Category Archives: Wealth

Chart of the day II: Ill prepared for tough times


Amidst growing economic uncertainty and signs of yet another crash to come, young Americans have few resources to fall back on, and virtually no savings.

From Visual Capitalist:

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H/T to Undernews.

Steve Breen: The Hillary Clinton makeover


From the editorial cartoonist of the San Diego Union-Tribune:

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And the story behind the cartoon from United Press International:

The Clinton Foundation will stop accepting all foreign donations and former President Bill Clinton will step down from running the charitable organization if Hillary Clinton wins the presidency, the group said.

The Clintons have faced criticism from Republicans for alleged “pay-for-play” arrangements between foundation donors and Hillary Clinton’s State Department while she was secretary. Emails obtained by a conservative group showed Douglas Band, a top adviser to Bill Clinton, seeking to arrange access for a donor to American diplomats in Lebanon. That same adviser also tried to land a job for a former foundation employee at the State Department.

Neither of those requests were sent to Hillary Clinton directly, but several of her top aides responded, saying they would try to help.

The Clintons have denied that any financial donations to their family foundation prompted official action by the State Department. A spokeswoman for the department also downplayed the emails, obtained by the group Judicial Watch, which filed a freedom of information lawsuit against the State Department to gain access to Clinton’s emails.

The Washington Post has more:

More than half of the Clinton Foundation’s major donors would be prevented from contributing to the charity under the self-imposed ban on corporate and foreign donors the foundation said this week it would adopt if Hillary Clinton won the White House, according to a new Washington Post analysis of foundation donations.

The findings underscore the extent to which the Clintons’ sprawling global charity has come to rely on financial support from industries and overseas interests, a point that has drawn criticism from Republicans and some liberals who have said the donations represent conflicts of interest for a potential president.

The analysis, which examined donor lists posted on the foundation’s website, found that 53 percent of the donors who have given $1 million or more to the charity are corporations or foreign citizens, groups or governments. The list includes the governments of Saudi Arabia and Australia, the British bank Barclay’s, and major U.S. companies such as Coca-Cola and ExxonMobil.

The foundation’s announcement drew skepticism Friday from the right and the left as critics wondered why the Clintons have never before cut off corporate and overseas money to their charity — and why they would wait until after the election to do so.

IMF sounds the alarm for the U.S. economy


It’s bad, and getting worse.

From Xinhua:

The U.S. economy risks getting stuck in a prolonged period of low-growth amid slowing productivity and a shrinking middle class, the International Monetary Fund (IMF) has warned.

The U.S. economy grew at an annual rate of 1.2 percent in the second quarter this year, following a downwardly revised 0.8 percent gain in the first quarter, according to the U.S. Department of Commerce. That marked the third straight quarter in which the U.S. economy grew at lower than 2 percent, the weakest period in four years.

The weaker-than-expected economic data underscores the continuing frustration about the current U.S. recovery, which has repeatedly failed to shift to higher gear in the past seven years.

The U.S. economy has grown at an average pace of 2.1 percent since the recession ended in the mid-2009, registering the weakest U.S. economic expansion since World War II. During the postwar period up to the current recession (1947-2007), the average annual growth rate for the United States was 3.4 percent.

The IMF warned in June that the United States faces “potentially significant longer-term challenges” to strong and sustained growth, including a shrinking labor force and middle class.

Recoveries grow increasingly feeble

A report from the Economic Policy Institute reveals that recoveries are slower with each succeeding recession:

BLOG Econ 2More from the EPI:

One key gauge of the severity of recessions is the output gap, which measures the difference between the economy’s actual output and its potential output if all resources (including workers) were fully employed. At the trough of the Great Recession in June 2009, the output gap was 7.1 percent, equivalent to over a trillion dollars. The only larger output gap in the postwar period was the 7.6 percent gap recorded at the trough of the early 1980s recession in the last quarter of 1982. Cumulatively, the losses over the Great Recession and the sluggish recovery dwarf even those from the early 1980s recession. The output gaps at the trough of the early 1990s recession (the first quarter of 1991) and that of the early 2000s (the final quarter of 2001) were 2.6 and 1.8 percent, respectively.

And the gold goes to. . .

