|Posted by Jerrald J President on January 9, 2020 at 9:20 AM||comments (0)|
As the world continues to turn Black citizens continue to fall further and further down the proverbial "RABBIT HOLE"! In 2012 black household income was $37k, today it's $41k. Wake up!!!!! By JJP
Racial and ethnic income gaps persist amid uneven growth in household incomes
Yesterday’s Census Bureau report on income, poverty, and health insurance coverage in 2018 shows that while there was a slowdown in overall median household income growth relative to 2017, income growth was uneven by race and ethnicity. Real median income increased 4.6% among Asian households (from $83,376 to $87,194), 1.8% among African American households (from $40,963 to $41,692), 1.1% among non-Hispanic white households (from $69,851 to $70,642), and only 0.1% among Hispanic households (from $51,390 to $51,450), as seen in Figure A. The only groups for which income growth was statistically significant were Asian and Hispanic households.
In 2018, the median black household earned just 59 cents for every dollar of income the median white household earned (unchanged from 2017), while the median Hispanic household earned just 73 cents (down from 74 cents).
Real median household income, by race and ethnicity, 2000–2018
Year White Black Hispanic Asian White-imputed Black-imputed Hispanic-imputed Asian-imputed White Black Hispanic Asian White Black Hispanic Asian
2000 $66,712 $43,380 $48,500 $69,069 $44,614 $46,989
2001 $65,835 $41,899 $47,721 $68,161 $43,091 $46,234
2002 $65,646 $40,839 $46,334 $73,660 $67,965 $42,001 $44,890 $79,501
2003 $65,388 $40,633 $45,160 $76,231 $67,698 $41,789 $43,753 $82,276
2004 $65,178 $40,292 $45,670 $76,631 $67,481 $41,438 $44,247 $82,708
2005 $65,458 $39,898 $46,360 $76,873 $67,771 $41,033 $43,846 $84,991
2006 $65,449 $40,116 $47,169 $78,291 $67,762 $41,257 $45,699 $86,560
2007 $66,676 $41,388 $46,958 $78,343 $69,032 $42,565 $45,495 $86,616
2008 $64,923 $40,154 $44,326 $74,913 $67,217 $41,296 $42,945 $82,824
2009 $63,895 $38,423 $44,628 $74,982 $66,153 $39,516 $43,238 $82,901
2010 $62,857 $37,114 $43,433 $72,402 $65,078 $38,170 $42,080 $80,048
2011 $62,001 $36,215 $43,217 $71,139 $64,192 $37,245 $41,870 $78,653
2012 $62,465 $36,945 $42,738 $73,415 $64,672 $37,996 $41,406 $81,169
2013 $62,915 $37,547 $44,228 $70,687 $65,138 $38,615 $42,850 $78,153 $65,138 $38,615 $42,850 $78,153
2014 $63,976 $37,854 $45,114 $78,883 $63,976 $37,854 $45,114 $78,883
2015 $66,721 $39,440 $47,852 $81,788 $66,721 $39,440 $47,852 $81,788
2016 $68,059 $41,924 $49,887 $85,210 $68,059 $41,924 $49,887 $85,210
2017 $69,806 $41,584 $51,717 $83,314 $69,806 $41,584 $51,717 $83,314 $69,851 $40,963 $51,390 $83,376
2018 $70,642 $41,692 $51,450 $87,1944
Note: Because of a redesign in the CPS ASEC income questions in 2013, we imputed the historical series using the ratio of the old and new method in 2013. Solid lines are actual CPS ASEC data; dashed lines denote historical values imputed by applying the new methodology to past income trends. The break in the series in 2017 represents data from both the legacy CPS ASEC processing system and the updated CPS ASEC processing system. White refers to non-Hispanic whites, black refers to blacks alone or in combination, Asian refers to Asians alone, and Hispanic refers to Hispanics of any race. Comparable data are not available prior to 2002 for Asians. Shaded areas denote recessions.
Source: EPI analysis of Current Population Survey Annual Social and Economic Supplement Historical Poverty Tables (Table H-5 and H-9)
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Based on EPI’s imputed historical income values (see the note under Figure A for an explanation), 11 years after the start of the Great Recession in 2007, only African American households remained below their pre-recession median income. Compared with household incomes in 2007, median household incomes in 2018 were down 2.1 percent for African American households, but up 0.7% for Asian households, 2.3% for non-Hispanic white households, and 13.1% for Hispanic households. Asian households continued to have the highest median income, despite large income losses in the wake of the recession.
The 2018 poverty rates also reflect the patterns of income growth between 2017 and 2018. As seen in Figure B, poverty rates for all groups were down slightly or unchanged, but remained highest among African Americans (20.7%, down 1.0 percentage point), followed by Hispanics (17.6%, down 0.7 percentage points), Asians (10.1%, up 0.4 percentage points), and whites (8.1%, down 0.4 percentage points). African American and Hispanic children continued to face the highest poverty rates—28.5% of African Americans and 23.7% of Hispanics under age 18 lived below the poverty level in 2018. African American children were more than three times as likely to be in poverty as white children (8.9%).
Overall poverty rate and poverty rate of those under age 18, by race and ethnicity, 2013–2018
Overall 2013 2014 2015 2016 2017 2018
White 10.0% 10.1% 9.1% 8.8% 8.5% 8.1%
Black 25.3% 26.0% 23.9% 21.8% 21.7% 20.7%
Hispanic 24.7% 23.6% 21.4% 19.4% 18.3% 17.6%
Asian 13.1% 12.0% 11.4% 10.1% 9.7% 10.1%
White 13.4% 12.3% 12.1% 10.8% 10.2% 8.9%
Black 33.4% 36.0% 31.6% 29.7% 29.7% 28.5%
Hispanic 33.0% 31.9% 28.9% 26.6% 25.0% 23.7%
Asian 14.7% 14.0% 12.3% 11.1% 10.4% 11.3%
M), an alternative to the long-running official poverty measure, provides an even more accurate measure of a household’s economic vulnerability. While the official poverty rate captures only before-tax cash income, the SPM accounts for various noncash benefits and tax credits. The SPM also allows for geographic variability in what constitutes poverty based on differences in the cost of living. According to the 2018 SPM, the official poverty measure understates poverty among Hispanics (the 2018 SPM rate is 21.2% vs. 17.6% by the official poverty measure) and among Asians (14.0% vs. 10.1%), while the measures produce relatively similar rates for whites (8.8% vs. 8.1%) and for African Americans (21.0% vs. 20.7%).
|Posted by Jerrald J President on December 16, 2019 at 8:50 AM||comments (0)|
Are you truly surprised by this so-called revelaton? The 2007-2008 Financial crisis illuminated their treacherous behavior/racist behavior towards BLACK MEN & WOMEN! By JJP
This Is What Racism Sounds Like in the Banking Industry
A JPMorgan employee and a customer secretly recorded their conversations with bank employees.
Jimmy Kennedy earned $13 million during his nine-year career as a player in the National Football League. He was the kind of person most banks would be happy to have as a client.
But when Mr. Kennedy tried to become a “private client” at JPMorgan Chase, an elite designation that would earn him travel discounts, exclusive event invitations and better deals on loans, he kept getting the runaround.
At first, he didn’t understand why. Then, last fall, he showed up at his local JPMorgan branch in Arizona, and an employee offered an explanation.
JPMORGAN CHASEJamie Dimon, the chief executive of the banking giant, said it needed to do more to tackle racism.
“You’re bigger than the average person, period. And you’re also an African-American,” the employee, Charles Belton, who is black, told Mr. Kennedy. “We’re in Arizona. I don’t have to tell you about what the demographics are in Arizona. They don’t see people like you a lot.” Mr. Kennedy recorded the conversation and shared it with The New York Times.
en baked into the American banking system. There are few black executives in the upper echelons of most financial institutions. Leading banks have recently paid restitution to black employees for isolating them from white peers, placing them in the poorest branches and cutting them off from career opportunities. Black customers are sometimes profiled, viewed with suspicion just for entering a bank and questioned over the most basic transactions.
This year, researchers for the National Bureau of Economic Research found that black mortgage borrowers were charged higher interest rates than white borrowers and were denied mortgages that would have been approved for white applicants.
Banks, including JPMorgan, say they are committed to eradicating the legacy of racism. And they insist that any lingering side effects simply reflect stubborn socioeconomic imbalances in society as a whole, not racial bias among their employees.
What recently transpired inside a cluster of JPMorgan branches in the Phoenix area suggests that is not true.
Mr. Kennedy was told he was essentially too black. His financial adviser, Ricardo Peters, complained that he, too, was a victim of racial discrimination. What makes their cases extraordinary is not that the two men say they faced discrimination. It is that they recorded their interactions with bank employees, preserving a record of what white executives otherwise might have dismissed as figments of the aggrieved parties’ imaginations.
Patricia Wexler, a JPMorgan spokeswoman, defended the bank’s overall treatment of Mr. Peters and Mr. Kennedy. She said that the bank hadn’t been aware of all of the audio recordings and that “in light of some new information brought to us by The New York Times,” the company put one of its executive directors on administrative leave while the bank investigates his conduct.
The Back of the Branch
Mr. Peters started his career at JPMorgan as a salesman in the bank’s credit cards division. After about eight years in various roles, he was promoted to a financial adviser position in Phoenix in 2016. His job was to help bank customers prudently invest their money.
Mr. Peters had won numerous performance awards at the bank, but things soon started going wrong for him.
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Mr. Peters won numerous awards from his employer, JPMorgan.Credit...Ash Ponders for The New York Times
He was working in a JPMorgan branch in the affluent Sun City West area of Phoenix. He sought a promotion to become a private client adviser, a job that would have let him work with wealthier and more lucrative clients.
The promotion never came. Instead, Mr. Peters was moved out of an office at the heart of the branch where he worked with other financial advisers and was relegated to a windowless room in the back.
In April 2017, one of his bosses, Frank Venniro, told Mr. Peters that another manager had accused him of taking customers’ files home at night, a violation of the bank’s code of conduct. Mr. Peters denied it, and Mr. Venniro accepted that he was telling the truth, according to a recording of the conversation. But, he added, Mr. Peters needed to be more cognizant of how his colleagues perceived him.
Mr. Peters was left with the impression that his managers, who were white, were predisposed to view him suspiciously. Could he prove it? No. What happened next was clearer.
Mr. Peters complained to Mr. Venniro that another financial adviser was trying to steal a prospective client: a woman who had just received a $372,000 wrongful death settlement after her son died. She was black.
Mr. Venniro told Mr. Peters that there was no point in his intervening in the dispute, because the woman was not a worthwhile client. “You’ve got somebody who’s coming from Section 8, never had a nickel to spend, and now she’s got $400,000,” Mr. Venniro said, referring to the federal program that provides vouchers to help with housing costs and whose title is sometimes used as a racial slur. “What do you think’s going to happen with that money? It’s gone.”
“But I thought that’s why we get involved,” Mr. Peters protested.
Mr. Venniro said no. “You’re not investing a dime for this lady,” he said. He knew from experience that she would quickly burn through the money. “It happens every single time.”
When Mr. Peters tried to argue, Mr. Venniro interjected. “This is not money she respects,” he said. “She didn’t earn it.”
Ms. Wexler, the bank spokeswoman, said that Mr. Venniro was put on leave after inquiries from The Times and that he resigned last Thursday. “Our employee used extraordinarily bad judgment and was wrong to suggest we couldn’t help a customer,” she said. She said Mr. Venniro knew the client was in subsidized housing but didn’t know her race.
In February 2018, Mr. Peters was transferred from the Sun City West branch to a JPMorgan branch in a less wealthy neighborhood. He perceived it as another example of managers, including Mr. Venniro, mistreating him because he was black.
One day, Mr. Peters met Mr. Kennedy, then 38. Mr. Kennedy had played for five N.F.L. teams as a defensive tackle. In 2011, he had joined the New York Giants — a homecoming that, The Times wrote at the time, was notable because of his impoverished childhood in Yonkers, N.Y. That season, Mr. Kennedy and the Giants won the Super Bowl.
Mr. Kennedy retired and later moved to Phoenix. JPMorgan bankers had been courting his business, but he hadn’t liked the financial advisers the bank had proposed to manage his investments. Then he met Mr. Peters. “The chemistry was just so real because he knew exactly what I needed to do,” Mr. Kennedy said in an interview.
In the summer of 2018, Mr. Kennedy gradually moved $800,000 to the bank. Mr. Peters and a colleague promised he would get “private client” status, which was reserved for accounts with more than $250,000.
Landing a wealthy client like Mr. Kennedy was a big win for Mr. Peters, but he was anxious about being targeted by his superiors. On Aug. 24, he filed a formal complaint with the bank. He said he had alerted Mr. Venniro “that I feel that I am being treated differently because of my race and color of my skin” and that Mr. Venniro had suggested that the solution was for him to work in the less-wealthy branch.
Less than two weeks later, JPMorgan agreed to pay $24 million to end a class-action lawsuit brought by other black employees who said the company had discriminated against them — in some cases by isolating them from colleagues and dumping them in poorer branches.
