The Hunger Game

The good news is there’s no reason anyone should ever starve to death in America.  The bad news is more and more working Americans, many earning what were once middle class incomes, are spending their time and scarce money to find their next meal.  

Think it can’t happen to you?  The necessity of food will be the last thing you’ll spend your limited funds on as wage stagnation, the cost of energy, housing and other mandatory expenses drive middle class family budgets to the breaking point.

Emergency Food: More and More, It’s What’s for Dinner 

The good news is there's no reason anyone should ever starve to death in America.   The bad news is more and more working Americans, many earning what were once middle class incomes, are spending their time and scarce money to find their next meal. 

Think it can't happen to you?   The necessity of food will be the last thing you'll spend your limited funds on as wage stagnation, the cost of energy, housing and other mandatory expenses drive middle class family budgets to the breaking point.

Val Traore, the radiant and gregarious CEO of the Food Bank of South Jersey (FBSJ), wanted to make one thing perfectly clear in our discussion of hunger in America today.   "We do not have starvation here in the United States.   In Mali," she says, referring to the West African country where about half the population lives below the international poverty line of $1.25 a day, "if you live in poverty you risk starvation and death.   That doesn't happen here in America."   It's an important point worth dwelling on. 

So what is happening here?

"We're seeing a large number of families that have never needed food assistance before," reports Traore.   How many?   So far, for 2010 FBSJ has witnessed a 10% increase in their client base of approximately 100,000 people.   Here's the surprise:   a large portion of the people needing food assistance today are working, and especially among FBSJ's new clients, many are earning incomes nearly twice the poverty line of $22,055 per year for a family of four (up to 185% of poverty).

Who are the hungry and why can't they afford to feed themselves and their families?   Increasingly, the shocking answer is this:   If you are not financially independent, the odds are good that someday you could be waiting in line to feed yourself and your family. 

Food Lines: The Growing Reality Based Social Network

December 18, 2010 - Burlington County, NJ:   Especially since the airing of television shows like "The Sopranos" and   "Jersey Shore" most of the nation probably sees New Jersey as some cultural aberration.   Perhaps it is.   But, this is south Jersey and the landscape looks a lot like other semi-rural areas of the country. 

On the drive from Philadelphia through Burlington County, a main highway cuts through farmland that includes several agricultural supply and farm equipment dealers. There are also strip malls, fast food franchises and diners offering breakfast for $2.99 and prime rib dinner specials as low as $10.99.   If you were somehow transported here and I told you that you were in Ohio, you would have no reason not to believe me.

In Browns Mills, population 11,257, a tractor trailer painted as the "Hope Mobile" carrying about 28,000 pounds of food is being unloaded at the local United Methodist Church.   People are lined up outside, but most of the line has been moved inside on this frigid morning.   The church pastor has allowed the use of the facility's assembly room and adjacent corridor to bring members of some 600 pre-qualified, pre-registered families in from the cold.

Depression soup lines have nothing on this sucker.   The first in line sit along the hundred foot length of the assembly room where a beautifully lighted Christmas tree glows.   The line extends out the door and down one side of a hundred foot corridor and then loops back on itself down the opposite wall.   At the end of the line, another 30 feet or so, people will brave the weather for an hour or two until things get moving.   Over 20,000 pounds of food will be provided to the crowd here, the remaining 7,000 pounds will go to a second event later in the day in Camden, NJ.

The Browns Mills' Hope Mobile drop has been occurring monthly since August in an effort to relieve demand on overwhelmed local pantries.   Some 450,000 people live here in Burlington County where the median household income here is just under $77,000 per year.   The county is 77% white, 17% black and 6% Hispanic.

Many of the people here (according to national averages about 70%) are just plain poor.   Some are on Social Security Disability.   Others are senior citizens living on small fixed incomes.   Some of them care for grandchildren that their own children, for whatever reason, can not care for.   

A few are homeless, or the formerly homeless who have recently found a place live.   They are white, they are black and they are Hispanic.   All represented in good numbers.   They are a typical gathering of Americans in winter wear, with kids in tow and babies in strollers.   If I put them all in a local shopping mall - even the ones that told me they were homeless - you would have no reason to believe they weren't holiday shopping.

Deborah (all the names of those interviewed for this article have been changed) is twenty-something, smart, articulate, bi-lingual single mother of four.   After losing a well paying job eight months ago, she took a warehouse position at minimum wage, $7.25 an hour in New Jersey, and moved her family into a shelter. 

She's hoping her education and language skills will mean a quick promotion and higher wages.   Though she pays little in rent, she tells me that after her car expense, diapers and clothes, there's no much left for food.   A quick calculation reveals her car expenses alone will eat up nearly a third of her $14,790 annual income.

If you can't quite relate to a single mother of four, who recently lost a significant amount of income, then consider Joan.

Joan tells me over and over that hers is a good story that people need to hear.   Unfortunately, for her and her family she is right.

Before moving to Shamong, NJ, Joan, her husband and four children, lived a well above average middle class life in a suburban Toledo, OH.   They owned a single family home.   She ran a home day care to supplement her husband's $80,000 plus income.   He worked as a pipeline technician, a career he built over 26 years, lost 14 months ago and has not been able to reclaim.   Two years ago he found work in New Jersey through relatives and the family moved. 

Moving meant Joan's day care income was gone.   It also meant a cut in her husband's salary to $40,000, and an increase in rent from $875 monthly mortgage payment, which included principle, interest, taxes and insurance, to a trailer park rent of $1,125. 

