Demographics – Page 18 – The Wrongologist

Our Thin-Skinned Blue Line

When we see each other as enemies, we are the Middle East, and we can no longer work together for the common good. Consider what happened last week at a Minnesota WNBA basketball game:

Four off-duty Minneapolis police officers working the Minnesota Lynx game at Target Center on Saturday night walked off the job after the players held a news conference denouncing racial profiling, then wore Black Lives Matter pregame warm-up jerseys.

Lt. Bob Kroll, president of the Minneapolis Police Federation, the union that represents rank-and-file officers, praised the officers walk out:

I commend them for it… If [the WNBA players] are going to keep their stance, all officers may refuse to work there.

What is lost in the police union grandstanding was that the Lynx jerseys in question read “Change starts with us, justice and accountability” and on the back had Philando Castile’s and Alton Sterling’s names along with “Black Lives Matter” and the Dallas Police Department shield. How is that seen as anti-cop? This highlights how thin-skinned police forces around the US are whenever criticism emerges about bad policing.

But what can be done?

The most recent report from the Bureau of Justice Statistics quadrennial “Census of State and Local Law Enforcement Agencies, 2008” shows that there are 17,985 state and local law enforcement agencies with at least one full-time officer or the part-time equivalent in the US. All of them are managed by local, county or state governments, and the majority of police are members of a local union. Wrongo is not anti-union, but the social identity of being in law enforcement cultivates a code of unduly protecting members, hiding evidence, and blindly supporting the position of other officers simply because of their collective identity. The “Blue Wall of Silence” around cops is the excuse to cover up bad behavior in the face of investigation.

Creating an equivalency between #BlackLivesMatter and #BlueLivesMatter is wrong. Consider this thought from Jonathan Russell, Professor and Chaplain at the USC Center for Religion and Civic Culture: (emphasis by the Wrongologist)

A black life is a life under the threat of social death, a social life constituted by precarity and the potential of imminent death…Blue lives have no analogous history, no precarious location from which their collective lives need recovery…Blue lives are not…living under conditions similar to black life. It is the history of black lives not mattering that gives meaning to the hashtag. Blue lives have no such analogous history.

Russell goes on to say:

Blue lives have always mattered, present and past. Their experience of social space is (for the most part) one of…deferential treatment… It is profoundly misrepresentative and disrespectful to develop an analogous hashtag, as if blue lives have an analogous experience of social life in America as black lives have. This hashtag is wrong in so much as it connotes that the lives of law enforcement officers have failed to matter sufficiently in the broader public consciousness.

For the umbrage-takers out there, relax. Wrongo isn’t saying that cops don’t deserve respect, they do. He thinks that cops have a tough job, and that we must mourn any cop killed on the job. But, we can’t be blind to the power of this confrontation between #Blue and #Black to tear us apart.

Here is ginandtacos: (emphasis by the Wrongologist)

I keep holding out hope that we will learn something from this, that police can say to themselves “All those Dallas officers wanted was to do their job and go home alive at the end of the day” and have some moment of inspired transference wherein they realize that every black person they pull over in a traffic stop wants the same...

Our National Trauma Wake Up Call – July 11, 2016

It didn’t take long after five dead officers in Dallas, victims of a racially motivated killer, for some on the right to say “Its Obama’s fault”, or “Its Black Lives Matter’s fault”.

Here is a sentiment that you would hope that all Americans can agree on:

FireShot Screen Capture #100 - EM Simpson-page-001

From Evan Osnos:

It is a vision at the heart of the modern gun movement: the more that society makes the threat of violence available to us, the safer we will be. In forty-eight hours this week, the poisonous flaw in that fantasy has been exposed from multiple angles…

Wrongo hasn’t seen the videos, and hasn’t checked deeply into the circumstances, but he can’t seem to keep these incidents at arm’s length:

The Baton Rouge incident seems to have been the result of panic among the police who shot the victim repeatedly, even though the victim was pinned down on the ground.
The Minnesota shooting of a man halted for a traffic violation, who informed the policeman that he was armed and had a permit for concealed carry of a firearm, again may have been the result of fear and/or panic by the cop. The victim was shot several times while trying to pull his identification from a pants pocket.
The attack on Dallas police, in which five policemen died, and seven were wounded, seems to be a racially motivated revenge killing by a black shooter.

