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The Great Recession of 2008, the Passing of the Middle Class & the Fragility of America’s Future: Social Justice as a Response to Radical Libertarian Individualism.

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Presentation on theme: "The Great Recession of 2008, the Passing of the Middle Class & the Fragility of America’s Future: Social Justice as a Response to Radical Libertarian Individualism."— Presentation transcript:

1 The Great Recession of 2008, the Passing of the Middle Class & the Fragility of America’s Future: Social Justice as a Response to Radical Libertarian Individualism Jeoffry B. Gordon, M.D., M.P.H. (619)223-7164 San Diego, Ca. I have no financial interests or conflicts of interest to declare. References:





6 Correlation Between Household Income and Unemployment Rate in the Last Quarter of 2009 Center for Labor Market Studies, Northeastern University, Boston, MA Prepared for: C.S. Mott Foundation, Flint, MI February 2010 Household IncomeRate $150,000 or more3.2% $100,000 to $149,0008.0% $75,000 to $99,9995.0% $60,000 to $74,9996.4% $50,000 to $59,0007.8% $40,000 to $49,0009.0% $30,000 to $39,99912.2% $20,000 to $29,00019.7% $12,500 to $19,99919.1% $12,499 or less30.8%

7 The Great Recession at 30 Months Half of Work Force Has Taken a Job-Related Hit PEW RESEARCH CENTER June 30, 2010


9 THE Middle Class Is Being Systematically Wiped Out Of Existence In America Michael Snyder, Business Insider -- July 15, 2010 01 )01 ) 83% of all U.S. stocks are in the hands of 1% of the people. 02 )02 ) 61% of Americans "always or usually" live paycheck to paycheck, which was up from 49% in 2008 and 43% in 2007. 03 )03 ) 66% of the income growth between 2001 and 2007 went to the top 1% of all Americans. 04 ) 36% of Americans say that they don't contribute anything to retirement savings. 04 ) 05 )05 ) A staggering 43% of Americans have less than $10,000 saved up for retirement. 06 )06 ) 24% of American workers say that they have postponed their planned retirement age in the past year. 07 )07 ) Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32% increase over 2008. 08 )08 ) Only the top 5% of U.S. households have earned enough additional income to match the rise in housing costs since 1975. 09 )09 ) For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together. 10 )10 ) In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to 1. 11 )11 ) As of 2007, the bottom 80% of American households held about 7% of the liquid financial assets. 12 )12 ) The bottom 50% of income earners in the United States now collectively own less than 1% of the nation’s wealth. 13 )13 ) Average Wall Street bonuses for 2009 were up 17% when compared with 2008. 14 )14 ) In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector. 15 )15 ) The top 1% of U.S. households own nearly twice as much of America's corporate wealth as they did just 15 years ago. 16 )16 ) In America today, the average time needed to find a job has risen to a record 35.2 weeks. 17 )17 ) More than 40% of Americans who actually are employed are now working in service jobs, which are often very low paying. 18 )18 ) For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011. 19 )19 ) This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour. 20 )20 ) Despite the financial crisis, the number of millionaires in the United States rose a whopping 16% to 7.8 million in 2009. 21 )21 ) Approximately 21% of all children in the United States are living below the poverty line in 2010 – the highest rate in 20 years. 22 )22 ) The top 10% of Americans now earn around 50% of our national income.


11 Aughts were a lost decade for U.S. economy, workers By Neil IrwinNeil Irwin Washington Post Staff Writer Saturday, January 2, 2010 [The January 8, 2010 US Labor Department] report caps a disastrous year for U.S. workers. Employers cut 4.2 million jobs in 2009, and the unemployment rate averaged 9.3 percent. That's compared to an average of 5.8 percent in 2008 and 4.6 percent in 2007. The economy has lost more than 8 million jobs since the recession began in December 2007. Median household income, adjusted for inflation, fell 3.6% last year (2008) to $50,303, the steepest year-over- year drop in forty years. The largest decline, 5.6%, was among Hispanics, a reflection of disappearing construction and service jobs. The median income for Asians fell 4.4%, while black incomes fell 2.8% and non-Hispanic whites fell 2.6%. The poverty rate, at 13.2%, was the highest since 1997. About 700,000 more people didn't have health insurance in 2008 than the year before. While the number of people with health insurance declined, the number of people covered by government insurance increased by 4.4 million people, in part because of surging Medicaid rolls. — U.S. consumers and businesses are filing for bankruptcy at a pace that made 2009 the seventh-worst year on record, with more than 1.4 million petitions submitted, an Associated Press tally showed Monday. The AP gathered data from the nation's 90 bankruptcy districts and found 1.43 million filings, an increase of 32 percent from 2008. There were 116,000 recorded bankruptcies in December, up 22 percent from the same month a year before.



