This long drawn out recession has really taken a toll on the middle class-a good article below summarizes this backwards economic trend inflicting most Americans.
Now it is Italy's turn to go on the European bail out merry go round.
The financial headlines for today are:
1) Stocks sink after dismal June jobs report-From the AP
An unexpected drop in hiring put an end to the excitement that had been bubbling up on Wall Street over the past two weeks.
Stock indexes fell sharply Friday, erasing most of the week's gains, after the government reported that U.S. employers created the fewest number of jobs in nine months. The 18,000 net jobs in created in June were a fraction of what many economists expected and dampened hopes that the economy was improving. Private companies added jobs at the slowest pace in more than a year. The unemployment rate edged up to 9.2 percent, its highest level this year.
A broader measure of weakness in the labor market was even worse. Among Americans who want to work, 16.2 percent are either unemployed or unable to find full-time jobs. That was up from 15.8 percent in May.
"There's just a lot more evidence than before that we're in an extended weak patch," said Brian Gendreau, market strategist for Cetera Financial Group. He said private economists will likely reduce their projections for overall economic growth this year.
The Standard and Poor's 500 index fell 9.42 points, or 0.7 percent, to 1,343.80. That eliminated the index's gains from Thursday and left it with a 0.3 percent gain for the week.
The Dow Jones industrial average lost 62.29, or 0.5 percent, to 12,657.20. The Dow, which had been down by as much as 150 points Friday, had only its second down day over the past nine. The Nasdaq composite dropped 12.85, or 0.4 percent, to 2,859.81. It was its first loss in two weeks.
Companies whose business would be most affected by a weakening economy were hit hardest. Bank of America Corp., General Electric Co. and Boeing Co. were among the biggest decliners in the Dow average.
2) How the Bubble Destroyed the Middle Class-From Market Watch
A lot of people say they are deeply puzzled by the slow recovery in the U.S. economy. They look at the 9+% unemployment rate and the mediocre growth in national output, and they scratch their heads and wonder: Where is the boom that inevitably follows a deep bust, such as we experienced in 2008 and 2009?
But there is no mystery. What other result would you expect from the financial ruin of the once-great American middle class?
And make no mistake, the middle class has been ruined: Its wealth has been decimated, its income isn't even keeping pace with inflation, and its faith in the American economy has been shattered. Once, the middle class grew richer each year, grew more comfortable, enjoyed a higher living standard. It was real progress in material terms.
But that progress has been halted and even reversed. In some respects, the middle class has made no progress in a generation, or two.
This isn't just a sad story about a few losers. The prosperity of the middle class has been the chief engine of growth in the economy for a century or more. But now our mass market is no longer growing. How could it?
The middle class doesn't have any money.
There are a hundred different ways of looking at the economy, and a million different statistics. But if you wanted to focus on just one number that explains why the economy can't really recover, this is the one: $7.38 trillion.
That's the amount of wealth that's been lost from the bursting of housing bubble, according to the Federal Reserve's comprehensive Flow of Funds report. It's how much homeowners lost when housing prices plunged 30% nationwide. The loss for these homeowners was much greater than 30%, however, because they were heavily leveraged.
Leverage is an amazing thing: When prices go up, the borrower gets all the gains. And when prices go down, the borrower takes all the losses. Some families lost everything when the bubble collapsed, others lost very little. But, on average, American homeowners lost 55% of the wealth in their home.
Most middle-class families didn't have much wealth to begin with — about $100,000. For the 22 million families right in the middle of the income distribution (those making between $39,000 and $62,000 before taxes), about 90% of their assets was in the house. Now half of their wealth is gone and it will never come back as long as they live.
Of course, rich folk lost lots of wealth during the panic as well. Their wealth is mostly in paper not bricks — stocks, bonds, mutual funds, life insurance. The market value of those assets fell further than home prices did during the crash, but they've mostly recovered their value now. The S&P 500 (^GSPC - News) lost 56% of its value when it crashed, but it's doubled since then. Stocks are down about 13% from peak.
The rich recovered; the rest of us didn't.
If losing half your meager life savings weren't bad enough, the middle class has also been falling behind in terms of income for decades. Families in the middle make most of their money the old-fashioned way: Working their fingers to the bone for 40 years for wages and a modest pension.
3) Berlusconi Tries to Allay Market Fears-From The Wall Street Journal
Italian Prime Minister Silvio Berlusconi on Friday sought to dispel escalating market concerns over a new bout of political instability in Italy, saying comments he made to a newspaper about the country's economy minister not being a "team player" were taken out of context.
The comments attributed to Mr. Berlusconi by Italian daily la Repubblica came as the economy minister, Giulio Tremonti, made the front page of virtually every newspaper in Italy after it emerged late on Thursday that the minister had been using a Rome apartment provided to him by a former top aide who is under investigation for corruption. The two events—plus continuing concerns that debt-laden Italy might be dragged into the European debt crisis—prompted Italian bond yields to rise and Italian bank shares to slide during the day on Friday.
In a statement, Mr. Berlusconi didn't deny the comments made about Mr. Tremonti, but criticized the Repubblica report, saying that "a friendly conversation was transformed into a formal interview." The premier also issued a separate statement saying he and Mr. Tremonti were meeting for lunch to plan out the political agenda for the next few days.
Separately, Mr. Tremonti tried to distance himself from the probe involving his former aide, Marco Milanese.
For months, prosecutors in Naples have been investigating whether Mr. Milanese—a lawmaker who formerly acted as a laison between the Economy Minstry and Italy's tax police—relayed confidential information related to a criminal investigation to a businessman in exchange for cash and gifts. On Thursday evening, a Naples judge filed a request to Parliament for approval to arrest Mr. Milanese; in Italy, parliament has to approve requests for any lawmaker to be arrested. In that request, viewed by The Wall Street Journal, the prosecutor claimed that Mr. Milanese paid €8,500 ($12,209) to rent a Rome apartment for Mr. Tremonti's use.
Mr. Milanese—who resigned from Mr. Tremonti's staff in late June after being questioned in the probe—didn't respond to phone calls to his office in Parliament. Mr. Milanese's lawyers didn't respond to phone calls seeking comment on the matter.
In a statement late on Thursday, Mr. Tremonti said that during his 15 years of commuting to Rome from his hometown northern city of Pavia, he would normally stay in hotels and military barracks. However, Mr. Tremonti said he had occasionally used the apartment rented by Mr. Milanese, "As of tonight ... I will change the living arrangements," Mr. Tremonti added.
Pierluigi Bersani, leader of Italy's leftist Democratic Party, told a press conference on Friday that Mr. Tremonti's ties to Mr. Milanese were "worrying."
"The whole government must resign. It's not a question of adjusting the situation of a single minister. We cannot continue with the made-for-TV movie," Mr. Bersani said.
Mr. Tremonti is one of the most highly respected ministers in Mr. Berlusconi's conservative government. For years, he has been the backbone of Italy's efforts to keep its public spending under control as the sovereign-debt crisis has turned up scrutiny Europe's weaker economies. Mr. Tremonti is the architect of the government's plan to slash €40 billion in cost savings from Italy's three-year budget.
Quote of the Day from Dave Ramsey.com:
Words can show a man's wit, but action shows his meaning. — Ben Franklin
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