Needless to say, we need people on both sides of the Black/Blue Lives Matter argument to stand down. Cooler heads need to prevail. There are probably many cops who are not in possession of the nerves of steel needed for their jobs in 2016. Policing America today is no cakewalk. Everybody has a gun, most people are angry, and many have very low points of frustration.

FWIW, these violent episodes are partly a reflection of the larger struggle reflected in our national politics. There is a palpable dissatisfaction with how our country operates. The accumulation of money and power by people controlling our institutions has brought us an elite that no longer operates in the best interests of the population at large.

Some of this frustration and anger is played out with gunfire, and guns are everywhere.

The past week shows clearly that America’s police and America’s black citizens are at odds. During the day or so after Baton Rouge and Minnesota, there was an opportunity to step back and perhaps discuss what we might have learned from these killings. But the shooter in Dallas muddied the bigger picture, making revenge the story in our national news.

Leonard Pitts, Jr. in the Miami Herald quotes former NYC Mayor John Lindsay at another time of racial division:

This is a drifting, angry America that needs to find its way again.

This week feels like a sea change. Until now, neither killings by police, nor killings of police have been happening at unusual rates. This feels completely different, but we won’t be sure for a while.

More Political Lessons From Brexit

There is a neoliberal aspect to Brexit that has many Brits in the 1% quietly (and tentatively) quite happy. Fraser Nelson, editor of the Spectator and a columnist for the Daily Telegraph, writing in the WSJ, said the Brexiteers:

…think the vote for Brexit was about liberty and free trade, and about trying to manage globalization better than the EU has been doing from Brussels.

Neoliberalism at its finest. You could substitute “No Obama” for “Brexit”, and “Washington” for “Brussels”, and think it was the GOP talking.

Mr. Nelson says that a major problem was that the EU’s centralized, command-type structure makes local issues difficult to manage. He says that regulations issued at the European level, rules promulgated by officials whose names Brits didn’t know, people they never elected and cannot remove from office, became law in the UK. More from Mr. Fraser: (emphasis and brackets by the Wrongologist)

Mr. Cameron has been trying to explain this to Angela Merkel…He once regaled the German chancellor with a pre-dinner PowerPoint presentation to explain his whole referendum idea. Public support for keeping Britain within the EU was collapsing, he warned, but a renegotiation of its terms would save Britain’s membership…Mr. Cameron was sent away with a renegotiation barely worthy of the name. It was a fatal mistake [by the EU] not nearly enough to help Mr. Cameron shift the terms of a debate he was already losing.

The EU took a gamble: That the Brits would not vote to leave. A better deal—perhaps aimed at allowing the UK more control over immigration, a top public concern in Britain—might have stopped Brexit. But the absence of a deal sent a clear message: The EU isn’t interested in reform.

The EU apparently needs fixing, but it won’t be the UK who does it. Cameron tried in a lukewarm way to fix Europe a little around the edges, and failed. A final point from Mr. Fraser:

The question is not whether to work with Europe but how to work with Europe. Alliances work best when they are coalitions of the willing. The EU has become a coalition of the unwilling, the place where the finest multilateral ambitions go to die.

Perhaps. It IS clear that not all regulations are created equal, some are inefficient, and some are just stupid. But, a business environment with fewer government regulations is the wet dream of most business owners, while it often harms consumers. It is also true that the Brexit supporters were able to conflate in the minds of voters all the discontent with UK austerity, benefit cuts, poor quality job creation and wage stagnation along with the EU’s hegemony, into a big ball of emotion.

And it worked.

The inside-the-bubble UK neoliberal view is that the EU was the problem, and the British voters solved that. America doesn’t have an analogue. We could leave NAFTA, but that has none of the earth-shaking possibilities. We could fail to pass the TPP. That would be a yuuge anti-neoliberal event.

There is an economic malaise in blue collar UK. Once an industrial powerhouse, it has become service driven, with finance and lawyering representing a significant portion of its economy. Sounds just like America in 2016.

Let’s link all of this up with our domestic political economy:

Income inequality has grown in the US since at least the 1980s.
Real median income is the same as in 1996.
Our Labor Participation Rate (the share of American civilians over the age of 16 who are working or looking for a job) is about where it was in the 1970s.
Despite a rosy headline unemployment rate of 4.7% (which counts only people without work seeking full-time employment), the U-6 rate (includes discouraged workers and all marginally attached workers, plus those workers who are part-time purely for economic reasons) is much higher at 9.7%. In human terms, that is 15.3 million souls who need a job.

