Land Of The Free, The Brave, And The Ignored Living In Abject Poverty
There are times when you read some stats. contained in an article or press release and it leaves you dumbstruck as to how broken and dislocated the financial system appears to be, particularly in the USA. Before we concentrate on the latest USA child poverty figures it’s worth noting another series of stats. The number of ‘millionaires’ and ‘billionaires’ in the USA is breathtaking, underpinning that is a series of five metrics that illustrate just how deep the divisions have burrowed over recent decades, but none more so than over the past decade.
The Top 1 Percent Of Americans Owns 40 Percent Of The Nation’s Wealth.
The Top 1 Percent Of Americans Take Home 24 Percent Of National Income. While the richest 1 percent of Americans take home almost a quarter of national income today, in 1976 they took home just 9 percent, their share of the national income pool has nearly tripled in roughly three decades.
The Top 1 Percent Of Americans Own Half Of The Country’s Stocks, Bonds, And Mutual Funds. The Institute for Policy Studies illustrates this massive disparity in financial investment ownership, noting that the bottom 50 percent of Americans own only 0.5 percent of these investments.
The Top 1 Percent Of Americans Have Only 5 Percent Of The Nation’s Personal Debt. Using 2007 figures, sociologist William Domhoff points out that the top 1 percent have 5 percent of the nation’s personal debt while the bottom 90 percent have 73 percent of total debt.
The Top 1 Percent Are Taking In More Of The Nation’s Income Than At Any Other Time Since The 1920′s. Not only are the wealthiest 1 percent of Americans taking home a tremendous portion of the national income, but their share of this income is greater than at any other time since the Great Depression the Centre for Budget and Policy Priorities reveals.
Today there were figures published by the USA Census revealing the child poverty rates in the USA. Now we can all term poverty “relative”, comparing absolute poverty in the USA to that of areas in India, Africa and Asia is perhaps insulting to those experiencing hardship beyond our imagination, but the fact that the richest country on the planet has allowed a situation to manifest, were over a third of its children are now officially growing up in poverty, is a shocking condemnation of the American ‘way of life’. The number of people living in poverty has reached an all-time high in the United States, despite the country’s position as the wealthiest in the world. Its gross domestic product per capita of $47,184 was 3,095 percent more than India’s $1,477 in 2010.
The number of children in the United States considered poor rose by 1 million in 2010, the U.S. Census said on Thursday, with nearly one in three of the youngest Americans now living in poverty. In 2010, when the Census survey was conducted, 32.3 percent of children across the country were poor, compared to 30.8 percent in 2009. The figures reflect the overall state of the economy. The national poverty rate stands at 15.3 percent and the unemployment rate is at 9 percent some two years after the recession that began in 2007 officially ended.
In 24 states and Washington, D.C., more than 20 percent of those up to 17 years old lived at or below the poverty threshold. The Census found that the percentage of white children in poverty increased in 25 states in 2010 from the year before.
The Census
Children who live in poverty, especially young children, are more likely than their peers to have cognitive and behavioural difficulties, to complete fewer years of education, and, as they grow up, to experience more years of unemployment. White and Asian children had poverty rates below the national average, while black children had the highest poverty rate at 38.2 percent. The poverty rate for Hispanic children was 32.3 percent, and children identified with two or more races had 22.7 percent living in poverty. About one of every three children in poverty lived in one of the four most populous states, each of which saw increases in the number and the percentage of children in poverty between 2009 and 2010.
Whilst these devastating figures hit the newswires Members of a Congress deficit-reduction committee considered scaling back their efforts on Thursday amid a Republican split over taxes and mounting doubts of reaching a deal by next week’s deadline. The 12-member “super committee” has until midnight on Wednesday, the day before the Thanksgiving holiday, to reach a deal to cut U.S. deficits by at least $1.2 trillion over 10 years.
Despite the abject poverty figures the USA Congress is scrambling for ‘smart’ ways to ensure wealth is protected for the elite few by dumping socialised debt obligations onto the poorest. As to how much more of the debt burden this same group of 90 percent, who currently service 73 percent of the total debt, can take on board before collapsing remains to be seen.