From the World Socialist Web Site:

Hundreds of retail stores have been shut over the past two years as the impact of relentless cuts in wages and pensions and the permanent destruction of decent-paying jobs, combined with sweeping cuts in social programs, have thrown tens of millions of working class families into poverty or near-poverty. The bankers and speculators have placed relentless pressure on the chains to cut costs and increase profit margins at the expense of their employees and the general public.

The surge in stock and bond prices both in the US and internationally, which has further enriched the capitalist elite, has come amid mounting indications of stagnation and slump in the real economy and a worsening social crisis. Economic growth in the US, Europe, Japan and China has slowed to a crawl. New figures released Friday pointed to a slowdown across the entire Chinese economy, with factory output, business investment and retail sales all failing to meet economists’ projections.

The euro zone economy grew by a paltry 0.3 percent in the second quarter, with Italy failing to register any growth and the German economy expanding at a reduced rate.

Gross domestic product in the US is barely increasing, rising only 0.8 percent in the first quarter and 1.2 percent in the second. Both labor productivity and business investment are falling sharply, reflecting the systematic diversion of resources from productive investment to financial speculation and parasitic activities such as stock buybacks, dividend increases and mergers and acquisitions.

US corporations, flush with cash extorted through the slashing of wages and benefits and the imposition of speedup, are hoarding $1.9 trillion. They refuse to invest in new plants and equipment that could provide decent jobs and address the decay of the country’s bridges, roads, schools and housing because the profit margins are too low, preferring instead to speculate on the market and buy back their own stock to increase the take of big investors and inflate the bonuses of top executives.

More from the Associated Press:

Income inequality has surged near levels last seen before the Great Depression. The average income for the top 1 per cent of households climbed 7.7 per cent last year to $1.36 million, according to tax data tracked by Emmanuel Saez, an economics professor at the University of California, Berkeley. That privileged sliver of the population saw pay climb at almost twice the rate of income growth for the other 99 per cent, whose pay averaged a humble $48,768.

But why care how much the wealthy are making? What counts the most to any family is how much that family is bringing in. And that goes to the heart of the income-inequality debate: Most Americans still have yet to recover from the Great Recession, even though that downturn ended seven years ago. The average income for the 99 per cent is still lower than it was back in 1998 after adjusting for inflation.

Meanwhile, incomes for the executives, bankers, hedge fund managers, entertainers and doctors who make up the top 1 per cent have steadily improved. These one-percenters account for roughly 22 per cent of all personal income, more than double the post-World War II era level of roughly 10 per cent. One reason the income disparity is troubling for the nation is that it’s thinning out the ranks of the middle class.

Incomes in California follow the pattern

The Golden State is, increasing, golden for those at the top, lead for those below.

Consider this graphic from the Public Policy Institute of California:

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More from the Institute:

Over the past three decades, the distribution of pre-tax cash income in California has been driven by broad, long-term economic forces—although economic booms and busts also figure in. We can track changes in the spread of incomes since 1980 by measuring family incomes at the top, middle, and bottom of the ladder.

Top income levels (at the 90th percentile) were 39.7 percent higher in 2014 than they were in 1980, while low incomes (at the 10th percentile) were 18.6 percent lower. The middle-income level (at the 50th percentile) in California is a mere 5 percent higher than it was in 1980.

California’s economy has experienced a number of boom-and-bust cycles in the past three decades, and incomes across the spectrum have clearly been affected by the gains and losses of these cycles. However, their effects have been uneven. Top incomes have contracted in bust periods, but they have typically rebounded fairly quickly and have gained additional ground. Over the long term, top incomes have increased well beyond 1980 levels. Middle incomes gained some ground in the late 1990s and early 2000s, rising roughly 10 percent above 1980 levels, but these gains disappeared during the last recession. Low incomes declined the most during each of he major recessions since 1980 (early 1980s, early 1990s, and late 2000s) and did not rise above 1980 levels during recovery periods. In 2006, after the growth period of the late 1990s and early 2000s, the 10th and 20th percentiles of income had rebounded to 1980 levels, but the Great Recession took hold soon after. These trends at the bottom, middle, and top of the income ladder add up to a long-term divergence of family incomes in California.

According to the most recent data (from 2014), the median family income before taxes and adjusted to represent a family of four in California is about $69,000. Incomes at the bottom are $15,000 or less, while the top incomes are $198,000 or more.

Corporations pay no Olympic taxes; winners do


If the Olympics were portrayed as they really are, its corporations who would be the gold medal winners.