Donald Trump and Hillary Clinton both see these things. The candidate who convinces voters that s/he will really address them will win.

Trump is correct when he says if there are millions out of work, how can we permit immigration? He wrongly focuses on Mexicans, but he’s right: We need fewer people pursuing the fewer jobs we will have until at least until 2025, when finally, all the Baby Boomers retire.

America is in a class war, but it’s the working class versus the middle class rather than workers versus billionaires, as Bernie talks about. Joe Six-pack doesn’t hate the billionaire class. Therefore, Trump is acceptable.

The Pandering Pant Load sees this, and has moved to exploit their anger.

How Brexit Informs The Pant Suit’s Strategy

We are told that the Pant Suit is the candidate of the status quo, while the Pant Load is a wild card who will bring about change, possibly change that causes immediate remorse if he is elected. That’s just what the UK is experiencing. After a weekend facing the realities of Brexit, 3.5 million Brits have signed a petition for a do-over vote on “Remain vs. Leave”.

The pundits say Clinton can’t be the candidate of change because she supports President Obama, and the common view is that her first term would be Obama’s third term. But, if Brexit has relevance for the American election, she must avoid appearing to be the candidate of the status quo.

If the Pant Load can make the election about any kind of change vs. more of the same, Clinton will be vulnerable.

She should run against Trump’s fitness to govern, and the fitness of the Republicans in Congress to govern as well. After all, Republican Congressional leaders decided not to govern in January 2009, and so far, they have not paid a political price for their obstructionism. Of course, Mr. Obama tried to run against the do-nothing Congress in 2014, and the result was that the GOP took control of both houses.

Maybe it would be different this time for the Pant Suit. As Steve Waldman said about this strategy at the WaMo:

But if it could ever work, it’s now. The most recent Economist/YouGov poll reported a 9% approval for Congress among registered voters. It is literally the most unpopular Congress in the history of polling. Clinton can make the attack more effectively than Obama, because it won’t sound as much like blame-shifting.

And she could make running against Congress sound like change. She needs to shift some of her focus away from declaring the Pant Load unfit for office. That is, unless he keeps making more mistakes like his inexplicable PR disaster in Scotland. If he does that, her speeches will write themselves, and he will keep sliding in the polls.

She should run to enact specific things that Congress has blocked – infrastructure spending, ending tax breaks for corporate off-shoring, and universal background checks for gun ownership. But she needs to distance herself from more from Obama on global trade deals. Consider this from the Detroit Free Press:

CNN’s exit poll, which surveyed 1,601 Michigan Democratic voters as they left their precincts Tuesday, showed that 58% of them believed trade with other countries costs jobs, compared to 30% who believe they create them. And among those who believe trade costs jobs, Sanders won by a large margin, 58%-41%.

Michigan is a key state for Clinton, and she needs to build a firewall in a few other states that Obama won in 2012, but where she now has some trouble, if the June 21 Quinnipiac polls for Florida, Ohio, and Pennsylvania are correct. The polls show Clinton with a clear lead in Florida (47%-39%), but locked in ties in Ohio (40%-40%) and Pennsylvania (42%-41%).

She has to keep the Pant Load from winning both Ohio and Pennsylvania, which right now, look to be toss-ups, meaning Trump could win both. Pennsylvania also has a number of swing House districts and an important Senate race, so Clinton must work hard there, even if it were completely in the bag for her. OTOH, PA elected a Democratic governor in the 2014 Republican landslide, and hasn’t gone red in a presidential election since 1988. This, from Booman:

For starters, Obama won in 2012 with 332 Electoral College votes to Mitt Romney’s 206. If we keep everything the same and award Ohio and Pennsylvania to Trump, the result is 294-244.

So, winning Ohio and Pennsylvania would be a start for the Pant Load, but without Florida, it’s hard to get from 244 to the 270 votes needed to win. In fact, without Florida, Trump would have to win Ohio, Pennsylvania, Virginia, New Hampshire and Michigan, while losing Iowa in order to garner a 277-261 victory.

It’s a long way to November, and who knows who will win? It’s difficult to believe it will be close, but we lived through two Nixon wins, so electing someone you dislike and distrust is nothing new for America.

Brexit: Better for the Pant Load or for the Pant Suit?

