Well, a buyer emerged-  New Era Windows, a worker-run cooperative founded by some of the former Serious and Republic Window workers.  But despite being willing to buy the factory, Serious Energy told New Era this week they were out of the running to buy the place because it would be easier to liquidate.  And they plan to do it by Friday July 6th!

So we have put a movement in motion again to save these jobs.  Please join us tomorrow to visit a principle investor and Serious Energy board member who works for Mesirow Financial- Thomas Gulahn.  And sign on to the petition- http://www.change.org/petitions/help-save-green-tech-jobs-in-chicago  in the half day its been up its gone viral with over 1,600 of signers!

What:  Rally and delegation at Mesirow Financial to save good Chicago jobs.
Where: 353 N Clark Street, Chicago
When: Thursday July 5th, 12pm Noon

Context matters particularly in terms of economic data. Bureau of Labor Statistics released the September Employment Situation last friday. The main story from the report were 103,000 jobs created in September and 9.1% unemployment which was unchanged from August. Sounds positive but there is more information - troubling information that was excluded from most traditional media’s analysis of the release. One huge omission from news reports was that 103,000 jobs included 45,000 returning Verizon workers who were on strike in August so if excluded those jobs then the economy only generated 56,000 new jobs. Oh, but there’s more.

Economic Policy Institute has been providing some very important analysis and context for the monthly job reports. This is what they said about Friday’s report:

The U.S. is currently 6.6 million jobs below where it was when the recession started. But because the working-age population grows as the population expands, in the three years and nine months since the recession started we needed to have added around 4.5 million jobs to keep the unemployment rate from rising. Putting these numbers together means the current gap in the labor market is roughly 11.1 million jobs. To fill that gap in three years—by Fall 2014—while still keeping up with the growth in the working-age population—would require adding around 400,000 jobs every single month. To fill the gap in five years—by Fall 2016—would mean adding 280,000 jobs each month. By comparison, over the last three months, the economy added just 96,000 jobs per month on average.  At this rate, the unemployment rate will not come down.

Wow, 400,000 jobs per month! We’re not even close to that. The jobs hole is very deep and weak job growth as reported on Friday will help very little. Even future prospects for significant job and economic growth appear very bleak especially with more talk of austerity at federal, state and local levels.

Oh, but wait there’s even more context that was missing from traditional media reports:

• 44.6% of the unemployed people have been unemployed for more than six months (this increased in September).
• Number of unemployed workers who have been jobless more than one year was 4.4 million (versus 4.3 million in September 2010).
• Underemployment rate (U-6), which includes the officially unemployed, the marginally attached (jobless workers who want a job and are available to work but have given up actively seeking work), and people who want full-time jobs but have had to settle for part-time work, increased in September from 16.2% to 16.5%.

Not to mention that the unemployment rate held steady at 9.1% - a relatively high number.

Want more context? Let’s not stop with just the employment situation. What household incomes? High unemployment provides downward pressure on wages and incomes. So it should not be a surprise when we read or hear about reports like this:

Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.

Welcome to the New Normal! This is going to be painful. But it doesn’t have to be this way. There are alternatives/solutions to this New Normal.

Good luck.

A bond is a loan or a debt between bond issuer (borrower) and bond holder/owner (lender). Like a loan or debt, a bond must be paid back with interest or at some rate of return. A bond holder, obviously, has no ownership interest in bond issuer - unlike a stock holder/owner.

There many types of bonds. Here are the more typical ones:

1. Treasury securities - Treasury Bills - mature one year or less; Treasury Notes - mature one to ten years; Treasury Bonds - mature 20 to 30 years; and Treasury Inflation Protected Securities (TIPS).
2. Federal government agency bonds - such as Small Business Administration, the Federal Housing Administration and the Government National Mortgage Association (Ginnie Mae) - there bonds are typically backed by the ‘full faith and credit’ of U.S. government.
3. Government Sponsored Entities bonds - such as the Federal Home Loan Mortgage Association (Freddie Mac), the Federal Home Loan Mortgage Association (Fannie Mae) and the Federal Home Loan Banks provide credit for the housing sector and Federal Agricultural Mortgage Corporation (Farmer Mac).
4. State and municipal bonds - these can be in form of “revenue bonds” or “general obligation bonds”
5. Corporate bonds - issued by corporations such as General Electric.

A bond is at face value (or par value) - usually $1,000 or $5,000. The bond issuer promises to pay bond holder the face value or principal at some specified future date known as the maturity date. To compensate the bond holder for paying principal at maturity date, issuer agrees to pay interest to bond holder at some coupon rate.