As for the athletes, well, they’re the losers — especially the ones who won.

First, the corporate winners, via teleSUR English [emphasis added]:

The exemption, which lasts until Dec. 31, 2017, excludes from taxes revenue generated by advertising, product sales, imports and any other activity related to the organization of the games.

“It is yet another manifestation of the privileges that multinationals worldwide have today,” said Antonio Martins, director of the alternative Brazilian news outlet Outras Palavras. “And it’s not an isolated event, which is limited to a sports mega event,” he told the BBC.

Brazil has 37 million people living in extreme poverty, its economy is currently in recession and the interim government of Senate-imposed President Michel Temer has approved a fiscal austerity program. Meanwhile, the country is expected to lose about a billion dollars in tax revenue thanks to the exemption, according to BBC.

According to Naomi Fowler of the Tax Justice Network, the tax exemption on corporations is a precondition forced on any candidate to host a world sport event.

And the losers are. . .the winners

At least that’s the case for American athletes

From BBC News:

American Olympians are subject to a so-called “victory tax” – a tax on both the money they receive from the Olympic committee for winning and on the value of the Olympic medal.

What are they taxed on?

US athletes who win a medal at the Rio games will take home the hardware and a cash bonus from the US Olympic Committee.

Gold medallists will receive $25,000, silver medallists get $15,000, and bronze winners earn $10,000.

Those winnings are taxed as income, the same way Americans are taxed on other prize money, like lottery winnings. Most countries exempt their athletes from these taxes.

So, let’s see if we’ve got this right.

Corporations, who get to use the Olympics to peddle their wares and make huge profits from sales at the events, get off without paying taxes, while the athletes, the very reason for the Olympics, are thoroughly taxed.

Anyone see anything wrong with this?

America’s ethnic wealth divides are growing deeper


BLOG Wealth

The chart is from a sobering new report from the Institute for Policy Studies: The Ever-Growing Gap: Without change, African-American and Latino families won’t match white wealth for centuries.

Key findings from the report:

  • Over the past 30 years, the average wealth of White families has grown by 84% — 1.2 times the rate of growth for the Latino population and threetimes the rate of growth for the Black population. If the past 30 years were to repeat, the next three decades would see the average wealth of White households increase by over $18,000 per year, while Latino and Black households would see their respective wealth increase by about $2,250 and $750 per year.
  • Over the past 30 years, the wealth of the Forbes 400 richest Americans has grown by an average of 736% — 10 times the rate of growth for the Latino population and 27 times the rate of growth for the Black population. Today, the wealthiest 100 members of the Forbes list alone own about as much wealth as the entire African-American population combined, while the wealthiest 186 members of the Forbes 400 own as much wealth as the entire Latino population combined. If average Black households had enjoyed the same growth rate as the Forbes400 over the past 30 years, they would have an extra $475,000 in wealth today. Latino households would have an extra $386,000.
  • By 2043 — the year in which it is projected thatpeople of color will make up a majority of the U.S. population — the wealth divide between White families and Latino and Black families will have doubled, on average, from about $500,000 in  2013 to over $1 million.
  • If average Black family wealth continues to grow at the same pace it has over the past three decades, it would take Black families 228 years to amass the same amount of wealth White families have today. That’s just 17 years shorter than the 245-year span of slavery in this country. For the average Latino family, it would take 84 years to amass the same amount of wealth White families have today — that’s the year 2097.

Next, an interview by The Real News Network‘s Kim Brown of one of the authors of the report, Josh Hoxie , who heads the institute’s Project on Opportunity and Taxation:

A Post-Racial Society With a Racial Wealth Divide?

From the transcript:

HOXIE: Historical policy definitely has played a role in contributing to the racial wealth gap. And one of the interesting things about studying wealth is that it’s really where the result of past policy meets the present that’s impacting people’s lives. So income can tell us a snapshot of where people are at right now, but wealth really gives us that longitudinal view. And as you pointed out, the historical public policies in this country have contributed directly to the growing racial wealth gap we’re witnessing today. And unfortunately, current policies that we have right now also contribute to the racial wealth gap we see today.

