Consumers sulk as inflation devours their stagnant income

Lowering the interest rate only robbed savers. Our gov. is always looking for a popular solution. Although the federal reserve is not a gov. agency, it follows political pressures. A strong dollar and a strong central gov. will do more than anything else to guarantee a speedy recovery.

Nice thoughts but it may be a bit too late. When the Fed cut rates it was more politically motivated and designed to keep the stock market stable. At least that is my take. Try to imagine what may have happened without the intervention. I have been commenting in this area for a long period of time and way-way back I said that the Fed is going to wind up in the position of the old saying of "between a rock and a hard place". They are not dumb people and they had to know the possible consequences - and perhaps they have a course of action. We will just have to wait and see. I expect they are just going to sit tight for as long as possible and than start to raise. On the credit side a lot has happened, but most has not been prime news. The Fed has made a concerted effort to shore up the commercial banking system which tells me that there is trouble there. The "fly in the ointment" has been oil and it's rise. I don't think that this was anticipated and now it is fueling (no pun) an inflationary spiral. This bears similarities to the early 70's embargo period with a myriad of new problems thrown in. There was no sub prime mess and rampant housing default, neither was there a water shortage looming on the horizon.
If the weather continues to be fickle this last line will overshadow all others.

The consumer confidence level is the result of more than stagnant income and the risk of job loss. In reality, I sense an overall feeling that there’s a bad moon rising -- that something big is about to happen, no one quite knows what it is, but for right now they're not spending any more than they have to.

Our current recession is NOT the result of the subprime mortgage debacle – that is just being used as a scapegoat. In reality, the subprime mortgage debacle is more of a symptom than a cause of the problem.

Inflation is not 2.6 percent.

I think the government’s 2.6 percent “announced rate of inflation” is and has long been, to be polite, a lie. They’ve been feeding us this number for years, when I think in reality the true rate of inflation has been much higher. My guess is somewhere between 8 and 15 percent – since about the mid-1980s.

Since that time, middle-class-and-below wages have remained stagnant or fallen due to globalization, outsourcing, and downsizing.

Just in the last eight years my own utilities are up 200 percent (and about to double again once Pennsylvania removes the rate caps from electricity in 2009), industrialized food is more profitable for the corporations, but lower quality, less nutritious -- sometimes poisoned -- and skyrocketing in price, my property taxes are up some 80 percent, gasoline and healthcare are completely out of control. Meanwhile, my income has increased only about 10 percent – and for a middle-middle class earner, that’s actually good, but it was largely due to the fact that I took a second job...as a military reservist. And, of course, here in Northeastern Pennsylvania, the real estate bubble never did inflate like the cost of everything else.

The average guy is really, really hurting right up through the upper middle class.

Now, are we in too much debt? No doubt yes, because lots of people used expensive credit foisted upon us by a freewheeling unregulated credit industry to pick up the slack created by double-digit inflation in the face of stagnant or decreasing wages. They wanted to maintain their lifestyles, and they did…until now.

The problem is, quite simply, that inflation has exceeded income growth for at least twenty years. Meanwhile, the corporatists have created a culture of credit and debt in the United States while at the same time selling out our jobs overseas and slashing wages for those lucky enough to keep their jobs, even as our social safety nets have quietly disappeared.

The backlash has already started. Right now, there is a web site dedicated to helping people (for a hefty fee, of course) orchestrate their own foreclosure while minimizing out of pocket expenses so they can start over (www.youwalkaway.com). There are similar sites to educate people on how to stiff the credit card companies.

Corporate policies are running smack dab into the Law of Unintended Consequences: The very wealthy have a saying: “If you owe a bank 200,000 and you can’t pay, you have a big problem. If you owe a bank 200 million and you can’t pay, then the bank has a big problem.”

The “stimulus package” is not going to help at all – most people are going use that money to make a credit card or mortgage payment. Unless Congress acts decisively, quickly, and drastically to stop the fleecing of America by corporate interests, lower the boom on the credit industry, cut the insurance industry out of heath care, create an intelligent energy strategy that is not based on pure profit alone, secure the border, and revive safe and sane labor and social laws, the age of American hegemony will be over so quickly it will make our heads spin. The age of Asian Hegemony will appear overnight, and it will be our own damn fault.

We need a new New Deal.

Mikey that was a great message .Too true. Give corporations some more money so they can send the rest of our jobs overseas. That is what they did with the profits the US consumers gave them.I hope everyone quits buying. It is all made overseas so who are we hurting.I don't want any more junk. I would rather have one nice American made thing then 10 Made in China.I don't trust their stuff anymore.

Quick note: The FED, by lowering interest rates have fueled BIG inflation pressures everywhere. They, the FED have made a huge mistake and they now know it, but most of the FED higher ups make a lot of money and this huge rise in gas prices DO NOT effect them. They make to much money. I rent, do not own a home and had a nice CD that was paying an extra $ 500 into my pocket every month. I still have the CD, but it now pays only $ 140 dollars a month to me. The FED doesn't care about the other 95% of all Americans who do not have Mortgage problems but the FED is now stealing our savings interest to help the other 5% of walkaways who will walk away from their mortgages anyway. If the FED had left interest rates at 5% this mortgage crisis would have been still painful but it would have worked its way out after a few years.