For example, let’s say you buy four - 10 year bonds at face value of $1,000 and pay 6% coupon rate. As a bond holder, you would receive $240 per year for 10 years and then receive $4,000 on the maturity date. Now, this example assumes a fixed coupon rate but many bonds have a floating rate - a coupon rate tied to some index rate such as London Interbank Offer Rate (LIBOR).

Now, the above example as assumes you buy bond in primary market or initial offering. But most bond investors buy bonds in the secondary market or bond market. This is where bond prices become relevant because bond prices do fluctuate over time. Bond pricing can be tricky for someone new to bonds. Let’s start with pricing convention - bond are priced as a percentage of par value. For example, you might see a quote in Bloomberg for 101-19 (dash or colon represents 32nds of a dollar for 10 year Treasury Note, this means the bond price is 101-19/32% of $1,000 or $1,015.94. In this example the bond price was above par value (101-19) this is known as a premium. Bonds trading below par value (say 99-27) are trading at a discount.

There are a number of factors that effect the price of bonds including issuer’s credit rating, inflation expectations, supply/demand of debt issues, and economic outlook. These factors and a few others such as reinvestment risk are reflected in market yield or bond yield. Generally, bond investors demand higher market yield or bond yield to compensate for higher risk. And this is where it sometimes gets tricky but it’s very important to understand: Bond price and market/bond yield have an inverse relationship - when market/bond yield goes up, bond price decreases; and when market/bond yield goes down, bond price increases.

So much for an introduction. Any questions?

Like all investments, before investing make sure we understand what we are getting ourselves into. For information on investing in bonds - check out - InvestinginBonds.com. Good luck.

We’re talking real hope not some campaign slogan. We’re talking hope we can believe in. No question that the economic situation for many Americans is pretty grim. The numbers confirm it. First, the Pew Charitable Trust released a report called “Downward Mobility from the Middle Class:Waking Up from the American Dream.” Next, the Census Bureau released its 2010 report on income and poverty in U.S. Both are very important reads but let’s cover just the highlights:

Downward Mobility from the Middle Class

• One third of Americans raised in the middle class fall out of the middle as adults.
• People raised in middle class homes are generally more likely to fall out of the middle if they do not obtain education beyond high school.
• 38 percent of black men fall out of middle class, compared with 21 percent of white men.
• 30 percent of white women fall out of middle class, compared with 21 percent of white men.

This report addresses a few of the drivers for downward mobility - mostly educational reasons and marital status of parents. But this translates into something bigger - an economic system that suppresses family incomes and provides much fewer opportunities, particularly through education, to achieve upward mobility. It used to be that a person could reach the middle class with a high school diploma but today it seems highly unlikely. It’s really the nature of our economic system today.

Income, Poverty, and Health Insurance Coverage in the United States: 2010

• Real median household income was $49,445 in 2010, a 2.3% decline from 2009.
• Since 2007, real median household income has declined 6.4% and is 7.1% below the real median household income peak that occurred in 1999.
• In 2010, 46.2 MILLION people were in poverty (15.2% poverty rate), up from 43.6 MILLION people in 2009 - FOURTH consecutive annual increase.
• in 2010, 49.9 MILLION people were without health insurance.

Can you see how both reports are related? Again no opportunities for upward mobility for millions of Americans. It’s the nature of our economic system today.

Some people would argue that the above facts show that we need a stronger social safety net or in short-term more fiscal stimulus. Sure, those things would help but they are only treating the symptoms and not the disease. The disease is our economic system itself. A system based on redistribution of wealth and income upward through suppression of wage growth and increased profit margins. Where economic benefits accrue to those who really don’t need any more. A system that substitutes debt for real income.

But there is hope. Real hope and possibilities to challenge our current economic status quo by conducting business through a different business model. A business model that has been around a long time but has been underutilized in the U.S. A business model that puts people before profits. Here are a few examples:

Arizmendi Association of Cooperatives - a network of six worker-owned bakery cooperatives that began in 1997. In this worker cooperative, like most others, workers are the owners and decision makers for the business. Here is good story about Arizmendi from Media Roots:

The central aim of the Arizmendi Cooperative Association is to create a truly democratic economy – one in which everyone has a say in the decisions that affect them on a day-to-day basis. The biggest challenges to achieving this goal, explains Tim [Huet], are raising money (they do not take government or foundation grant money) and more importantly, living in a society that actually teaches people to be powerless.