On Oct. 5, Mr. Venniro took Mr. Peters to a meeting room and said he was being fired. Mr. Venniro said he didn’t know why. “I’m just given marching orders,” Mr. Venniro told him, according to a recording of the conversation.
Mr. Peters filed a discrimination claim with the federal Equal Employment Opportunity Commission and the civil rights division of the Arizona attorney general’s office, accusing JPMorgan of racial discrimination. JPMorgan denied that and said Mr. Peters was fired for improperly assigning credit for a new client to an employee who managers didn’t think deserved it.
“We stand by our decision to terminate Peters,” Ms. Wexler, the spokeswoman, said. “The facts are indisputable.”
Mr. Peters disputed the facts. He said that he had given credit to the correct employee. He said the bank was using a mundane internal dispute as an excuse to fire him. He has since started his own investment advisory firm in Arizona.
‘If This Dude Gets Upset’
Mr. Peters’s termination left Mr. Kennedy in the lurch. A number of his transactions were frozen or not carried out. In one case, $92,000 of Mr. Kennedy’s money that was supposed to go into a new investment product ended up in a holding account, inaccessible to Mr. Kennedy. (Ms. Wexler said the problems were caused by administrative errors.)
JPMorgan assigned him a new financial adviser, Mr. Belton. He struck Mr. Kennedy as inexperienced. He was black, and Mr. Kennedy felt that was the only reason they’d been paired. Mr. Kennedy said he began recording their conversations so he could get feedback from other people about Mr. Belton’s financial recommendations.
Mr. Kennedy had been under the impression that he had been granted the coveted “private client” status that Mr. Peters had promised. When Mr. Kennedy learned that was not the case, he complained to Mr. Belton — and then to Mr. Venniro.
Mr. Belton warned Mr. Kennedy not to talk to Mr. Venniro again. In two secretly recorded conversations in October last year, he asked Mr. Kennedy to think about the impression he left on people at the bank. He pointed out that Mr. Kennedy was a big black man in Arizona. And he said that Mr. Venniro had been afraid to tell Mr. Kennedy that his application to become a private client had been deleted when Mr. Peters was fired.
A few days later, Mr. Kennedy went back to the branch, and the conversation returned to the question of why the bank refused to grant Mr. Kennedy the status and perks of being a private client.
Mr. Belton said that bank employees were scared of dealing with him and that therefore Mr. Kennedy would be better off interacting only with Mr. Belton.
“They’re not going to say this, but I don’t have the same level of intimidation that they have — you know what I’m saying? — not only being a former athlete but also being two black men,” Mr. Belton said. Referring to Mr. Venniro, he added, “You sit in front of him, you’re like three times his size — you feel what I’m saying? — he already probably has his perception of how these interactions could go.”
Moments later, he said: “We’ve seen people that are not of your stature get irate, and it’s like, ‘Well, if this dude gets upset, like what’s going to happen to me?’”
Continue reading the main story
Mr. Kennedy asked if Mr. Belton was saying that Mr. Venniro was racist. “I don’t think any person at that level is dumb enough for it to be that blatant,” Mr. Belton replied. “I don’t have any reason to believe blatantly that he’s that way. You feel what I’m saying? Now, whether there’s some covert action? To be honest? I always err on the side of thinking that. You know, people that are not us probably have some form of prejudice toward us.”
Mr. Kennedy pulled most of his money out of JPMorgan and filed a grievance with an industry watchdog, and in June the bank sent him a letter trying to put an end to his complaining.
“You stated that Mr. Belton informed you that our firm was prejudiced against you and intimidated by you because of your race,” the letter said. “We found no evidence to substantiate your allegations.”
An earlier version of this article mischaracterized comments by a JPMorgan spokeswoman about the bank's handling of accusations from a customer and an employee. She defended the overall treatment of Mr. Peters and Mr. Kennedy; she did not deny that the bank had discriminated against them.
|Posted by Jerrald J President on December 6, 2019 at 9:40 AM||comments (0)|
44% of American workers are employed in low-wage jobs that pay median annual wages of $18,000. Men Lie, Women Lie Numbers Don't! By JJP
Report: Nearly half of American workers have low-wage jobs
By Matthew Segura | Posted: Tue 12:41 PM, Dec 03, 2019 | Updated: Tue 12:58 PM, Dec 03, 2019
MONROE, La. (KNOE) - A new report indicates that nearly half the working American population has a problem.
According to a Brookings Institution analysis, unemployment may be down, but there aren't enough good jobs to go around.
They say 44% of American workers are employed in low-wage jobs that pay median annual wages of $18,000.
The report says their median hourly wages are $10.22. That's higher than the federal minimum wage which sits at $7.25. The minimum wage in Louisiana is also $7.25.
That's nearly half of the American workforce who don't make what's considered a living wage. According to MIT, a living wage for a single person in Louisiana is $11.28. The poverty wage for a single adult with two children is $9.99.
This isn't just a problem for workers who are young or inexperienced, according to the report. The low-wage workforce is primarily made up of post-college age adults and older Americans.
56% of them are ages 25-50. 19% of them are ages 51-65.
23% of low-wage workers have an associate's degree or more. Add in the number of workers who are in school or have some college education and that number jumps to 48%.
Job Quality Index data appears to back up the analysis. It assesses job quality in the United States and measures the "direction and degree of change in high-to-low job composition."
While the JQI chart shows increases and declines in job quality since its inception in 1990, the trend has generally been a downward one. According to the index, job quality has declined by 14.3% since 1990. The index most recently began to trend upward in 2012 but started to drop again in 2017. You can see it here.
Most workers appear to feel it. A CBS report in October said 6 in 10 workers rate their job quality as "mediocre to bad."
|Posted by Jerrald J President on December 6, 2019 at 9:35 AM||comments (0)|
Surprise, Surprise, Surprise welcome to the real AMERICA! By JJP
Almost half of all Americans work in low-wage jobs
BY AIMEE PICCHI
DECEMBER 2, 2019 / 1:04 PM / MONEYWATCH
Almost half of U.S. workers between ages 18 to 64 are employed in low-wage jobs, the Brookings Institution found.
Low-wage jobs are pervasive, representing between one-third to two-thirds of all jobs in the country's almost 400 metropolitan areas.
Smaller cities in the South and West tend to have the highest share, such as Las Cruces, New Mexico, and Jacksonville, North Carolina, where more than 6 in 10 workers are in low-wage work.
America's unemployment rate is at a half-century low, but it also has a job-quality problem that affects nearly half the population, with a study finding 44% of U.S. workers are employed in low-wage jobs that pay median annual wages of $18,000.
Contrary to popular opinion, these workers aren't teenagers or young adults just starting their careers, write Martha Ross and Nicole Bateman of the Brookings Institution's Metropolitan Policy Program, which conducted the analysis.
Most of the 53 million Americans working in low-wage jobs are adults in their prime working years, or between about 25 to 54, they noted. Their median hourly wage is $10.22 per hour — that's above the federal minimum wage of $7.25 an hour but well below what's considered the living wage for many regions.
Even though the economy is adding more jobs, there's increasing evidence that many of those new positions don't offer the kind of wages and benefits required to get ahead. A new measure called the Job Quality Index recently found there is now a growing number of low-paying jobs relative to employment with above-average pay.
For the U.S. overall, median household income is $66,465, according to Sentier Research, with roughly half of families earning less than that amount.
Workers aren't shy about expressing their frustrations, with about 6 of 10 workers saying their jobs are mediocre to downright bad, according to a recent Gallup job-quality survey. For instance, 1 in 5 workers told Gallup their benefits are worse now than five years ago.
"Not enough jobs paying decent wages"
Low-wage jobs represent between one-third to two-thirds of all jobs in the country's almost 400 metropolitan areas, Brookings found. Smaller cities in the South and West tend to have the highest share, such as Las Cruces, New Mexico, and Jacksonville, North Carolina, where more than 60% of workers are low-wage.
But not only small cities in the South and West have a high proportion of low-paid jobs, the Brookings authors noted.
"Places with some of the highest wages and most productive economies are home to large numbers of low-wage workers: nearly one million in the Washington, D.C., region, 700,000 each in Boston and San Francisco, and 560,000 in Seattle," Ross and Bateman wrote.
But, they added, the issue can't entirely be addressed by improving workers' skills, since low-wage jobs reflect the strength of a local economy. Recent research suggests "there simply are not enough jobs paying decent wages for people without college degrees (who make up the majority of the labor force) to escape low-wage work," they wrote.
In other words, even if low-wage workers undergo job training and learn new skills, they're not guaranteed to find good-paying jobs anywhere near where they currently live.
So what makes a good job? Simply put, middle-class wages and benefits like health insurance, according to previous research from Brookings. But only about 30 million Americans have good jobs by that definition — and most of those are held by workers with college degrees, it found.
The reality is that Americans are working but aren't earning enough to gain stable economic footings. As Ross and Bateman noted, "Nearly half of all workers earn wages that are not enough, on their own, to promote economic security."
|Posted by Jerrald J President on December 4, 2019 at 9:20 AM||comments (0)|
Yet we wonder why we're BROKE, the privately owned Federal Reserve Bank is creating money out of thin air. Giving this new money to it's friends at ZERO interest, which allows their buddies to buy up everything in their path. Please don't say they kept this a SECRET! By JJP
The $4 trillion force propelling US stocks to record highs
By Matt Egan, CNN Business
NEW YORK, NY - FEBRUARY 03: The front of the New York Stock Exchange is viewed on February 3, 2012 in New York City. Following a positive report on U.S. employment numbers, the Dow Jones industrial average jumped more than 140 points in afternoon trading. (Photo by Spencer Platt/Getty Images)
New York (CNN Business)The Federal Reserve's rescue of the overnight lending market appears to be having an unintended side effect: it's juicing the stock market.
The September spike in overnight lending rates revealed that the plumbing of the financial markets was broken. Banks and other financial institutions simply didn't have enough cash. The Fed, acting as a plumber, started pumping in lots of cash to ease the crunch.
Markets view any increase in the size of the Fed's balance sheet as QE and the $250B increase in just two months is no doubt helping to lift stock prices."
In addition to temporary cash injections, the Fed reversed course by promising to purchase bonds — a ton of them. After months of shrinking its balance sheet, the Fed vowed to buy $60 billion worth of Treasury bills per month through the spring of 2020.
As a result, the Fed's balance sheet has swelled by $286 billion since early September, to $4.05 trillion.
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Despite the similarities to quantitative easing, the Fed has stressed its current actions are not a return of that 2008 crisis-era bond-buying program, which was aimed at stimulating the economy and boosting markets. The Fed says what it's doing now is purely a technical fix.
The fix has worked: Borrowing costs in this critical corner of Wall Street are now back in line.
But there is a growing realization that the Fed's bond purchases are supporting stocks, even if that wasn't the goal.
"I don't even think it's debatable," said Danielle DiMartino Booth, a former Fed official who is now CEO of Quill Intelligence. "It's patently obvious that the Fed's interventions into the market is having a huge effect on the stock market."
Michael Wilson, Morgan Stanley's chief investment officer, agrees. Wilson told clients in a note this week that the expansion of the Fed's balance sheet is "helping further loosen financial conditions in an effort to boost growth."
Of course, the recent march to record highs on Wall Street was hardly just about the Fed's balance sheet.
US stocks, at least up until the past few days, have been riding high on hopes for a preliminary trade agreement between the United States and China. Such a deal, which so far has proved elusive, would remove the biggest risk facing the economy.
At the same time, recession fears have eased amidst encouraging economic reports that suggest the economic expansion could endure.
And the Fed's recent string of rate cuts — the central bank lowered rates at three straight meetings — is also playing a role.
The sudden surge in the Fed's balance sheet has captured Wall Street's attention.
Part of the impact could be psychological: Some investors have been conditioned to buy stocks when the Fed is growing its balance sheet. Such a strategy worked well when stocks soared during the first three iterations of quantitative easing, known as QE1, QE2 and QE3.
"Whether it should be considered QE4 or not, in the eyes of the market it's just semantics," Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote in a recent note to clients. "Markets view any increase in the size of the Fed's balance sheet as QE and the $250B increase in just two months is no doubt helping to lift stock prices."
Powell has repeatedly pushed back against the argument that this is a stealth-version of QE by pointing out significant differences.
For one thing, the intent is different this time. After the 2008 crisis, the Fed gobbled up assets to push down borrowing costs and increase confidence in markets. Now, the Fed is focused squarely on easing the cash crunch that emerged in the overnight lending market, which allows banks, hedge funds and other financial players to cheaply and easily borrow for brief periods.
For another, the Fed isn't even buying the same assets this time. During QE, the central bank purchased long-term Treasuries, which have a direct impact on mortgages, car loans and other forms of credit. Today, it's focused on short-term bonds known as T-bills.