14 “Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.unemployed, underemployed or just plain out of workcan't make the minimum paymentdefault or foreclosurefood stampsbankruptcy$5 trillionsavingsout on the street America Without a Middle Class Elizabeth WarrenElizabeth Warren Chair of the Congressional Oversight Panel created to oversee the banking bailouts. HUFF POST December 3, 2009 10:00 AM To cope, millions of families put a second parent into the workforce. But higher housing and medical costs combined with new expenses for child care, the costs of a second car to get to work and higher taxes combined to squeeze families even harder. squeeze families even harder Even with two incomes, they tightened their belts. Families today spend less than they did a generation ago on food, clothing, furniture, appliances, and other flexible purchases -- but it hasn't been enough to save them. Today's families have spent all their income, have spent all their savings, and have gone into debt to pay for college, to cover serious medical problems, and just to stay afloat a little while longer.


16 The end of the American dream? THE HIDDEN ROOT CAUSE by Steve Schifferes BBC News Website, September 4, 2006

17 Manufacturing isn’t gone from America yet, but it’s at serious risk of leaving. Manufacturing employs 14 million people, generates nearly 12 percent of U.S. gross domestic product and accounts for 60 percent of U.S. exports. Manufacturing is at least the third- largest sector or greater in 40 states. But manufacturing has sharply declined from 27 percent of GDP in 1950 to only 11.5 percent today. And a quarter of the nation’s 282,000 remaining manufacturing companies -- 90,000 in all -- are now deemed severely "at risk."

18 STOCK INVESTMENT PERFORMANCE 1999 --- 2009 THE WALL STREET JOURNAL December 20, 2009 TOTAL RETURN PER YEAR 1999 - 2009 STANDARD & POORS 500 (-10.19%) (-1.07%) 1999 - 2009 DOW JONES 30 INDUSTRIALS +12.79% +1.21% 1999 - 2009 NASDAQ 100 (-42.19%) (-5.35%) includes reinvesting all dividends Enlarge This Image

19 The Wealth of Older Americans and the Subprime Debacle Barry P. BosworthBarry P. Bosworth, Senior Fellow, Economic Studies, Global Economy and Development Rosanna Smart, Senior Research Assistant, Economic StudiesEconomic StudiesGlobal Economy and DevelopmentEconomic Studies Center for Retirement Research at Boston College, BROOKINGS INSTITUTE, Saturday January 23, 2010 This study explores the consequences of the housing price bubble and its collapse for the wealth of older households. We utilize micro survey data to follow the rise in home values to 2007, observing which households enjoyed home price appreciation and how they responded in terms of equity withdrawal. We then use the SCF survey data on wealth holdings from 2007 in combination with national price indexes to simulate the magnitude and distribution of wealth loss from the 2008-2009 financial crisis. The collapse of the housing market triggered a broad decline of asset prices that greatly reduced the wealth of all households. The FoFs [Flow of Funds] report a $13 trillion (15 percent) loss of household wealth between the peak of mid-2007 and March 2009; and, as shown in Figure 1, the wealth-income ratio has basically fallen back to the levels of the early 1990s.






25 Effect of continuing the Bush Tax cuts vs Obama’s plan THE WASHINGTON POST September 13, 2010

26 On August 1, 2007 thirteen commuters were killed On September 8, 2010 a natural gas line and more than 100 were injured when the eight explosion in San Bruno, California killed at lane bridge in Minneapolis, Minnesota carrying least 4 and injured at least 20, destroying 53 Interstate 35W over the Mississippi River collapsed. Homes and damaging 120 more. Ed Rendell Speaks: 2.2 Trillion Infrastructure Deficit Ed Rendell Speaks: 2.2 Trillion Infrastructure Deficit Wednesday February 11, 2009 9:00 am

27 Recession Continues to Batter State Budgets; State Responses Could Slow Recovery By Elizabeth McNichol and Nicholas JohnsonElizabeth McNicholNicholas Johnson Updated December 23, 2009 Center on Budget And Policy Priorities The worst recession since the 1930s has caused the steepest decline in state tax receipts on record. As a result, even after making very deep cuts, states continue to face large budget gaps. New shortfalls have opened up in the budgets of at least 39 states …totaling $34 billion or 6 percent of these budgets for the current fiscal year (FY 2010, which began July 1 in most states). In addition, initial indications are that states will face shortfalls as big as or bigger than they faced this year in the upcoming 2011 fiscal year. States will continue to struggle to find the revenue needed to support critical public services for a number of years.