Around here, Monday means a wake-up tune. We should have Brexit breakup music, but instead of song, we need to watch this video by Mark Blythe, a Scottish political scientist, and a professor of international political economy at Brown University, about the logic behind voting for Brexit:

Blythe makes more sense in 5 minutes about the EU, why Brexit happened, and some implications for the US, than the entire journalistic class has said using millions of words over the past few days. At 4:01, he says, “As I like to say to my hedge fund friends, the Hamptons is not a defensible [military] position.”

Let’s take a quick look at a few conclusions of the Brexit vote:

Rust cities and towns largely voted to Leave
Wealthy cities favored Remain
Rural areas that have not seen much immigration had seen a lot of austerity
Older voters wanted to return to the prosperous 1970s-1980s, regardless of whether that is realistic

Demographically, the most striking difference in voting was between young people and older people. A YouGov poll showed:

18-24: 75% voted for Remain
25-49: 56% voted for Remain
50-64: 44% voted for Remain
65+: 39% voted for Remain

So younger voters wanted to keep the option to be citizens of a larger economic unit, where they might find more and better job opportunity, while older voters wanted out of the EU for a variety of fact-based and fear-based reasons. On either side of the Atlantic, it’s a mistake to think that people know all the facts before they decide. From Seth Godin:

There are two common causes of uninformed dissent…The second (quite common in a political situation), is the tribal imperative that people like us do things like this. No need to do the science, or understand the consequences or ask hard questions. Instead, focus on the emotional/cultural elements and think about the facts later.

Our first Brexit lesson is that America has a huge base that is angry, scared, and possibly, more than willing to jump into the abyss. Sober analysts warned Britons that pulling out of the EU would be an economic and security debacle. But, as Matthew d’Ancona of The Guardian observed:

They heard the warnings, listened to experts of every kind tell them that Brexit meant disaster, watched the prime minister as he urged them not to take a terrible risk…And their answer was: Get stuffed.

Our second Brexit lesson is that nativism, anti-immigration fervor, and elite-bashing are potent tools.

There was a definite scent of “Make Britain Great Again” running through the Leave campaign. The Leavers urged Britain to “take control” of its borders. While we point at Mexico, they pointed at Turkey, which they said would flood the UK with immigrants, even though Turkey may never be a member of the EU.

You can call it racism, you can blame it on the “market” or, you can blame it on the economic circumstances created by the political elites steering the ship.

This resonates in the US because foreigners are a source of marginal cheap labor that corporations use to bludgeon our working class. That anger is partly justified. However, it is misdirected, because people only believe what they want to believe, and because it’s easier for working people to blame foreigners than to blame themselves for repeatedly electing an economic elite that just keeps playing them over and over.

Brexit is an important wake-up for the US presidential election. Britain’s uprising against the European Union is the sort of populist victory over establishment politics that could easily happen here. As the NYT said on Sunday:

Mrs. Clinton shares more with the defeated “Remain” campaign than a similar slogan — her “Stronger Together” echoing its [Remain’s] “Stronger In.” Her fundamental argument, much akin to Prime Minister David Cameron’s against British withdrawal from the European Union, is that Americans should value stability and incremental change over the risks entailed in radical change and the possibility of chaos if Donald J. Trump wins the presidency.

Hillary urges potential voters to see the big picture, while promising to manage economic and immigration upheaval, just as Mr. Cameron did. She is also a pragmatist battling against nationalist anger, cautioning that the turmoil after the Brexit vote underscored a need for “calm, steady, experienced leadership in the White House.”

But we are not the UK, and today, the ABC/WaPo poll has Hillary is up by 12 points, although we still have miles to go before 2016’s election night.

We will have future columns covering our neo-liberal policies, their impact on the American people, and their implications for 2016, over the coming days and weeks.

Sunday Cartoon Blogging – June 26, 2016

Sunday cartoons return! Sorry for the hiatus, but it was unavoidable.

Quite the week. Did the sky just fall on the UK? We will have more over the next few days. There is still left-over emotion about Orlando. We had a sit-in by Dems, or as one wag said, it was the first time in years that Democrats stayed up past 10:00pm. But, did it achieve much? And of course, there is the 2016 presidential campaign.