"Our Treasury bill purchases should not be confused with the large-scale asset purchase programs that we deployed after the financial crisis," Powell told reporters during a press conference last month. He added that today's moves "should not materially affect demand and supply for longer-term securities or financial conditions more broadly."
'Double-shot of liquidity'
Nonetheless, financial conditions have become extremely bullish.
The Dow has climbed about 1,300 points, or 5%, since the Fed announced on October 11 it would start buying T-bills. The CNN Business Fear & Greed Index of market sentiment recently hit "extreme greed."
And beyond the psychological impact, the Fed's balance sheet expansion is having several important impacts.
Fed liquidity is boosting the bond market, making it easier for companies to borrow cash that can be used for share buybacks. Those share repurchases help boost demand for stocks while simultaneously boosting per-share earnings.
"It's a double-shot of liquidity straight into the veins of the stock market," said Quill's Booth.
In addition, the T-bill purchases reduced returns on short-term government bonds, making stocks look more attractive by comparison.
"That is pushing investors with short-term horizons towards the stock market," said Philip Marey, senior US strategist at Rabobank. "It is contributing to a stronger stock market."
The great Fed experiment
Analysts say the Fed's balance sheet expansion has also helped to reinvert the yield curve, the gap between short and long-term bonds. That is a huge positive because investors were spooked when the yield curve flipped upside down earlier this year. Historically, that has been an ominous sign about the economy. The steeper yield curve, by contrast, is likely encouraging risk-taking behavior.
"We view the Fed's purchase program as integral to the promotion of easy financial conditions and supportive of asset prices," Ralph Axel, senior US rates strategist at Bank of America Merrill Lynch, wrote in a note to clients.
The decision by the Fed to ramp up the size of its balance sheet was a tacit admission that the central bank erred by shrinking its balance sheet, and unintentionally sucking out too much cash. That left markets exposed to a liquidity crunch.
Now, the Fed is fiddling with the dials, trying to determine precisely how much cash is needed to keep the system operating smoothly.
The entire episode is a reminder of how, behind the scenes, modern central banking is very much an experiment. And experiments often bring about unintended side effects.
|Posted by Jerrald J President on December 4, 2019 at 6:40 AM||comments (0)|
400 US citizens — or roughly 0.00025% of the American population have more wealth than 184 Million american citizens.
Wealth owned by the Forbes 400 in 2009: $1.27 trillion (2.7% of total US wealth). Their tax rate: ~27% of income.
Wealth owned by the Forbes 400 in 2019: $2.96 trillion (3.3% of total US wealth). Tax rate: ~23% of income
The staggering amount of wealth held by the Forbes 400 more than doubled over the last decade. But their tax rates actually dropped.
The share of wealth held by the Forbes 400 more than doubled from $1.27 trillion in 2009 to nearly $3 trillion this year.
That marks a significant increase encouraged by a combination of sliding tax rates, stock market growth, and the economic recovery, according to Gabriel Zucman, an economist at the University of California, Berkeley.
Zucman, an economist who has consulted with the Warren and Sanders campaigns, noted the staggering amount of wealth that the richest 400 US citizens — or roughly 0.00025% of the American population — built up over the last decade.
The amount of taxable income for the wealthiest group of US citizens dropped from 27% in 2009 to around 23% this year, the first time they were effectively taxed lower than the nation's working class, Business Insider reported last month.
Some economists have argued that the relatively small tax burdens of the wealthy are the product of decisions made by American lawmakers, whether directly or through congressional gridlock.
Visit Business Insider's homepage for more stories.
The share of wealth held by the Forbes 400 more than doubled from $1.27 trillion in 2009 to nearly $3 trillion this year. That marks a significant increase encouraged by a combination of sliding tax rates, stock market growth, and the economic recovery, according to Gabriel Zucman, an economist at the University of California, Berkeley.
Zucman, an economist who has consulted with the Warren and Sanders campaigns, noted the staggering amount of wealth that the richest 400 US citizens — or roughly 0.00025% of the American population — has built up over the last decade in a Sunday tweet.
Wealth owned by the Forbes 400 in 2009: $1.27 trillion (2.7% of total US wealth). Their tax rate: ~27% of income.
Wealth owned by the Forbes 400 in 2019: $2.96 trillion (3.3% of total US wealth). Tax rate: ~23% of income
The amount of taxable income for the wealthiest group of US citizens dropped from 27% in 2009 to around 23% this year, the first time they were effectively taxed lower than the nation's working class, Business Insider reported last month.
The drop reflected changes in federal income tax as well as state and local levies, but particularly corporate taxes, Zucman said in an email to Business Insider.
trump tax bill
U.S. President Donald Trump displays his signature after signing the $1.5 trillion tax overhaul plan along with a short-term government spending bill in the Oval Office of the White House in Washington, U.S., December 22, 2017. REUTERS/Jonathan Ernst
A blend of factors which included the rapid growth of the stock market, the nation's economic recovery after the Great Recession, the unfettered growth of large corporations, and declining tax rates fostered a favorable environment for a surge in the wealth held by the Forbes 400, Zucman said.
Meanwhile, the tax rate that the bottom 50% of American taxpayers pay hasn't budged much over time.
Zucman and Emmanuel Saez — another economist at the University of California he's partnered with — have argued that the relatively small tax burdens of the wealthy are the product of decisions made by American lawmakers, whether directly or through congressional gridlock. Tax avoidance has also become more common.
Congress has cut taxes on capital gains and estates over the years. And the top income tax rates were slashed six times since 1980, some with the support of Democrats, The Washington Post reported. In 2010, President Obama delayed ending the George W. Bush tax cuts by two years, and Congress allowed it to expire in 2013.
President Trump's 2017 Republican tax cuts largely benefited wealthy citizens and corporations, experts say. They axed the corporate tax rate from 35% to 21%, while also reducing the top rates for individuals.
Many economists say that decades of income tax cuts in particular have led to the increasing concentration of wealth atop the economic pyramid and contributed to the accelerating inequality within US society, now at a record high according to the Census Bureau.
|Posted by Jerrald J President on December 3, 2019 at 10:25 AM||comments (0)|
This is what happens when the proverbial 'CHICKENS COME HOME TO ROOST"! By JJP
Before having her own kids, Whitney Phinney acknowledges she thought of paid leave and subsidized child care as "handouts."
"I've definitely evolved my perspective from an individualistic 'Everyone just needs to take care of themselves; no one's going to help you out' to 'Hey, it's our job as a society to help support each other, and that means supporting kids and raising kids and taking care of kids,'" she said.
America's parents want paid family leave and affordable child care. Why can't they get it?
With so many women in Congress, the nation looked closer than ever to affordable child care and paid family leave. So far, nothing. We found out why.
Alia E. Dastagir, Charisse Jones, Courtney Crowder, and Swapna Venugopal Ramaswamy, USA TODAY
Updated 6 hours ago
CENTENNIAL, Colo. – The dilemma at dinner concerns a little less than $25 and how much it's worth to this family of four.
Whitney and Tim Phinney couldn't have imagined how much time they would spend scrutinizing amounts like these, weighing options that never seem ideal. But then they had children in America.
Tim, a stay-at-home dad in suburban Denver, is struggling. He would prefer to return to his career, but the family can't afford full-time child care – and the long days with kids and away from work have taken a toll.
Tim tells his wife, Whitney, he wants to attend a mental health therapy group Wednesday. But Whitney, who works two jobs and goes to school, says she won't get home in time. Whitney could cut her workday short, costing the family $15. Or Tim could take their two kids, Brennan, 4, and Sunny, 2, to the drop-in day care at a cost of $22.50.
Leaving work early isn't ideal. Neither is losing $7.50 on child care – an amount of money that has become maddeningly consequential.
"Having kids for us has been financially devastating," Whitney said. "That sounds dramatic, but it's really true. ... We're on this financial ledge, where if something good doesn't happen ... we're going to get pushed off."
The Phinneys' struggle is typical of millions of American families trying to balance work and kids in a country that has long lacked affordable, quality child care and paid parental leave, despite polling that shows public support for both and research laying out the drawbacks of not having either.
Whitney Phinney reacts to realizing she prepaid for a day of preschool her son can't attend because he's sick. Money is tight, and the Phinneys are in the red every month.
Whitney Phinney reacts to realizing she prepaid for a day of preschool her son can't attend because he's sick. Money is tight, and the Phinneys are in the red every month.
HARRISON HILL, USA TODAY
With both parents working in more and more American families, an unprecedented number of women in Congress and support from a Republican president and his daughter, the nation appeared on the cusp of changing all that.
But so far, nothing.
Working parents feel the frustration every day, lamenting how difficult and expensive it is to raise a family in America. Outrage-inducing stories pop up daily on social media, on TV and in the grocery checkout line.
It turns out not everyone shares working parents' urgency.
Some businesses – and their lobbyists to Congress – don't want to sign on to federal legislation that would provide relief for child care costs and require paid leave. Some companies do provide family-friendly perks to their employees, such as paid parental leave. But major business lobbying groups have balked at laws that would require all employers to provide those kinds of benefits. Among the issues: Smaller companies say mandated paid leave, as an example, could cripple their businesses.
But it's more than businesses and their lobbyists. Polling continues to show many Americans don't see the need for the federal government to get involved in affordable child care – or, for that matter, for women to work.
Nearly half of all Americans still believe kids are best off if one parent stays home with them, preferably the mother. Many say they don't want to pay for child care for other people's kids. Some say federal policies for working parents instead would penalize parents who choose not to work.
Those attitudes contribute to inertia in Congress, insiders say. When Ivanka Trump, the president's daughter and policy adviser, got to Washington to push for paid leave and affordable child care, she found conservatives in Congress were nowhere near ready to sign on.
“I actually thought the first year (of the presidency) would be around debating the policy, which is where we are today," Trump said. "The first year and a half was explaining what paid family leave was and why it made sense ... which was not something I had expected."
Meetings and policy debates in Washington have indeed picked up. More stakeholders are joining the conversation. Insiders on Capitol Hill say the political heat around child care and parental leave is hotter than ever.
Yet a solution remains out of reach: Federal proposals for what action to take and how to pay for it diverge wildly.
“I see this child care issue as part of the whole global ‘What's wrong with Washington?'" said Massachusetts Sen. Elizabeth Warren, a Democratic front-runner for the 2020 nomination, who is pushing for universal child care as part of her candidacy. "It's an issue that matters to families. It's mattered for a long time now. And people are pushing harder and harder for change."
'It's not going to work': Some businesses balk at federal paid leave
Before having her own kids, Whitney Phinney acknowledges she thought of paid leave and subsidized child care as "handouts."
"I've definitely evolved my perspective from an individualistic 'Everyone just needs to take care of themselves; no one's going to help you out' to 'Hey, it's our job as a society to help support each other, and that means supporting kids and raising kids and taking care of kids,'" she said.
One family's daycare, preschool struggle: 'Financially devastating'
Whitney and Tim Phinney couldn't have imagined how hard it would be to work and have kids at the same time. But then they had children in America.
HARRISON HILL, USA TODAY
When Whitney had Brennan, she had no paid leave. Tim had one week of paid leave and one week of paid vacation he saved up for the birth. So Whitney was off, without a salary – a financial hardship for the family. And Tim had to keep working to pay the bills, so he wasn't there to support her emotionally, or take time to care for himself.
Money was tight, and their mental health suffered.
"That was a really hard start, and I think if things could have been different in that time – if Tim could have stayed home for 12 weeks with no financial repercussions, I think our life now would be totally different," Whitney said. "It snowballed."
Americans want paid leave for parents – overwhelmingly.
And they don't have it – overwhelmingly.
It's not that all workplaces are against expanding paid leave. More employers are recognizing it's good for business: It helps them hold on to highly trained workers.
But some businesses balk at the idea of federal paid leave. They don't want to be told to pay for a certain policy themselves. Some don't want to share the cost via paying a tax, either. And if they do offer paid leave, they want to decide who gets it and how much.
“Trust us to treat our employees well,’’ said Brad Close, who heads public policy and advocacy for the National Federation of Independent Businesses (NFIB), whose member companies each have 100 or fewer workers. “Please don’t make a ‘one size fits all’ for every business out there. It’s not going to work for the little guys.”
Congress could pass paid leave without the business community's stamp of approval, but "it'll help," said Sen. Kirsten Gillibrand of New York, sponsor of The FAMILY Act, the Democrats' main legislation, which funds time off for qualifying life events through a payroll tax.
Some big corporations support a federal policy. But the ones that have offered headline-capturing paid leave and child care assistance aren't necessarily doing it to pressure Congress for a federal mandate.
“Companies who do this are doing it … for their employees, and of course they use it as a recruiting tool,’’ said Marc Freedman, the U.S. Chamber of Commerce’s vice president for workplace policy.
In fact, a majority of Americans back this approach: They say paid leave, required by a federal mandate or not, should be paid for by employers, not the government, according to the Pew Research Center.
As companies add the benefit, some experts say pressure increases on Congress to finally ensure all workers can access paid leave.
Others caution that the conversation is still just beginning.
"This is a big, complicated question with many different pieces to it that need to be worked out," Freedman said.
