It's a Good Thing

It's a good thing we're in a recovery and there's no real prospect of another downturn (at least that's what Wall Street "strategists" and politicians keep telling us). Otherwise, reports like these might be a cause for concern:

"Pawn Shops Go Upscale for Affluent Clients" (USA Today)

Maybe it's the original artwork displayed around the office or the soft lighting, paneled walls, Persian rugs and leather furniture. The receptionist adds to the aura, too. So does the TV screen turned to a financial-news channel.

Whatever the reason, Biltmore Loan and Jewelry feels more like a stock brokerage or private-banking office than a pawn shop.

...

"We want to give people a professional option with dignity," said David Goldstein, Biltmore's president and a veteran jewelry retailer. "We're private, quick and discreet."

Pawn-brokering might be associated more with dingy storefronts cluttered with junk and customers desperate to scrape up enough cash for groceries or rent. But the recession, credit crunch and slow economic recovery have hit Americans up and down the socio-economic ladder, and that has created an opportunity to serve a more high-end clientele for firms like Biltmore.

"We're seeing an increase in these kind of stores in Beverly Hills and other affluent neighborhoods," said Emmett Murphy, a spokesman for the National Pawnbrokers Association. "People in all walks of life are in need of short-term credit."

"U.S. Economic Confidence Falls to Lowest Since January" (Gallup)

Americans' economic outlook weakens more than ratings of current conditions

PRINCETON, NJ -- Gallup's U.S. Economic Confidence Index averaged -27 for the week ending July 15, down four points from -23 each of the prior two weeks. This extends a gradual decline in confidence that has been underway since late May, when the index was at a four-year best of -16. The index was nearly this low a month ago -- at -26 in mid-June -- and now stands at the lowest weekly average since late January of this year.

"Americans Joining Disability Now Outpacing Americans Finding Jobs" (The Weekly Standard)

A new chart set to be released by the Republican side of the Senate Budget Committee details an alarming fact: In the last three months, more Americans have joined disability than have found a job:

As the chart shows, between April-June 2012, an estimated 246,000 Americans were added to Social Security's disability insurance program. In that same time period, only 225,000 American jobs were created.

These alarming numbers, though, are part of a wider trend, as another chart, also set to be released later today, from the Republican side of the Senate Budget Committee shows:

As this chart shows, since 2008, 3.6. million Americans have been added to Social Security's disability insurance program. In that same time period, a net total of 1.3 million jobs were lost.

"Fewer U.S. Companies Planning to Hire; Europe Looms: Poll" (Reuters)

American companies are scaling back plans to hire workers and a rising share of firms feel the European debt crisis is taking a bite out of their sales, a survey showed on Monday.

Only 23 percent of the firms polled in June plan to add to staff in the next six months, the National Association for Business Economics said on Monday.

NABE's prior survey, conducted in late March and early April, had shown 39 percent of companies planning to add workers.

Already, hiring by U.S. companies has slowed dramatically in recent months as employers worry about a sagging global economy hurt by Europe's snowballing debt crisis.

"Fiscal Crisis in States Will Last Beyond Slump, Report Warns" (New York Times)

WASHINGTON — The fiscal crisis for states will persist long after the economy rebounds as states confront financial problems that include rising health care costs, underfunded pensions, ignored infrastructure needs, eroding revenues and expected federal budget cuts, according to a report issued here Tuesday by a task force of respected budget experts.

The severity of the long-term problems facing states is often masked by lax state budget laws and opaque accounting practices, according to the report, an independent analysis of six states released by a group calling itself the State Budget Crisis Task Force. The report said that the financial collapse of 2008, which caused the most serious fiscal crisis for states since the Great Depression, exposed a number of deep-set financial challenges that will grow worse if no action is taken by national policy makers.

“The ability of the states to meet their obligations to public employees, to creditors and most critically to the education and well-being of their citizens is threatened,” warned the two chairmen of the task force, Richard Ravitch, the former lieutenant governor of New York, and Paul A. Volcker, the former chairman of the Federal Reserve.

