Category Archives: Wealth

Headlines of the day: Oh, isn’t that rich? Really rich


“That” being the Trump cabinet.

First from the Washington Post:

Donald Trump is assembling the richest administration in modern American history

  • Trump is putting together what will be the wealthiest administration in modern American history. His announced nominees for top positions include several multimillionaires, an heir to a family mega-fortune and two Forbes-certified billionaires, one of whose family is worth as much as industrial tycoon Andrew Mellon was when he served as treasury secretary nearly a century ago.
  • Rumored candidates for other positions suggest Trump could add more ultra-rich appointees soon.
  • Many of the Trump appointees were born wealthy, attended elite schools and went on to amass even larger fortunes as adults. As a group, they have much more experience funding political candidates than they do running government agencies.

And from BBC News:

Trump assembles America’s ‘richest cabinet’

  • US President-elect Donald Trump took a populist tone on the campaign trail, pledging to stand for a beleaguered working class abandoned by the elite.
  • Mr Trump, of course, brings immense wealth to his new role. The property tycoon’s worth is estimated at $3.7bn (£3bn) by Forbes magazine, with more than 500 businesses in his empire.
  • But he might not be the richest member of his team. His nominee for education secretary, Betsy Devos, is the daughter of Richard DeVos, who founded the Amway retail giant. Forbes puts their family wealth at $5.1bn.
  • Next up is Wilbur Ross, the president-elect’s pick for commerce secretary. Forbes puts the wealth of Mr Ross, who headed Rothschild Inc’s bankruptcy practice before starting an investment firm, at $2.5bn.
  • Mr Ross’s deputy will be Todd Ricketts, co-owner of the Chicago Cubs baseball team, who has an estimated wealth of $1.75bn.

Finally, the front page headline on the New York Times:

Trump Cabinet Choices Signal Embrace of Wall St. Elite

  • Donald J. Trump picked Steven Mnuchin, a hedge fund manager, to run the Treasury and Wilbur L. Ross Jr., a billionaire investor, to head the Commerce Department.
  • The choices have been cheered by investors, but they stand in stark contrast to the populist campaign that Mr. Trump ran.

And while not headlines, two of this morning’s tweets from Sen. Bernie Sanders add some perspective:

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As does the editorial cartoonist of the Los Angeles Times:

David Horsey: Trump gets comfy in the Washington swamp

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Economy: Spain’s Millennials live with parents


While Eurocrats have hailed Spain’s “recovery” from the Great Recession, lauding themselves for accomplishing a miracle with bailout loans from the International Monetary Fund, and European Central Bank, the reality is quite different.

The draconian austerity regime dictated by the by the financial oligarchs effectively destroyed the futures of millions of young Spaniards.

From El País:

For the first time in 12 years, less than 20% of people aged between 16 and 30 are living outside the family home. In the second quarter of 2016, the figure was 19.6%, a 4.84% increase on the period in 2015, says Spain’s Youth Council. It adds that of those who have managed to leave their parents, only 16.7% are living alone.

The official unemployment rate among the under-30s is 34.4%, but the reality is that only two out of every 10 under-24s is working, and more than 55% of them are on short-term contracts, while 60% are earning less than €1,000 a month.

Victor Reloba, of the Youth Council, says that while unemployment has fallen slightly, young people are unable to leave the family home because even if they are in work, they will likely be on zero-hours contracts, short-term contracts, or earning money from a number of different activities. “One in four young people is poor,” he explains.

Most under-30s who have managed to leave home are living in shared accommodation with two or more other people.

Fukushima reactor disaster costs near $200 billion


The latest sobering numbers from Japan Today:

Japan’s trade ministry has almost doubled the estimated cost of compensation for the 2011 Fukushima nuclear disaster and decommissioning of the damaged Fukushima Daiichi nuclear plant to more than 20 trillion yen ($177.51 billion), the Nikkei business daily reported on Sunday.