Just one example of that is the tax expenditures that we see come out of Congress year-in, year-out, which now total over half a trillion dollars, $600 billion, to be exact. So we’re seeing this money come out that’s designed to be helping people generate wealth. It’s for retirement savings, it’s for home ownership, it’s for things like saving for your child’s college. But the problem is that it’s being skewed into fewer and fewer hands, people at the tippity-top of the economic spectrum who don’t need huge subsidies in order to maintain or generate wealth. People at the bottom are not getting the same amount of help, or anywhere near the amount of help that people at the top are getting.

BROWN: And your report notes that, that there has been tremendous accelerated wealth, growth by the top 1 percent of Americans. You cite the Forbes 400 and you say that they have seen wealth gains of over 700 percent in the last 30 years. I’m curious, because most of the Forbes 400 are white Americans, now, if you were to somehow exclude these very wealthy hundreds of people from this equation, does that change the wealth gap at all? Does that shrink it between when you’re looking at average black, white, and Latino families? Or is the gap still about the same?

HOXIE: Well, it’s certainly true the wealth has concentrated over the past 30 years in an incredible amount into the tippity-top of the economic spectrum. The Forbes 400, as you mentioned, had an average wealth gain of over 700 percent. For context, that’s 10 times faster than the rate of growth for an average Latino family and 27 times the rate of growth for an average black family. So no doubt that money has been concentrating significantly.

And to you direct question, I think there is a role that money concentrating at the top plays in driving the averages up for white families. Because if we look at the median income, or median wealth, excuse me, black wealth over the past 30 years for the median family has actually gone down. So we talk a lot in this report about the average family which, you know, the statistical average is being pulled up by those at the top, and the same is true for white families.

Now, the median white family has gone up, but less than the average, which implies that the top of the spectrum is pulling up that average. But for the black median family and for the Latino median family those rates have been going down. So what we’re seeing is that a typical family that you see on the street is not doing as well as they were 30 years ago when it comes to generating and maintaining wealth.

What more to say?

California history, marketed as a teardown home


There’s a house for sale in Pacific Palisades, one of the most exclusive communities in the Los Angeles area. It’s located at 1550 San Remo Drive, just a two-minute drive from the house at 1669 San Onofre Drive, where esnl interviewed Nancy Reagan in 1979 as her husband was running for president.

The home on San Remo is now up for sale and the asking price is a mere $14,995,000. Here’s how the broker, Coldwell Banker, describes the property [emphasis added]:

First time on the market in almost 65 years! Park-like grounds with lush forest solitude on almost a full FLAT ACRE on one of the most desired streets in the Pacific Palisades Riviera. Extreme privacy surrounded by mature trees and landscaping provides amazing serenity coupled with incredible city lights views. Create your dream estate or remodel and expand the existing home in the ultra-exclusive upper Riviera neighborhood. It’s like living in your own private reserve!

There’s only one thing missing from the enthusiastic sales pitch.

Unlike the Reagan’s home, which was a gift from General Electric, given to the future president in 1955 as a reward for Reagan’s role as a corporate shill after his cinematic career hit the skids, the home on San Remo was built and paid for by the labors of Thomas Mann, the Nobel Prize-winning author of some of the most important works of fiction of the 20th Century.

The artist in exile

Mann had fled Hitler’s Germany to take up residence in the United States, settling into his new home in the Palisades to do what he did best, write.

It was within these walls that he created what may be arguably his finest work, Doctor Faustus, a powerful novel encompassing the trends of the early 20th Century that gave rise to fascism.

As playwright and poet Sean O’Brien wrote in an essay on the novel for the Independent:

It is a novel of ideas of a kind rarely found in English, but sees thought and art as inseparable from character. It is in a sense the story of the early 20th century in the light of Fascism and modernism, yet neither history nor the individual is sacrificed to allegory.

Mann at work in his Pacific Palisades study. Mann at work in his Pacific Palisades study, via the Literaturarchiv und Bibliothek in Munich..

Mann at work in his Pacific Palisades study. Mann at work in his Pacific Palisades study, via the Literaturarchiv und Bibliothek in Munich..

The media take note

But now Coldwell Banker is peddling it as a teardown, valuable mainly for the land it occupies.

From today’s Los Angeles Times:

Although the language in the listing — “Create your dream estate or remodel and expand the existing home in the ultra-exclusive upper Riviera neighborhood” — hedges its bets a bit, Joyce Rey, the agent representing the seller, was more direct in a phone interview, saying she had a hard time imagining that any potential buyers would be interested in its history.