Doing some quick math for Joan's situation reveals how the Great Recession has decimated middle class America:   after taxes $40,000 is about $30,000 take home in New Jersey.   Less $5,000 for carfare to get to work.   Less $13,500 for rent.   Utilities and phone, let's say $2,400; way too low, right?   That leaves $14,100 for food, insurance, diapers, laundry, clothes and every other vagary life throws at a family of six.   Since a decent family health care insurance is at least $9,000 per year, I'll bet they aren't making what's left of the COBRA payments.

Think you can feed yourself for $5 a day?   What would you buy?   What would you forego?   Fast food will eat up that whole amount in a single meal.   If Joan spends every cent of her family's $14,100 of "discretionary" money on food she would have a $6.53 per person per day food budget.

Joan wasn't embarrassed to talk about her situation with me.   For whatever reason, she wanted people to know her story.   But she was the exception.   There were many others seeking a week's worth of food who didn't want to be noticed.   They were still well shod.   One middle aged gentleman, escorting his wife, was twitching.   He didn't care to share his story.

Why You Will Choose to Be Hungry

Setting priorities when your budget gets squeezed is exactly why food is going to come last and why you're going to be left with little or nothing to feed your face and the hungry faces of those you love.

In a strange subversion of Maslow's hierarchy of human needs, when things get tough in our modern world, you will put food last.    "There are a couple of reasons," explains Traore.   "First impulse is we don't want other folks to know we're struggling.   So, Americans have a tendency to decide to pay for the visible expenses first." 

If you think about it, it's pride, practicality and the unwillingness to give up hope too soon.    Mix it all together and before you know it, you're hungry. 

You may put off buying new clothes, or if interviewing for a job is a must, you won't. 

You've been out of work for a couple of months, but obviously now is no time to sell the house.    So you'll continue to make the payments as long as you can, especially in this market.

The car is leased or not yet paid off and you have to get to interviews and in today's environment public transportation to a job may not be an option.    Anyway, you don't want to start taking the bus or train when a better situation is probably just around the corner, and the neighbors will notice the Camry is gone.

In today's world, how can you live without a cell phone?    A haircut?   An internet connection?   A clean pressed suit?   A couple beers with the crew after a hard day on the job site?   Paper towels for the kitchen, heck toilet paper for the bathroom?   A small gift for the kid's birthday?   A coffee at break time?   Money for the school field trip?   License, registration and auto insurance?

So, you're going to pay the rent, you're going to keep the car, you're going to pay the cell phone bill.    Do you think you want the neighbors seeing the electric is off?   I don't think so.   And, as things don't improve for months and months, you're going to max out the credit cards and home equity line of credit. 

In retrospect, you're going to see that it was time to stop the hemorrhaging of money long ago, but you didn't do that.    You couldn't do that.   Where would you move?   How much would that save?   Are you underwater on the mortgage, ditto the car loan?  

Whether it's looking for a job equal to, or nearly equal to the one that's long gone, or running in the right circles to get that job, appearances are important.    The fear is if you're seen as a loser now there's no going back.   Sadly, employers appear to be embracing this thinking as evidence continues to show that older workers and long time unemployed workers are being discriminated against.

Nice Spread:   The Odds on You vs. Food

Sustained under or unemployment, yours or that of your life partner, or any other significant decrease in income is certainly the most obvious way to find your tight budget has you looking for your next meal.   But it is not the only way.

Case in point:   Paul, a postal worker, and his wife Amy, a part-time housecleaner and full-time mother of six. 

On paper, Paul doesn't look like he belongs on a breadline.    He has a solid employment history, 23 years with the United States Postal Service.   His wife not only raised their children, but supplemented the family income.   He has always had a government medical insurance plan for the entire family.   With $52,000 of earnings in 2010, you would think he would be at least lower-middle class.

Paul's family, formerly of Queens, NY, moved to south Jersey two years ago to get out from under an oppressive and ever escalating rent that ate up nearly half of their family income of $62,000 per year, $2,500 per month when they left, utilities not included.

There were other reasons to move as well.  Two of Paul's children have learning disabilities.   So it made sense to also look for a good school district that could meet their educational needs.   The move to a two-plus bedroom garden apartment in Mount Holly, NJ at a rent of $1,300 per month looked like a smart thing to do.

With a little luck, Paul could make a swap transfer to a post office in New Jersey without losing his seniority.    But the recession and luck was not with them.   Housecleaning work in New Jersey has not been plentiful for his wife.   The hoped for transfer has yet to materialize.   And, Paul is spending $400 a month for a 2 hour commute to Brooklyn, NY on a commuter bus, then the NYC subway and then a second bus to main post office. 

In New Jersey they also have a car expense.    Paul tells me he is not a regular food pantry client, but the children are getting older and eating more in their teen years.   At just over 130% of the poverty line, Paul's family is not poor enough to get food stamps.   They are well within the 185% of poverty qualifier for food assistance. 

What happened?    Did Paul and his wife have too many children?   They were all born by the year 2000.   If their income was as little as $40,000 per year 11 years ago, they were no where near living in poverty.   Just ten years later, with only a slight decrease in income and their efforts to decrease their housing expense, they are no longer getting by. 

Paul's was probably one of the few families here with decent healthcare insurance.    But ten years of higher living costs without enough increase in income has thrown them off balance and into a financial net loss.

Together, decreases in income and increases in living costs are the combined factors that will put more and more of us in the food lines.    In a way, Paul and his family are solidly in the middle class, a middle class newly defined as not quite able to afford the necessities of life.    

The imbalance is continuing even if, by academic measures, the recession is over.   The engine of this financial imbalance for the middle class is another imbalance: wealth and income inequity.   By all indications, the financial assault on working people will continue.