Many companies skeptical of a federal mandate understand offering paid leave is the right thing to do, said Rose Arriada-Keiper, vice president of global rewards for Adobe. The problem, she said, is how to keep a business running while key employees are out for months.
"I think a lot of companies struggle with having that forced on them,’’ she said.
Even at Adobe – where parents get 16 weeks of paid leave after a new child arrives, plus an additional 10 weeks for women who give birth, and where top leaders support the FAMILY Act – paid leave has been frustrating for some managers.
Smaller companies say the hardship of a federal program could be especially acute for them because they have fewer resources when it comes to staffing and finances.
The NFIB insists the U.S. doesn't need a federal mandate – a 2016 survey found 73% of its members offered paid time off for reasons such as vacation or sickness to full-time employees. However, just 18.3% of its surveyed businesses specifically offered paid maternity leave, and only 19% of working Americans have access to paid family leave, according to the Bureau of Labor Statistics.
Many large companies aren't pushing for a federal mandate. They're busy trying to outbid their competitors for highly coveted recruits – especially in tech.
“It’s a war for talent out here’’ – especially for women, said Alan May, Hewlett Packard Enterprise's chief people officer. “We’re just upping the game.’’
HPE expanded its policy on May 1. It offers parents six months of paid leave at full salary and lets them apply to work a part-time schedule for up to three years after bringing a new child home.
Still, some businesses say they hope their paid-leave policies push Congress to do more – and they're backing proposals already on the table.
Levi Strauss, for instance, offers up to eight weeks of paid parental leave for all workers, a policy implemented in 2016. It has worked well, the company says, and it also supports the payroll-tax-funded FAMILY Act.
“There is a lot to be said for business making the case for why this is helpful for companies, that it hasn’t hindered or hurt or caused an undue cost,’’ said Anna Walker, Levi Strauss's vice president of public affairs.
The U.S. economy would reap more than $500 billion a year if women ages 25 to 54 were part of the workforce at the same levels as their German and Canadian peers who have access to family-friendly benefits, according to a projection from the Department of Labor’s chief economist.
Small businesses often don't have the money or time to rehire and train, let alone pay for new parents to take time off – so some of them do support federal paid leave, even if it would mean a small payroll tax. For instance, the Main Street Alliance, which represents roughly 30,000 small businesses, backs the FAMILY Act.
Thanks to a paid-leave tax in New Jersey, Tony Sandkamp says a valued employee was able to take time off from Sandkamp's custom cabinetry business when his wife had twins. After drawing wages from the state fund, the worker eventually returned to the job.
“It helped me maintain … a skilled employee who is very difficult to replace,’’ Sandkamp said. Finding and training a new worker could cost about $30,000, he said, compared with the roughly $2 a paycheck he says goes toward paid leave.
Plus, he said, “it helps level the playing field and keeps my employee from getting cherry-picked by bigger employers.’’
What child care means when you don't work 9 to 5
|Posted by Jerrald J President on November 26, 2019 at 9:55 AM||comments (0)|
They create the money which they use to buy real assets such as GOLD and PROPERTY! A'm I the only person that thinks this does'nt make sense? Ot's only a matter time before the people on this planet awakens. When that happens watch out! By JJP
Central Banks Are Purchasing Gold at Record Highs. Why?
The World Gold Council reported that central banks bought a historic high of 374.1 tons of gold this year.
Thursday, August 22, 2019
Economics Gold Standard Gold Cryptocurrency Inflation Federal Reserve
As reported by Dion Rabouin at Axios, an unprecedented shift toward gold has been led by the financial authorities of the world in what appears to be a move away from the US dollar.
The World Gold Council reported that central banks bought a historic high of 374.1 tons of gold this year. While this move accounts for only 16 percent of total gold demand, it offers an inside look into the minds of the central bankers. It was only seven years ago that a survey of economists revealed significant disagreement with regard to the potential benefits of a gold standard. Do central bankers not agree with leading academic economists or is a different motive at play?
The Evolution of Money
The history of money has featured coins made from precious metals, privately issued IOUs that could be redeemed for precious metals, and government-issued IOUs that could similarly be redeemed for precious metals. Many have speculated that cryptocurrencies are the next step in this evolution, but could it be gold that is looming over the horizon?
It was only relatively recently that fiat money came into use.
Many have speculated that cryptocurrencies are the next step in this evolution, but could it be gold that is looming over the horizon? Although the history of money has trended toward greater degrees of government control, this new trend of gold accumulation raises many questions.
Is a Gold Standard Feasible?
In the Cato Journal, Lawrence White explores how the world might transition to a new gold standard. He notes two possible paths. First, a parallel gold standard could be allowed to grow alongside the current fiat currency. Alternatively, there could be a transition date in which a currency is then defined as some amount of gold.
While network effects require a painful inflation to occur for fiat currencies to lose their incumbency advantage, White explains that the second path offers an opportunity for a smooth transition.
For the switch to be effective (i.e. not cause inflation or deflation), the new parity will need to be based on the current price of gold. In one case, the Russian currency is the ruble. The ruble currently trades at 100,826.22 rubles per ounce of gold. With the Russian money supply around 9,339 billion rubles, the country would need to purchase 92,624,716.07 ounces of gold.
That number looks menacing, but a quick conversion cleans it up. With 32,000 ounces in a ton, that number becomes 2,894.52 tons. And this is a maximum amount that would be required with a 100 percent reserve ratio, not the historical ratios observed under both private and government banking. At a 20 percent reserve ratio, the requirement drops to only 578.9 tons! In terms of feasibility, that is less than 1 percent of the world supply of gold.
A Golden Hedge?
Rather than implementing a gold standard, it is also possible these countries are looking to insulate themselves from the US economy—a difficult prospect. When Adam Smith wrote The Wealth of Nations in 1776, one could get their investments out of a country with a few days’ horse ride. Unlike the majority of tasks over time, this has become much more difficult.
Russian President Vladimir Putin called for an increase in gold purchases as part of a “fiscal fortress” policy.
The global economy is more integrated than ever, and this integration hit center stage when the Great Recession rippled across the globe. With the US dollar on one side of most trade and utilized as a base in the majority of currency exchanges, there is little escape from the US economy.
For this reason, China has made calls for an IMF currency to replace the dollar as a global reserve currency. It is possible, due to the lack of traction this policy recommendation has received, that they simply decided to enact safeguards by investing in the original global reserve currency. In addition, Russian President Vladimir Putin called for an increase in gold purchases as part of a “fiscal fortress” policy of high reserves and low external debt.
Could Gold Be a Signal?
One last consideration lies in the state of modern international trade. Whether gold is being accumulated as a currency or an asset, the movements have not gone unnoticed. With hostility growing in the US-China trade war, it is possible the purchases are being made for leverage.
In game theory, opponents can make threats and promises, but this is mostly considered cheap talk. There’s no cost to say it and there is no cost to receive it. So, why not do it? It is for this reason that no player will change what their strategy is in response to cheap talk. However, signaling is a different matter. A credible signal is costly and separates the aces from the jokers.
Accumulating gold is a costly, credible signal.
In the case of the US-China trade war, China could use gold holdings to dump the dollar. If so, the US would incur a cost much higher than the revenue from tariffs levied on Chinese businesses and American citizens. By accumulating these holdings, China signals that coordination is a better long-term policy.
The classical gold era featured lower mean inflation, smaller price level uncertainty, global network benefits, and fiscal discipline. These benefits are undeniable and enough to warrant a monetary authority’s attention. However, this is not to say it is the only thing worth their attention. The danger in leaving economic theory and entering practice is that there is an entire world full of complex dynamics to account for. Whether recent gold accumulation is merely a demonstration of political weight to leverage trade policy, a hedge against market turbulence, or a move toward a new gold standard is yet to be seen.
|Posted by Jerrald J President on November 26, 2019 at 9:35 AM||comments (0)|
Men Lie, Women Lie, Numbers Don't. If the worlds richest 1% percent have 82% percent of the worlds wealth. Which is less than 750 Thousand people out of 7.5 Billion people. Why do we think and believe a college education and hard work will get us to the proverbial TOP?Wake Up!!! By JJP
Inequality gap widens as ‘world’s richest 1% get 82% of the wealth,’ Oxfam says
Approximately 82 percent of the money generated last year went to the richest 1 percent of the global population, the report said, while the poorest half saw no increase at all
Last year, Oxfam said billionaires would have seen an uptick of $762 billion — enough to end extreme poverty seven times over
The report is timely as the global political and business elite gather in snow-clad Davos for the World Economic Forum’s annual meeting this week
The world’s richest 1% get 82% of the wealth, Oxfam says
Just 42 people own the same amount of wealth as the poorest 50 percent worldwide, a new study by global charity Oxfam claimed.
In a report published Monday, Oxfam called for action to tackle the growing gap between the super-rich and the rest of the world. Approximately 82 percent of the money generated last year went to the richest 1 percent of the global population, the report said, while the poorest half saw no increase at all.
The report is timely as the global political and business elite gathers in snow-clad Davos for the World Economic Forum’s annual meeting this week, which aims to promote responsive and responsible leadership.
Oxfam said its figures, which some observers have criticized, showed economic rewards were “increasingly concentrated” at the top. The charity cited tax evasion, the erosion of worker’s rights, cost-cutting and businesses’ influence on policy decisions as reasons for the widening inequality gap.
The charity also found the wealth of billionaires had increased by 13 percent a year on average in the decade from 2006 to 2015. Last year, billionaires would have seen an uptick of $762 billion — enough to end extreme poverty seven times over. It also claimed nine out of 10 of the world’s 2,043 billionaires were men.
Booming global stock markets were seen as the main driver for a surge in wealth among those holding financial assets last year. The founder of Amazon, Jeff Bezos, saw his wealth balloon by $6 billion in the first 10 days of 2017 — leading to a flood of headlines marking him as “the richest man of all time.”
‘Something is very wrong’
Mark Goldring, chief executive of Oxfam GB, said the statistics signal “something is very wrong with the global economy.”
“The concentration of extreme wealth at the top is not a sign of a thriving economy but a symptom of a system that is failing the millions of hard-working people on poverty wages who make our clothes and grow our food,” he added.
Oxfam has published similar reports over the past five years. At the start of 2017, Oxfam said eight billionaires from around the globe had as much money as the 3.6 billion people who make up the poorest half of the world’s population. Improved data has seen last year’s figure revised to 61, but the charity said the trend of widening inequality was still evident.
The report, “Reward Work, Not Health,” is based on data from Forbes and the annual Credit Suisse Global Wealth datebook, which has detailed the distribution of global wealth since 2000.
The survey assesses a person’s wealth based on the value of an individual’s assets — mainly property and land — minus any debts they may hold. The data excludes wages and income to determine what he or she is perceived to own. This methodology has attracted criticism in the past, as a student with high debt levels and a high future earning potential would classify as poor under the current criteria.
Nonetheless, Oxfam said even if the wealth of the poorest half of the population was recalculated to remove the people in net debt, their combined wealth would still be equal to 128 billionaires.
|Posted by Jerrald J President on November 26, 2019 at 9:20 AM||comments (0)|
There is approximately US $37 trillion in circulation: this includes all the physical money and the money deposited in savings and checking accounts.
Money in the form of investments, derivatives, and cryptocurrencies exceeds $1.2 quadrillion.
This is to illuminate that this entire financial system will devour all in its path for the benefit of the white supremest who created it! If you think I'm wrong, PROVE IT. By JJP
Global debt to top record $255 trillion by year's end
LONDON (Reuters) - Global debt is on course to end 2019 at a record high of more than $255 trillion, the Institute of International Finance estimated on Friday — nearly $32,500 for each of the 7.7 billion people on planet.
FILE PHOTO: Morning commuters walk through a steam cloud on Wall St. during a morning snow fall in New York's financial district March 4, 2016. REUTERS/Brendan McDermid
The amount, which is also more than three times the world’s annual economic output, has been driven by a $7.5 trillion surge in the first half of the year that shows no signs of slowing.
Around 60% of that jump came from the United States and China. Government debt alone is set to top $70 trillion this year, as will overall debt (government, corporate and financial sector) of emerging-market countries.
“With few signs of slowdown in the pace of debt accumulation, we estimate that global debt will surpass $255 trillion this year,” the IIF said in a report.
Across sectors, government debt saw the biggest rise in the first half of the year, increasing by 1.5 percentage points, followed by non-financial companies, with a 1 percentage point rise.
Moreover, with state-owned companies now accounting for over half of non-financial corporate debt in emerging markets, sovereign-related borrowing has been the single most important driver of global debt over the past decade.
Separate analysis from Bank of America Merrill Lynch on Friday calculated that since the collapse of U.S. investment bank Lehman Brothers, governments have borrowed $30 trillion, companies have taken on $25 trillion, households $9 trillion and banks $2 trillion.
The IIF’s data, which are based on Bank for International Settlements and International Monetary Fund figures as well as its own, also said the amount of debt outside the financial sector now topped 240% of world gross domestic product at $190 trillion.