Women’s Action to Gain Economic Security (WAGES) a not-for-profit organization operating in San Francisco Bay Area.  WAGES’ mission is to build worker-owned green businesses that create healthy, dignified jobs for low-income women. WAGES launches cooperatives where women develop personal and professional skills, become leaders, and gain economic security. WAGES has developed five eco-friendly cleaning cooperatives.

Isthmus Engineering & Manufacturing - a worker owned cooperative from Madison, Wisconsin. Since 1980, Isthmus has been delivering thousands of high performance automation machines and systems. Fun little fact about Isthmus - they were featured in Michael Moore’s documentary, “Capitalism: A Love Story.”

Union Cab - a worker owned cooperative from Madison, Wisconsin. Union Cab has a very interesting history. Union Cab may be the only taxi cab company in the U.S. that pays a living wage plus 100% of health insurance premiums of worker-owners.

Evergreen Cooperatives from Cleveland, Ohio. Evergreen Cooperative Laundry is the first in a network of green cooperatives centered around ‘anchor institutions’ such as hospitals, universities and hotels in Cleveland, Ohio. Evergreen cooperatives are worker-owned and democratically managed.

Cooperative Home Care Associates (CHCA) from New York, City.  CHCA is the largest worker owned cooperative in the U.S. with 1,600 members and revenue upward of $40 million. CHCA provides quality home health care and above industry average wages and benefits to its worker-members.

Green Worker Cooperatives from the South Bronx, New York. Green Worker Cooperatives helps develop environmentally positive worker cooperatives in South Bronx. It also has developed a very popular Coop Academy where it provides an intense 16 weeks of training and support for aspiring entrepreneurs who want to start a green cooperative business.

Again, these are just a few examples of hope but we need more. Particularly if want to make positive changes to the gloomy poverty and downward mobility data. We need figure out ways to change this economic status quo. We can no longer expect nor can we wait for Washington to address the dire economic situation. We have to do this on our own. We have to find new solutions and new ideas. Worker cooperatives can be one solution.

But change will only happen when we decide to make change. Otherwise we will continue at best to languish or at worse to economically degrade. It’s really up to us.

Good luck.

Facts are showing a broken economic system. High poverty, high unemployment, low job growth, stagnate wages, growing income inequality, no economic mobility. It’s all there. We have an economic system that is providing very very few opportunities for people and providing a bleak future for younger generations. Yet hardly a peep from most people. Why?

Is that people are scared to demand change? Or is that people are just too complacent - content with a bleak future as long as we get our 500+ cable channels and internet access? What is it?

We have people who can’t afford to retire. We have families who either can’t afford or going into massive debt to send their children to college. We have people working not one but two or three jobs just pay the bills. But no protests. Why?

Is it that people are not aware that there are alternatives to current economic system and related bankrupt institutions?

We have a political system that’s controlled by those who can contribute the most money. We have a financial system that is incredibly destructive. We have business models that prioritize short-term profits at any cost - costs which are typically hoisted on the public or workers.

What will it take for people to wake up and realize how screwed we are under this current economic system?

Here is the the news release on the data.

Maybe it’s best to show the data in pictures. Now, instead of just showing totals for personal consumption expenditures, disposable personal income and the like, I will show changes from previous year. This should give a better perspective on the situation.

1) Personal Consumption Expenditures.

2) Personal Income

3) Disposable Personal Income

Not surprisingly personal income and disposable income (personal income minus taxes) are kind of flatlining. Oh, I digress.

There are several deeper issues to all of this. We had what economist Richard Koo called a “balance sheet recession”. Basically, families and businesses took on a lot debt based on inflated asset prices. Then sometime in 2007 the House of Cards came tumbling down. Families and businesses turned to paying down massive debt loads instead of buying stuff or consuming. For an economy driven by consumption (over 70% of GDP) having families paying off debt instead of consuming or investing is bad.

One deep issue is what has actually changed from the beginning to the Great Recession until now that will positively impact our economy? I suggest nothing. Sure, Wall Street and corporate profits have bounced back nicely and there was a weak fiscal stimulus the effects of which have worn off but now the emphasis is on deficit reduction. High unemployment will continue to suppress family incomes and debt loads are still high.

Another deeper issue is whether families will continue to pay down debt or even have the means or incomes to do so? Are families essentially still tapped out and still struggling with stagnate wages and higher living costs? We will see. One month of good numbers won’t provide answers to these questions.

Good luck.