28 Struggling Cities Shut Firehouses in Budget Crisis By MICHAEL COOPER THE NEW YORK TIMES August 26, 2010MICHAEL COOPER SAN DIEGO — Fire departments around the nation are cutting jobs, closing firehouses and increasingly resorting to “rolling brownouts” in which they shut different fire companies on different days as the economic downturn forces many cities and towns to make deep cuts that are slowing their responses to fires and other emergencies. Philadelphia began rolling brownouts this month, joining cities from Baltimore to Sacramento that now shut some units every day. San Jose, Calif., laid off 49 firefighters last month. And Lawrence, Mass., north of Boston, has laid off firefighters and shut down half of its six firehouses, forcing the city to rely on help from neighboring departments each time a fire goes to a second alarm…. The risks of cutting fire service were driven home here last month when (in San Diego) Bentley Do, a 2-year-old boy who was visiting relatives, somehow got his hands on a gum ball, put it in his mouth, started laughing and then began choking…. It is only 600 steps from the front door of the neatly kept stucco home where the boy was staying to the nearest fire station, just down the block. But the station was empty that evening: its engine was in another part of town, on a call in an area usually covered by an engine that had been taken out of service as part of a brownout plan. The police came to the home within five minutes and began performing cardiopulmonary resuscitation, officials said. But it took nine and a half minutes — almost twice the national goal of arriving within five minutes — for the fire engine, with a paramedic and more medical equipment, to get there. An ambulance came moments later and took Bentley to the hospital, where he was pronounced dead. The San Diego Fire-Rescue chief, Javier Mainar, said it was impossible to say whether the delay contributed to Bentley’s death on July 20. But he said there was no doubt that the city’s brownouts, which take 13 percent of firefighters off the streets each day to save $11.5 million annually, led to the delay. Fire service was once a sacred cow at budget time. But the downturn has lingered so long that many cities, which have already made deep cuts in other agencies, are now turning to their fire departments.


30 The Fat Lady Has Sung By THOMAS L. FRIEDMANTHE NEW YORK TIMES February 20, 2010THOMAS L. FRIEDMAN A small news item from Tracy, Calif., caught my eye last week. Local station CBS 13 reported: “Tracy residents will now have to pay every time they call 911 for a medical emergency. But there are a couple of options. Residents can pay a $48 voluntary fee for the year, which allows them to call 911 as many times as necessary. Or there’s the option of not signing up for the annual fee. Instead they will be charged $300 if they make a call for help….” Indeed, to lead now is to trim, to fire or to downsize services, programs or personnel. We’ve gone from the age of government handouts to the age of citizen givebacks, from the age of companions fly free to the age of paying for each bag. Let’s just hope our lean years will only number seven. That will depend a lot on us and whether we rise to the economic challenges of this moment. Our parents truly were the Greatest Generation. We, alas, in too many ways, have been what the writer Kurt Andersen called “ The Grasshopper Generation,” eating through the prosperity that was bequeathed us like hungry locusts. Now we and our kids together need to be “The Regeneration” — the generation that renews, refreshes, re-energizes and rebuilds America for the 21st century. President Obama’s bad luck was that he showed up just as we moved from the fat years to the lean years. His calling is to lead The Regeneration. He clearly understands that in his head, but he has yet to give full voice to it…. To be sure, taking over the presidency at the dawn of the lean years is no easy task. The president needs to persuade the country to invest in the future and pay for the past — past profligacy — all at the same time. We have to pay for more new schools and infrastructure than ever, while accepting more entitlement cuts than ever, when public trust in government is lower than ever. On top of that, the Republican Party has never been more irresponsible. Having helped run the deficit to new heights during the recent Bush years, the G.O.P. is now unwilling to take any responsibility for dealing with it if it involves raising taxes.