Global bond markets have increased from $87 trillion in 2009 to over $115 trillion. Government bonds now make up 47% of the market compared with 40% in 2009. Bank bonds have dropped to below 40% from over 50% in 2009.
Global debt to hit new high of $255 trillion - hereReuters Graphic
|Posted by Jerrald J President on November 20, 2019 at 6:50 AM||comments (0)|
The chickens will eventually come home to roost. By JJP
As Fed Pumps $3 Trillion into Repo Market, Morgan Stanley and Goldman Sachs Practice Borrowing from the Fed’s Discount Window
By Pam Martens and Russ Martens: November 18, 2019 ~
Last week, Jim Grant, the Editor of Grant’s Interest Rate Observer, was interviewed by CNBC’s Rick Santelli. Grant said that since September 17, the Fed has pumped “upwards of $3 trillion” in repo loans to Wall Street. Santelli asked if the Fed had effectively nationalized the repo market. Grant said “there is no more price discovery and we are dealing with administered rates.”
For the first time since the financial crisis, the Federal Reserve Bank of New York has been pumping out hundreds of billions of dollars each week to trading houses on Wall Street in order to provide liquidity to the repo (repurchase agreement) market where financial institutions make collateralized, overnight loans to each other. Liquidity had dried up in this market to the point that on September 17 overnight lending rates spiked from the typical 2 percent to 10 percent. The Fed then turned on its money spigot and brought the rate back down. But even after the rate went back down, the New York Fed has continued making these massive loans, raising fears on Wall Street about what is really going on behind the scenes.
Thus far, Fed Chairman Jerome Powell has tried to peddle the narrative that the Fed is just making “technical” adjustments through its open market operations rather than launching another massive bailout program to Wall Street. Congress has failed to conduct one hearing on the serious matter, even as the program has grown. Just last Thursday the Fed announced that in addition to its daily offering of $120 billion in overnight loans and twice-weekly offering of $35 billion in 14-day loans, it will be adding three more term loans over the next month, totaling $55 billion in 28-day and 42-day term loans.
There is some evidence residing quietly on the Federal Reserve’s web site that it has been planning for the next Wall Street crisis since at least August 11, 2011. That’s when Morgan Stanley Bank NA shows up as a borrower at the Discount Window of the New York Fed, receiving a $1 million overnight loan at the rate of 0.75 percent against pledged collateral of $13.6 billion. These practice runs by Morgan Stanley at the New York Fed’s Discount Window have continued since that time. The Fed makes its Discount Window disclosures on a two-year lag time. According to its most recent data for the third quarter of 2017, Morgan Stanley Bank NA received a $500,000 overnight loan from the Discount Window on September 13, 2017 at an interest rate of 1.75 percent against pledged collateral of $10.7 billion.
Morgan Stanley Bank NA is the federally-insured bank of Morgan Stanley, a sprawling Wall Street investment bank that received more than $2 trillion in secret revolving loans from the Fed during the last financial crisis. (See chart from federal agency audit below.) On September 29, 2008, the day that the House of Representatives initially rejected the proposed TARP taxpayer bailout plan (which would eventually, and publicly, inject $10 billion into Morgan Stanley) it secretly received $61.28 billion from the Fed’s Primary Dealer Credit Facility.
Goldman Sachs has also been conducting these periodic test runs with the New York Fed’s Discount Window since October 15, 2013, when it borrowed $100,000 at 0.75 percent against collateral of $325,000. Most notable about the situation with Goldman Sachs is that its practice runs have continued at the level of $100,000 through the third quarter of 2017, but on September 20, 2017 when it borrowed its typical $100,000, it was against pledged collateral of $12.37 billion. According to the Office of the Comptroller of the Currency, when taking Goldman Sachs’ derivatives into consideration, its total credit exposure to capital stands at 372 percent.
Both Morgan Stanley and Goldman Sachs were investment banks with no access to the Fed’s Discount Window until September 2008. Both requested and received permission to become bank holding companies, entitling them to borrow at the Fed’s Discount Window, the weekend after Lehman Brothers filed for bankruptcy on September 16, 2008.
According to our sources, the Federal Reserve is either requiring or requesting that any bank that may have the need to make daylight overdrafts of its reserves at the Federal Reserve regional banks, or might have a need to borrow from the Discount Window, maintain a formulaic amount of pledged collateral at the Federal Reserve bank of which it is a member.
The largest and most dangerous banks in the country are members of the New York Fed. But for reasons that remain thus far unexplained, among the mega banks on Wall Street, we find only the names of Morgan Stanley and Goldman Sachs on the Discount Window list of test run borrowers since 2011. JPMorgan Chase, a three-count felon whose precious metals trading desk is currently under an ongoing criminal probe for racketeering (with multiple indictments already handed down) does not show up as conducting any practice runs. Nor does Citigroup, the largest recipient of the New York Fed’s bailout loans during the financial crisis when it received over $2.5 trillion in secret revolving loans from the Discount Window, the Primary Dealer Credit Facility and other Fed programs from 2007 to at least the middle of 2010. (See chart below.)
We do know, however, that JPMorgan Chase has standing, pledged collateral at the Fed because it makes reference to it in its most recent 10-Q filing with the Securities and Exchange Commission. The JPMorgan Chase statement reads:
“As of September 30, 2019, the Firm also had approximately $313 billion of available borrowing capacity at FHLBs [Federal Home Loan Banks], the discount window at the Federal Reserve Bank, and other central banks as a result of collateral pledged by the Firm to such banks. This borrowing capacity excludes the benefit of securities reported in the Firm’s HQLA [High-Quality Liquid Assets] or other unencumbered securities that are currently pledged at the Federal Reserve Bank discount window. Although available, the Firm does not view this borrowing capacity at the Federal Reserve Bank discount window and the other central banks as a primary source of liquidity.”
The reason that JPMorgan Chase and other Wall Street mega banks do not want to say that they view the Discount Window as a key source of borrowing is that there is an age-old stigma attached to borrowing at that window. It is assumed that if you need to borrow from the Fed, known as the “lender-of-last-resort,” it’s because you are in such dire straits that other financial institutions will not lend to you.
The Federal Reserve waged a multi-year court battle during the financial crisis in an effort to avoid naming the bank recipients of its massive bailout programs, which included the Discount Window. After losing its case at the District Court and Second Circuit Appellate Court, a consortium of Wall Street banks called the Clearing House (which includes JPMorgan Chase and Citigroup) took the case to the U.S. Supreme Court, which refused to hear the case.
That forced the Fed to release the details of its massive Discount Window loans on March 31, 2011 – almost three years after Bloomberg News reporter Mark Pittman had first filed a Freedom of Information Act request for the data and was stonewalled. (Pittman died before the data was released.)
The data showed that the same banks that were being supervised by the New York Fed were the largest recipients of the Fed’s obscene amounts of secret loans. Despite its clear ineptitude at supervising these behemoths, it remains their supervisor even after the Dodd-Frank financial reform legislation was passed by Congress in 2010.
One New York Fed program, the Primary Dealer Credit Facility (PDCF), doled out $8.95 trillion in revolving loans against dodgy collateral like stocks and junk bonds – at a time when both were in freefall. Citigroup received $2.02 trillion from that program. Morgan Stanley was the second largest borrower in that program, receiving $1.9 trillion. Merrill Lynch received $1.8 trillion. (See GAO audit chart below.)
Today, the New York Fed seems to be back at the game of electronically creating trillions of dollars out of thin air and doling it out to Wall Street banks that are proving all over again that they are too big to supervise, too derelict to govern themselves and need to be broken up for the good of the country.
|Posted by Jerrald J President on November 19, 2019 at 8:20 AM||comments (0)|
Just imagine this $75 Billion dollars the Federal Reserve bank is magically creating was giving directly to the her citizens! Or to the states so they would'nt need to TAX it's citizens. By JJP
NY Fed to pump $75 bn into money markets daily through Oct 10
New York (AFP) - The New York Federal Reserve Bank said Friday it will inject billions into the US financial plumbing on a daily basis for the next three weeks in an effort to prevent a spike in short-term interest rates.
The Fed will offer up to $75 billion a day in repurchase agreements -- exchanging secure assets for cash for very short periods -- through October 10, it said in a statement.
In addition, it will offer three 14-day "repo" operations of at least $30 billion each.
Banks have struggled in recent days to find the cash needed to meet reserve requirements which has pushed up short-term borrowing rates, prompting the New York Fed to pump billions into US money markets with repo operations over the past four days.
However, in a sign a cash crunch could be easing, demand for liquidity on Friday did not significantly exceed the amount offered, as it had on two prior days.
After October 10, the New York Fed will "conduct operations as necessary to help maintain the federal funds rate in the target range, the amounts and timing of which have not yet been determined."
Federal Reserve Chair Jerome Powell this week downplayed concerns about the money market's cash crunch, saying it was not a sign of problems in the wider economy or a concern for monetary policy.
Economists say an array of conditions converged to dry up liquidity in the banking system -- including quarterly corporate tax payments and a surge in government debt sold to investors, which drained cash out of banks.
Banks borrow regularly in markets for very short periods, usually overnight, to make sure their daily cash reserves do not fall below the required level. But interest rates increase with demand.
The New York Fed adds or removes liquidity to keep interest rates in line with the desired target, but the cash shortage in recent days prompted it to pump funds into the short-term repo market as rates soared and threatened to break out of the Fed's target range.
The central bank cut benchmark lending rates interest rate on Wednesday, and also made some technical adjustments to try to keep the market rates from breaking out of the range, including cutting the interest it offers on bank reserves held at the Fed that are in excess of the minimum required level.
|Posted by Jerrald J President on November 8, 2019 at 8:05 AM||comments (0)|
Roads are crumbling, school buildings are dilapidating and Flint
The Fed pumps another $105 billion into markets, continuing its streak of capital injection!
The Federal Reserve on Tuesday sold $105 billion in market repurchase agreements, or repos, in a continued effort to calm money markets and bring interest rates within its intended range.
The bank offered $75 billion in repos expiring overnight and $30 billion in repos expiring in 14 days. Banks bid for more than was available of each repo, signaling strong demand for the government-backed asset.
The bank began a streak of repo offerings last week, marking the first time such assets were sold since the 2008 financial crisis. The central bank said the offerings would continue through early October.
Visit the Markets Insider homepage for more stories.
The Federal Reserve added $105 billion to the nation's financial system on Tuesday in two transactions, seeking to calm money markets and keep interest rates in its intended range.
The New York Fed continued its streak of market repurchase agreements, or repos, selling $75 billion of overnight repos and $30 billion of repos expiring in 14 days. Banks bid for $80.2 billion in overnight repos and $62 billion in 14-day repos, signaling strong demand in the government-backed investments.
Last week marked the first time in a decade that the bank had taken such steps to relieve pressure on money markets. The bank offered a total of $278 billion in repos from Tuesday through Friday.
Also last week, the Federal Open Market Committee cut its benchmark interest rate by a quarter of a percentage point, landing in a window of 1.75% to 2%. Fed Chairman Jerome Powell called the repo offerings a temporary action.
"Funding pressures in money markets were elevated this week, and the effective federal funds rate rose above the top of its target range," he said.
The Fed's schedule calls for another $75 billion of overnight repos to be sold every business day until October 10, with certain days also offering at least $30 billion worth of 14-day repos.
|Posted by Jerrald J President on November 8, 2019 at 7:30 AM||comments (0)|
If this does'nt prove to you that the financial system is rigged, i don't know what will. They've pumped in close a TRILLION DOLLARS into this PONZI SCHEME. For the benefit of the WHO? Not you or me, it's for the WHITE SHOE BOYS AND GIRLS ON wall street. The rest of can America eat cake. This is why the RICH stay RICH! By JJP
The Fed’s monetary juice has tied directly to the rise in stocks: ‘Here we go again’
The Federal Reserve has been pumping billions into the financial system after the mid-September tumult in very short-term lending markets known as repo.
As the central bank’s balance sheet has expanded, the S&P 500 has grown at almost the exact pace.
Some on Wall Street worry that the market is back to depending on the Fed’s monetary juice, rather than fundamentals, as the path to gains.
Financial markets have seen this story before: The Federal Reserve rides in with piles of freshly minted digitized money that helps send the prices of stocks and other assets lurching forward.
But this isn’t 2009.
Instead, it’s 2019, and once again the central bank, whether by intention or coincidence, has seen its efforts to keep the financial system running smoothly end up as a bonanza for Wall Street, where the decadelong bull market has taken another leg higher in step with a Fed liquidity effort.
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Since a mid-September flare-up in the repo market, where banks go for overnight financing, the Fed has been injecting billions into the markets, buying up mostly short-term Treasury bills in an effort, ostensibly, to keep its benchmark funds interest rate within its targeted range, currently at 1.5% to 1.75%.
The results: a $175 billion expansion of the Fed’s balance sheet to $4.07 trillion, representing growth of 4.5% since the operations began. During that time, the S&P 500 has risen just shy of 4%.