“The value is in the land,” she said. “The value is not really in the architecture, I would say.”

>snip<

The house is not one of L.A.’s official historic-cultural monuments, though it is listed as a “historic resource” in a larger inventory called SurveyLA. A new citywide ordinance requires that owners seeking to demolish houses older than 45 years provide notice to neighbors and the local city council office at least 30 days in advance. But in general there are limited protections for most residential buildings in Los Angeles, even those with notable architectural pedigrees.

Rey said the seller, whom she declined at least for the time being to identify, was not interested in opening the house to preservationists or journalists.

The home is notable in its own right, designed for Mann by fellow German emigre J.R. Davidson, one of the seminal figures in creating the L.A. style of architecture that resulted in some of the region’s most influential designs of the mid-20th Century.

He was first to create homes with floor to ceiling windows and sliding glass doors, features that would become virtually standard in California’s temperate climate.

Mann and his family outside their San Remo Drive home. Source.

Mann and his family outside their San Remo Drive home. Source.

Reaction from Germany comes fast and furious

Needless to say, the German cultural community is outraged. All of Mann’s European homes have been spared the wrecking ball and are revered as national landmarks, a designation which somehow was never sought for his home on the California coast.

Deutsche Welle reports:

Despite the home’s outward appearance, Jürgen Kaumkötter, curator of the recently founded Center for Persecuted Arts in Solingen#, says the villa should be saved at all costs. He’s gone so far as to demand that the German government buy the property in order to prevent the demolition of this historical house.

“The building could serve as a meeting ground for young writers,” Kaumkötter said, “perhaps in combination with the Villa Aurora (the former home of German-Jewish novelist and playwright Lion Feuchtwanger)” If Germany wants to have an international outlook, it should also provide some room for critical thinkers.

That view is echoed by Jürgen Serke, a Hamburg-based collector of art and literature and the author of “Die verbrannten Dichter” (“Burned poets”). He thinks German Culture Minister Monika Grütters should give the idea some thought; in his view, there is plenty of money to finance this proposal. He believes a demolition of the villa would be a great shame for Germany, with Mann being the most significant German author of the 20th century.

>snip<

The lawyer who purchased the house from the Mann couple when they returned to Europe in 1952 knew quite well that what he had bought was an important site for German culture and intellectual history. He marked the spot with a bronze plaque featuring a profile of Thomas Mann, explaining in English and German the significance of the home.

In Los Angeles, land in rich enclaves like the Palisades is often “worth: more than the homes occupying it, and some of the city’s greatest and most significant houses and other buildings have fallen to the wrecking ball.

To allow Mann’s home to follow that same tragic trajectory would nothing less than sinful.

ChevronTexaco’s deadly Ecuadorian legacy


During our years reporting for the Berkeley Daily Planet, we wrote any number of stories about the Chevron refinery in nearby Richmond on the shores of San Francisco Bay.

As the dominant economic power in a city on of the region’s poorest city, one with a large minority population and in a state of economic implosion, the company was the target of considerable community concerns about fires [they had ‘em] and pollution.

The firm was represented by Willie Brown, the former powerful speaker of the lower house of the legislature of the richest and most populous state in the country, the same Willie Brown casino developers hired to sell the black population of Atlantic City on the ballot measure that legalized casinos there. Willie promised them jobs and good housing; they got neither.

Sophisticated at public relations and press-spinning, Chevron played a dominant role in funding city council elections and turning out supporters, sometimes financed by contributions to churches and other organizations, to ensure their messages got across at city council meetings.

But Richmond’s concerns pale compared to those experienced by thousands of Ecuadorians, the subject of former Bay Area journalist Abby Martin’s latest episode of her series for teleSUR English:

The Empire Files: Chevron vs. the Amazon – Inside the Killzone

Program notes:

A U.S. court just handed another victory to the oil giant Chevron Texaco, in its decades-long battle to avoid paying damages it owes in one of the worst environmental disasters in history. In the Ecuadorean Amazon, the most biodiverse area of the world, the energy titan deliberately poisoned 5 million acres of pristine habitat and subjected tens of thousands of indigenous peoples to destruction of their health and culture. In Part 1 of ‘Chevron vs. the Amazon,’ Abby Martin takes The Empire Files inside Chevron Texaco’s Amazon killzone to see the areas deemed “remediated” by Chevron, and spoke with the people living in the aftermath.