Oil is now hovering at $90 a barrel and the average national gasoline price is set to break $3.00 a gallon any moment.    Not only is this more money out of the pockets of Americans, most of whom must drive to work, it threatens another round of layoffs should demand for goods and services fall as a result.

In a new report from the Food and Agriculture Organization of the United Nations, global food prices are forecast to spike over the coming decade.    The report concludes that demand for food from developing countries will outstrip even an increased production supply.    

But inflation over the past ten years has been tame, right?  Wrong, whenever you hear a report of "core inflation," just remember that number does not include two categories that affect working people the most: food and energy.   Shelter costs, that spiked with the bank fashioned housing bubble, have also thrown many middle class families into financial turmoil.

The only good news on the horizon is in the area of housing where costs are predicted to fall.   But moving is expensive and foreclosures will soon return to historic high levels as soon as the banks sort out their questionable procedures for putting people out on the street.

So, what does it take to be middle class today?    That depends, and it's not necessarily an income number, though many analysts throw around income from $70,000 to $100,000.   Tell that to Joan.   You'll need to be able to sustain those dollars year after year without much in the way of cash flow interruption.

To be middle class, paying for all the vital and frivolous "necessities" of American adult life, you do need an income, usually from a job.

If it took education to get the training or degree needed for that job, subtract the cost of student loan repayment.    Then you need housing at a cost that fits that income, and transportation that provides a reliable way for you to do what you need to do to earn that income. 

As you would like to have more in your life, like a spouse and/or children your income needs may change, i.e. increase substantially.    But because life is generally unpredictable you also need to be able to afford at least some insurance, auto, home and medical, to smooth those costs. 

To be middle class, you will also need the one thing the current economic and socio-political situation refuses to oblige: stability. 

You need to know that at least most of the important things that you've build your life on will not disappear tomorrow.    For example, the job that expensive education bought will not be down-sized, right-sized, off-shored, out-sourced or become obsolete and eliminated altogether. 

Unfortunately, that modicum of stability no longer exists.    Too many things that put your stability at risk are out of your control.

It may not seem possible, but in today's global corporate market, your job could be history tomorrow. 

The probability that you will need to retrain for another job, no matter how old you are, is high and today education is very expensive and may mean becoming a debtor in a big way.

The odds energy costs will increase to unaffordable levels, for at least periods of time, is nearly a sure bet.   These spikes will increase what you pay for transportation, heating, electric and also affect a broad market basket of prices on everything from food to paper.

That housing shortages and increased rents may occur is still in the cards.    If housing costs do decease you will need money to move and reestablish your living situation.

That labor prices may continue to be depressed is nearly certain. Most American workers have already tightened their belts.    You only need to look a Paul's story to see the fine line between making it and otherwise.

That large corporations will enter more and more business categories where small business once thrived is a foregone conclusion.    Today, there are only a handful of small business opportunities that have not been taken over by corporate category killer big box and national chain operations.

Odds that some day you and your family will need food assistance because you haven't yet made the rent or paid the phone or gas bill and your next paycheck is nine days hence: better, much better, in my opinion, than ten to one.

The Hunger Game:   What You Will Do to Get Food

As stated earlier, unless for some odd reason you are unable to make contact with the outside world, you will not starve to death in America.    You will, however, play a game with certain rules and you will also spend time, money and effort to play the hunger game.

As with many lifelines in American society, help is available but you will need to jump through a few hoops to get it.    We just can't bring ourselves to make basic needs easy to get.   It's a puritanical punishment our society seems to need mete out to those in need.

Money is short.    The fridge has a bottle of ketchup and bread bag with a heel in it.   What do you do?   That night you'll scour the house for loose change and buy some macaroni and a jar of tomato sauce.   While you're eating you'll vow to do something about the situation. 

That night on the internet tubes, you will look into Supplemental Nutrition Assistance Program or SNAP, formerly known as Food Stamps.   SNAP is not only an acronym, it's also a contradiction; nothing about the program is quick or easy.

You will probably find you don't qualify as your income can be no more than 130% of the federal poverty threshold.    If you're single that's $14,079 pre year; for a childless couple $18,941.   Then, for each additional person or child in the family add $4,862.   Really!?!   It just doesn't add up, expenses for children can be much greater than those for adults, but that's the formula.

Let's say you think you may qualify, SNAP won't get food on the table tomorrow or the next week or even necessarily the next month.    Remember Joan, the woman who moved with her family from Toledo?   She applied for SNAP in September of this year.   To date, her application has neither been accepted nor rejected.

Eventually, depending on how dire your need is, you will find a food pantry.    If the one you find isn't open the next day, you may get referred to one that is.   Maybe you'll remember those little $1, $3 and $5 coupons you occasionally purchased at the supermarket that make a donation to a food bank.   In that case, you might call the food bank and they will somehow get you somewhere you can get your first supply of emergency food.

Congratulations!    You've just join the ranks of 37 million Americans served by Feeding America and all the related agencies that are part of their food assistance programs and the ranks of approximately 49.1 million people who are food insecure in the U.S. today.   Don't be embarrassed.   If you or you spouse or significant other has a job you are among 36% of those millions that do, the working class Americans that are not able to afford food.

That's just the beginning.   Now the major part of the game begins.   Pantries are not open every day and lately they've also been running out of food.   More importantly, you may not be able to get there when they are open.   So, like any good game, you'll need a strategy and a plan.

Still got a car?    Great!   You can drive to the food pantry and depending on their inventory you may get enough food for a day or two.   No, car?   It's public transportation or spring for a car service.   Call before you leave to check if food is available.   Also ask when they open and get there early to be sure you get your share.