Traditional media and some talking heads are starting to recognize the huge level of income inequality and wealth gap in the U.S. U.S. hasn’t experience this level of inequality since time preceding the Great Depression. There are serious consequences to this level inequality. One of which we are seeing today - those at the top do what ever they can to keep what they have by controlling the political system. Yep, we’re talking a plutocracy.

To some it’s obvious what is happening. In fact, Warren Buffett, famous stock investor, even called it:

“There’s class warfare, but it’s my class, the rich class, that’s making war, and we’re winning.”

Mr. Buffett was at it again today in an op-ed in New York Times titled “Stop Coddling the Super Rich” where he called for higher taxes on the super-rich.

There’s no question that Mr. Buffett is right about class warfare but raising tax rates on the super-rich is not enough. We have serious structural problems in our economy that will not be addressed by simply raising tax rates on the super-rich. Stagnate wages and household incomes is one the problems that will still remain. What do we do about that?

My concern is that this one thing - increased tax rates on super-rich - is being sold as the end all be all to our economic ills. It’s not. The problems we have relate in large measure to our economic system.

Fighting class warfare by the old rules is obviously a losing proposition for poor and working class families. This debate over taxing the super-rich is part of the old rules. We know that tax rates can easily change again under another presidential administration and another party controlling congress. What we need is fundamental and transformational change to our economic system. This won’t happen using the old rules.

We must change the Rules of Engagement on this class war. Or in non-military lingo - we must challenge the status quo. We can do that by starting a New Economy - one that competes with the current economic system that’s the root cause of our economic problems. This involves creating new institutions that could eventually replace existing ones. One example would be to increase the use of credit unions and local/community banks and snubbing the big banks. Another would be increase use of business models that prioritize people and environment over profits.

David Korten has written extensively on a vision for a New Economy. He offered ten principles for a New Economy that are worthy of consideration. Here are just a few:

1. The proper purpose of an economy is to secure just, sustainable, and joyful livelihoods for all. This may come as something of a shock to Wall Street financiers who profit from financial bubbles, securities fraud, low wages, unemployment, foreign sweatshops, tax evasion, public subsidies, and monopoly pricing.
2. GDP is a measure of the economic cost of producing a given level of human well-being and happiness. In the economy, as in any well-run business, the goal should be to minimize cost, not maximize it.
3. A rational reallocation of real resources can reduce the human burden on the Earth’s biosphere and simultaneously improve the health and happiness of all. The Wall Street economy wastes enormous resources on things that actually reduce the quality of our lives—war, automobile dependence, suburban sprawl, energy-inefficient buildings, financial speculation, advertising, incarceration for minor, victimless crimes. The most important step toward bringing ourselves into balance with the biosphere is to eliminate the things that are bad for our health and happiness.

There are two things that I would explicitly add to these principles (because that’s just how I roll) and those are to encourage more cooperative businesses and worker ownership. Both would go a long way to improving local economies and overall democracy, increasing community wealth and promoting business models that put people and environment before profits.

Economic empowerment gained from creating a New Economy and building local, self-sufficient economies will lead to political empowerment. Now, that’s Change that we can believe in.

Good luck.

What can they possibly be discussing and do you think your interests will be represented at these emergency meeting? Hell no, but the oligarchs will certainly be represented.

We are witnessing an economic system that generated the Global Financial Crisis simply shifting crisis from one sector to another sector. Never really fixing the problems - just avoiding pain for those with money and power. And the problems we see in Europe are not the same as those in U.S but the resulting policies will be.

The problems in Europe, while instigated by the Global Financial Crisis, are systemic and inherent to their monetary system. Essentially, with the Euro or European Monetary Union there are countries issuing debt in a currency (Euro) that they don’t control. It becomes incredibly burdensome over time, and particularly in a recession, for a country to pay its debt obligations in currency it doesn’t control. But what is happening is not at all different to what happened in Wall Street bailout. Big European banks that hold the debt of countries like Spain, Greece and Italy don’t want to take ‘haircuts’ on the debt. Instead, what we are seeing is that people of these indebted countries are paying the price in the form of austerity - severe cuts to social programs and pension programs.

The problem in U.S. is a different one. Right now, we have a political crisis. We have a political system hell bent on addressing issues, such as deficit and federal debt, that are not crises. The real crisis is a jobs crisis. The debt/deficit fiasco is manufactured crisis but the results will be same as what many Europeans are experiencing now - DEEP AUSTERITY. Yes, this means cuts to many programs that help poor and working class Americans including Social Security, Medicare and Medicaid.