Coincidence? Maybe. After all, the Fed has stressed repeatedly that the recent bond-buying operations are not akin to the three rounds of quantitative easing that happened during and after the financial crisis and accompanying Great Recession.
Under QE, the Fed credited primary dealers with funds in exchange for high-quality assets like Treasury debt, in an effort to loosen financial conditions, lower borrowing rates, and direct money to stocks and corporate bonds. The operations this year, as stated by the Fed, are specifically to stabilize short-term rates, though the process is identical.
Market participants see stark similarities not just in the operation — but also in its effects.
QE and the latest round of stimulus are “absolutely” similar, said Lisa Shalett, chief investment officer at Morgan Stanley Asset Management. “Financial conditions are extraordinarily loose and accommodative. One of the things that the Fed balance sheet liquidity has done has also been to allow the U.S. dollar to weaken for really the first time in about two years. These are things that are definitely contributing to this move in the market.”
Indeed, the Goldman Sachs Financial Conditions Index, which Fed officials follow closely, is around its lows of the year, due in large part to rising stock prices and falling bond yields and credit spreads.
Shalett said the Fed’s moves have also caused financial imbalances elsewhere, a key concern for central bank officials who have pushed back against the recent interest rate cuts and looser policy. She cited the since-abandoned WeWork initial public offering as one example of money looking for financial assets rather than being put back into the real economy.
“This really speaks to the idea that once again we’re on the brink of potentially being in this bubble, where valuations are about the story and the narrative and not about the cash flow and profits,” she said. “You would think we would have learned this lesson before. But here we go again.”
Wall Street took notice earlier this week when hedge fund king Ray Dalio of Bridgewater Associates penned his latest missive for LinkedIn, this one titled “The World Has Gone Mad and the System Is Broken.”
In the essay, the head of the largest hedge fund in the world noted that investors are having money “pushed on them by central banks that are buying financial assets in their futile attempts to push economic activity and inflation up. The reason that this money that is being pushed on investors isn’t pushing growth and inflation much higher is that the investors who are getting it want to invest it rather than spend it.”
Dalio said the active role that central banks are playing in the financial system is creating wealth disparity because the money earned by those at the top is not flowing into those further down the ladder.
“Because the ‘trickle-down’ process of having money at the top trickle down to workers and others by improving their earnings and creditworthiness is not working, the system of making capitalism work well for most people is broken,” he wrote. “This set of circumstances is unsustainable and certainly can no longer be pushed as it has been pushed since 2008. That is why I believe that the world is approaching a big paradigm shift.”
Another buyback boom
The Fed’s machinations, however, are working for financial markets.
The S&P 500 has gained about 4% in the fourth quarter and more than 7% over the past three months, thanks in good part to a strong push in stock buybacks, which also have historically risen in tandem with the Fed’s liquidity efforts Share repurchases are tracking 14.9% higher in the third quarter from Q2, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
That market gain has come even amid a more pronounced slowdown in manufacturing as well as corporate profits that appear headed for the fourth consecutive decline on a year-over-year basis. S&P 500 company earnings are tracking at a 2.7% drop in Q3 and are expected to fall 0.4% in the fourth quarter, according to FactSet estimates.
“The surge in equity markets has come on the back of the Fed hosing liquidity into the banking system via repos and T-Bill purchases,” Albert Edwards, market analyst at Societe Generale, said in a note for clients. “Remember this is not QE4, as the Fed has repeatedly assured us. Tell that to the equity market, which is certainly reacting as if it was as it forges to new all-time highs.”
For investors looking over the long haul, the developments should be “massively concerning,” said Morgan Stanley’s Shalett.
“The market is diverging from the fundamentals quite a bit,” she said. “This entire cycle has been proof in the pudding that liquidity is going into the financial markets. It’s not going into the real economy.”
|Posted by Jerrald J President on October 28, 2019 at 10:35 AM||comments (0)|
Turn on your television and you will hear "The Economy Is Doing Great". The stock market is at an all time high, yet your checking/savings account doesnt reflect that. There are 3 individuals who have more wealth than halh of Americas popuation, which in excess of 150 million people. Gangster Economics at its best. By JJP
Income inequality grew again: The highest level in more than 50 years, Census Bureau says
ORLANDO, Fla. – The gap between the haves and have-nots in the United States grew last year to its highest level in more than 50 years of tracking income inequality, according to Census Bureau figures.
Income inequality in the United States expanded from 2017 to 2018, with several heartland states among the leaders of the increase, even though several wealthy coastal states still had the most inequality overall, according to figures released Thursday by the U.S. Census Bureau.
The nation’s Gini Index, which measures income inequality, has been rising steadily over the past five decades.
The Gini Index grew from 0.482 in 2017 to 0.485 last year, according to the bureau’s 1-year American Community Survey data. The Gini Index is on a scale of 0 to 1; a score of “0″ indicates perfect equality, while a score of “1″ indicates perfect inequality, where one household has all the income.
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The increase in income inequality comes as two Democratic presidential candidates, U.S. Sens. Bernie Sanders and Elizabeth Warren, are pitching a “wealth tax” on the nation’s richest citizens as a way to reduce wealth disparities.
The inequality expansion last year took place at the same time median household income nationwide increased to almost $62,000 last year, the highest ever measured by the American Community Survey. But the 0.8% income increase from 2017 to 2018 was much smaller compared to increases in the previous three years, according to the bureau.
Even though household income increased, it was distributed unevenly, with the wealthiest helped out possibly by a tax cut passed by Congress in 2017, said Hector Sandoval, an economist at the University of Florida.
“In 2018 the unemployment rate was already low, and the labor market was getting tight, resulting in higher wages. This can explain the increase in the median household income,” Sandoval said. “However, the increase in the Gini index shows that the distribution became more unequal. That is, top income earners got even larger increases in their income, and one of the reasons for that might well be the tax cut.”
A big factor in the increase in inequality has to do with two large population groups on either end of the economic spectrum, according to Sean Snaith, an economist at the University of Central Florida.
On one side, at the peak of their earnings, are baby boomers who are nearing retirement, if they haven’t already retired. On the other side are millennials and Gen Z-ers, who are in the early stages of their work life and have lower salaries, Snaith said.
“I would say probably the biggest factor is demographics,” he said. “A wealth tax isn’t going to fix demographics.”
The areas with the most income inequality last year were coastal places with large amounts of wealth – the District of Columbia, New York and Connecticut, as well as areas with great poverty – Puerto Rico and Louisiana.
Three of the states with biggest gains in inequality from 2017 to 2018 were places with large pockets of wealth – California, Texas and Virginia. But the other six states were primarily in the heartland – Alabama, Arkansas, Kansas, Nebraska, New Hampshire and New Mexico.
A variety of factors were at play, from a slowdown in agricultural trade and manufacturing to wages that haven’t caught up with other forms of income, economists say.
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While some states have raised the minimum wage, other states like Kansas haven’t. At the same time, the sustained economic growth from the recession a decade ago has enriched people who own stocks, property and other assets, and have sources of income other than wages, said Donna Ginther, an economist at the University of Kansas.
“We’ve had a period of sustained economic growth, and there are winners and losers. The winners tend to be at the top,” Ginther said. “Even though we are at full employment, wages really haven’t gone up much in the recovery.”
|Posted by Jerrald J President on September 2, 2019 at 4:50 PM||comments (0)|
You ever wonder why your city is ran down and dilapidated, google Municipal Disinvestment? Then pay close attention to your local politician say " AFFORDABLE HOUSING or REDEVELOPMENT". BY JJP
Tax Increment Financing: A Bad Bargain for Taxpayers
By Daniel McGraw
First published by Reason Magazine, January, 2006
The decision was made easier by the financing plan that Fort Worth will use to accommodate Cabela’s. The site of the Fort Worth Cabela’s has been designated a tax increment financing (TIF) district, which means taxes on the property will be frozen for 20 to 30 years.If you’re imagining an attraction that will draw 4.5 million out-of-town visitors a year, the first thing that jumps to mind probably isn’t a store that sells guns and fishing rods and those brown jackets President Bush wears to clear brush at his ranch in Crawford, Texas. Yet last year Cabela’s, a Nebraska-based hunting and fishing mega-store chain with annual sales of $1.7 billion, persuaded the politicians of Fort Worth that bringing the chain to an affluent and growing area north of the city was worth $30 million to $40 million in tax breaks. They were told that the store, the centerpiece of a new retail area, would draw more tourists than the Alamo in San Antonio or the annual State Fair of Texas in Dallas, both of which attract 2.5 million visitors a year.
Largely because it promises something for nothing—an economic stimulus in exchange for tax revenue that otherwise would not materialize—this tool is becoming increasingly popular across the country. Originally used to help revive blighted or depressed areas, TIFs now appear in affluent neighborhoods, subsidizing high-end housing developments, big-box retailers, and shopping malls. And since most cities are using TIFs, businesses such as Cabela’s can play them off against each other to boost the handouts they receive simply to operate profit-making enterprises.
A Crummy Way to Treat Taxpaying Citizens
TIFs have been around for more than 50 years, but only recently have they assumed such importance. At a time when local governments’ efforts to foster development, from direct subsidies to the use of eminent domain to seize property for private development, are already out of control, TIFs only add to the problem: Although politicians portray TIFs as a great way to boost the local economy, there are hidden costs they don’t want taxpayers to know about. Cities generally assume they are not really giving anything up because the forgone tax revenue would not have been available in the absence of the development generated by the TIF. That assumption is often wrong.
“There is always this expectation with TIFs that the economic growth is a way to create jobs and grow the economy, but then push the costs across the public spectrum,” says Greg LeRoy, author of The Great American Jobs Scam: Corporate Tax Dodging and the Myth of Job Creation. “But what is missing here is that the cost of developing private business has some public costs. Road and sewers and schools are public costs that come from growth.” Unless spending is cut—and if a TIF really does generate economic growth, spending is likely to rise, as the local population grows—the burden of paying for these services will be shifted to other taxpayers. Adding insult to injury, those taxpayers may include small businesses facing competition from well-connected chains that enjoy TIF-related tax breaks. In effect, a TIF subsidizes big businesses at the expense of less politically influential competitors and ordinary citizens.
“The original concept of TIFs was to help blighted areas come out of the doldrums and get some economic development they wouldn’t [otherwise] have a chance of getting,” says former Fort Worth City Councilman Clyde Picht, who voted against the Cabela’s TIF. “Everyone probably gets a big laugh out of their claim that they will draw more tourists than the Alamo. But what is worse, and not talked about too much, is the shift of taxes being paid from wealthy corporations to small businesses and regular people.
“If you own a mom-and-pop store that sells fishing rods and hunting gear in Fort Worth, you’re still paying all your taxes, and the city is giving tax breaks to Cabela’s that could put you out of business,” Picht explains. “The rest of us pay taxes for normal services like public safety, building inspections, and street maintenance, and those services come out of the general fund. And as the cost of services goes up, and the money from the general fund is given to these businesses through a TIF, the tax burden gets shifted to the regular slobs who don’t have the same political clout. It’s a crummy way to treat your taxpaying, law-abiding citizens.”
Almost every state has a TIF law, and the details vary from jurisdiction to jurisdiction. But most TIFs share the same general characteristics. After a local government has designated a TIF district, property taxes (and sometimes sales taxes) from the area are divided into two streams. The first tax stream is based on the original assessed value of the property before any redevelopment; the city, county, school district, or other taxing body still gets that money. The second stream is the additional tax money generated after development takes place and the property values are higher. Typically that revenue is used to pay off municipal bonds that raise money for infrastructure improvements in the TIF district, for land acquisition through eminent domain, or for direct payments to a private developer for site preparation and construction. The length of time the taxes are diverted to pay for the bonds can be anywhere from seven to 30 years.
Local governments sell the TIF concept to the public by claiming they are using funds that would not have been generated without the TIF district. If the land was valued at $10 million before TIF-associated development and is worth $50 million afterward, the argument goes, the $40 million increase in tax value can be used to retire the bonds. Local governments also like to point out that the TIF district may increase nearby economic activity, which will be taxed at full value.
So, in the case of Cabela’s in Fort Worth, the TIF district was created to build roads and sewers and water systems, to move streams and a lake to make the property habitable, and to help defray construction costs for the company. Cabela’s likes this deal because the money comes upfront, without any interest. Their taxes are frozen, and the bonds are paid off by what would have gone into city coffers. In effect, the city is trading future tax income for a present benefit.
But even if the dedicated tax money from a TIF district suffices to pay off the bonds, that doesn’t mean the arrangement is cost-free. “TIFs are being pushed out there right now based upon the ‘but for’ test,” says Greg LeRoy. “What cities are saying is that no development would take place but for the TIF.…The average public official says this is free money, because it wouldn’t happen otherwise. But when you see how it plays out, the whole premise of TIFs begins to crumble.” Rather than spurring development, LeRoy argues, TIFs “move some economic development from one part of a city to another.”
