The US Economy In 2011

The 2011 seems to usher in some good news after the long economic slump. At least that is what the experts have to say. Though not a major economic punch, but the betterment can be felt in ripples. Read more of this post

US Government ‘Hiding True Amount Of Debt’

The actual figure of the US’ national debt is much higher than the official sum of $US13.4 trillion ($14.3 trillion) given by the Congressional Budget Office, according to analysts cited by the New York Post. Read more of this post

2010 US Bank Failures Rose to 143 Surpassing 2009

On Friday, State and Federal regulators closed four banks, as the total number of bank failures this year rose to 143, surpassing 2009 which saw a total of 140 bank failures amid the recession and mounting loan defaults. Read more of this post

Peace In Great Lakes Region Tops Obama Agenda

Uganda is at the top of US presidential candidate Barack Obama’s African agenda, a top aide has said.

Ambassador Howard Wolpe said Obama is concerned about the suffering of children caught in the conflict in northern Uganda.

His revelation comes less than 10 days when America elects its 46th president.

Wolpe, a former top envoy in the Clinton administration, said one of Obama’s top priorities, if he won the election, would focus on peace in the Great Lakes region.

The Democratic nominee, Wolpe added, was likely to maintain the current US foreign policy of engaging “very actively in a diplomatic way.”

Wolpe was Clinton’s special envoy to the Great Lakes region that included Burundi, Uganda, Rwanda, Tanzania, the DR Congo and Zimbabwe between 1996 and 2001.

In an interview with The New Vision in Washington, the ambassador added that Obama was concerned about the LRA war and the insecurity in northern Uganda.


World Leaders May Consider Suspending Financial Markets

 Italian Premier Silvio Berlusconi told reporters today that stock markets might be suspended in response to the financial meltdown. He was quoting as saying that the solution to the crisis will have to be global and innovative.

The solutions to the crisis will have to be “global and innovative,” Berlusconi said. “There is talk of suspending the markets” while international financial rules are “rewritten.”


Lord Help Us. 

On Another Note

Jamaica is on the World Bank List of financially strain states. Does that means Jamaica may be the one most vulnerable to feel the effects of this global financial meltdown first in the Caribbean?

A new World Bank report on Thursday named 28 countries in Africa, Asia and the Middle East facing financial strains due to high food and fuel costs and now from a cascading credit crisis.

Among the “fiscally vulnerable” countries are Jordan, Cambodia, Lebanon, Jamaica, Eritrea, Ethiopia, Tajikistan, Madagascar, Nepal, Sri Lanka, Rwanda, Malawi, Ivory Coast, Eritrea, Fiji, Haiti, Seychelles and Mauritania.


Morgan Stanley Next To Go?

A Wall Street analyst slashed his price target and earnings estimates for Morgan Stanley late Thursday, as rattled investors pulled their money out of the financial giant amid concerns that it could become the next big victim of the credit crisis.

Ladenburg Thalmann analyst Richard Bove wrote in a note to clients that, “The pressures on the company are enormous,” while cutting his price target for the shares to $19 from $44.



America Debt Clock Run Out Of Digits Space Debt Now $10.2 Trillion!

  In a sign of the times, the National Debt Clock in New York City has run out of digits to record the growing figure.

As a short term fix, the digital dollar sign on the billboard-style clock near Times Square has been switched to a figure – the “1” in $10 trillion. It’s marking the federal government’s current debt at about $10.2 trillion. The Durst Organization says it plans to update the sign next year by adding two digits. That will make it capable of tracking debt up to quadrillion dollars.

The late Manhattan real estate developer Seymour Durst put the sign up in 1989 to call attention to what was then a $2.7 trillion debt.

Source – The International  Herald Tribune

Millions, billions, trillions, quadrillions , what next in line?????????.

Standard & Poor Revised Barbados Economic Outlook It’s Now Heading For Rough Times What A Discovery!

  The last time Standard & Poor make any predictions on the bajan economy it was back in early September. The economy was going to be smelling like a rose.

“There is no immediate impact as far as we can tell on Barbados.”

“We currently forecast two per cent growth for Barbados in both 2008 and 2009.”

Even Central Bank Governor Dr Marion Williams echo the same sentiments later.

The Barbados economy is expected to feel the effects of the turbulence in the United States financial markets later, rather than sooner.

Central Bank Governor Dr Marion Williams said yesterday that while the situation is unlikely to have a significant impact on Barbados immediately…….

