was a lie? We wont get universal health care?

Are you saying I voted for him for no reason? The Obama: "Change You Can Believe" In sign on my front lawn was to to no avail?

You mean Daschle was nominated for nothing?

Wish you had our taxes and our benefits, huh?

Jealous, huh?

I know, Joshie, I know.

Australia has really taken you for a ride.

you have to excuse mr josh ang. he is currently very sore as you have reminded him of obama's universal health care program to be implemented in 2009 and beyond.

on the old forum mr josh ang, aka "neddy" proudly stated in his australian university he learned the US is the only nation that can print dollars and get away with it.

now he seems to disagree with his australian professors. too bad the record bond markets are proving mr josh ang, aka "neddy" wrong.

how very upsetting. but what else can we expect from poor subprime singaporeans stuck in australia? all those tax dollars sucking them dry and the sudden collapse of the australian economy must be very upsetting indeed. only now do they realize why everyone is still heading to the US and australia is practically begging idiots to migrate there to fill thier tax coffers

hee hee

 

[neddy]

http://www.usatoday.com/news/nation/2008-10-21-homeless_N.htm
USA: Homeless numbers 'alarming'
Updated 10/22/2008 11:14 AM |
By Wendy Koch, USA TODAY

---------------------------------------
FORECLOSURES INCREASING

A surge in families seeking housing aid or shelter has followed rising home foreclosures nationwide.

Foreclosures Jan.-Aug.
2006: 801,354
2007: 1,341,295
2008: 2,049,782

Source: RealtyTrac

---------------------------------------


More families with children are becoming homeless as they face mounting economic pressures, including mortgage foreclosures, according to a USA TODAY survey of a dozen of the largest cities in the nation.
Local authorities say the number of families seeking help has risen in Atlanta, Boston, Denver, Minneapolis, New York, Phoenix, Portland, Seattle and Washington.

"Everywhere I go, I hear there is an increase" in the need for housing aid, especially for families, says Philip Mangano, executive director of the U.S. Interagency Council on Homelessness, which coordinates federal programs. He says the main causes are job losses and foreclosures.

Other factors have been higher food and fuel prices hitting families with "no cushion," says Nan Roman of the National Alliance to End Homelessness.

Many mayors have 10-year plans to end homelessness and had reported progress until this year. The most recent official count, in January 2007, found 671,888 people living on U.S. streets or in shelters, down 12% from January 2005.

FIND MORE STORIES IN: Washington | Atlanta | Boston | Seattle | New York City | Phoenix | Portland | Minneapolis | Denver | University of Pennsylvania | National Alliance | Hennepin County | Cathy | End Homelessness | Philip Mangano | Nan Roman
"We saw family homelessness began to increase last winter," says Sally Erickson, Portland's homeless program manager. "There's definitely a spike in the last six months." The number of requests for emergency shelter doubled from fiscal year 2007 to fiscal 2008, which ended in June.

Darlene Newsom, who runs United Methodist Outreach Ministries' New Day Centers, which provide shelter programs for families in Phoenix, says the number of requests is "alarming." She says families who never sought help before are calling.

Los Angeles says it has no 2008 data. Miami reports no major change. Chicago has not had a surge in requests, but more come from renters evicted because of landlords' foreclosure, says Nancy Radner of the Chicago Alliance to End Homelessness.

USA TODAY found:

• In New York City, 2,747 families applied for shelter in September 2008, up from 2,087 in September 2007.

• In Hennepin County, including Minneapolis, 880 families were in shelters from January through August 2008, up from 698 in that period last year. At least 10% this year came from foreclosed properties where most had been renters, says Cathy ten Broeke, county coordinator to end homelessness.

Dennis Culhane, a University of Pennsylvania professor of social policy, expects foreclosures to cause a "big increase" in homeless families.

Mangano says a new federal law gives communities $3.9 billion to buy foreclosed properties or provide services to the homeless.