Europe and the UK worked for nearly 70 years to put the EU together, and it is undone in an evening:

COW Brexit 2

The conventional economists’ view of what Brexit means:

COW Brexit 3

UK Prime Minister David Cameron misreads the people, pays the price:

COW Brexit 4

Orlando led to sit-ins, political and otherwise:

COW Sit In

Loyalty oaths were on display after Orlando:

COW Loyalty

Trump has less campaign dough than expected, but there was a benefit:

COW Bigger Hands

The Pant Suit vs. the Pant Load – Jobs, Part Infinity

We are in a time when a presidential candidate’s personality counts for more than the candidate’s policies. Candidates obfuscate on most policy issues and the media lets them get away with absolutely outrageous declarations of near-facts or outright half-truths.

One policy we must make them nail down explicitly is their jobs policy.

The key to making America great again is adding more jobs. Wrongo is a pest on this subject, but without more jobs, growth in GDP is harder to achieve. Tax revenues are more difficult to grow. People who are idle get into trouble.

The Pant Suit and the Pant Load know this, so they will talk from here to November about adding manufacturing jobs back to cities that lost them starting in the 1970’s. Those jobs are never coming back, but both of them are working hard to convince you they can do it. Consider this, from Parallel Narratives:

We’re now being told by folks who know better that all we need to do to bring those jobs back, to resurrect a future we can believe in, or make America great again, is to elect the outsider politician who is not beholden to elite interests like banks, CEOs and politicians. Unfortunately, that horse has left the barn, those jobs are gone for good…

A great example of a politician braying the “I can bring jobs back” mantra was in Sunday’s NYT business section’s column, “Preoccupations.” In it, a young couple had the option to work from home, so they moved from Austin, TX, that hot-bed of tech, to South Portland ME, not so techie. They work for two different firms from two home offices. Then, they are invited to attend a funds-raiser for a gubernatorial candidate: (emphasis by the Wrongologist)

The candidate raising campaign funds was a hard-working lawyer who seemed genuinely well meaning, but no one had told him that his economic platform of protecting manufacturing jobs and Maine’s traditional industries wasn’t going to fly with an audience of health care professionals, programmers, web designers and researchers…We muttered to each other that this guy didn’t have a place in his platform for people like us, many of whom worked for employers in other states. Our checkbooks stayed in our pockets.

If you hear this kind of BS from the Pant Suit or the Pant Load, your checkbook should also remain hidden.

While the low-wage jobs problem has been around for more than 40 years, America’s politicians are still peddling the same solutions. In fact, a new analysis from the White House’s Council of Economic Advisers (CEA) released Monday shows that only 88% of men ages 25 to 54 are participating in the US workforce. The CEA reports that the US has the third-lowest labor-force participation rate for “prime-age men” among the world’s developed countries. We have done so well that, on a percentage basis, Greece, Slovenia and Turkey all have more men working than the US does. Greece! The decline is concentrated among less educated. Here is a chart:

Male Labor Force Part by Edu

More than 95% of men used to work in 1964, regardless of their educational attainment. Today, you better have at least a bachelor’s degree if you want to be sure you will get a job. But it is worse than that. The CEA said:

In recent decades, less-educated Americans have suffered a reduction in their wages relative to other groups. From 1975 until 2014, relative wages for those with a high school degree fell from over 80% of the amount earned by workers with at least a college degree to less than 60%.

Clinton and Trump would have you believe that the problem is bad trade deals with China, the TPP, or immigration. Trump in particular, is saying that the political elites have knowingly caused this all at the expense of the American worker. There is a modicum of truth to that, but it is the American corporation and the American tax code that is closing out US jobs, and hammering the middle class. American corporations now pay about 11% of our total US taxes, down from about 30% of US taxes in 1960, as jobs (and markets) have moved abroad.

What are the Pant Suit and/or the Pant Load going to do in the face of advancing automation now facing us not just in manufacturing, but also in the service and knowledge industries?

It is time to make the candidates talk about this on the campaign trail.

The basic policy choice we have is to put people to work, or to continue to allow the profit motive to dominate. If the profit motive remains supreme, we will continue our relentless drive to reduce labor costs — by eliminating jobs, or by paying workers less for the same work.

To date, our leaders have chosen the latter path, and we have reaped the results. We have become a land of spreadsheets and flags.

Pant Suit vs. Pant Load, Part III

(Note: this week there will be no Sunday Cartoon Blogging, since Wrongo will be visiting MA and PA through Sunday, returning on Monday.)

Wrongo and long-time blog reader Terry engaged in a short email dialog on how to “fix” the US political system. We were concerned that there is no individual Congressperson accountability. A backbencher can follow an agenda that can imperil our nation (and a few have done just that) without consequence.