All of a sudden now, economists, financial advisers, politicians, businessmen and whoever else that relied on Standard & Poor figures to make concise decisions, now have to find themselves dashing back to the drawing board to revised figures. Why? Because the same economy that was coming out smelling like a rose this year is now heading for rough seas!

From The Barbados Advocate

THE Barbados economy is headed for rough times.
International rating agency Standard & Poors has revised downward it’s economic outlook for Barbados, predicting the island will have less economic growth this year and the next.
A lead S&P spokesman also forecasted foreign direct investment (FDI) into the island “could dry up” as a result of the economic turmoil in the United States (US) and internationally.
This bad news was expected to spread to all other Caribbean economies except Trinidad and Tobago, S&P’s director of Sovereign Ratings Richard Francis.
Francis shared these views with the Barbados Advocate ahead of US president George W. Bush signing a US$700 billion bailout plan for collapsing Wall Street firms into law.
“We are revising our forecasts for Barbados to one per cent growth this year and 1.5 per cent growth next year from 2.5 per cent and two per cent, respectively. In terms of the Caribbean overall, we have begun trimming our growth forecasts overall for the region, just as in Barbados (with the exception of Trinidad and Tobago),” the official disclosed.
Francis said it was “still too early to say what the effects of the bailout will be”, but believed the signs were not good.
“If you look at the economic releases from Barbados, you already see a sharp slowdown in growth, with first half growth of just 1.3 per cent with a decline in long-stay arrivals from tourists from the US. However, there were increases from British and Canadian tourists,” he said.
“The weak US dollar is probably helping with these tourists. Given the economic slowdown, we are starting to see in Canada and Europe, especially Britain, I would say that growth is probably to the downside”.
Francis said S&P’s prediction was that the US gross domestic product would drop at the end of December, “bottom out” between January and March next year “and then to show signs of recovery after that”.
He added, however, that America’s economic growth was unlikely to improve in 2009, “decelerating to just 0.8 per cent in 2009 (from 1.8 per cent in 2008). And the odds that an actual recession will result have risen to 80 per cent”.
According to him, this was not a good thing for Barbados, especially in the area of FDI inflows.


Rapid European Banks Bailouts Another US Bank Goes Under As Financial Crisis Further Spreads

European governments had to step in with a flurry of major bank bailouts from Iceland to Germany as fear and turmoil from the U.S. credit crisis spread through the financial system.

Even as U.S. lawmakers were preparing to vote on a massive $700 billion (€490 billion) rescue of their own banks, [$US700b Bailout Deal Voted Down] the governments of Belgium, the Netherlands and Luxembourg took partial control late Sunday of struggling bank Fortis NV, while Britain seized control of mortgage lender Bradford & Bingley early today.

Germany organized a credit lifeline for blue-chip commercial real estate lender Hypo Real Estate Holding AG, while Iceland’s government took over Glitnir bank, the country’s third largest.

The rapid-fire European bailouts were quickly followed by news that U.S. financial giant Citigroup Inc. was acquring the banking operations of troubled Wachovia Corp., the latest U.S. financial institution to fail or be sold. Citigroup will absorb losses of up to $42 billion in a government-facilitated takeover.

European shares fell heavily and money markets remained frozen with banks refusing to lend to each other for all but the shortest periods.

“All banks are having difficulty with long term loans and short term financing. It’s difficult to say which could be affected,” said UniCredit economist Alexander Koch in Munich. “Despite the rescue packages in the U.S. (and Europe) that doesn’t fully correct the problem. I see the problem flowing until late next year,” he added.


PM Thompson Calling It As It Is Should Barbadians Worry About Their Assets In US Banks?

   Photo credit -UN

I came across an interesting piece of information on Bajan Dream Project blog where it states that 35,000 bajans live on less than $8.00 a day.

The Project primary aim according to its blog is to ‘deliver a unique intervention by combining skills training, micro-financing and housing provision in a sustainable ‘workfare’ model. Our broad aims are to give the poor the tools needed to earn their own income and grow their personal wealth, while supplementing their economic independence through the provision of affordable housing.’

 At the recent held 63rd UN General Assembly, the topic of poverty, the needs for small nations concerns to be well heeded in the internaional arena and the ongoing global financial crisis in the financial markets today, PM David Thompson wasted no time in declaring his views on the current financial turmoil in the States and its ripple effects throughout the worldwide banking system and stock markets.