But this deep austerity will be sold as ‘shared sacrifice’ by politicians. ‘Shared sacrifice’ is a campaign slogan or a lie to cover up what is really happening. There will never be ‘shared sacrifice’ when we have millions of foreclosures, millions of home mortgages underwater, 25 MILLION people either unemployed or underemployed and 44 MILLION on food stamps. And nothing in Washington being discussed to address these problems. However, there is more talk of cutting programs. Some would argue but there are tax increases for top tax brackets. Yeah, so!  Impact of cuts to programs such as Social Security, Medicare, Medicaid and the like will be far more painful to those affected than a small tax increase on top incomes - in other words this NOT ‘shared sacrifice’.

This DEEP AUSTERITY is really a symptom of our economic system. Our political system is really a reflection of our economic system. An economic system characterized by huge income inequality and little to no economic mobility. The consequences of this are what we see in our political system - a plutocracy where polices are determined by what is best for those with money (consider the piece of propaganda - top incomes are the ‘job creators’) and big corporations. This is also a major reason why we see the shift of crisis from one sector to another - the global financial crisis was instigated by financial sector and was quickly moved to government sector via $13 TRILLION bailout. Now, a manufactured debt/deficit crisis is being used to eliminate help for those who need it or move much of the government sector functions to the private sector through privatization. Bottom line is that political system and the economic system behind it are not working for poor and working class families.

It’s time to change that. Since our political system is a reflection of our economic system. The place to start is our economic system. Time to start creating new economic institutions that will support the challenge to and the eventual down fall of our current economic system. Economic institutions that encourage increased community wealth, increased democracy and increased economic opportunity for people. There are plenty of ideas/visions for this New Economy - just look up people like Gar Alperovitz, David Korten, David Schweickart. There are others. Don’t be fooled - there are alternatives.

Good luck.

Let’s start with this graph:

It use to be that our economic growth model included steady wage growth for workers. Companies would share the gains in worker productivity with workers. Thus, the idea or notion that people were rewarded for hard work. But then something happened in the 1970’s. The link between wage growth and productivity growth was broken. There are several factors in break of the link including drop in union participation, globalization of labor markets, and technological advances.

Let me digress and show one huge implication of this break:

There’s clearly a correlation between the huge income inequality in U.S. and the break between wage growth and productivity. Currently, the productivity gains, and the resulting profits, powered by worker on behalf of their employers - the companies, is no longer being shared. All the gains are staying at the top with shareholders and senior executives. So it should be no surprise when we hear news stories (covering an actual study) like this one: The Wageless, Profitable Recovery. Sorry, I digress

As we know that if the cost of living continues to rise but wages are not keeping up the cost of living, something has to happen to maintain a certain living standard. Well, as recent history shows when wages are not increasing but families are struggling to maintain a certain living standard - a ‘middle class’ living standard - something did fill the void. Prior to the Great Recession it was more debt:

The above graph measures the amount of family debt versus disposable personal income or the amount of leverage. This graph shows there are huge limitations on the amount of debt families can take on before becoming tapped out. But this was the ‘old normal’ for our economic growth model: lack of wage growth was substitute with debt. Then the Great Recession happened.

Now, we have a ‘new normal’. One that is characterized by low job creation and low economic growth. This all works to suppress wage growth even more - it’s simple higher unemployment means lower wages - law of supply and demand. National Employment Law Project has report out that confirms this ‘new normal’. NELP found that:

• In the weak recovery to date, employment growth has been concentrated in lower-wage occupations, with minimal growth in mid-wage occupations and net losses in higher-wage occupations.
• The net result is that the current U.S. jobs deficit is not evenly distributed.
• Workers’ real wages have shown no growth since the start of the recession.

This ‘new normal’ with low job growth and continued wage stagnation is different from the ‘old normal’ in one very big way - family debt is no longer an option. This means that our economic growth model is tapped out - the debt driven growth we saw years ago is not an option any more. This doesn’t bode well for the living standards of millions of American families. With this status quo economic growth model we will see even bigger income inequality with more and more families falling to the bottom. It doesn’t have to be this way.

We have choices. Any option pursued will not easy or quick to accomplish. But at this point maintaining the status quo economic growth model means economic devastation for millions of American families.

There are options. Some require political involvement - others do not. It truly is up to us to determine the direction we want to go (BTW, there a plenty more options-these are ones that I have studied):

1) Employer of Last Resort/Job Guarantee - obviously this requires legislative action which is a huge problem. Our political system and both political parties don’t really care about the concerns of poor and working class families.