But in America, accountability is managed by election district. Your only alternative is to round up enough votes to replace poor representation. So, if you wanted to reform the impact that money has in our politics, or the way the filibuster works in the Senate, you have to reform Congress.

Yet, under our Constitution, only Congress can reform Congress. And today, there are three parties vying for control of it, and since they rarely are willing to work with each other, not much gets done. So you can completely forget about Reform.

And the parties have not been willing to deal with the not-so hidden desperation in America that shows up in statistics like increasing opioid addiction and suicide rates. The political class ignores how lethal the US economy is for the less fortunate: The New York Times reported this week that US death rates have risen for the first time in a decade.

The increase in death rates among less educated whites since 2001 is roughly the size of the AIDS epidemic. One reason is the use of opioids. And, despite Mr. Obama’s speech in Elkhart, IN where he said our economy is doing well, there has been a spike in suicides to levels higher than during the 2008 financial crisis.

The little people know that the economic policies followed by both parties have brought income inequality to Gilded Age levels. They know that all of the post-crisis income gains have accrued to the top 1%. Unlike in China which continues to grow, our economic expansion has brought with it high unemployment and underemployment, particularly among the young.

As a result, people feel powerless. In fact, a RAND survey in January found that 86.5% of GOP voters who strongly identified with the statement “people like me don’t have any say about what the government does” were Trump supporters.

And, since so much of politics is about corralling money into the bank accounts of our politicians, your Congresspersons have no intention of listening to you unless you have given at least $10,000 to their campaign fund, or are the CEO of a major employer in their district or state. In US politics, money=speech. But, there is little meaning to free speech without free access to influence the political process.

Many of us feel nihilistic about our politics and our government. So the Pant Load’s support seems a lot like a form of public political vandalism where The Donald is the can of spray paint.

Most people can see that a large portion of Americans are poorer with each new election cycle. After all, the reason Trump (and Sanders) are doing well is because many, many workers are seeing their job security, income security, and retirement security all go up in smoke. That’s no mystery, just the natural outcome when the government fails to represent the people in favor of the rich who fund their campaigns. It’s no wonder the Pant Load is easily corralling the frustrated.

But can the Pant Suit reverse the Democratic Party’s abandonment of the working class in America?

We know that she needs to focus on drawing more potential working class and young supporters, but so far, Democrats are content to run only in their municipal strongholds, following a strategy of stitching together interest groups, largely in states with big urban populations.

Energizing people around the fact of our corrupt political system is both a way to get higher turnout, and a way to elect members of Congress and state legislatures to fix the corrupt system. That is Bernie’s message, what he calls a “political revolution.” But Sanders is not the person to bring this about. Consider Sanders just the messenger.

Strategically, the Pant Suit needs to figure out how to get folks energized enough to vote for her and against Trump for reasons that don’t so paralyze them with fear that they stay home. If she is successful, it could be the start of re-establishing the New Deal coalition, and a re-installation of the principles of the civil rights movement.

That’s a huge job that will not be completed in one election cycle.

This threat is the GOP’s worst nightmare. They have worked for 40 years to eliminate these ideas, so expect the GOP to unanimously support the Pant Load:

COW Never Hillary

The Bernie Dems will rally behind Hillary for similar reasons.

Trump/Arpaio 2016: Because immigrants are the greatest threat to the nation.

Will Take-Home Pay Grow?

One of the big questions that we must force Hillary Clinton and Donald Trump to address is: Where will growth in take-home income come from?

If we look at pay, despite recent improvements, real average hourly earnings have declined since the 1970s:

Real Hourly Earnings 2016

Source: Advisorperspectives.com

At the same time, the average hours per week have trended down from around 39 hours per week in the mid-1960s to a low of 33 hours at the end of the last recession. It is 33.7 hours today. After eight years of economic recovery, it is only up by 42 minutes.

So, take-home pay has stagnated (or worse) for the average American since the Nixon administration. People have coped by having both spouses work, by borrowing under a Bank of America heloc, and by refinancing mortgages when interest rates declined.

But, by 1995, spousal participation in the job market had peaked, at about 60%. Borrowing under home equity lines of credit peaked in 2005 at $364 billion. These loans that were used to pay for remodeling, education costs, or new Ford F-150s were less than half of that amount in 2015, at $150 billion.