 

[neddy]

http://business.inquirer.net/money/...81932/Homeless-Japanese-rise-due-to-recession
Homeless Japanese rise due to recession
By Gilles Campion
Agence France-Presse
First Posted 12:54:00 01/07/2009

Filed Under: Poverty, World Financial Crisis


TOKYO--Fumio Hayashi may never have studied economics, but he knows a thing or two about recession.

He learned the hard way 12 years ago when he lost his job, his home and his friends. For him, the current economic crisis in Japan and the world has a painful echo.

According to official estimates, some 85,000 workers on temporary contracts have recently lost their jobs or will lose them between now and March as Japanese factories close because of slumping demand.

But unlike the Japanese who lost their accommodation a generation ago when the so-called bubble economy burst, the new crop of homeless people have it worse as they are hounded by police.

"There are going to be even more people like me, that's for sure," Hayashi said as he took a drag on his cigarette while sitting on a stool at the Sanyukai association, which was founded in 1984 to help Japanese abandoned by society.

"When my employer went broke 12 years ago, I looked around for work but very quickly I found myself out on the street without anything," said the 58-year-old.

For the past eight years, he has lived under a bridge in a makeshift tent made of four slabs of wood and a plastic sheet in the Sanya district of northeastern Tokyo, one of the closest things Japan has to a slum.

Japan, the world's second largest economy, once prided itself on being a universally middle-class society and free of the poverty that afflicts most other wealthy countries.

But thousands were thrown onto the streets to become "homuresu" with the collapse of the bubble economy, which shattered Japan's promise of lifelong, secure company jobs for all men.

Many companies have since hired workers on temporary contracts -- and laid them off when the economy went into recession starting last year.

The homeless often feel deep shame in Japan, where a senior official this week raised controversy by accusing them of laziness. Many day laborers stay near their former workplaces after they are sacked.

"In Japan, when you lose your job, you don't go back to your home town. For the sake of the family, it's better to disappear," said Jean Le Beau, a Canadian who runs Sanyukai and has lived in Japan since 1972.

The last government survey showed Japan had more than 18,500 homeless people as of January 2007, with more than half of them living in Tokyo or the western metropolis of Osaka.

Most of Tokyo's homeless live in the northeast of the capital in a tent village in Ueno Park or on the banks of the Sumida River.

"In the '90s, there were tents everywhere in Tokyo, even around the train stations, and it reached the point that the city was finally forced to act," Le Beau said.

But the authorities were concerned not about helping the homeless but about removing an eyesore, he said.

Five years ago, Tokyo's local government began to address homelessness by renting out super low-cost rooms at 3,000 yen a month -- a little over 30 dollars at current exchange rates.

But Hayashi, who earns a small income cleaning trash in a park, said it was still too expensive when adding the costs of electricity and gas.

And the housing is available only on two-year contracts.

"If he didn't have a job at the end of that time, then he would be evicted and it would be very difficult to find another place to stay as the police are on alert to stop new tents from going up. They patrol five times a day, even at night," Le Beau said.

Whenever a tent goes down -- either because the homeless person leaves or dies -- the police quickly seal off the area to prevent another person from pitching up there.

In any case, the city's low-income housing plan has been halted due to budget constraints, giving poor people few options other than sleeping in a box on the street.

Besides the winter cold, the homeless also face the risk of violence as seen by a string of murders of destitute people.

In one case last year, a teenage boy told police he set a man on fire, killing him, because the homeless "do not contribute to society and are just like dogs and cats".

For New Year, Japan's most important holiday, volunteers offered tents and meals to some 300 homeless people in Hibiya Park, just a stone's throw from the Imperial Palace and some of Tokyo's most expensive real estate.

On the banks of the Sumida river, volunteers from the Sanyukai group also come once a week to each tent to offer homeless people food, basic medical care and a chance for some badly needed human contact.

But every other month, teams from the Tokyo government also come to "clean" the area -- and put pressure on the homeless to leave.

"I take everything down, I pile it all up, and later I put it all back together again until next time," Hayashi said with resignation.