Facing The Money Crunch
still struggling to maintain that “Middle Class” way of life are facing even more financial hardship in the months
ahead. If still making mortgage payments on what is now a home valued at less than is owed, if those credit cards are maxed
out, if working and driving any distance to that job, and if there are children in the home to keep fed, clothed and sent
to school, and if anybody in the household needs dental or medical care, the deck is stacked.
broad picture in America is this: Wages have remained stagnant for years while the cost of food, fuel, medicine and state
and local taxes are climbing. Local schools and governments are struggling to continue operating because federal revenue sharing
and special grant money has stopped flowing. Consequently many public services are going away. Schools are doubling class
sizes, closing some buildings and trimming bus routes. Subsidized public transit services are in jeopardy. Public libraries
are closing their doors. The nation’s crumbling infrastructure will no longer be getting badly needed repairs.
is no big secret that the nation has plunged into a multi-trillion dollar financial deficit following a decade of constant
war and the bail-out of the big financial institutions threatened with collapse because of reckless and probably illegal lending
on a volatile housing market. What most people may not know or understand is that the federal government has done little to
curb these banking practices, the secret wheeling and dealing continues unchecked, and many leading economists warn of yet
another pending crash.
of the complexities of the way the banking system operates most people do not understand how they are being hoodwinked by
the banks and especially the Federal Reserve, which is printing more and more paper money to make it appear as if money remains
in circulation. In truth, without gold in the vaults to back up the value of those greenbacks, every dollar now in circulation
has only a portion of the value it once had. Thus it should take more dollars to buy the same product today as it did only
a year or two ago. This is called inflation. To hedge against inflationary price increases, however, manufacturing companies
are moving overseas where they use low-cost and non-union labor to make the things we buy. And this has been a primary cause
of the unemployment crisis in America.
United States also is borrowing a lot of money from other nations like China, India, Germany and Saudi Arabia to cover what
has been a wild spending spree. This is why the nation has now accumulated an estimated 13 trillion dollar deficit. The interest
payments on that kind of debt are sucking up most of what Americans pay each year in income taxes.
how do we get out of such a dilemma? The new Republicans now entering Congress are calling for cuts in spending. They even
want to go so far as vote against a looming call to raise the nation’s debt ceiling. This move is needed to allow for
even more borrowing as demand for even more cash to keep the wheels of government operating sucks up the rest of the money
left in government coffers. A political fight over this issue is expected to happen sometime this spring.
the Republicans get their way and plug efforts to raise the debt ceiling, most operations of our government will probably
grind to a halt. If legislators give in and agree to hike the debt ceiling, it means that America will plunge even deeper
into debt, thus creating an even bigger strain on the economy.
a compromise agreement was made in December to extend the Bush tax cuts to all Americans, including the very wealthy, was
a mistake. The wealthy few are now controlling most of the nation’s money. The burden of paying off the massive national
debt is thus thrown back onto the shoulders of the working Middle Class, which is disappearing.
national deficit is having a big impact on State and local governments. These governments are required by federal law to operate
with balanced budgets. They are not allowed, by law, to seek bankruptcy protection. Ironically the federal government does
not live under these same rules. State and local governments also have been operating with the help of federal revenue sharing
money since the days of the Johnson Administration. As federal dollars disappear, the money passed down to states, schools
and local governments is drying up. And this is forcing state and local governments to cut services and raise fees, income
taxes, property taxes and sales taxes to generate money to keep their books out of the red..
how will all of this affect that “Middle Class” homeowner family with children, with both parents working, and
with credit cards maxed out from holiday spending? These people are caught in a terrible cash crunch situation. They can expect
a raise in taxes on every front. That drive to work will get tougher because the roads will be falling into disrepair. Snow
removal may be affected. Water and sewer line breaks will be more and more common.
the stockholders are experiencing good times on Wall Street, everything that is happening there is not reflecting what is
going on in the homes of grass roots America. The government is reporting about a 10 percent unemployment rate, but many economists
say the real number of people out of work is probably much worse. It is estimated that many people have out of a job so long
they have stopped looking for work. If they don’t file they do not get counted. The real unemployment level may be hovering
at depression era levels.
who have jobs are clinging to them, fearful that if they quit or get fired they won’t find another. Many employers are
taking advantage of the situation. Thus many people are slaving harder in understaffed work places and not daring to complain.
Many workers are hired as “part time” or temporary staffers although they may be working full time. Because they
are rated as “temporary help” or “part time” employees, they do not qualify for health insurance or
other benefits like paid vacation time, paid sick time or retirement. It is a trick that employers of non-union shops can
get away with.
year the extreme weather patterns and other natural and man-made disasters are raising fears of world food shortages. Commodity
brokers are investing heavily in grains, coffee, cocoa and other food commodities, thus cornering the market on these products.
Fuel prices also are on the rise so farmers are paying more to produce food. Needless to say, the price of food is climbing.
price of a gallon of gasoline and home heating fuel also is increasing . . . some believe gasoline at the pump may go as high
as $4 this year. This means the trip to and from work will be more expensive for that two-car family. Home heating bills and
electric bills are rising.
schools struggle to continue operating within the confines of squeezed budgets, many districts are cutting back to four days
a week. They also are requiring families to pay for services that once were financed by the school. These include music, sports
and other extracurricular activities.
cost of dental and medical treatment has skyrocketed. People without medical insurance are choosing to go without regular
checkups and treatment for anything but the most extreme emergencies. The Obama health care package is beginning to offer
some help, but for most families it is too little and too late. With family budgets stretched to the limit, people cannot
afford to go to the doctor anymore.
the banks and lending institutions, the guys believed largely responsible for starting much of the financial chaos now occurring
in the country, are in the process of raising fees for services. Some people in the know say that things like “free
checking” and overdraft protection services will be disappearing. Credit
card holders without a locked-down interest rate established on those cards can expect interest rates to soar. Missed or late
mortgage or credit card payments may lead to expensive penalty fees.
you get far enough behind in those house payments your friendly banker will put you out on the street. The rash of home foreclosures
in America has reached epidemic levels with no end in sight.
will it all end? It appears as if we have unknowingly allowed ourselves to be shoved into an impossible financial corner with
no way of escape.
is one interesting ray of hope, however. The news from Europe this week concerning the release of bank records from a Swiss
bank whistleblower who headed the office of Julius Baer, a bank branch in the Cayman Islands, to Julius Assange may be enlightening
to many struggling Americans. Assange, the founder of the controversial WikiLeaks website, said the data is expected to be
published within the next few weeks.
Julius Baer whistleblower, Rudolf Elmer, says the information contains bank records of about 2,000 wealthy banking clients,
including high profile individuals and big corporations, who have been secretly hiding their money in the Cayman Island banks
to avoid paying taxes.
is scheduled to go on trial in Switzerland this week on a charge of breaching bank security.
Elmer’s accusations are correct, and the WikiLeaks data exposes corruption in such high places, there must be public
pressure on government leaders to take action. Getting the high rollers back on the tax rolls will go a long way to help get
the U.S. financial picture out of red ink. Those that have broken federal tax laws should be prosecuted and held accountable
for their actions.
our elected representatives in Washington fail to take control of these destructive corporate and banking practices, and do
it quickly, we may never be able to reverse the damage that has been done. We will all be left at the mercy of the power brokers
with their hands on all of the wealth.
January 18, 2011