The trade ministry at the end of 2013 calculated the cost at 11 trillion yen, which was comprised of 5.4 trillion yen for compensation, 2.5 trillion yen for decontamination, 1.1 trillion yen for an interim storage facility for contaminated soil, and 2 trillion yen for decommissioning, the report said.

The new estimate raised the cost of compensation to 8 trillion yen and decontamination to 4-5 trillion yen, the cost for an interim storage facility remained steady, and decommissioning will rise by several trillion yen, it added.

The part of the cost increase will be passed on in electricity fees, it added, citing multiple unnamed sources familiar with the matter.

A parallel story from California

The Fukushima reactor complex was constructed adjacent to the Pacific Ocean coast in a nation known for it’s frequent and furious earthquakes.

Remind you of California?

As we’ve written previously and extensively, California allowed construction of both its commercial power reactor complexes on the Pacific Coast and in areas riddled with earthquake faults.

And when one of the reactor complexes suffered a major breakdown, the Golden State did just as Japan is now doing. They stuck utility customers with the bill.

From a 3 June story in the San Diego Union-Tribune, reporting on the shutdown of the San Onofre reactor complex in northern San Diego County, a project of San Diego Gas & Electric Co.:

According to the utility, customers are on track to save $500 million or more off their share of the original $4.7 billion deal adopted by regulators 19 months ago.

An insurance payout and funding from a federal nuclear decommissioning trust have helped, the utility said. And further reductions in the ratepayer contribution may come if Edison is successful in a lawsuit against vendor Mitsubishi Heavy Industries, and in selling off fuel purchased for the nuclear plant that will no longer be needed.

Consumer advocates criticized Edison’s response to the utilities commission. They said the company cherry-picked numbers to make it appear customers are being charged less than they are.

The critics said that nowhere in the filing does the utility accept responsibility for installing flawed equipment that led to the shutdown of the plant amid a radiation leak in January 2012.

The reason for the shutdown is that the company installed a faulty piping system inside the reactor complex, a set of pipes so flawed that they leaked radioactively “hot” water inside the containment structure.

The whole nuclear power industry was an offshoot of the U.S. nuclear weapons program, and the government lied to the American people in order to get concessions and support run through Congress.

The most notorious lie came in 1954, when the first chair of the Atomic Energy Commission [now the Department of Energy] told science writers that “Our children will enjoy in their homes electrical energy too cheap to meter.”

Those children now have children of their own, and those meters are still clocking up the dollars.

And now when those power stations go flooey [a favorite phrase of esnl’s own dad], the customers are stuck with the bill.

Consider an analogy

You’re in a grocery store when an earthquake hits, hurling all those beer and wine bottles, milk containers, pickle jars, and all the rest smashing to the floor.

Where they break.

Then you go the the checkout line to pay for whatever you’re gathered before the earth moved, only to discover that you’re forced to pay for all that smashed inventory — goods smashed because the store didn’t built in devices to restrain those goods from hurtling into into a catastrophic mess of goo and gunk. . .

Seem fair to you?

Chart of the day: The collapse of Greek retailers


From Elstat, the Hellenic Statistical Authority:

blog-greece

While Greece’s retail trades, the bulwark of the middle class, have continued to fall since the start of the Great Recession, the lenders of the Troika continue to battle over terms of the next round of bailout cash, even though Greece has already sold much of its public holdings [rail and transit systems, ports, and even islands] while imposing draconian pay and pension cuts while downsizing its civil service.

From Greek Reporter:

The “serious disagreement between the IMF and European institutions” puts the chances of Greece’s economic recovery at risk, said Bank of Greece governor Yiannis Stournaras on Monday.

Stournaras spoke about the Greek economy at the American-Hellenic Chamber of Commerce conference and talked about the crucial negotiations on the second bailout program review. He warned that “a possible failure to reach an agreement could halt the upward trend of the economy, resulting in the return to uncertainty and would undermine confidence.” He said that the disagreement between euro zone partners and the International Monetary Fund on debt relief measures is pushing back decisions.

