Welcome To Your Recession

Far be it from me not to obsess about who called who a monster, but we're in the middle of a recession.

U.S. employers cut payrolls for a second straight month during February, slashing 63,000 jobs for the biggest monthly decline in nearly five years as the nation's labor markets weakened steadily, a government report on Friday showed.

The Labor Department said last month's cut followed an upwardly revised loss of 22,000 jobs in January rather than the 17,000 reported a month ago. It also said only 41,000 jobs were created in December, half the 82,000 originally reported.

"This confirms the fears that have been lurking in the financial markets in recent weeks. The probability of a U.S. recession is at more than 50 percent," said Richard DeKaser, chief economist for National City Corp. in Cleveland.

I'd say it's 50% more than 50%.

The Fed's reaction to this is going to be to lower interest rates again. But that's not going to make people who are out of work or seeing shrinking equity in their homes suddenly regain confidence again. The pathetic "stimulus" won't be in anyone's hands until May, and people are mostly going to use it to pay off debt, so it won't kick-start the economy. People have been bled dry by consumer spending to prop up an unsound economy.

The problem is the extreme inequality as a result of the tax system distributing wealth upwards.

The nation's top 400 taxpayers reported a total of $85.6 billion of income on their federal income-tax returns for 2005 — an average of $213.9 million apiece, according to Internal Revenue Service data obtained by The Wall Street Journal.

....The top 400 taxpayers have greatly increased their share of individuals' income since the mid-1990s. The group accounted for 1.15% of total income in 2005, up from 1.02% the prior year — and more than twice as large as its 0.49% share a decade earlier. It's the highest percentage since the early 1990s, which is as far back as the IRS data go.

Even after adjusting for inflation, the minimum amount of income required to make the top-400 list has nearly tripled since 1992.

....The average federal income-tax rate for the group was 18.23%....well below the average income-tax rate of nearly 30% back in 1995, when Bill Clinton was in the White House. By contrast, the average income-tax rate for 2005, based on all returns filed, was 12.6%.

They don't pay any taxes, and if they have corporate status, they're probably setting up tax shelters and shell companies in the Caymans to avoid Medicare and Social Security taxes. Why John Edwards' two Americas claim didn't resonate is beyond me. It's 100% true.

UPDATE: The housing market is also a complete mess and the dollar is at its lowest level ever. These Fed tricks are killing us.