2) New Economy - that’s right, organizing a new economy that is based on an entirely different set of values. Two very important ones: people over profits and more and better democracy. David Korten has written extensively on the subject of a New Economy. There are others with similar visions of a New Economy.

Again, it’s really up to us decide on the direction of our economy. But one thing should be absolutely clear - we have to challenge the economic status quo - it’s now a matter of survival. Any other ideas?

Good luck.

Nice system we got:

1)  No economic mobility;
2)  Low to stagnate wage growth;
3)  More household debt to maintain living standard;
3)  Low job growth;
4)  Huge income inequality.

We can do better. We must do better because it’s a matter of survival for millions of Americans. These characteristics and other not listed point to one thing - time to create a New Economy. 

Good luck.

Hobson offered the following very important tip:

DO NOT CARRY YOUR SOCIAL SECURITY CARD IN YOUR WALLET

If your wallet is ever lost or stolen someone with bad intentions has your entire identity at their disposal - name, home address and social security number. They can do a lot of damage with that information. It was only a few years ago when I started not carrying my SS card in my wallet. It is something that we often overlook but with identity theft a huge ‘black market’ industry we can no longer afford to.

Good luck.

Austerity will crash an already weak economy. I am not sure why this is so difficult for people to understand: when businesses are not hiring and families are cutting back having federal government (state and local governments are already cutting back) also cut back doesn’t help. Don’t confuse the finances of the federal government with that of businesses or households - they are very different. Even a conservative organization like the International Monetary Fund recognizes that austerity will not help with economic growth. But both political parties in Washington are determined to crash the economy again - Pres. Obama is calling for $4 trillion (over 10 years) in spending cuts and tax increases and republicans are calling for $2 trillion in spending cuts. 

We are hearing a lot of bullshit about ‘shared sacrifice’ and ‘balanced approach’. There’s nothing ‘shared’ or ‘balanced’ about cutting from those who have very little and pretending to tax those who can easily shelter income or already have tons of money and who benefited tremendously from government bailouts. Both proposals from supposed opposition parties will not improve the huge income inequality we’re experiencing today but actually may make it worse.

Cuts to social programs and other crazy ideas such as eliminating the minimum wage will only serve to make people more poorer.  This certainly won’t strengthen an economic system or even stabilize it. It would create conditions for serious civil unrest. It’s convenient for some and down right ignorant for other to ignore history. Many of the programs created after the Great Depression and that are under attack today were a response to great civil unrest and to preserve the capitalist system.

Those blinded by ideology persist to the detriment of or possible salvation for poor and working class families. This idea that making people poorer will allow them to pick themselves up by the bootstraps is a joke particularly in an economic system such as ours.  Instead of picking themselves up by their bootstraps their are more likely to revolt.

Here lies my quandary. Austerity will crash the economy and cause great pain to poor and working class families. And out that pain will create an opportunity to overthrow the current economic status quo and organize a new economy. A new economy that at the very least is defined by the following values:

• Prioritizing the well being of people and our environment over profits;
• Creating a more equitable distribution of wealth;
• Providing more and better opportunities for families to improve their living standards;
• Encouraging people to have more control or say over how they work;
• Developing strong and self-sufficient local economies; and
• Encouraging more direct participation by people in the creation of new institutions.

I keep thinking about that quote ‘don’t let a crisis go to waste’. Crises that are so common to our current economic system will lead to an opportunity for great change. Change that can benefit most people and not just a select few.

Good luck

What’s worse: a political system beholden to big money interests such as Wall Street or one that’s totally oblivious to a crisis? Actually, it doesn’t matter because in either case we are screwed. The events leading up to global financial crisis and government’s response to it are prime examples of government in the service of industry - particularly Wall Street. But that wasn’t enough. The global financial crisis, instigated by Wall Street, caused severe job losses from which we really haven’t recovered.  But hey, Washington has more important things to worry about - deficit and federal debt. Damn you pesky people who can’t find jobs.

Today’s June job’s report screams jobs crisis:

• Only 18,000 jobs were added.
• Unemployment rate - 9.2%
• Number of workers unemployed for more than 6 months increased to 6.2 million.
• 250,000 workers dropped out of labor force.
• Last months job numbers were revised lower

Pretty grim numbers. Certainly a cause for concern. But not if you’re in Washington. Washington is to paralyzed by a ridiculous debate over what to cut - that’s right austerity. This debate stumbles on despite more evidence that austerity will not help with economic growth or job growth. Washington doesn’t care about facts. They have (a flawed) ideology to rationalize their actions while the economy burns and families struggle with unemployment.