“Barbados believes that those responsible for the crisis, and who also created, controlled, and manipulated the global financial system for their own advantage, cannot be trusted to heal it,” Prime Minister David Thompson told the assembly.


“Developing countries must demonstrate leadership in the search for a lasting solution to the global financial crisis and insist that any exan ercise to institute reforms must strictly adhere to the principles of openness, transparency and inclusiveness, with the United Nations taking the lead,” said the Barbados leader. Source The People Online. Read more of this post

Another US Bank Collapses – Biggest In US History

As the debate over a US$700-billion bank bail-out rages on in Washington, one of the largest US banks – Washington Mutual Inc. -has collapsed under the weight of its enormous bad bets on the mortgage market.

The Federal Deposit Insurance Corporation seized WaMu yesterday, and then sold the thrift’s banking assets to JPMorgan Chase & Co. for US$1.9 billion ($2.28 billion).

Seattle-based WaMu, which was founded in 1889, is the largest bank to fail by far in America’s history. Its US$307 billion ($368 billion) in assets eclipse those of Continental Illinois National Bank, which failed in 1984 with US$40 billion in assets; adjusted for 2008 dollars, its assets totalled US$67.7 billion ($81.2 billion). IndyMac, seized in July, had US$32 billion ($38.4 billion) in assets.

One positive is that the sale of WaMu’s assets to JPMorgan Chase prevents the thrift’s collapse from depleting the FDIC’s insurance fund. But that detail is likely to give only marginal solace to Americans facing tighter lending and watching their stock portfolios plunge in the wake of the nation’s most momentous financial crisis since the Great Depression.


Tough Times Ahead For Barbados Due To US Financial Turmoil

    The Barbados economy is expected to feel the effects of the turbulence in the United States financial markets later, rather than sooner.

Central Bank Governor Dr Marion Williams said yesterday that while the situation is unlikely to have a significant impact on Barbados immediately, “as the US economy slows or goes into recession as it copes with these difficulties, the result could be a slowdown in the growth of the Barbados economy going forward”.

She added that recession in the United Kingdom and European economies would also impact adversely on the country’s tourism prospects and investment inflows. But she was optimistic that the Barbados economy could withstand the effects of the turmoil.

“The Barbados financial system should remain sound although there may be some loss in value – realised and unrealised – on US dollar fixed income securities held by financial institutions, including the Central Bank, as securities’ prices in the US markets tumble,” Dr Williams said.

And even as the US government seeks to provide a US$700 billion bailout for American businesses in financial crisis, the Central Bank Governor said that could also have an impact on the Barbados economy.

“Over the longer term and into 2009, given the size of the bailout by the US government, we can expect larger US fiscal deficits, possibly a further depreciation in the US dollar and a likelihood of a longer US recession than was anticipated. The likelihood of a global slowdown also becomes greater. The international credit markets are likely to be hesitant to lend for a while until markets settle,” she said.


Oil Price Jumps $25 In A Day Now $120/Barrel Gold $900/Ounce



The price of crude oil today is not made according to any traditional relation of supply to demand. It’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. How?

 ‘Perhaps 60% Of Today’s Oil Price Is Pure Speculation’

Fadel Gheit, senior energy analyst for Oppenheimer & Co., said “people are seeing the bailout [$700b] today as the fleecing of America. They are expecting the dollar to sink even more, and there is no place for the investment money to go except back into commodities and oil.”

Gheit added that the market was back to being driven by something other than traditional forces, at least in the short run. “This is not oil responding to supply and demand fundamentals,” he said.

Oil Price Posts Largest-ever One -Day Gain

Is it fair that businessmen who fail in neighborhood stores have to close shop and often sell their homes, while Wall Street titans are spared the consequences of monumental stupidity and greed?

An Amnesty For Stupidity

“You had regulators sitting back as loans were being made with no documentation … predatory lenders taking advantage of the  situation – that’s how this all unfolded. It’s not a mystery,” Dodd [Democrat chair – senate banking committee] said.

US Congress Leaders Attack Bail-Out

Party’s Over As Financial Terrorism Takes Over Wall Street

The Crash of 2008, which is now wiping out trillions of dollars of our people’s wealth, is, like the Crash of 1929, likely to mark the end of one era and the onset of another.