Big events, like FBSJ's Hope Mobile are a godsend as you'll pick up 5 days of food in one stop.    But chances like this don't come every day, or every week, just once a month.   Deborah, Joan and Paul all drove 20 miles, about 30 minutes, each way to get to the Browns Mills Hope Mobile.   They were early birds and waited just three hours to receive about $50 worth of food.

So, to win the Hunger Game, you will gather information on where the pantries are and when they are open.    You will talk to a counselor at your child's school and enroll your children in whatever programs may be available.   You will get pre-qualified with the local food bank.   If you're an older citizen or physically disabled you may be able to get your food delivered, if possible, or a senior center or other nearby agency to relieve you of the need to stand in line. 

The Hunger Game comes with an excellent support feature.    You are not alone.   Organizations like the FBSJ and other Feeding America organizations are playing the game and they're on your side.   Besides procuring surplus food and donations to buy food for you, they are also working every day to figure out who is hungry, where they are and how to get food to them as easily as possible.

For example, demand for food and the need to get more food to more people spawned the Hope Mobile. 

Preston Beckley the Hope Mobile Program Manager at FBSJ is obviously proud of the good work and success of the Browns Mills event.    Not only have 600 pre-qualified families received food, another 28 families were qualified at this event.   That's well over 1,300 people getting food they need in one quick shot.

Next year, FBSJ's Beckley plans to expand the program from 9 sites to 16 sites.    "There's a real need and it's increasing.   With this program we are able to supplement pantries that can't keep up with the increased need.   We can also bring the truck to places that have no pantry."

That's the point of many of the FBSJ's programs:  find ways to get the food to the needy.   For seniors it's home delivery.   For school children it was a weekend supply of food for the child, but that soon turned into a program of school based pantries were parents could obtain a weekend supply of food for the entire family. FBSJ supplies food to over 200 agencies, homeless shelters, soup kitchens, special services, church and faith based organizations in their four New Jersey county service area.

Nobody wants to see an important donated resource, like food or food stamps, turned into a nefarious business enterprise.     But why do people have to prove they are in need, a reasonable requirement, but also spend excessive amounts of time and money to get help?

The Hunger Game shouldn't just be about getting food.    It's getting food, keeping a job, working toward a self-sustaining future, getting the necessary education and to the point where you can afford all the necessities of life on your own. 

Eliminating the Hunger Game

If hunger is the problem, food is the answer and the Food bank of South Jersey is just one of over 200 such non-profit organizations that serve all 50 states, the District of Columbia and Puerto Rico, distributing more than 2.5 billion pounds of food and grocery products annually under the national organization Feeding America.

Traore's organization is the hub of an intricate, charitable food distribution system designed to provide sustenance to anyone hungry in four south Jersey counties when money for food is scarce. 

Hers is part of a shadow system to the gigantic profit driven arrangement that has made relatively inexpensive food easily available everywhere.    They do a great job at minimal administrative cost and deserve your support.

Shouldn't there be a better way?    After all, there are already large caches of food nearly everywhere in places called supermarkets, wholesale clubs and big box department stores?    I put that question to Traore and she agreed.

"I'm sure our services are not accessible to everyone who needs emergency food in our area and that's a function of logistics," confessed Traore.   So, what can be done?

"My wild idea is that certain food, what I call ground provisions," explains Traore, "should be free and available at all major food outlets."   She defines "ground food" as basic, no frills food stuffs.   A protein, maybe chicken, maybe just dark meat chicken, though I believe people deserve a whole chicken, a meal and soup after.   Flour or basic bread.   A green vegetable and a fruit, canned if not otherwise.   Milk.

Under Traore's proposal, everyone would have a ground food provision that could be electronically tracked.   You would "purchase" up to your provision limit monthly, or not use it at all.   That's it.   Have a food emergency?   Tap your ground food provision.   Need to supplement your food supply?   Tap your ground food provision.   Feel entitled to food Just because you are human, even if you're a millionaire?   Tap you ground food provision.   Nobody goes hunger.   Nobody is put out.   Nobody is wasting other valuable resources, like time and fuel, in the pursuit of a self-sustainable life here in America.

You know it's so crazy Traore's scheme just might work and be a boon to the economy.

The Big Banga Theory

THE BIG BANGA THEORY is the next battle in People versus Wall Street.

Americans are ditching credit cards and according to a report in this morning's The New York Times holiday shopping with plastic is at a 27 year low. 

Last month, president and chief executive officer of MasterCard Ajay Banga said, "I have declared war on cash.   I believe MasterCard will grow by growing against cash." (Source: The Economic Times.)

Though we may thank Mr. Banga for his recent candor, the most recent battle in the war between the banks and people has been raging since at least September of 2009. 

Banks and credit card companies have made aircraft carriers full of money since creating plastic as a substitute for cash in the 1950's.   Plastic was sold as a "convenience" product/service at price that has always been hidden to the purchasers, but perhaps at a fair value. Prior the economic crash, credit card offers were just business, nothing personal.

Now, it's personal and it's war.   Since the too-big-to-fail financial corporations destroyed the economy, the public has also learned that broad categories of the same companies' consumer products are pernicious.   This has caused a degree of resentment among the American public (perhaps this is the understatement of the decade).

How's the war going?   You won't find reports from the front issued by Brian Williams.   After all, he works for General Electric a most profitable company in large part due to the financial products of GE Capital.   GE Capital also nearly brought its parent company to its knees with its exposure to toxic derivative "assets."

So, here's the body count you won't find anywhere else and it may surprise you:

In 2008 there were 176.8 million American "general use" credit cardholders (Amex, Visa, MasterCard, Discover). 