As if today’s June jobs report wasn’t enough, Economic Policy Institute has a presentation of ten facts about this “recovery”. Here a just a few of them:

1. The real gap in the labor market is now around 11 million jobs.
2. Job growth this recovery outpaces that following the 2001 recession, but is still too slow.
3. The loss of public-sector jobs is a huge obstacle to growth in this recovery.
4. Most of the improvement seen this recovery consists of a decline in layoffs, not an increase in hiring.

President’s advisors don’t seem to worried about these facts. According to David Plouffe, senior advisor to President Obama, voters don’t consider unemployment rate or GDP numbers when voting. He may be right but then he says this:

..they’re going to vote based on: ‘How do I feel about my own situation? Do I believe the president makes decisions based on me and my family?’ ”

Well, right now there are 14.1 million people who are unemployed and I would guess that they’re not feeling too good about their situation right now. Those pesky facts.

Good luck.

In the U.S. this mantra was called various pseudonyms such as ‘trickle down economics’ and practiced by both major political parties. This mantra evolved into a religion - a terrible flawed religion - devoid of reality and requiring a blind faith that it would actually work for most people. It turns out that it only worked for those on the top end of the income ladder. No ‘trickle down’ economics here:

Many believers in TINA tried to convey the idea that capitalism and democracy were the same. They are not. Just take a look at China. China practices capitalism, a very authoritarian form, but I certainly wouldn’t call it a democracy. This false connection is part of the propaganda supporting this religion. Propaganda that includes labeling anything that challenges the status quo as ‘evil’ or ‘socialism or ‘communism’.

After years of devotion to TINA by both political parties and the dominate economic consensus what we have to show for it - huge income inequality, several financial crises (don’t forget Saving & Loan Crisis and Long-term Capital Management crisis), continued destruction of the environment, bigger corporations and ‘too big to fail’ financial institutions that can crash the global economy. We have a government and regulators that serve the interests of big money donors over the interests of the people. We are a plutocracy with a predatory capitalist economic system.

American workers haven’t fared too well under this TINA religion. As Thomas Palley said:

Workers are “boxed in” on all sides by a policy matrix consisting of globalization, labor market flexibility, a focus on inflation rather than full employment, and the erosion of popular economic rights (as exemplified by the 1996 welfare reform act) in the name of “small government.”

The sides of this box are starting to collapse on American workers. Current job situation in the U.S. is characterized by low job growth, low paying jobs and stagnate wage growth. Nothing is being offered to change the economic status quo displayed here:

Source: The State of Working America

The above graph shows that while American workers have been working harder pay has not been keeping up the productivity gains like it use to. Before TINA and deregulation (or labor flexibility) of labor markets income gains and productivity gains were linked - hard work or being more productive was rewarded with higher pay. Not anymore. But who is benefiting from these productivity gains? It is shareholders who are mostly executive managers and top income households.

This TINA religion has been bad for workers. But yet we’ve brainwashed into thinking there is no alternative or that anything else is bad. TINA has a very good propaganda machine behind it.

There are examples all over the world and in even in the U.S.of alternatives to this TINA religion. Examples where people and workers matter more than short-term profit and exploitation of the environment. Examples where the way of doing business is more conducive to democracy than TINA.

Mondragon Cooperative Corporation (Mondragon, Spain)

Mondragon is fifth largest business in Spain and the world’s largest worker owned cooperative. Mondragon operates in the Basque region of northern Spain. People of the Basque region have long fought for their own autonomous region from Spain. Mondragon may be a reflection of this fight for autonomy from an economic standpoint by building a series of cooperatives that serve to economically empower its workers and the region it operates in. Here is its mission statement:

MONDRAGON Corporation is a business-based socioeconomic initiative with deep roots in the Basque Country, created for and by people and inspired by the Basic Principles of our Co-operative Experience. It is firmly committed to the environment, competitive improvement and customer satisfaction in order to generate wealth in society through business development and the creation of, preferably co-operative, employment, which:

• Is based on a firm commitment to solidarity and uses democratic methods for organisation and management.
• Fosters participation and the involvement of people in the management, profits and ownership of their companies, developing a shared project which unites social, business and personal progress.
• Fosters training and innovation through the development of human and technological skills, applying its own Management Model aimed at helping companies become market leaders and fostering Co-operation.