Development Would Have Occurred Anyway
Local officials usually do not consider how much growth might occur without a TIF. In 2002 the Neighborhood Capital Budget Group (NCBG), a coalition of 200 Chicago organizations that studies local public investment, looked at 36 of the city’s TIF districts and found that property values were rising in all of them during the five years before they were designated as TIFs. The NCBG projected that the city of Chicago would capture $1.6 billion in second-stream property tax revenue—used to pay off the bonds that subsidized private businesses—over the 23-year life spans of these TIF districts. But it also found that $1.3 billion of that revenue would have been raised anyway, assuming the areas continued growing at their pre-TIF rates.
The experience in Chicago is important. The city invested $1.6 billion in TIFs, even though $1.3 billion in economic development would have occurred anyway. So the bottom line is that the city invested $1.6 billion for $300 million in revenue growth.
The upshot is that TIFs are diverting tax money that otherwise would have been used for government services. The NCBG study found, for instance, that the 36 TIF districts would cost Chicago public schools $632 million (based on development that would have occurred anyway) in property tax revenue, because the property tax rates are frozen for schools as well. This doesn’t merely mean that the schools get more money. If the economic growth occurs with TIFs, that attracts people to the area and thereby raises enrollments. In that case, the cost of teaching the new students will be borne by property owners outside the TIF districts.
Such concerns have had little impact so far, in part because almost no one has examined how TIFs succeed or fail over the long term. Local politicians are touting TIFs as a way to promote development, promising no new taxes, and then setting them up without looking at potential side effects. It’s hard to discern exactly how many TIFs operate in this country, since not every state requires their registration. But the number has expanded exponentially, especially over the past decade. Illinois, which had one TIF district in 1970, now has 874 (including one in the town of Wilmington, population 129). A moderate-sized city like Janesville, Wisconsin—a town of 60,000 about an hour from Madison—has accumulated 26 TIFs. Delaware and Arizona are the only states without TIF laws, and most observers expect they will get on board soon.
First used in California in the 1950s, TIFs were supposed to be another tool, like tax abatement and enterprise zones, that could be used to promote urban renewal. But cities found they were not very effective at drawing development into depressed areas. “They had this tool, but didn’t know what the tool was good for,” says Art Lyons, an analyst for the Chicago-based Center for Economic Policy Analysis, an economic think tank that works with community groups. The cities realized, Lyons theorizes, that if they wanted to use TIFs more, they had to get out of depressed neighborhoods and into areas with higher property values, which generate more tax revenue to pay off development bonds.
|Posted by Jerrald J President on September 2, 2019 at 4:25 PM||comments (0)|
Wake Up the, it's not a coincidence we have no wealth! Please stop allowing the so-called establihed individuals to make you feel guilty. By saying you just have to work harder and get more education. It's fools gold and they know it.By JJP
Why Blacks and Hispanics Have Such Expensive Mortgages
High-cost lenders are targeting these communities, preventing them from building wealth to pass on to their children.
Despite the housing bust and its lasting implications, owning a home nevertheless remains one of the most common ways for American families to build wealth—white families, predominantly. The homeownership rates of black and Hispanic Americans lag dramatically behind that of white Americans. These minority groups are much less likely to purchase a home, and if they do, they are less likely to have homes that appreciate in value. They’re also more likely to lose their homes through foreclosure. These gaps help explain, in part, the staggering disparity in wealth between whites and people of color.
The reasons for this are not solely practices of the recent past, such as redlining. Today, home loans are consistently more expensive for black and Hispanic buyers than they are for white buyers. Why? Because banks and other lenders direct these groups toward high-risk, high-priced products. The result is, in part, that blacks and Hispanics are less likely to own homes in general, and additionally that when they do obtain home loans, those loans are often a more expensive and risky proposition—think of the subprime loans that tanked the housing market—which can increase the chance of financial ruin and default.
Why is this? Why are blacks and Hispanics targeted with these risk financial products? Perhaps these differences stem not from the borrowers’ race but from their worse financial circumstances, a reason some would say justifies the higher rates. Not the case, according to a new study from the National Bureau of Economic Research, which finds that race and ethnicity matter substantially on their own.
According to the study’s authors, the economists Patrick Bayer, Fernando Ferreira, and Stephen L. Ross, race and ethnicity were among two of the key factors that determined whether or not a borrower would end up with a high-cost loan, when all other variables were held equal. According to them, even after controlling for general risk considerations, such as credit score, loan-to-value ratio, subordinate liens, and debt-to-income ratios, Hispanic Americans are 78 percent more likely to be given a high-cost mortgage, and black Americans are 105 percent more likely.
“The results of our analysis imply that the substantial market-wide racial and ethnic differences in the incidence of high-cost mortgages arise because African American and Hispanic borrowers tend to be more concentrated at high-risk lenders,” the authors write. “High-risk lenders are not only more likely to provide high-cost loans overall, but are especially likely to do so for African American and Hispanic borrowers.”
What explains this? Why are African American and Hispanic borrowers ending up at the lenders who will charge them the most? High-cost lenders are much more aggressive in minority markets, the researchers say, which increases such borrowers’ exposure to these pricier loans. Prior research has found that members of these minority groups are less likely to comparison shop for mortgage products, which in turn increases the chances that they’ll wind up with the first offer they receive, and those offers tend to be expensive ones. The greater exposure of minorities to the high-cost loan marketplace accounted for about 60 to 65 percent of the differential in loans, the researchers found. And once committed to these lenders, minorities were likely to receive worse terms, such as higher or fluctuating interest rates, than whites, even if they had similar financial profiles.
By looking at the different variables that factor into mortgage type and mortgage rates, the researchers find that race alone accounted for nearly all of the disparity in high-cost mortgage lending between whites and minorities. They additionally find that while the discrepancies between whites and minorities varied in size around the country, they were present everywhere.
Among their recommendations for decreasing the racial inequities in the mortgage lending market, the researchers suggest focusing on the way lenders do business, specifically ending the division of major lenders’ subsidiaries into “prime” and “subprime” entities, which can unfairly channel minorities into riskier, more expensive loans for no good reason.
|Posted by Jerrald J President on September 2, 2019 at 4:15 PM||comments (0)|
From "Redlining" to "De Jure Segregation" white supremacy/racism continues to harm Descendants of Slaves" in America! By JJp
Black Home Buyers Denied Mortgages More Than Twice As Often As Whites, Report Finds
Black and Hispanic homebuyers are significantly more likely to get turned down for a conventional mortgage loan, according to new data.
A recent analysis from Zillow shows that in 2016, nearly 21% of black applicants were denied a conventional loan, while 15.5% of Hispanics were. Those rates are down from 2007, when black applicants were turned down 34.3% of the time and Hispanics faced denials on 30% of applications. The national denial rate is down, too, dropping from 18% in 2007 to 9.8% in 2016.
Still, even with the reduction over the past decade, a major gap exists between loan denials for white and Asian applicants and those of black and Hispanic applicants. In 2016, Asian applicants were denied a conventional loan in 10.4% of cases — slightly more than the national average — and whites in only 8.1%. The gap widens even further in certain geographic locations — particularly in the North and on the Atlantic Coast.
Where Denials Are Highest
Conventional loan denials for black applicants are the highest in Miami, where 25% of applications are turned down. Black denial rates are also above 20% in St. Louis; Tampa and Orlando, Florida; New York City; Philadelphia; and Detroit.
For Hispanic borrowers, denials are highest in Columbus, Ohio, with 22.2% of applications denied. Hispanic denial rates were above 15% in Orlando, Miami, Philadelphia, Chicago and New York City.
Though Asian borrowers have a statistically lower denial rate nationally, there are several metros bucking that trend. In Miami, for example, Asian buyers get turned down 18% of the time, while those in nearby Orlando face a denial rate of 16.3%.
The Homeownership Divide
The gap in denial rates isn’t the only problem facing minority homebuyers. Black and Hispanic borrowers also have significantly lower buying power than white buyers. In fact, according to Zillow Chief Economist Aaron Terrazas, black buyers had the least purchasing power of all races last year, able to afford just 55% of all homes for sale, while white buyers could afford nearly 80%.
That steep discrepancy in buying power is widening the divide in homeownership among the races. In fact, it’s now worse than a full century ago. In 1900, the disparity between black and white homeownership was 27.6%. Now, it’s 30.3%.
According to recent data from the Urban Institute the racial disparity in homeownership rates is highest in cities in the Northeast and Midwest.
Minneapolis claims the biggest divide, with a 50% difference between black and white homeownership rates. In Albany, New York, the disparity clocks in at 48.8%, and in Buffalo, it’s 45.5%. Salisbury, Maryland, and Bridgeport, Connecticut, also show a big divide between the races.
The smallest divides between black and white homeownership are in the south, according to the Urban Institute’s research. In Killeen, Texas, the disparity is just 14.4%, while Fayetteville, North Carolina, sees a gap of 17.4%. Charleston, South Carolina; Austin, Texas; and Augusta, Georgia, also had some of the smallest gaps in homeownership rates in the nation.
But even in cities with above-average black populations, whites still outnumber black households when it comes to homeownership.
“Not one of the 100 cities with the largest black populations has a black homeownership rate close to the white homeownership rate,” the study reported. “Even in places where black households are the majority, like Albany, Georgia, the gap persists.”
If loan denials stay at current rates, it will continue persisting, too.
“For the large majority of home buyers, getting approved for a loan is the first step on the road to homeownership, and these continued disparities represent an ongoing barrier to housing and social equity in America,” Terrazas said.
Why The Disparity?
When it comes to the widening gap in homeownership, there are dozens of factors at work, but according to Doug Ryan, senior director of affordable homeownership at the Washington D.C.-based nonprofit Prosperity Now, both lower income and lower credit are contributing to the problem.
“Because of income disparities, black borrowers have fewer housing choices, especially in expensive markets,” Ryan said. “This will drive up debt ratios that could disqualify them. Also, black and Latinos generally have worse credit — measured in the classic way — than whites. Twenty-five percent of blacks, versus 65% of whites, have prime credit scores.”
In fact, according to Zillow’s data, white households earned about $21,000 more than black households last year in 48 out of the nation’s top 50 markets. In 2017, white households could afford a home 75% more expensive than black households. On average, black households could afford just over half of all U.S. home listings last year, while Hispanic households could afford 64.9%. White and Asian households could afford 77.6% and 85.2%, respectively.
In the long term, Ryan said this disparity in homeownership — and housing affordability — could have a significant impact on wealth-building opportunities for American minorities.
“I think the future is bleak,” Ryan said. “We have lost a generation of new homeowners, and with it, the community efficacy that comes with ownership. We are losing intergenerational wealth, already a challenge for black and Latino families. And we have lost a vast supply of single-family homes to the rental market, which means fewer homes to buy. For minorities, the trend will be devastating.”
|Posted by Jerrald J President on August 29, 2019 at 11:25 AM||comments (0)|
This is not a Right or Left creation, this is what Capitalism produced. Until we realize the system was created by the very same people who told you" all men are created equal" yet owned my ancestors and denied their own mothers and daughters the right vote! Gangster-ism 101.... By JJP
CEO compensation has grown 940% since 1978Typical worker compensation has risen only 12% during that time
What this report finds: The increased focus on growing inequality has led to an increased focus on CEO pay. Corporate boards running America’s largest public firms are giving top executives outsize compensation packages. Average pay of CEOs at the top 350 firms in 2018 was $17.2 million—or $14.0 million using a more conservative measure. (Stock options make up a big part of CEO pay packages, and the conservative measure values the options when granted, versus when cashed in, or “realized.” CEO compensation is very high relative to typical worker compensation (by a ratio of 278-to-1 or 221-to-1). In contrast, the CEO-to-typical-worker compensation ratio (options realized) was 20-to-1 in 1965 and 58-to-1 in 1989. CEOs are even making a lot more—about five times as much—as other earners in the top 0.1%. From 1978 to 2018, CEO compensation grew by 1,007.5% (940.3% under the options-realized measure), far outstripping S&P stock market growth (706.7%) and the wage growth of very high earners (339.2%). In contrast, wages for the typical worker grew by just 11.9%.
Why it matters: Exorbitant CEO pay is a major contributor to rising inequality that we could safely do away with. CEOs are getting more because of their power to set pay, not because they are increasing productivity or possess specific, high-demand skills. This escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of top 1.0% and top 0.1% incomes, leaving less of the fruits of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%. The economy would suffer no harm if CEOs were paid less (or taxed more).
How we can solve the problem: We need to enact policy solutions that would both reduce incentives for CEOs to extract economic concessions and limit their ability to do so. Such policies could include reinstating higher marginal income tax rates at the very top; setting corporate tax rates higher for firms that have higher ratios of CEO-to-worker compensation; establishing a luxury tax on compensation such that for every dollar in compensation over a set cap, a firm must pay a dollar in taxes; reforming corporate governance to give other stakeholders better tools to exercise countervailing power against CEOs’ pay demands; and allowing greater use of “say on pay,” which allows a firm’s shareholders to vote on top executives’ compensation.