By the end of 2009, that same category of credit cardholders decreased 7.4% to 164.7 million.

Today, only about 156.7 million people are credit cardholders.

This last year 8 million Americans deserted credit cards.   They are no longer cardholders; that's right they don't have a one!   BTW, having 3.5 pieces of general use plastic is the average.

This is a stunning reversal for the financial services industry as cardholders grew by over 13% from 2000 through 2008.   (U.S. Census Bureau). 

The projections were that cardholder numbers would continue to increase by 8 million through 2009, not drop by 8 million.   (U.S. Census Bureau). 

By January 1, 2010 there were suppose to be 181 million American credit cardholders, now there are only about 156.7 million, a 15.3% decrease. 

Upon hearing this news the collective yelp of "Ouch!" from lower Manhattan was loud enough to be heard in Topeka, KS, but never crossed the transom of the mainstream media.

There's no doubt the public's abandonment of this high cost alternative to cash is causing a great deal of gnashing of teeth, sweaty palms and blazing calculators in the banking sector, not to mention on the desks of Wall Street finance analysts.

TransUnion, the source of the worrisome report put the best spin on it they could: most people are using some other form of credit, and the decrease is due to charge-offs in higher credit risk segments, and consumers are acting to maintain their good credit.   (Source: TransUnion.com)  

This may all be true as far as it goes, but...

Big Banga Trio: Banga, Bernanke & Geithner by Chaz Valenza

Your credit score goes down when you close an active credit card account. 

And, average total debt in 2009 (includes credit cards, mortgage, home equity, student loans and other debt) for U.S. households was $54,000, down a whopping $34,850 from 2008, a decrease of over 42% in one year. (Source: Federal Reserve's G.19 report, March 2010)   

And, credit card advertising campaigns are in full swing; mailings of offers continue unabated.

And, 29% of those recently polled said they do not have a credit card.   (Source: 2009 scientific poll conducted for CreditCards.com)

Personal Finance Expert for Credit.com Gerri Detweiler, an advocate for fair credit since 1987, offered a fourth reason: "We don't know how many, but some credit cardholders I've spoken with are angered by how they were treated before the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 was passed," referring to the drastic cuts in credit limits, over limit fees, late charges and drastic sudden interest rate increases.

Why don't we know how many Americans may be "financial insurgents" giving up plastic to deny money to the banking industry?   The data needed to do such an analysis is not public. The credit card and reporting companies have probably done the math of the backlash, but why tell Americans that voting with their feet is succeeding at the industry's expense? 

Adding to the growing public discontent is the continuing victory of the banks to be profitable while withholding credit.   Yes, banks paying back their TARP bailout loans with interest make big news.   But most Americans would rather have more robust employment.   The fact that the banks have constrained lending is acknowledged as a contributing factor to the continuing high unemployment and de facto recession on Main Street.

Does the public rightly see credit as no longer a banking service but as a political sledgehammer being applied to the underpaid workers of America?

Some Americans are acutely aware of this change.   With the widespread curtailment of business loans and lines of credit, micro business* owners have been forced to finance their enterprises with credit cards at an average interest rate of over 14%. 

Back to Mr. Banga, who so recently declared "war on cash."   According to the New York Times, "Who Needs Cash (or Borders)? by Vikas Bajaj and Andrew Martin, October 16, 2010, from 2000 to 2002, Mr. Banga ran CitiFinancial and it was, "his task to clean up the unit, which became part of Citigroup in an acquisition."

The Times story isn't clear about timeline but it's important.   Banga joined Citicorp in 1996.   Citicorp then merged with Travelers Group in 1998 to form the first financial power house in defiance of the Glass-Steagall Act of 1933.   With that merger came the acquisition of the CitiFinancial sub-prime loan business.

An FTC investigation resulted in a Citigroup settlement for $215 million for predatory lending practices during Mr. Banga's tenure at CitiFinancial.   Then Banga was put in charge of Citigroup's North American retail banking including mortgages, student loans and car loans.   He denies having anything to do with Citigroup's problems with sub-prime financial derivatives, which precipitated the corporation's demise in 2008/9, saved only by the government bailout.

Until Banga's arrival, MasterCard was, according to industry analysts, a staid company and a reliable cash cow owned by a consortium of American banks.    Banga's style is $90 tasting menus, $70 - $300 bottles of wine and an executive directive giving approval to all department requests not acted upon by MasterCard headquarters within two weeks.   Well, that sort of oversight should give all of upper management plausible deniability. 

How familiar does this sound?   What could possibly go wrong? 

Mr. Banga has said, "Cash is expensive. Cash is inefficient."   This is a pitch to governments, like our own, more than anyone else.   To people the cost of cash has already been expensed.   The fees and charges of electronic payments are additional. 

Statistically, cash is safer than any plastic, including debit cards, when identity theft is included.   You're more likely to get caught waiting behind someone paying with a check or having a plastic payment problem than some one paying with cash.   Plastic is convenient in that you don't have to carry cash but at a high price and that price is nearly impossible for users to determine.   One estimate calculated that credit card merchant fees cost an average family $600 a year in costs passed along in the price of the goods and services purchased.

When asked her assessment of the recent credit card reform, Gerri Detweiler said, "While it helped to stop abusive practices going forward, for some it didn't go far enough. It did nothing to help those with interest rates approaching 30%.

Under the new Banga leadership MasterCard's stock has more than doubled in value. 