Market Overview
The Standard & Poor’s 500 Index lost 1.7 percent to close at 1,216.13 at 4 p.m. in New York, with losses accelerating as it fell below levels watched by traders including its average over the past 100 days. The euro was little changed at $1.3459 after climbing as much as 0.6 percent. The S&P GSCI Index of commodities slid 2.9 percent, the most since September, as silver and gasoline tumbled at least 4.5 percent.
The dollar strengthened against 11 of 16 major peers and the Dollar Index rose for a fourth straight day, rising 0.4 percent to 78.293. Gains in U.S. Treasuries sent the 10-year yield down four basis points to 1.97 percent.
All but four of the 24 commodities tracked by the S&P GSCI Index fell. Oil retreated back below $100 a barrel, falling 3.7 percent to $98.82 after surging to as high as $103.37 earlier. Silver futures tumbled 6.9 percent to $31.497 an ounce.
German Chancellor Angela Merkel said that neither joint euro-area bonds nor using the ECB as a lender of last resort offer solutions to the debt crisis at present.
All the main European bourses saw their indices fall during the two sessions. The STOXX 50 closed down 1.1%, the UK FTSE closed down 1.56%, the CAC down 1.78% and the DAX closed down 1.07%. The equity index futures are looking sick for tomorrow’s session. The UK FTSE is down 1.76% and the CAC is down 1.84% with the MIB down 1.18%. The SPX future is down 0.34%. Crude is down $34 a barrel.
There are no significant economic data releases that may affect sentiment during the morning session.
Source: FX Central Clearing Ltd. (FXCC BLOG)
http://blog.fxcc.com/november-18-am/
Market Commentary by FXCC - Can A Two Speed Europe Be The Route Forward, Or Will The Divisions Render It Unworkable?
UK Prime Minister David Cameron will be warned today that he risks creating an unstoppable momentum behind a “two-speed Europe”, which would be dominated by France and Germany, if Britain seeks to gain political advantage by making demands for too many concessions during the eurozone crisis. In a series of meetings in Berlin and Brussels, the UK prime minister will be advised that Britain should table modest proposals next year when EU leaders embark on a small treaty revision to underpin the euro.
Cameron will have breakfast in Brussels with José Manuel Barroso, the president of the European commission. He will then meet Herman Van Rompuy, the president of the European council, before flying to Berlin to meet Angela Merkel, the German chancellor.
Leading German magazine Der Spiegel reported that Berlin would like the European Court of Justice to take action against eurozone members that break the rules. A six-page German foreign ministry paper, published by Der Spiegel this week, calls for “a (‘small’) convention that is precisely limited in terms of content” to present proposals “rapidly”. These would then be agreed by all 27 members of the EU.
Merkel warned the prime minister at an emergency European council meeting in Brussels on 23 October that she would reluctantly have to side with France if Britain overplayed its hand in the negotiations. Nicolas Sarkozy, the French president, wants a treaty to be agreed among the 17 members of the eurozone, excluding Britain and the other nine EU members outside the single currency.
This would be seen as a major step towards the formalisation of a “two-speed Europe” in which France, Germany and the four other triple A-rated eurozone members would form an inner core. Britain and Denmark, the only two members of the EU with a legal opt-out from the euro, would form the backbone of an outer core.
Europe is running out of options to fix its debt crisis and it is now up to Italy and Greece to convince markets they can deliver the necessary austerity measures, Finnish Prime Minister Jyrki Katainen said.
The European Union cannot restore confidence in Greece and Italy if they don’t do it themselves. We can’t do anything to boost confidence in them. If there are doubts about these countries’ abilities to take sensible and correct decisions on economic policy, no one else can repair that.
Mapping out the possibility of euro exits Katainen said;
It should be discussed when the rules are revamped. It’s no medicine to fix this crisis. Finland can’t lull itself into thinking all is always well here. We must defend our credibility and the stability of our economy. The best guarantee for low yields is to keep our economy in good shape.