Introduction and key findings
Chief executive officers (CEOs) of the largest firms in the U.S. earn far more today than they did in the mid-1990s and many times what they earned in the 1960s or late 1970s. They also earn far more than the typical worker, and their pay has grown much more rapidly. Importantly, rising CEO pay does not reflect rising value of skills, but rather CEOs’ use of their power to set their own pay. And this growing power at the top has been driving the growth of inequality in our country.
About the CEO pay series and this report
This report is part of an ongoing series of annual reports monitoring trends in CEO compensation. In this report, we examine current trends to determine how CEOs are faring compared with typical workers (through 2018) and compared with workers in the top 0.1% (through 2017). We also look at the relationship between CEO pay and the stock market.
To analyze current trends, we use two measures of compensation. The first measure includes stock options realized (in addition to salary, bonuses, restricted stock awards, and long-term incentive payouts). Because stock-options-realized compensation tends to fluctuate with the stock market (as people tend to cash in their stock options when it is most advantageous to do so), we also look at another measure of CEO compensation, to get a more complete picture of trends in CEO compensation. This measure tracks the value of stock options granted (in addition to salary, bonuses, restricted stock awards, and long-term incentive payouts).1
Trends over the past two years
Using the measure that includes stock options realized, we find that CEO pay fell by 0.5% from 2017 to 2018, to $17.2 million on average in 2018. CEO compensation using another measure, which captures the value of stock options granted (whether exercised or not), grew last year by 9.9% to $14.0 million. Both measures show strong growth in CEO compensation over the last two years, up 7.1 and 9.2%, respectively, for compensation measured with options exercised and options granted. Compensation grew strongly because of increasingly large stock awards given to CEOs; these stock awards averaged $7.5 million in 2018, making up nearly half of CEO compensation.
CEO compensation has grown 52.6% in the recovery since 2009 using the options-exercised measure and 29.4% using the options-granted measure. In contrast, the typical workers in these large firms saw their annual compensation grow by just 5.3% over the recovery and actually fall by 0.2% between 2017 and 2018.
Average CEO compensation attained its peak in 2000, at the height of the late 1990s tech stock bubble, at $21.5 million (in 2018 dollars) based on either measure—368 or 386 times the pay of the typical worker, depending upon the measure used.2 CEO compensation fell in the early 2000s after the stock market bubble burst, but mostly recovered by 2007, at least for the measure using exercised stock options (the measure using options granted remained substantially below the 2000 level). CEO compensation fell again during the financial crash of 2008–2009 and rose strongly over the recovery since 2009 but still remains below the 2000 peak levels. CEO compensation continues to be dramatically higher than it was in the decades before the turn of the millennium. CEO compensation was 940.3% higher in 2018 than in 1978 using the options-exercised measure and 1,007.5% higher using the options-granted measure. Correspondingly, the CEO-to-average-worker pay ratio, using the options-exercised measure, was 121-to-1 in 1995, 58-to-1 in 1989, 30-to-1 in 1978, and 20-to-1 in 1965.
The relationship between CEO pay and the stock market
CEO pay has historically been closely associated with the health of the stock market, although this connection loosened over the last few years when CEO compensation did not correspond to rapid stock price growth. The generally tight link between stock prices and CEO compensation indicates that CEO pay is not being established by a “market for talent,” as pay surged with the overall rise in profits and stocks, not with the better performance of a CEO’s particular firm relative to that firm’s competitors.
The relationship between CEO pay and the pay of other top earners; the rise of inequality
Amid a healthy recovery on Wall Street following the Great Recession, CEOs enjoyed outsized income gains even relative to other very-high-wage earners (those in the top 0.1%); CEOs of large firms earned 5.4 times that of the average top 0.1% earner in 2017, up from 4.4 times in 2007. This is yet another indicator that CEO pay is more likely based on CEOs’ power to set their own pay, not on a market for talent.
To be clear, these other very-high-wage earners aren’t suffering: Their earnings grew 339.2% between 1978 and 2017. CEO pay growth has had spillover effects, pulling up the pay of other executives and managers, who constitute more than 40% of all top 1.0% and 0.1% earners.3 Consequently, the growth of CEO and executive compensation overall was a major factor driving the doubling of the income shares of the top 1% and top 0.1% of U.S. households from 1979 to 2007 (Bakija, Cole, and Heim 2012; Bivens and Mishel 2013). Income growth has remained unbalanced. As profits and stock market prices have reached record highs, the wages of most workers have grown very little, including in the current recovery (Bivens et al. 2014; Gould 2019).
The report’s main findings include the following:
CEO compensation in 2018 (stock-options-realized measure). Using the stock-options-realized measure, we find that the average compensation for CEOs of the 350 largest U.S. firms was $17.2 million in 2018. Compensation dipped 0.5% in 2018 following a 7.6% gain in 2017. CEO compensation measured with realized stock options grew 52.6% over the recovery from 2009 to 2018.
CEO compensation in 2018 (stock-options-granted measure). Using the stock-options-granted measure, the average compensation for CEOs of the 350 largest U.S. firms was $14.0 million in 2018, up 9.9% from $12.7 million in 2017 and up 29.4% since the recovery began in 2009.
Growth of CEO compensation (1978–2018). From 1978 to 2018, inflation-adjusted compensation based on realized stock options of the top CEOs increased 940.3%. The increase was more than 25–33% greater than stock market growth (depending on which stock market index is used) and substantially greater than the painfully slow 11.9% growth in a typical worker’s annual compensation over the same period. Measured using the value of stock options granted, CEO compensation rose 1,007.5% from 1978 to 2018.
Changes in the CEO-to-worker compensation ratio (1965–2018). Using the stock-options-realized measure, the CEO-to-worker compensation ratio was 20-to-1 in 1965. It peaked at 368-to-1 in 2000. In 2018 the ratio was 278-to-1, slightly down from 281-to-1 in 2017—but still far higher than at any point in the 1960s, 1970s, 1980s, or 1990s. Using the stock-options-granted measure, the CEO-to-worker compensation ratio rose to 221-to-1 in 2018 (from 206-to-1 in 2017), significantly lower than its peak of 386-to-1 in 2000 but still many times higher than the 45-to-1 ratio of 1989 or the 16-to-1 ratio of 1965.
Changes in the composition of CEO compensation. The composition of CEO compensation is shifting away from the use of stock options and toward the use of stock awards, which now average $7.5 million for each CEO and make up roughly half of all CEO compensation. Stock-related components of compensation—stock options and stock awards—make up two-thirds to three-fourths of all CEO compensation, depending on the particular measure used. The shift from stock options to stock awards leads to an understatement of CEO compensation levels and growth in our measures as well as in other measures, including the measure prescribed in SEC reporting requirements.
Changes in the CEO-to-top-0.1% compensation ratio (1989–2018). Over the last three decades, compensation for CEOs based on realized stock options grew far faster than that of other very highly paid workers (the top 0.1%, or those earning more than 99.9% of wage earners). CEO compensation in 2017 (the latest year for which data on top wage earners are available) was 5.40 times greater than wages of the top 0.1% of wage earners, a ratio 2.22 points higher than the 3.18 average ratio over the 1947–1979 period. This wage gain alone is equivalent to the wages of more than two very-high-wage earners.
Implications of the CEO-to-top-0.1% compensation ratio. The fact that CEO compensation has grown far faster than the pay of the top 0.1% of wage earners indicates that CEO compensation growth does not simply reflect a competitive race for skills (the “market for talent” that also increased the value of highly paid professionals: Rather, the growing differential between CEOs and top 0.1% earners suggests the growth of substantial economic rents in CEO compensation (income not related to a corresponding growth of productivity). CEO compensation appears to reflect not greater productivity of executives but the power of CEOs to extract concessions. Consequently, if CEOs earned less or were taxed more, there would be no adverse impact on the economy’s output or on employment.
Growth of top 0.1% compensation (1978–2017). Even though CEO compensation grew much faster than the earnings of the top 0.1% of wage earners, that doesn’t mean the top 0.1% did not fare well. Quite the contrary. The inflation-adjusted annual earnings of the top 0.1% grew 339.2% from 1978 to 2017. CEO compensation, however, grew three times as fast!
CEO pay growth compared with growth in the college wage premium. Over the last three decades, CEO compensation increased more relative to the pay of other very-high-wage earners than did the wages of college graduates relative to the wages of high school graduates. This finding indicates that the escalation of CEO pay does not simply reflect a more general rise in the returns to education.
This section provides detailed analysis of our findings. We examine several decades of available data to identify recent and historical trends in CEO compensation.
|Posted by Jerrald J President on August 29, 2019 at 9:55 AM||comments (0)|
This is not a Right or Left creation, this is what Capitalism produced. Until we realize the system was created by the very same people who told you" all men are created equal" yet owned my anscestors and denied their own mothers and daughters the right vote! Gangsterism 101.... By JJP
CEOs rake in 940% more than 40 years ago, while average workers earn 12% more
CEO compensation rose 940% from 1978 to 2018, compared with a 12% rise in pay for the average American worker during the same period, according to the Economic Policy Institute.
In 2018, average CEO pay at the 350 biggest U.S. companies was $17.2 million.
Chief executives at large companies make roughly $278 for every $1 a typical worker earns — that's up from a ratio of 20-to-1 back in 1965 and a ratio of 58-to-1 in 1989.
The chasm between what the country's corporate leaders and their workers earn is widening to Grand Canyon-like proportions, according to new research that shows CEO compensation surged 940% between 1978 to 2018 while the average worker saw a meager 12% pay hike over the same 40-year period.
"CEOs are getting more because of their power to set pay, not because they are increasing productivity or possess specific, high-demand skills," economist Lawrence Mishel and research assistant Julia Wolfe said in the report from the Economic Policy Institute, a left-leaning think tank.
Depending on how it's calculated, the average pay of CEOs at the 350 biggest U.S. companies last year came to $17.2 million, the EPI research found. (Or, alternatively, about $14 million, with the smaller number valuing the stock options that make up a big chunk of CEO pay at the time they were granted rather than when they were cashed in at typically higher prices.)
Last year chief execs got $278 for every $1 a typical worker earned, according to Mishel and Wolfe. Back in 1965, top corporate chiefs earned $20 for every dollar a typical worker earned, with that ratio rising to 58-to-1 by 1989. The gap widened dramatically in the following decades, they noted, due to a shift in the 1990s and 2000s to compensate CEOs mostly with stock options, restricted shares and other incentive-based pay fueled a spike in their earnings.
Other factors that have driven income inequality in recent years: failure to raise the federal minimum wage, eroding union membership and globalization -- all of which reflect shifts in economic policy in ways that favor big corporations and the rich, Mishel said.
Pay for performance?
The EPI findings are in line with an analysis by Equilar for the Associated Press earlier this year that found that CEOs at S&P 500-listed companies made a median of $12 million last year, including salary, stock and other compensation.
Many CEOs who haul in massive stock awards aren't necessarily demonstrating their worth, EPI's Mishel told CBS MoneyWatch this week. Rather, the jump in executive compensation broadly reflects the runup in stocks in recent years.
"When every industry stock goes up, their stock goes up, and they're rewarded as though they hit a triple, Mishel said. "That's not for performance as they are sitting in the bleachers."
Excessive CEO pay is the result of a rigged system that creates the wrong incentives for top executives and is the same time terrible for company morale, observed Steven Cliffords, CEO of King Broadcasting for five years and National Mobile Television for nine.
"When people talk to me, they'll say, 'Yeah, but look at those baseball stars and all the money they make,' " Cliffords explained. "But there's a key difference: Baseball players make their money in what's essentially an auction market, where teams bid for their services. It's the same with movie stars. You know Mike Trout is going to improve any team he's on, that Meryl Streep is going to improve any movie she's in."
Conversely, a CEO is not going to improve just any company, as the knowledge it takes to perform well in the job is company-specific. That's why three-quarters of all new CEOs among S&P 500 companies involve internal promotions, said Cliffords, who has chaired numerous compensation committees for public and private companies. (He's also the author of "The CEO Pay Machine, How it Trashes America and How to Stop It.")
The pay gap between CEOs and rank-and-file workers had some members of Congress calling out bank CEOs on the pay disparity earlier this year. New York Democrat Nydia Velazquez told the heads of the nation's largest financial institutions appearing on Capitol Hill that the swelling pay gap "doesn't look good."
Disney heiress Abigail Disney has repeatedly criticized the compensation paid to public company CEOs, calling it "a moral issue" and one that leaves some low-wage earnings sleeping in their cars and rationing insulin. She and other activists contend that workers are often laid off without severance, while top executives line their own and investors' pockets through share buybacks and cash dividends.
"In the 1980s, it became all about creating money for shareholders," William Lazonick, an economist and professor at the University of Massachusetts Lowell, said of the practice of companies spending billions of dollars to repurchase their own stock and artificially driving the price higher.
In its report, EPI called for policies including reinstating higher marginal income tax rates at the very top and setting higher corporate tax rates on companies with higher ratios of CEO-to-worker compensation.