The new era will see a more sober and much diminished America. The “Omnipower” and “Indispensable Nation” we heard about in all the hubris and braggadocio following our Cold War victory is history. Seizing on the crisis, the left says we are witnessing the failure of market economics, a failure of conservatism.

This is nonsense. What we are witnessing is the collapse of Gordon Gecko (”Greed Is Good!”) capitalism. What we are witnessing is what happens to a prodigal nation that ignores history, and forgets and abandons the philosophy and principles that made it great. A true conservative cherishes prudence and believes in fiscal responsibility, balanced budgets and a self-reliant republic. He believes in saving for retirement and a rainy day, in deferred gratification, in not buying on credit what you cannot afford, in living within your means.

Is that really what got Wall Street and us into this mess — that we followed too religiously the gospel of Robert Taft and Russell Kirk?

“Government must save us!” cries the left, as ever. Yet, who got us into this mess if not the government — the Fed with its easy money, Bush with his profligate spending, and Congress and the SEC by liberating Wall Street and failing to step in and stop the drunken orgy?

For years, we Americans have spent more than we earned. We save nothing. Credit card debt, consumer debt, auto debt, mortgage debt, corporate debt — all are at record levels. And with pensions and savings being wiped out, much of that debt will never be repaid. Our standard of living is inevitably going to fall. For foreigners will not forever buy our bonds or lend us more money if they rightly fear that they will be paid back, if at all, in cheaper dollars.

We are going to have to learn to live again without our means.

The party’s over

Up through World War II, we followed the Hamiltonian idea that America must remain economically independent of the world in order to remain politically independent.

But this generation decided that was yesterday’s bromide and we must march bravely forward into a Global Economy, where we all depend on one another. American companies morphed into “global companies” and moved plants and factories to Mexico, Asia, China and India, and we began buying more cheaply from abroad what we used to make at home: shoes, clothes, bikes, cars, radios, TVs, planes, computers. As the trade deficits began inexorably to rise to 6 percent of GDP, we began vast borrowing from abroad to continue buying from abroad. Read more of this post

Asian Markets Tumble, Global Investors Panic-Stricken, Flee To Gold

“If the largest insurance company [in the world] can fail, [America International Group Inc] than no one is safe.”

Photo credit –

Asian stocks tumbled Thursday, tracking declines on Wall Street as investors feared more companies could succumb to the global financial crisis that forced the US to bail out troubled insurer American International Group Inc.

Every regional benchmark fell deeply in the red. Hong Kong’s Hang Seng Index led the region’s losses, tanking 1,272.86 points, or 7.22 percent, to 16,364.33 – its lowest level in over two years.

In Japan, the Nikkei 225 stock index was down 445.67 points, or 3.79 percent, at 11,304.12. Australia’s S&P/ASX200 index fell more than 3.5 percent, South Korea’s Kospi lost 3.6 percent and Shanghai’s index fell 5.8 percent. As equities markets staggered, investors fled to gold, seen as a safe haven in times of trouble.

Investors were unsettled by the Federal Reserve’s $85 billion loan to AIG, the huge US insurer that lost billions in the risky business of insuring against bond defaults. It was the latest financial giant to fall in a historic financial crisis on Wall Street that’s already claimed investment banks Lehman Brothers and Merrill Lynch.

“It’s a complete collapse of confidence,” said Francis Lun, general manager of Fulbright Securities Ltd in Hong Kong. “The financial crisis in the US is hitting everyone, everyone is running for cover. If the largest insurance company can fail, than no one is safe.

Financial stocks across Asian went into a tailspin.

Japan’s three megabanks fell hard: Mizuho Financial Group, Inc. sank 7.2 percent, Mitsubishi UFJ Financial Group, Inc. shed 4.6 percent, and Sumitomo Mitsui Financial Group retreated 7.4 percent.

Leading China lender Industrial & Commercial Bank of China Ltd, or ICBC, fell over 5 percent in Hong Kong.

Macquarie Group Ltd., Australia’s biggest investment bank and securities firm, took an 18 percent nosedive.

Richard herring, the director of trading at Burrell Stockbroking, said Australian investors were nervous about AIG bailout.

“It has actually opened up a whole lot of other questions for investors to answer and that is: AIG is on the rack, what else is potentially out there that could go under?” Herring said.

Source – Jerusalem Post

Federal Reserve New Role – Sugar Daddy

Andrew Horowitz over at  writes an interesting article on the new role of the Federal Government.  