After the Great Recession, The only remaining way to boost household cash was mortgage refinance. There were windows to refinance a mortgage in 2009, and again in 2013. The reason was that mortgage interest rates stayed very low. In fact, US 10 year treasuries were at a 60 year low in 2013 at 1.50%, and mortgage rates are tied to the treasury rate. Refinancing mortgages can happen to many people, this is where companies like Polar Mortgage come in to help homeowners out. Homeowners also have the ability to get financial help from the government through the use of federal credit union home loans in order to refinance their homes.

As an example, a 1.5% decline in a mortgage payment on a $250,000 house would save $3750 a year, or a little over $300 a month added to the pockets of the average hourly worker. Taking income tax into consideration, it would take an additional 17.5 hours of work at the $21.45 rate to equal that amount. But that’s not practical. It would require a 52% increase in hours, if you are working the national average number of hours, which isn’t going to happen.

So, if the Federal Reserve raises interest rates, as they seem set to do this month or next, mortgage refinance will no longer be helpful to the vast number of working people. CoreLogic tracks the interest rates on outstanding mortgages, collecting data from mortgage servicers. Their data track the volume of outstanding mortgages by interest rate level for both the number of mortgages, and the unpaid principal balance on those mortgages (UPB).

Their analysis says that few mortgages will be refinanced if rates go up: Most borrowers have mortgages with rates below 4.50%, with 62% of mortgages and 72% of UPB in this range. There are an additional 14% of borrowers and 13% of UPB with mortgage rates between 4.5 and 5.0%.

Since refinancing has costs (legal, title search and insurance, and points), a simple rule of thumb is to add 1% to the current mortgage rate to get a rate at which borrowers would have a financial incentive to refinance. The current Freddie Mac mortgage rate is 3.57%, so the point of indifference for a borrower would be ~4.5%. CoreLogic estimates that only about 28% of the UPB of America’s outstanding mortgage loans are worth refinancing today. And should the Fed live up to their plan, and increase rates by ½% in 2016, an additional 5.5 million borrowers will lose their incentive to refinance.

So, if mortgage rates rise in 2016 as predicted, refinancing won’t improve the financial situation for very many of us.

New Deal Democrat sees all of this and says:

So the bottom line is, we are already in a period…where real gains by average Americans won’t be available from financing gimmicks, but must come from real, actual wage growth. At the moment I see little economic or political impetus to make that happen, even though average Americans understand via their wallets the issue all too well.

We’ve killed our economy.

You’d think after 8 years where most US job growth was in part-time jobs, where hourly income is at the same level as in the Ford administration, where we have the most people ever in poverty, where student debt exceeds credit card debt and automobile debt, people would catch on.

Maybe, but not unless we demand real answers of Hillary Clinton and Donald Trump, and not let the candidates say the plan is to rearrange the deck chairs on the Titanic.

Sunday Cartoon Blogging – April 24, 2016

(Mr. Wrong and Ms. Right are in Bordeaux. Next, we visit the Normandy Beaches)

RIP Prince. “When Doves Cry” was a personal favorite:

COW Doves Cry

Wrongo didn’t appreciate when Prince was so popular, how gloriously filthy some of his mainstream songs were when you watched MTV, or heard them on the radio. The web has few Prince live performances because of his tenacious control over his artistic product. Check out this video from his 2004 induction into the Rock and Roll Hall of Fame:

Those who read the Wrongologist in email can view the video here.

Apparently, the guitar that Prince used in the video was a cheap Telecaster knock-off. The Diminutive One tosses it into the audience as he finishes. Rolling Stone reports that it almost didn’t happen: George Harrison’s widow, Olivia, wanted the performance of “While My Guitar Gently Weeps” to be limited to people who knew George — unlike Prince, who later claimed he had never even heard the song before it was sent to him to learn for the performance.

Obama of Arabia meets up with his homies:

COW Whats New

Tubman on the $20 bill gives new meaning to new money:

Clay Bennett, Chattanooga Times Free Press

Irony anybody? A 2-term President who was a soldier, a lawyer and served in Congress both in the House and Senate, and a Democrat, is replaced by a pro-Lincoln freed slave who worked for the US Army and was a Republican? And the guy responsible for it is a Democrat!

Trump and the GOP get ready to play delegate football:

COW Lucy

Trump told the GOP he was gonna be a new man in the General Election:

COW New Trump

The Wrongologist

Geopolitics, Power and Political Economy

Category: Demographics