Emilia-Romagna, Italy

Emilia Romagna, Italy is an administrative region in northern Italy with Bologna, Italy as its capitol and largest city. Emilia–Romagna today is considered as one of the richest and most developed regions in Europe and has the third highest GDP per capita in Italy. Bologna, the region’s capital, has one of Italy’s highest quality of life, and has highly advanced and modern social services. This region also has an incredibly strong cooperative economy:

More than half the population are co-op members. Coops—including employee-owned businesses—employ 10% of the workforce and generate, according to University of Bologna economist Stefano Zamagni, about 30% of the GDP in the region and up to 60% of the GDP in some cities like Imola. In Bologna itself, 15 of the 50 largest businesses are coops, and coops employ 25,000, or 10% of the labor force. Housing co-ops and consumer co-ops are so numerous that they hold down prices, and most privatized social services are provided by employee co-ops (including 60% of home health care services).  Flavio del Bono,  the regional finance minister, tells foreign visitors point blank that “the massive presence of cooperative firms is a stabilizing factor in the regional economy.”

Evergreen Cooperatives (Cleveland, Ohio)

A group of local organizations, foundations, banks and City of Cleveland helped form worker owned cooperative centering on the idea that many cities have ‘anchor’ institutions such as hospitals and universities and need services that can be provided by locally owned businesses. Evergreen Laundry Cooperative and other planned cooperatives, all relating to environmentally friendly practices, are 100% owned by workers and community members:

In the midst of this urban distress, the Evergreen Laundry employee-owners will earn a living wage and health benefits. As members of the co-op, they will enjoy greater job security than workers at more traditional businesses, and, after seven years on the job, they will have built an ownership stake of as much as $65,000.

The laundry is the flagship of a wider network of Evergreen Cooperative businesses, part of an effort to transform the quality of life for Cleveland’s low- and moderate-income residents.

There are clearly alternatives to the TINA religion. Alternatives that are working right now. We can build a new economic system if we ever decide to do so. One that is allows for and requires more participation by us. One that facilities community wealth building and self-sufficiency. One that focuses on long-term impacts instead of short-term ones. One that prioritizes the well-being of people and the environment over profits. We can do this.

Good luck.

Keep in mind that previous votes to increase the debt ceiling were never this contested and debating how much to cut from social security and medicare is not necessary to raise it. There is definitely a political reason for this - the desire to obliterate social security and medicare, tank the economy and try to pin it on President Obama. Of course, President Obama is providing an easy target by not establishing a line in the sand.

Anyway. The debt ceiling is an old relic of the U.S. gold standard - a monetary system backed by gold. In 1933 FDR and U.S. congress took U.S. off the gold standard meaning U.S. no longer exchanged dollars for gold with general public. However, U.S. did belong to the Bretton Woods System created during the Great Depression and World War II. Under this system U.S. would exchange gold at a fixed price (ex. $35/ounce) for U.S. dollars with other governments. In 1971, Richard Nixon ended the Bretton Woods exchange system which effectively created the fiat currency system we have today.

But we still have this section of the U.S. Code on the books (31 USC Sec. 3101(b)):

The face amount of obligations issued under this chapter and the face amount of obligations whose principal and interest are guaranteed by the United States Government (except guaranteed obligations held by the Secretary of the Treasury) may not be more than $12,394,000,000,000, outstanding at one time, subject to changes periodically made in that amount as provided by law through the congressional budget process described in Rule XLIX of the Rules of the House of Representatives or otherwise.

That one number in the above United States Code is what is being debated. Under the gold standard having a debt ceiling was important since U.S. couldn’t issue more money than it had in gold. This self-imposed constraint was necessary.  But not now. There is no economic reason for the debt ceiling.

With a fiat currency system the only thing backing U.S. dollar is the full faith and credit of federal government. Basically the U.S. dollar and federal debt obligations (mostly treasury securities) addressed in debt ceiling provision are just different forms of debt. The difference being treasury securities pay interest. Both are not needed for federal government to spend.

Seriously, federal government could continue to spend by simply crediting bank accounts without ever having to issue more debt. Federal spending is basically an electronic credit to deposit account somewhere or accounting entry nothing more. This doesn’t mean that federal government should go hog wild with spending. There are two constraints that can prevent that from happening: inflation and federal budgetary process (actually there’s another unnecessary self-imposed constraint that Prof. Wray addresses here).

Regardless of the final outcome of this debt ceiling fiasco one thing appears certain - that poor and working class families will be the ones paying the price for it.

Good luck.