Only 15% of purchases made worldwide are done with plastic or some other form of electronic payment system that Mr. Banga hopes to make ubiquitous.   His reasoning is simple: about 3.5% revenue on each transaction, plus fees, plus usury interest rates.   But the ads make it look so glamorous, easy and, oh, those rewards!

Why have so many Americans abandoned plastic?   We don't really know.   We also don't know how many people are using cash more often and plastic less, which is just as good a way to deny money to a financial system badly in need of real reform.

If people are starting to look more critically at their financial services purchases, the well heeled still too-big-to-fail corporations have the WMD option.   Don't choose to use our services?   We'll just make that illegal.

Hence the next financial battleground: national ID numbers to make it easier to have a mandatory cashless society.   From Current News India:

"Mumbai - October 18, 2010:  A day after the Indian government started a campaign to give identification numbers to all its 1.2 billion citizens, Ajay Banga, the newly minted chief executive of MasterCard, arrived in town, eager to lend a hand.

"The program will identify people based on fingerprints and retina scans, and could make it easier for the government to route food stamps and other payments to people below the poverty line.

"Mr. Banga says he believes he has a simple way to process the payments: via the MasterCard network."

Are you afraid now?

*"Micro business" is defined as a closely held business with sales revenues under $1 million, which typically would net owners well under $200,000 per year in taxable wages and/or profits, i.e. mom and pop enterprise.   Unfortunately, the term "small business" has been co-opted as a cover for much larger business interests and extremely wealthy individuals that have incorporated, so it is no longer specific enough to be descriptive.

Working the System to Death: How It’s Done

“The long run is a misleading guide to current affairs.  In the long run we are all dead.” John Maynard Keynes

And, therefore, the trick (“The Game”) is to leave the biggest bill for the next guy.  A painful lesson most of America learned from Big Greed when we all got stuck with the bill from Wall Street pyramid scheme called “securitization” or “derivatives” or “collateralized debt obligations” or any other word or phrase as a euphemism for fraud.

Keynes Distorted

Here’s the math:  Sales $ minus Cost = Profit or (Loss).  Run such a business in today’s world?  Good luck little man or woman.

I make you a sandwich at my store price:  $5.  Cost of bread, mustard, cold cuts, wrapper: $1.  Cost of store rent, insurance, taxes, utilities, et cetera per sandwich sold: $1.  Profit: $3.

Here’s where we bring in “The Players.”  Accountants, rating agencies, investment bankers, rocket scientists, statisticians, security traders and other notable geniuses in on “The Game.”  Note: Without complicity of “The Players” you are otherwise not allowed to entry the world of big business fraud, “The Game.”

Business Plan (“The Plan”):

Build 1,000 sandwich shops at $1 million each (prima facie absurd, but currently done every day).

Proposal:          $1 billion to build shops

                        $1 billion working capital to pay everyone and purchase insurance

Sell long term – forever outstanding or until bankruptcy – investments to raise $2 billion. 

Grow at 1,000 more stores per year. 

Fund store growth from cash flow “profits,” but never figure in paying back investors.

Let nobody use a calculator to consider paying off investment, as we will all be dead in the long run. 

Pay “The Players,” again everyone in on “The Plan,” exorbitant returns in the short run, while they are alive, so nobody blows the whistle. 

Pay workers (non-willing “Sub Players” with little choice) making and selling the sandwiches as little as possible. 

Out-source any work possible to countries with even lower wages (“Sub-sub Players?”)

Under cut competition and employ predatory pricing via national advertising, since you don’t really care if you make a profit in the short term, to eliminate small potatoes competition.

Shift any and all possible costs to others.  In “The Game” such costs are called externalities.  For example: pollution, health care, retirement, roads needed to reach your stores, gas to run the cars to get to your cheap prices, etcetera.

Run business at loss giving huge paydays and bonuses to “The Players” in “The Plan” until bankruptcy or death, otherwise known as the end of “The Game.”

Or, cook books to show paper profit and continue making pay-offs to keep “The Players” and “Sub Players” silent for as long as possible.

Repeat.

Diversify using same obfuscation in as many industries and sectors as possible: retail shopping, hardware, casual dining, etc.

Employ twists to “The Game.”

Find ways to have government purchase product or grant loans to purchase product from you.  For example: for profit education, housing, gambling, oil, farming, military industrial products, etcetera.

Find ways to have government mandate that your product must be purchased by everyone.  For example: auto insurance, home insurance, medical insurance, vaccinations, code required building products, mandatory inspections, etcetera.

Now, not all of the above is necessarily bad, building codes for example, but all of it has now been taken to an extreme with capital flowing only to “The Plans” that are playing “The Game” and are sure bets for “The Players” leaving the rest of us soon to be, if not already, “Sub Players” or “Sub-sub Players” or out in “The Cold.”

So, keep using your debit and credit cards, buying fast food, going to Big Box stores, banking at corporate banks, playing the stock market with your retirement, etcetera.  In the long run we are all dead.  What a wonderful world to leave to your children.

Obama Gets a Big Fat F for Leadership

From the Department of The Truth Shall Set You Free... but first it will piss you off. Who is the better leader: Barack Obama or Sarah Palin?

President Obama may be a great leader. I don't know if he is or isn't. But I do know this, up to this point he has not taken any viable leadership actions.

He has forgotten that the number one thing the President of the United States must do to be successful is to lead the nation, not to react, not to compromise and certainly not to follow the dictates of the opposition into oblivion.

He failed to lead on healthcare reform. He compromised even before the debate had begun. He framed the issue too broadly and then gave up more and more to the corporate sponsored enemy. The result is a revised healthcare system that now has over 50 million uninsured Americans, does little to nothing to control costs, and won't even make any of its biggest, and still unproven, changes for two to three years.

