American Voters Say ‘Throw Em Out’ As Anger At Public Salaries Grows

I joined a health club two weeks ago in the UK, as they had such a good deal on offer, and spending too much time on computers is not good for you.  After swimming a few laps, as I ease off in a jacuzzi or a sauna, I hear people talking.  Every day the talk amongst the other members is always the same, banks and money.  They are angry that while minimum lending rates have tumbled, retail rates have surged.  They are even more angry that they can’t borrow much anyway without sizeable deposits, and that there is no work.

It’s not a big sample, maybe six or so people over two weeks, but it is like a stuck record, and such a change from the confident almost arrogant Britain I left behind just a few years ago.
The recent stockmarket boomlet seems odd against this background,  with shares in Britain’s FTSE rising 10% in two weeks, pushed up by rather unconvincing European bank stress tests, and reports of company profits rising.  The key to future prosperity, though is not how much companies have been able to cut costs, but consumer confidence.  And the story on that, if what I am hearing at the swimming pool each week, is that is in free fall.
This report from the USA shows that the confidence of consumers there too is diving.  The political effects according to the writer of a coming hard recession, will be to fell all incumbents.  Obama, Sarkozy, Merkel, Cameron will all be one term leaders.  There will be a far greater likelihood of countries electing women as their leaders from hereon.  Small parties will benefit, and society will polarise into camps which blame each other for the economic malaise.
Whether those theories are correct or not, the key element will be a growing anger, as people demand that the jobs of the privileged pubic servants who earn far higher salaries than those in the private sector are axed.  When people see how much has been borrowed by government and its agents during the credit boom, and as panic sets in, people will get angrier still.
In the USA these are the facts….

  • 61 percent of Americans “always or usually” live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.
  • 66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.
  • 24 percent of American workers say that they have postponed their planned retirement age in the past year.
  • Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
  • Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.
  • In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.
(Business Insider, 7/15)
… Then people tend to get agitated when they learn that some part-time city employees are earning $100,000 a year.
Yes, it’s another “can you believe this?” financial story of a California town — specifically, a suburb where one in six live in poverty. The struggling taxpayers in this community have been footing the bill for outrageous city worker salaries. Investor’s Business Daily (7/26) reports that:
“…3 officials quit city jobs in poverty-stricken Bell, Calif., amid an outcry over their combined $1.6-mil salaries. Residents threatened to oust the mayor and 3 city council members who still make $100,000 a year for part-time work.”
The city manager of Bell, which is southeast of Los Angeles, earns a reported salary of $787,000 a year.
Public outrage was expressed at a recent city meeting. The basic message: “Throw ’em out!”
This episode comes at a time when the National League of Cities, National Association of Counties, and U.S. Conference of Mayors are teaming up to get the federal government to pick up the tab for local government payrolls. These three groups, says Reuters, are aiming “to press Congress on pending legislation that would give them $75 billion over two years to preserve jobs.”

With the November mid-term elections only a few months away, this level of public anger at government officials could dominate the outcome at the state and national level.
The same trends are starting in Britain and Europe.  Brits are normally phlegmatic and don’t bother much with politics, but their trust and disinterest in public affairs has been badly abused, and the coming slowdown will be so severe that the slogan ‘throw ’em  out’ won’t be long in coming over here.  I’ll be watching out to see if it crops up in jacuzzi talk in the weeks ahead.

FT –  The broadly market-friendly newsflow came to an abrupt halt, however, as the Conference Board said its confidence index had fallen to 50.4 in July, a five-month low, from an upwardly revised 54.3 in June. The expectations component of the report dropped to 66.6 from 72.7.

Consumer confidence falling by near 10% in a month gives the picture well enough.  They say that 90 is needed for a healthy economy.  We might be looking at 40s in another two or three months from here.

The Tap Blog is a collective of like-minded researchers and writers who’ve joined forces to distribute information and voice opinions avoided by the world’s media.

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