"ZIRP Strikes Again: Pension Under-Funding For S&P 500 Companies Hits Record" (Zero Hedge)

The public pension and retirement 'schemes' are in considerable trouble (as we noted here and here) and now, according to a recent S&P study, private companies are at record levels of pension under-funding. Fiscal 2011 shows that the under-funded level for S&P 500 companies' defined pensions reached an epic $354.7 billion - an increase of over $100 billion from 2010 and surpassing the 2008 record of $308.4 billion - and OPEB under-funding reached $223.4 billion. An aggregate $578 billion or 29.5% underfunding or the $1.96 trillion in obligations is increasing as the rates of return are reduced thanks to yet more unintended consequences of the Fed's ZIRP and perhaps most worrying is there comment that "The American dream of a golden retirement for baby boomers is quickly dissipating; plans have been reduced and the burden shifted with future retirees needing to save more for their retirement. For many baby-boomers it may already be too late to safely build-up assets, outside of working longer or living more frugally in retirement."

S&P 500 Pension Underfunding Compared to Market Level

Don't worry, be happy. It's all good.

Comments

[Marion Shaw]

One of the most useful classes I
ever took in college, decades ago,
was in "personal finance" . It was
taught by a visiting teacher who was not academically inclined. I
always remembered his admonition:
"Ladies (for it was an all girls
school), if you find yourself in a
pawnshop, to solve your economic
problems, you are in very serious
trouble. Make no mistake about it."

[Rocky]

Michael, are you suggesting by the graphs that it is somehow Obama's fault? Maybe he will end up losing the election because of these horrible statistics, but many of the seeds were sown during the Bush 43 administration. The push towards financial deregulation and anything goes capitalism dates at least to the Clinton administration when Glass-Steagall was repealed by Congress.

Next month marks the 20th anniversary of Patrick Buchanan's culture wars speech at the Republican convention of 1992. The culture wars were good for some Republican politicians but bad for many if not most Americans. They distracted voters from the issues that really impact their lives with bogus issues such as gay marriage and abortion.

We are a divided country. As Lincoln said before the Civil War, "A house divided against itself cannot stand." The butcher's bill has now come due.

[gardener1]

"A house divided against itself cannot stand." The butcher's bill has now come due.

I love mixed metaphors.

[Anon]

I defer to nobody in my loathing of Obama, but the issues here are systemic and, yes, the seeds were planted years ago.

[Tom]

Oh, it's a lot worse than that:

http://guymcpherson.com/2012/07/global-madness/

[fraud is a necessary evil]

One-on-One with Paul Craig Roberts

Former Assistant Treasury Secretary Paul Craig Roberts says, “The last thing the banks want is a rise in interest rates that would drive down the values of their holdings and reveal large losses masked by rigged interest rates.” The Libor rate rigging scandal was all about keeping the financial system and the big banks from failing. Forget prosecuting the perpetrators because Roberts says, “The minute those interest rates go up, the loss to people will just dwarf the interest rate loss.” Fraud is now part of the system that keeps it from crashing. Roberts has a PhD and was responsible for economic policy at the Treasury. He says, “We are probably headed for a crash anyway because I don’t think they can maintain this forever.”

http://usawatchdog.com/one-on-one-with-paul-craig-roberts-2/

[roger]

Not a good thing!
The Walton family was worth $89.5 billion in 2010, the same as the bottom 41.5 percent of U.S. families combined, according to Josh Bivens of the Economic Policy Institute. That's 48.8 million American households in total.
And you WONDER what is wrong with the US?

[wild]

hummph, I guess it is purely political then...this disability application increase. The circus in washington is fun to watch, but the reality is tipsy exxon valdez, gmo-monsanto, & radioactive jap sunami,~~sigh~~the list could be much much informative basis of disabilities but I'll just settle for a big plate of New Orleans gumbo, before I too sign on for disabilities, if nothing else just to give my Republican friends another reason in avoidance of the obvious.

hahahaarofl

wild;)

[sharonsj]

The Eurozone will eventually fail but I wonder if TPTB will still find ways to prop up our stock market and banks. I have yet to figure out how the Fed gave trillions to the international banks without any congressional approval. I have yet to figure out how, when the Asian stock market tanked about a decade ago, our stock market barely felt a ripple.

Obviously these fuckers have been screwing us for a long time. Both the banks and the politicians are getting rich off taxpayer money. And when you run out of money, they just take everything else you own. P.S. With climate change, they'll be charging you for the water you drink next, and you'll pay it or die.

Lastly, I wonder why there aren't thousands of Americans rioting in the streets.