The President failed to lead on torture reform and prosecution, on prosecution of Wall Street banking and investment fraud, on bringing a swift end to two unjustified wars, on continued unemployment compensation for those out of work for over 99 weeks, and on energy policy, to name just a few important issues that define and set the tone for effective government.

His half measures on nearly every issue, though perhaps politically more digestible in the short term, have rendered him ineffective. Now he is left with a tepid left leaning electorate at best and unmotivated base that will sit out the upcoming midterms at worst. Count me in the company of the downright disgusted former supporters wrapping their fingers on the table questioning their President's motives.

Let's take a moment to grade the President on obvious aspects of leadership.

The President's Vision for America: F

What is Mr. Obama's vision for our country? If you know, please articulate it in comments for the edification of us all.

Some questions as examples of how the President might define a vision for our county that American citizens of many stripes could rally round:

How much of our power supply should be supplied by renewable energy, by when and how?

If our monetary and financial systems are not benefiting the people how should they be changed?

Are we to be a country with a strong, stabilizing middle class? If so, how are we going to reverse the current increase in poverty?

Are we going to be a country with full employment? If so, what needs to change and how are we going to make those changes?

Do we believe medical care should be accessible to all Americans? If so, the job of healthcare reform is far from done. What do you propose as the next steps toward the goal of universal health care?

Should we move toward isolation because globalization is adversely impacting American citizens, or should adjustments be made in our international trade policy, by when and what means?

The President's Articulation of His Vision for America: F

If President Obama has a vision for our country, he has done little to set it as an agenda to be achieved by a viable plan. His half measures reveal him as a political player working a system that is broken beyond repair, not as a leader hell-bent to make necessary changes for the survival of his county.

The President's Ability to Persuade the Public: F

To date the President has not been able to make the case that his ideas and decisions are correct. Of course, this stems from not having a solid vision as a foundation, but it goes further.

A majority of Americans are dissatisfied with healthcare reform, among them many of us on the left and most of us who consider ourselves Progressives. The situation is so bad healthcare reform is being treated as if it never happened. Maybe it didn't.

The reason the President is unable to make a case for his many of his actions and ideas is they are mere political compromises. He is unwilling to take a stand or draw a line in the sand for what he believe is right.

Also, his team has failed to provide cogent arguments for those policy changes he does endorse. Language seems to be a particular problem. Is it astimulus program (short-term and ill defined) or an investment in our future (long-term, with a specific demonstrable payoff). These are novice public relations mistakes.

The President's Message Consistency and Exposure: D

Each policy campaign the President has launched has been marked by a wait and see approach. He refused to develop, announce and stump for what he believed would be the best approach to healthcare reform. Instead he let others take the lead and he was left being a follower. In these cases, he gets an F for message management.

In other cases, he sets a broad objective but takes his case to the people in fits and starts. One day he's at an Ohio factory. The next day he's taking a swim in the Gulf of Mexico, and the day after that, and for days to come, we hear little or nothing from him.

(Aside and in relation to this discussion: I gots to give Sarah her props! Her message may be simple, but it's clear and she hammers away at it day after day after day. Sometimes she's incompetent even at this, but there's nobody who doesn't know what she claims are the big issues and what she would do if elected. A frightening thought!)

Again, this goes back to President Obama's halfhearted, half measures, half baked, half made arguments.

This country, and it's citizens, are in trouble Mr. President. This is not the time for a half governor or a half president to not be leading.

Three Ways to Put America Back to Work Now!

Labor Day 2010

In theory The Great Recession is history, but for those of us who live and work on Real Street the carnage and horror continues. On Real Street, outside the gated communities where 1% of the people own 90% of everything, we are now at 99 weeks and counting.

The insurance we purchased over years of dutiful employment has run out. We will be living on the street soon, it's just a matter of time.

Police evict MA couple evicted despite protest. September 2008. by Boston Globe (David L. Ryan/Globe Staff)

If you're a small business on Real Street, a business run by a real person that employs less than 25 real workers, that relies on real people to purchase real goods and real services, the economy looks like a desert of foreclosure and unemployment. We search the horizon from our shop windows and trade vans thirsty for customers. They're out there, but they're penny less and some are bleeding a real sadness that will be diagnosed as depression.

And, what has our government done to get us back to work? Nothing. The Congress has done nothing. The White House has done nothing. The Chamber of Commerce has done nothing. The Democratic, Republican, Green, Liberal, Socialist, Tea parties have done nothing.

The economists and the stock market have been cheering for months that our troubles are behind us. They say there will be no second economic crash. But, out here on Real Street the Gross Domestic Product is nothing more than a mantra economists chant while they contemplate in their dirty navels.

Week after week, Paul Krugman of the New York Times argues economic semantics with the likes of the Wall Street Journal as the main stream media throws gasoline on the fighters to fire up the political polarization. Cut the crap. None of it matters. We're dying from a thousand cuts of being nickle and dimed.

President Obama says there is very little the government can do to create jobs. I wretch and my eyes bulge each time I hear our most promising leader in decades spew such a lie. The government makes the rules. The current rules aren't working or were never enforced. Take the bull by the horns you shameless flak for Wall Street and do something: Put the American people back to work now!

Small businesses are running on cash flow fumes. High unemployment, less and less discretionary income, fewer and fewer middle class families means less customers spending less and less and less. Add them up: a few million 1099 workers without benefits here, tens of millions of part-time and freelance workers there, millions more struggling to pay the rent, before you know it you're talking real unemployment and peonage.

We can't do anything to create jobs? Really!?

Bangalore call center. Outsourcing Jobs to India. by Picture from TIME Inc.

