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Reich is Right

$$$$$ Broke $$$$$

Ex Clinton administration Labor Secretary Robert Reich makes an important point when he says that we’re all about broke.
Reich is co-founder of the American Prospect magazine. He also offers weekly comments for NPR’s “Marketplace.” His insightfulness and straight thinking always was impressive and this commentary (see title link) is no exception. To paraphrase his main points:
  1. Consumer confidence has not completely bounced back from Hurricane Katrina. People say they will spend less during the holidays.
  2. The economy is not booming. Business are laying people off and pay isn’t good enough.
  3. Men’s hourly pay dropped; many spouses went to work, but family budgets are still running short. And workers now put in many more hours on the job, more even than the Japanese.
  4. Another way we have tried to cope is to take equity out of our homes. Reich reports that we pulled $600 billion by refinancing. And Americans are going more deeply into debt; it is at a record high level.
  5. For the past 5 years we have spent more than we earned; and about to retire baby boomers will soon have to start saving.

As Reich puts it,

Put it all together and you see why we’re running on empty. We’re busted. We’ve exhausted all the coping mechanisms for spending more. Our buying binge has to come to an end.

I am concerned about all our adult children’s pocketbooks. Their generation is having to work harder to get ahead and stay ahead than we did; saving anything at all is impossible for many. The ranks of the very rich are growing; the middle class is shrinking. Poverty and hunger are growing problems. Couples are exhausted and many are very worried. Credit card companies are thriving as interest rates creep up. Bankruptcy has been made much more difficult for those who have absolutely no other answer. Far too many do not have health insurance.And it is the younger workers are supporting those of us who are now retired and on fixed incomes and Medicare. For that I have eternal gratitude; just know that I worry about your current circumstances.

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