Calling them a sugar daddy, he isn’t to keen on the Fed’s bailing out large failing corporations at the expense of taxpayers because of bad financial decisions and risking investments. For a money manager I am surprised Mr Horowitz lumps the Federal Reserve as the US government when the former is a distinct separate entity from the US government controlling the monetary system. No wonder taxpayers monies are used to bail out these companies. Americans are tax heavily enough! There’s enough dough coming in!


Barbados Safe For Now – Standard & Poors

Barbados Government and those in the financial sector can breath easy, at least for now.

That’s because the local economy will likely feel no immediate  burn from Monday’s financial meltdown on Wall Street in the United States (US) .

In fact, a leading analyst of respected rating agency Standard & Poors (S&P) believes the upside of the ongoing economic turmoil in the US, which saw finance giants Merrill Lynch agreeing to sell itself to Bank of America for US$50 billion and Lehman Brothers filing for bankruptcy, could be lower oil prices and reduced inflation for Barbados.

S&P’s Director of Sovereign Ratings, Richard Francis, shared this view with the Barbados Advocate yesterday when quizzed on the likely impact current events on Wall Street would have in Barbados.

There is no immediate impact as far as we can tell on Barbados, Francis said.

We will have to wait and see what the impact the turmoil will have on the overall US economy, if any. S&P’s current baseline scenario calls for a shallow but long recession that began in December 2007 and lasts 15 months ending in March 2009, he said, noting this forecast represented only two quarters of negative growth through the upcoming fourth quarter of this year going into the first quarter of next year.

We have not changed the forecast. This will have an impact on tourism. We currently forecast two per cent growth for Barbados in both 2008 and 2009, according to him.

American finance experts said the humbling moves involving Merrill and Lehman had reshaped the landscape of American finance, marking the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments.

It was also pointed out that even as the fates of Lehman and Merrill hung in the balance, another crisis loomed as the insurance giant American International Group was also on the brink of financial problems. Rocked by losses stemming from the credit crisis, AIG has sought a US$40 billion lifeline from the US Federal Reserve, without which the company may have only days to survive.

Yesterday as the Federal Reserve announced it was not cutting interest rates in response to the crisis, Francis said the financial challenges could eventually turn out to be a positive in terms of oil prices and inflation. The up side for Barbados could be lower oil prices which would signal somewhat lower inflation and lower oil exports, which would aid the current account deficit and balance of payments pressures. It would also help consumers, he noted.

Brazil, Argentina To Eliminate US Dollar

US Dollar - Money - Economy    As the US dollar continues its slide against other world currencies and the banking and financial sectors weight in on the stock markets in the global economy, two of our South American neighbours have made the decision to stop using the US dollar in bilateral trade.

From Times of India

The presidents of Brazil and Argentina signed an agreement Monday to stop using the dollar in bilateral trade, but it will be up to traders to decide if they want to end use of the U.S. currency.

Brazilian President Luiz Inacio Lula da Silva and Argentina’s Cristina Fernandez hope the measure will smooth trade transactions between the two nations _ which are forecast to top US$30 billion this year.

But it is unclear how many exporters and importers will decide to do away with the dollar when the measure takes effect in early October.

Silva says it will reduce transaction costs for both exporters and importers, especially those operating on a smaller scale.

Alexandre Barros, an analyst with the Brasilia-based Early Warning political risk consultancy, says the dollar’s fall in the past year has prompted many nations to look for alternative currencies to use for trade.

PM David Thompson: “Barbadians Feel Good About A Black Man Running For President Of United States” Examining Obama And McCain Polices For The Caribbean


While Barack Obama, the likely Democratic presidential nominee, appears to be the rage across the Caribbean, some analysts express concerns about how his policies would affect the region. And, although John McCain, the presumptive Republican nominee, generates less attention in the Democratic-leaning Caribbean, some observers say his support of free trade and his policy experience could be better for the islands.

Still other analysts see the Caribbean as a low priority for each and express little optimism that either will produce radical change.

Neither McCain nor Obama has ”expressed serious positions on the Caribbean, with the exception of Cuba, where there is a difference between the two candidates,” said Rupert Lewis, a political-science expert at the University of the West Indies (Mona) in Jamaica

Peter Hakim, president of the Washington think-tank Inter-American Dialogue, said he believes the lack of focus by either candidate on the region is a hint of what’s to come regardless of who wins in November.