The central bank chief urged Greece’s European partners to make decisions on the measures that will ensure the long-term sustainability of the state debt and reduce the target for the primary surplus to 2% of GDP from 3.5%, in order to enhance the prospects of growth.

Stournaras said that,  Despite the mistakes and setbacks, despite the significant economic and social costs of the crisis, Greece has made significant progress over the last six years in terms of budget adjustments and external imbalances.”

However, he said, the harsh measures Greek governments have implemented and the burden Greek people have shouldered are at serious risk. “Despite positive forecasts for the second half of 2016 and 2017, serious risks for the Greek economy still lurk. The main danger is a possible failure to reach an agreement for the second evaluation of the program and delays or setbacks in the implementation.”

More from To Vima:

The head of the Eurogroup Jeroen Dijsselbloem argued that European lenders should be “realistic” in the fiscal targets they set for Greece after 2018, when the program of financial aid will end.

“We need to be realistic” Jeroen Dijsselbloem told the economic affairs committee of the European Parliament, saying that the International Monetary Fund has a point when it says “running a primary surplus of 3.5 percent for a very long time is a huge thing to ask”.

Dijsselbloem’s remarks come a few days before a Eurogroup meeting in Brussels on 5 December, when Europe’s Finance Ministers are set to decide for how long Greece should maintain a primary budget surplus – which excludes debt servicing costs – of 3.5% after 2018, when its current program of financial aid expires.

Even Barack Obama, who has otherwise shown himself a faithful apostle of neoliberal “reforms,” is calling for the banksters to back off and give the beleaguered Greeks some measure of debt relief.

And well he should, considering that it was the avarice of Wall Street banksters who caused the crash in the first place.

Quote of the day: Sanders takes down the GOP


From the website of Sen. Bernie Sanders, the candidate who had the best chance of downsizing The Donald, a statement:

The threat to American democracy under Republican control is two-fold. First, they will likely move to go beyond the disastrous Citizens United Supreme Court decision and end all campaign finance limitations. Right now, the Koch brothers and the billionaire class can spend as much as they want only on independent expenditures. The Republican leadership wants more. They want billionaires to be able to contribute directly to the candidate and, in essence, make the candidate a full-fledged employee of wealthy contributors.

Secondly, the Republicans will likely move aggressively to expand their current voter suppression efforts. When Trump talks his disgraceful and unfounded nonsense about millions of people voting illegally, he is sending a very clear signal that the Republicans will move to make it harder for people of color, the elderly, immigrants, young people and poor people to participate in elections.

Our job: State by state and at the federal level, resist all efforts at voter suppression. We must do everything we can to make it easier for people to participate in the political process, not harder. States like California, Vermont and others have already moved effectively in that direction. Others must follow.

For many Republicans leaders, ‘democracy’ means billionaires buying elections and poor and working people being disenfranchised. Too many Americans have fought and died to defend American democracy. The Republican anti-democratic vision is not a future we will allow to happen.

Chart of day: Rich gain most during post-crash


Click on the image to enlarge.

Click on the image to enlarge.

From the latest Income Inequality Report from the Organisation for Economic Co-operation and Development report on growing income disparities in the 36-nation group:

Between 2007 and 2010, average real income fell by 2.1% on average, with a stronger decline at the bottom (-5.3%) and the top (-3.6%). While the recovery since 2010 improved average incomes, more rapid growth of top incomes (2.3%) and weaker improvement at the bottom and at the middle (1.1% and 1.3%) increased inequality, although only marginally.

By 2013/14, incomes at the bottom of the distribution are still well below pre-crisis levels while top and middle incomes had recovered much of the ground lost during the crisis.

During the economic downturn, low- and high-income households lost the most. During the recovery, high-income households gained more due
to unequal growth of labour incomes and changes in redistribution.

