Economic News Pre-Election

Mortgage foreclosures in the U.S. are up 43% compared to last year. One might think the 2005 Bankruptcy Bill President Bush signed would have cut foreclosures instead of increasing them. Who loses when a foreclosure happens? Not the mortgage company or the realtor as they made money on the first transaction.

How did the Bankruptcy Bill impact the other group of lenders, credit card companies? Their pretax profits rose some 30% to $18.5 billion from 2004 to 2005. Revolving credit debt reached a new record in August of 2006 at $846 billion.

Now what was the major cause of bankruptcies when the bill passed? High medical debt comprised the cause for most Americans historically declaring insolvency. What did the bill do about that? Absolutely nothing, zip, nada. A study of Kansas farmers already on health insurance similar to the President’s solution of high deductible plans revealed growing, not decreasing medical debt.

CNN had a report on exporting a new layer of professional American jobs overseas at a savings to U.S. businesses of $58 billion. The Chamber of Commerce likes to talk about the multiplier effect of bringing in new employers. A dollar in new salaries ends up impacting the community as it is circulated through the community. What happens when those dollars are taken out and sent overseas? What is the ripple effect in that case?

The President of the U.S. Chamber of Commerce suggests no negative impacts occur in cases where jobs are sent overseas. He went as far to say “the benefits from one displaced job far outweigh the costs”.

Count me confused. How do new jobs in a community create benefits while losing hometown positions to foreign workers do likewise? It appears anything a business does benefits everybody. A little closer scrutiny reveals who benefits, the politicians slinking up to the corporate money trough. It appears Chamber Execs, like politicians lie. Who gets to have it both ways (other than evangelicals preaching against drugs and gay sex, while secretly having both)?

However, despite American’s savings turning negative, mortgage foreclosures increasing, credit card debt soaring, and having nearly 47 million people without health insurance, the economy is humming on all 4 cylinders. The problem is the engine has eight pistons.

What’s growing are corporate profits and corporate scandals. It’s estimated nearly 1/3 of publicly traded companies did something untoward with their stock options. That amounts to 2,000 companies where the top dogs unethically manipulated their incentive performance system for financial gain. In straight talk, they cheated. Nearly 80% of workers said they would switch employers to work for a more ethical concern.

So the worker suffers as more bills are passed on to them by the government/business combo while elected leaders and corporate chiefs manipulate the system to maximize their payola. It’s lever pulling time so keep this in mind as you head to the ballot box.