”Americans right now are very insecure about their future. They are unhappy with the effects of globalization. There is not a great deal of interest in having the United States really engage in overseas these days,” Hakim said.

Others say it will be hard to ignore the Caribbean or Latin America, especially when so many nationals are registered U.S. voters. Brian Meeks, director of the Center for Caribbean Thought at the UWI, said that while many in the Caribbean are ”fascinated with the fact that there is a black candidate with a credible chance of becoming president,” leaders are not looking closely at either Obama’s or McCain’s policies.

”I don’t think they are approaching it in a hard-nosed realist way,” Meeks said, ‘which is to say `What is in it for the Caribbean? What is in it for Latin America and to what extent Obama, or for that matter McCain, will be addressing our concerns?’ ”

Caribbean leaders have increasingly complained of neglect following the Sept. 11, 2001, attacks as U.S. foreign policy shifted to other parts of the world. The region as a bloc opposed the U.S.-led invasion of Iraq. In 2004, the Caribbean Community demanded an international investigation in the Feb. 29 ouster of Haiti’s democratically elected president, Jean-Bertrand Aristide.

Relations in the past year have warmed under President Bush, but they point out that he — unlike his predecessor Bill Clinton — has yet to set foot in Haiti or the English-speaking Caribbean. Clearly, Obama’s race has captured the imagination of many in the Caribbean.

”The idea of having a black man or a man of mixed race running for the president of the United States is very historic and important,” Barbados Prime Minister David Thompson told The Miami Herald.

“Barbadians feel good about that.”

And George Lamming, a Barbados-born novelist and intellectual, adds: “The planet has been ruled by white power for 500 years, and you have the overwhelming majority of the world’s population [as] nonwhite people. It’s not only black people down here.”

But symbolism isn’t good enough, critics of U.S. policy say, when leaders consider the challenges facing a region wrestling with crime and economic troubles.

”The United States has defaulted in the last decade in having any meaningful aid relations with the Caribbean, and that is where Venezuela has stepped in and has provided that,” Meeks said. “How does Obama view that? What are the prospects for that kind of mutually beneficial relations?”

Both McCain and Obama speak of a shift in policy. McCain supports expanding trade with the Caribbean basin, while Obama is much more restrictive on trade preferences.

”It seems to me that from an economic and foreign policy point of view, Obama may be more destructive to Trinidad and Tobago interests specifically, and Caribbean interests more generally, than a Category 5 hurricane,” said Anthony Wilson, editor in chief of the Trinidad Guardian newspaper.

Obama’s position on trade ”has the potential to cast thousands of workers into unemployment throughout the region,” Wilson said in an e-mail to The Miami Herald. “From the perspective of foreign relations, [John] McCain would be much better for Caribbean economies than Obama.”

While Obama’s support for wiping out poor countries’ debt is welcomed, his push to tighten regulations of offshore banking jurisdictions have riled others. He currently is sponsoring the Stop Tax Haven Abuse Act, legislation that targets tax havens. The bill lists Antigua and 14 other Caribbean jurisdictions among those countries singled out for increased scrutiny.

”I put that down to his lack of information,” said St. Vincent and the Grenadines Prime Minister Ralph Gonsalves, a critic of the legislation but an admirer of Obama.“Once he is properly informed — he would see that these islands, which are among the closest friends of the American people — he would not do anything knowingly for them to suffer.”

While McCain and Obama have spoken of a need to address transnational crime in the region, neither has given any indication that the U.S. policy of deporting criminals will change.

Adapted from Miami Herald

Middle Class In America Losing The Battle In Hard Economic Times

US Internet users commented on the fact now the evidence is out that the middle class in America is eroding away.

America’s middle class is growing increasingly squeezed by sagging incomes and soaring expenses, experts told Congress on Wednesday.

Adjusted for inflation, median household income dropped by $1,175 between 2000 and 2007, said Elizabeth Warren, professor at Harvard Law School, in written testimony before the Joint Economic Committee. At the same time, the average family is spending $4,655 more on basic expenses, such as gas, housing, food and health insurance. Gas alone costs $2,195 more for a family making the same commute in May 2008 as it did eight years earlier.

Families with children saw their child care costs soar. Those with children under age 5 spent an addition $1,508 a month, while after-school costs for older children rose $622.

To cover these soaring expenses, many people have had to turn to credit cards. Nearly 10% of total disposable income in the United States goes to paying off such debt, Warren said.


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