El País reports on the growing income gap in Spain, one of the nation’s hardest hit by the Great Recession:

Inequality is one of the biggest consequences of the economic crisis in Spain. The latest Income Inequality Update by the Organization for Economic Cooperation and Development (OECD) shows that between 2010 and 2014, Spanish workers with the lowest salaries suffered the greatest wage cuts of all OECD member states after Portugal.

“In Spain, despite the prolonged period of strong job creation, stimulated by the 2012 labor reform, persistently high levels of long-term unemployment, falling real wages and persisting labor market segmentation translated into a sharp fall of labor incomes, especially at the bottom,” reads the report, which was released on Thursday.

Spain also has the highest rate of poor workers after Turkey and Chile.

“Higher-income households benefited more from the recovery than those with middle and lower incomes,” states the study. “The fruits of the economic recovery have not been evenly shared.”

In Spain, inequality grew in 2014 even though the economy was growing at a rate of 1.4%. The reports finds that the average Gini coefficient of disposable household income – “a standard measure of inequality that takes the value of 0 when everybody has the same income and 1 when one person has all the income” – reached 0.346. In 2007 that figure was 0.324 while in 2012 it was 0.335, according to the OECD.

In 2014, the bottom 10% of workers in Spain earned just 2% of all income in the country while the top 10% earned 24.7%.

Chart of day: Trump’s vile self-serving tax plan


When it comes to self-serving, nobody trumps The Donald.

Consider his tax plan, which will serve nobody better than the President-elect while imposing heavier taxes on those least able to afford it.

Call it a reverse Robin Hood play, stealing form the poor to give to the rich.

We begin with a graphic from the Guardian:

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From the accompanying story:

“Listening to Trump’s rhetoric, most Americans probably don’t realise at all the impact of Trump’s tax plan,” Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy (ITEP) said. “Any way you slice it, the very best-off Americans will be the biggest beneficiaries.

“If it looks bad now for middle-income families, those who turned out to vote for him, it’s only likely to get worse [with Trump as president]. It is very likely that they will end up poorer still. The most likely victims are middle- and low-income families.”

Gardner said that under Trump, America will become even more divided between the rich and poor. “America is already very unequal, and his proposals would make income inequality a lot worse,” Gardner said. “This is obviously quite worrisome. If he rode to victory on a middle-income wave of support, those middle Americans will be very disappointed.”

The inequality problem will be exacerbated by Trump’s plan to scrap inheritance tax – which he refers to as “the death tax”. The 40% inheritance tax is currently only charged on personal estate worth more than $5.45m and joint estates of $10.9m – sums so large that it only affects less than two in 1,000 Americans.

Trump has proposed repealing the tax entirely. While Clinton, pushed by Bernie Sanders’ strong stance on the issue, had suggested lowering the threshold to $3.5m and increasing the rate to 65% for the super-wealthy.

“It’s hard to think of a tax change that will have a more detrimental effect on inequality,” Garnder said. “There is no question that this will lead to a perpetual income elite – hardly the thing that Trump voters would have wanted. This will lead to a new era of dynastic wealth.”

Biggest losers; Large and single parent families

From the Associated Press:

President-elect Donald Trump’s proposals would modestly cut income taxes for most middle-class Americans. But for nearly 8 million families – including a majority of single-parent households – the opposite would occur: They’d pay more.

Most married couples with three or more children would also pay higher taxes, an analysis by the nonpartisan Tax Policy Center found. And while middle-class families as a whole would receive tax cuts of about 2 percent, they’d be dwarfed by the windfalls averaging 13.5 percent for America’s richest 1 percent.

Trump’s campaign rhetoric had promoted the benefits of his proposals for middle-income Americans.

“The largest tax reductions are for the middle class,” said Trump’s “Contract With the American Voter,” released last month.

The tax hikes that would hit single parents and large families would result from Trump’s plan to eliminate the personal exemption and the head-of-household filing status. These features of the tax code have enabled many Americans to reduce their taxable income.