Finland and other AAA rated euro nations are becoming more outspoken in their opposition to expanding rescue measures for Europe’s most indebted members. German Chancellor Angela Merkel yesterday rejected French calls to force the European Central Bank to become a lender of last resort. Germany and Finland both oppose common euro bonds as a solution to the crisis.
World stocks fell again on Friday, extending the overnight slide, with renewed pressure on Spanish bonds reflecting fears that the euro zone’s debt crisis was spiraling out of control. Worries over the crisis also prompted investors to shed riskier commodities, after prices took their steepest tumble since September on Thursday.
Spain’s borrowing costs at a sale of 10-year debt soared to their highest in the euro’s history on Thursday, pulling it back into the vortex of a crisis that is increasingly threatening Europe’s second biggest economy France. The new 10-year Spanish bond was yielding 6.85 percent, with traders expecting more upward pressure before the country’s elections on Sunday.
Spanish banks, under pressure to cut property-backed debt, hold about 30 billion euros ($41 billion) of real estate that’s “unsellable,” according to a risk adviser to Banco Santander SA and five other lenders.
Spanish lenders hold 308 billion euros of real estate loans, about half of which are “troubled,” according to the Bank of Spain. The central bank tightened rules last year to force lenders to aside more reserves against property taken onto their books in exchange for unpaid debts, pressing them to sell assets rather than wait for the market to recover from a four- year decline.
Spanish lenders hold 308 billion euros of real estate loans, about half of which are “troubled,” according to the Bank of Spain. The central bank tightened rules last year to force lenders to aside more reserves against property taken onto their books in exchange for unpaid debts, pressing them to sell assets rather than wait for the market to recover from a four- year decline.
Italy’s new government has announced far-reaching reforms in response to a European debt crisis that on Thursday pushed borrowing costs for France and Spain sharply higher, and brought tens of thousands of Greeks onto the streets of Athens. Italy’s new technocrat prime minister, Mario Monti, unveiled sweeping reforms to dig the country out of crisis and said Italians were confronting a “serious emergency.” Monti, who enjoys 75 percent support according to opinion polls, comfortably won a vote of confidence in his new government in the Senate on Thursday, by 281 votes to 25. He faces another confidence vote in the Chamber of Deputies, the lower house, on Friday, which he also expected to win comfortably.
Overview
The euro gained 0.5 percent to $1.3520 after falling the past four days. German Chancellor Angela Merkel rejected yesterday French calls to deploy the European Central Bank as a crisis backstop, defying global leaders and investors calling for more urgent action to halt the turmoil. Merkel listed using the ECB as lender of last resort alongside joint euro-area bonds and a “snappy debt cut” as proposals that won’t work.
Copper dropped 0.3 percent to $7,519.25 a metric ton, having fallen as much as 2.1 percent today. The metal is set for a 1.6 percent decline this week, the third weekly drop. Zinc weakened 0.7 percent to $1,913 a ton and nickel lost 1.1 percent to $17,870.
Market snapshot 10am GMT (UK)
Asian markets closed down in overnight early morning trade. The Nikkei closed down 1.23%, the Hang Seng closed down 1.73% and the CSI closed down 2.09%. The Australian index, the ASX 200 closed down 1.91% for the day, down 9.98% year on year.
European bourses have recovered some of the earlier opening losses, the STOXX is currently flat, the UK FTSE is down 0.52%, the CAC down 0.11% and the DAX down 0.21%. The PSX equity future is currently up 0.52% responding to optimism that the U.S. economy may end 2011 growing at its fastest clip in 18 months as analysts increase their forecasts for the fourth quarter just a few months after a slowdown raised concern among investors. Brent crude is currently up $116 a barrel with spot gold up $6 an ounce.
There are no significant data realises this afternoon that may affect market sentiment.
Source: FX Central Clearing Ltd. (FXCC BLOG)
http://blog.fxcc.com/can-a-two-speed-europe-be-the-route-forward-or-will-the-divisions-render-it-unworkable/
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