Tuesday, April 05, 2011

Democrats Offer to Triple Cuts in Social Spending While Tsunami of Inflation is Headed Our Way.

As "many workers are barely treading water as their wages fail to keep up with rising prices" the Obama administration and congressional Democrats have offered to triple the amount of cuts in social spending for 2011, from $10 billion to $30 billion, in order to appease congressional Republicans, who, after intense lobbying from the Tea Party, want to cut $61 billion,  before the April 8 deadline. These cuts "would mark the largest-ever federal budget cuts in social spending in a single year."

Despite the  criminal behavior of the ruling class, and, that throughout the bankster-created  crisis, their pay grew at pre-downturn clip, the extreme polarization of wealth, as productivity gains continue, and corporate profits surge, continues. It is not estimated that one in four American households have zero or less than zero net worth.
The modest wage growth appears to reflect lower expectations among the unemployed.

"There's a capitulation on the part of workers," said David Resler, chief economist at Nomura Securities. "They're increasingly willing to accept a lower wage than they might have thought they had to when the recession started. The fact that average hourly earnings are now weak or falling is an indication to me that the market is starting to clear."

This gives businesses an additional cushion at a time of higher commodity costs.

"Companies are in the dominant bargaining position," said Paul Ashworth, chief U.S. economist at Capital Economics, a consultancy. "They don't have the added problem of paying more for their wages as well."
And, if that's not depressing enough, according to the National Inflation Association a tsunami of inflation will hit the U.S. due to the Japan crisis.

Links:

It's the Inequality, Stupid

Greenspan Returns to De-Regulation

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