32 FEBRUARY 15, 1999


34 Ryan Grim and Shahien NasiripourRyan Grim and Shahien Nasiripour | Revealed: See Who Was Paid Off In The AIG Bailout HuffPost Reporting First Posted: 01-27-10 02:47 PM | Updated: 01-27-10 09:05 PM A key question at the heart of the controversial bailout of AIG is just how much money the government lost. The Federal Reserve and Treasury Department have worked to keep that number secret and to conceal who was on the winning end. An unredacted document obtained by the Huffington Post list the damage in detail…. The list was produced as part of a congressional investigation led by the House Oversight and Government Reform Committee into the federal bailout of AIG. The troubled insurer tried to publicly disclose these details in December 2008 before being thwarted by the Geithner-led New York Fed. A month later Geithner left to head the Treasury Department. The Federal Reserve Bank of New York, then led by now-Treasury Secretary Tim Geithner, purchased a slew of souring assets from the world's biggest banks for 100 cents on the dollar in November and December 2008. A scathing report by a government watchdog held Geithner responsible for the overpayments. Those insurance contracts, called credit default swaps, are what the New York Fed ultimately took off AIG's books, paying the banks 100 cents on the dollar for toxic mortgage bonds -- home mortgages that were bundled together and securitized. The banks could never have gotten anywhere near such a generous deal on the open market, so the move served essentially as a direct subsidy to those banks from taxpayers.scathing report At the time the document was prepared, Goldman's $14 billion in souring derivatives had a market value of just $6 billion. Goldman had more than $8 billion in collateral from AIG to protect it from losses, meaning it was still about $6 billion short. But more than $2 billion of those collateral payments came from AIG after it was bailed out on Sept. 16 of that year, according to a Nov. 2008 presentation prepared for the New York Fed that was released this week. So that $2 billion was made possible partly due to taxpayer assistance.this week Combined with the $6 billion deficit it faced in the face value of those securities, Goldman Sachs ultimately received about $8 billion from taxpayers via AIG. Goldman posted a $1.3 billion profit for 2008…. A government audit this month found that as of Sept. 30, 2009, the Treasury Department was expecting a $30 billion loss on its TARP-related AIG investment. The value of the securities could ultimately rise, though.profit2008government audit this month

35 Banks’ Self-Dealing Super-Charged Financial Crisis




39 By Bruce Hoffman Sunday, January 10, 2010 THE WASHINGTON POST First, al-Qaeda is increasingly focused on overwhelming, distracting and exhausting us. To this end, it seeks to flood our already information-overloaded national intelligence systems with myriad threats and background noise. Al-Qaeda hopes we will be so distracted and consumed by all this data that we will overlook key clues, such as those before Christmas that linked Abdulmutallab to an al-Qaeda airline-bombing plot. Second, in the wake of the global financial crisis, al-Qaeda has stepped up a strategy of economic warfare. "We will bury you," Soviet Premier Nikita Khrushchev promised Americans 50 years ago. Today, al-Qaeda threatens: "We will bankrupt you." Over the past year, the group has issued statements, videos, audio messages and letters online trumpeting its actions against Western financial systems, even taking credit for the economic crisis. However divorced from reality these claims may be, propaganda doesn't have to be true to be believed, and the assertions resonate with al-Qaeda's target audiences.

40 An Empire at Risk We won the cold war and weathered 9/11. But now economic weakness is endangering our global power. By Niall Ferguson | NEWSWEEK Niall Ferguson Published Nov 28, 2009 From magazine issue dated Dec 7, 2009 …if the United States succumbs to a fiscal crisis, as an increasing number of economic experts fear it may, then the entire balance of global economic power could shift. Military experts talk as if the president's decision about whether to send an additional 40,000 troops to Afghanistan is a make-or-break moment. In reality, his indecision about the deficit could matter much more for the country's long-term national security. Call the United States what you like—superpower, hegemon, or empire—but its ability to manage its finances is closely tied to its ability to remain the predominant global military power.










50 Cameroon15.79.144.615.4200144.62001 Côte d'Ivoire16.69.744.617.0200244.62002 United States 15.98.440.815.02007 est.452007 Uruguay17.910.244.917.9200345.22006 Jamaica 17.39.845.517.0200445.52004 Uganda16.69.245.716.4200245.72002 Ecuador44.917.353.617.52006 ] 462006 Malaysia22.112.449.228.02003 est.46.12002 Mexico 24.612.846.124.6200446.12004 Rwanda 18.69.946.818.2200046.82000 People's Republic of China 21.612.246.921.8200446.92004 Country UN R/P 10%UN R/P 20%UN GiniCIA R/P 10%YearCIA GiniYear Sweden 6.24256.2200023 2005 Denmark8.14.324.712.02000 est.242005 Slovenia5.93.928.45.91998242005 IcelandN/A 252005 Austria6.94.429.16.82004262005 Czech Republic5.23.525.45.21996262005 Finland5.63.826.95.72000262005 LuxembourgN/A 6.82000262005 Slovakia6.7425.86.71996262005 Bosnia and Herzegovina 5.43.826.25.5200126.22001 Albania7.24.831.17.2200426.72005 Belgium8.24.9338.32000282005 France9.15.632.78.32004282005 Germany6.94.328.36.92000282005





55 It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way - in short, the period was so far like the present period. Charles DickensCharles Dickens, A Tale of Two Cities English novelist (1812 - 1870)

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