One: End the H1B Visa and All Tax Incentives for Offshore Jobbing

The H1B is nothing more than a license to put American workers on the unemployment line. There are plenty of people right here in America right now that can do anything a person from any other county can do.

The only Americans that benefit from the H1B, other than CorpPersons, are the lawyers toiling day after day to craft absurd job specifications allowing companies to not employ Americans and import cheaper workers. None of that was the intent of the H1B in theory, but on Real Street that is exactly how this nonsensical device is used.

Who doesn't believe Americans can do any job here? Where in the world are there better workers? That we are failures and have fallen behind is a myth. We are the hardest working people in the world, you know it, I know it, the corporations know it and the government knows it. American workers are a real value, until you have to pay them what they're worth and a living wage necessary to live in America.

Requiring Hindi language skills to work in America to better work with a foreigner who has taken your job is circular logic any software spreadsheet would not let you get away with.

President Obama promised to end the tax breaks that are sending jobs offshore. I suggest he do more. Tax offshore labor the way you tax all of us here. Why do they get to work in another country and ship their labor here tax free? I'd like to say I'm phoning it in from Bangalore and, therefore, I'm not subject federal and state payroll, sales and use taxes on my services.

Educated, skilled, professional, eager to work Americans are on the sidelines now, benched without hope of getting back in the game. They are losing their skills to foreigners because Big Greed corporations will not let them train on the job, which is how any new and now necessary skills are learned.

Shame on you Mr. President. Shame on every elected member of Congress for allowing the H1B and its flagrant abuse continue. End it!

And, one last word on this to all the conservative economists and anyone else who spouts the lie that globalization is unstoppable and always good: Don't dare call me a protectionist. Until the playing fields are level from country to country globalization is just a ruse to enrich the pockets of Wall Street and the monied elite.

Finally, just to make sure that every able bodied man and woman in America that wants to work has a job, Mr. President, you should temporarily rescind all international trade agreements until this crisis is over, the crisis on Real Street that is.

Two: Enforce a Home Foreclosure Moratorium

At the beginning of the Great Recession banks took over homes and put them on the market. Then, they began warehousing foreclosed homes with chip board and spray paint. Now, they're ignoring mortgage delinquencies so as not to draw attention to their insolvency. In doing so, Big Banking recast neighborhoods into blighted slums and made the unemployed and under-employed into the indefinitely non-employable homeless.

These actions are despicable anytime, but particularly in a time of crisis manufactured from the greed and fraud of the same banks that are now tossing American families into the street.

The Obama Administration's, voluntary for the mortgage industry, Making Homes Affordable program is a farce. It is doing little to nothing to end the inhumane practice of making American's homeless. You not allowed to do this to a dog, but the banks can do it to American families.

I am certain a sane, practical and fair moratorium on home foreclosure for those who have lost their ability to temporarily pay the rent, due to no fault of their own, can be crafted.

Foreclosures, at this point in a worldwide financial crisis, are destroying people, families and the property that the banks claim is so valuable. Leave a house empty, watch it fall.

Mr. President, members of Congress, how can you watch this happen on your watch! How? Americans without enough work are spending sleepless nights, convulsing in hopelessness. You should be doing the same until you end this atrocity.

With a foreclosure moratorium in effect, out of work Americans can at least continue to spend what money they have on life's other necessities and have a address from which to search for employment. It will help break the downward economic spiral of both the housing crash and cash crunch. It's an instant unemployment benefit in the form of temporary rent relief. If time is money, and it is, all this costs us is the time it will take. Time allowing unemployed Americans a place to sleep that would otherwise be empty and deteriorating. Cash that will immediately be spent and, therefore, create customers and demand that will spur employment growth in the private sector.

Windmills in Copenhagen. by Common Alternative Energy Sources.

Three: Renewable Energy Investment

Oil is the problem. Renewable energy, made in America, is the answer. Renewable energy is the Erie Canal, the locomotive, the railroad, the little engine and the fuel that could and can drive our economy out of this crisis.

Don't call it stimulus. That will just get the know-nothing economists fighting with each other. It's an investment and it must be made now.

Start with enough money to put a new roof and solar energy system on every home in American. Grant every homeowner up to $40,000 in the form of a no interest loan with a payment equal to the loan amount divided by 360 months. These loans should be attached to the home's deed and pass on to the next owner until the grant is paid in full.

Necessary roofing a huge, quick boost in construction employment. by This Old House - PBS.

Next, I want to see windmills. They are the most beautiful things in the world and I want to see them everywhere. I live at the Jersey Shore and I would love nothing more than to see windmills to the horizon and beyond as I peruse the Atlantic Ocean.

They say we may break-even on the Wall Street (extortion) bailout called the Troubled Asset Repurchase Program (TARP). Big deal. What was the estimated possible downside cost of the banks plunging 90% of us into turmoil? I'll remind you, $700 billion. That ought to be enough.

Let's INVEST $700 billion over ten years on renewable energy. Earmark all of it for American companies and American labor. You off shore anything, you're out. Better set up a separate company to do this and we will be looking at the books, records and up your ass to see if you're hiding a H1B.

Don't tell me we can't spend it all in America. We can. (See Number Two).

Break-even? Ha! America will be ready for anything. America will be so green the sky might fall. The return on investment will be in multiples of hundreds, just like the old Erie Canal which, by the way, was called Governor Clinton's Folly. It proved to be one of the best investments New York State ever made.

Oh, you politicians that don't want to do this. As we say here in New Jersey, I would hate for to see sometem' bad happen to such a nice guy such as yourself. If you know what I mean.