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Lou Dobbs: "reality does have to be legislated"

This is a doozy!

In the middle of a booming economy where home ownership is at a record high and the middle class has a better standard of living then they ever have before, Lou Dobbs and CNN ran the most perplexing story.

Sporting a spiffy new info-graphic that read "ASSULT ON THE MIDDLE CLASS," Lou started down the rabbit hole:

Well, the shipment of American jobs to cheap foreign labor markets is just part of the assault on this country's middle class. Prices on just about anything, in fact, are rising, despite outsourcing, despite a $600 billion-plus trade deficit. And American incomes are now struggling to keep up. [Editor's note: Inflation is up - to a whopping 1.6%. Is Lou old enough to remember Jimmy Carter?]

Bill Tucker has the report.

(BEGIN VIDEOTAPE) BILL TUCKER, CNN CORRESPONDENT (voice-over): The rich really do keep getting richer. [sigh -ed] Last year, the overall CEO's salary rose 5 percent to $10.7 million, while the overall income increase for all Americans was just 3.5 percent when adjusted for inflation. [Editor's note: Missing from the CNN report is the fact that the vast majority of "CEOs" run companies with 40 people or less. They are both CEO and OWNER. Many of these people took cuts in pay or took no pay at all during the recent down turn. That they would pay themselves more when business picks up is really quite predictable.]
...
TUCKER: And as the cost to heat homes, fill gas tanks and pay for health insurance continues to rise, the margin for error gets smaller.

AMELIA TYAGI, AUTHOR, "ALL YOUR WORTH": If something goes wrong, you can't say, "Why don't we just get half of health insurance, or why don't we give one bedroom back on that new house we bought?" These are costs that are largely fixed, and people don't have a lot of room to cut back on them.

[Blah Blah Blah, we're all going to die.]

TUCKER: And that squeeze is getting tighter. Homeowners cashed out almost half a trillion in equity in their homes over the past three years.

[Editor's note: A COMPLETELY phenomenally misused statistic. People did not "cash out" equity because they could not afford to fill their gas tanks, as he suggests. They refinanced to take advantage of lower interest rates. A perfectly logical thing to do. Further, the oldest trick the book is that if you want to buy a new boat or other big ticket item, you refinance your house and use that cash for the big ticket item. That way the interest paid is both at a lower rate AND tax deductible. And this is a business reporter?]

(END VIDEOTAPE)

[But not my post, it's in the extended section]

TUCKER: And it is that cash which has fueled much of the economy. Now interest rates are rising and home prices are no longer increasing. In fact, the last month the median price of a home fell almost 5 percent. [Editor's note: That's fake but accurate. Median prices did fall last month... Due to horrific weather in regions where they sell the most expensive homes. People don't usually go house shopping in 24 inches of snow. more...]

And Lou, given that set of figures, you have to wonder just how much gas is left in the tank for the middle class. [OHMYGAWD WE'RE ALL GOING TO DIE!]

[Then Dobbs just goes completely into left field...]

DOBBS: And you have to wonder why policymakers, lawmakers that presumably represent working men and women in this country aren't representing them on Capitol Hill and why the White House won't focus on the reality. I love the fact Senator Hillary Clinton saying that you can't legislate reality.

Well, there are a few folks, like 435 congressmen and 100 senators that are wondering just exactly -- well, make that 99 other senators -- wondering what she meant by that. Because reality does have to be legislated, or it's going to be unbearable for our middle class.

What the hell is he talking about? How exactly does one "regulate reality?"

The whole report sounded like something right out the Jimmy Carter era. The middle class was being "assaulted" by that runaway 1.6% inflation while their houses were losing 5% per month of their value. At that rate in 2 years, their houses will be worth nothing! The fact interest rates are up a bit speaks well for the economy. 1.6% inflation is historically near nonexistent.

Dobbs has been teetering on the verge of loony for a while now... I think he might be falling the wrong way.


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Comments (16)

Someone needs to have a cha... (Below threshold)

Someone needs to have a chat with our county assessor. My property tax assessment is up over 20% for the year. Home prices are up similarly...

Lou was one of my favorite ... (Below threshold)
BurbankErnie:

Lou was one of my favorite guys on CNN for quite awhile. About two years into Bush's first term, I swear he lost it. It was like night and day, he lost all objectionism towards anything that came out of the White House. I haven't been able to watch him since, and that is a shame because the guy was good and non partisan.

I have never liked Dobbs. H... (Below threshold)
Rob Hackney:

I have never liked Dobbs. He tends to have an anti-American agenda, and pushes a far laft socialist line. He hates business, CLEAR AND SIMPLE!

Last year, the overall C... (Below threshold)
scott:

Last year, the overall CEO's salary rose 5 percent to $10.7 million, while the overall income increase for all Americans was just 3.5 percent when adjusted for inflation.

Notice the difference... Given the inflation rate you mentioned(1.6%)-- the overall income increase for all Americans was higher than for CEO's.

But, do you think they want to tell that story?

Ted Turner has hated Americ... (Below threshold)
Rod Stanton:

Ted Turner has hated America for at least 45 years. Turner built CNN with "news men" who also hated America. What more do you need to know?

"There's lies, there's damn... (Below threshold)
John:

"There's lies, there's damn lies, & then there's statistics"

I'm sorry, but I have trouble with the 'middle class has the best starndard of living ever'.

I sincerely believe Clinton fudged the numbers in a huge way during his administrations and Bush kept up similar accounting practices.

I don't have any data on this. Just my subjective case is that I'm comparing myself and others to people who were in similar situations 20-30 years ago and I don't feel we have the same standard of living.

"you want to buy a new boat... (Below threshold)
Bucky Katt:

"you want to buy a new boat or other big ticket item, you refinance your house and use that cash for the big ticket item."

On top of that, as Kevin mentioned, values of homes (at least in my are of DC/MD/No. VA) have soared. Basically, home values have at least doubled in the past 5 years. Just more home equity to cash in on. It's the property tax part that's the bummer.

TUCKER: And as the cost ... (Below threshold)
Steve L.:

TUCKER: And as the cost to heat homes, fill gas tanks and pay for health insurance continues to rise, the margin for error gets smaller.

Whenever I hear people talk about the price of gas, it gets my blood up. I have a degree in economics, and simple supply and demand theory will tell you that gas is priced where it is primarily because...

that's what people are willing to pay.

Yes, there are supply factors that play into it and fears and blah, blah, blah, but the single biggest factor is demand. How many people can truly say that they have cut back on driving in the last two years? I know I haven't. I go to the pumps and fill up. Yeah, I gripe about the price, but I don't drive less because of them.

What that tells me is that gas isn't over-priced now. It was UNDER-priced before. In fact, we may be approaching a quasi-equillibrium point in the market. Prices have stopped fluctuating as wildly in the past few months. Of course, during the summer when demand goes up (that sounds like a market force not an evil Halliburton force,) the price will rise again. Seasonal fluctuation is to be expected.

The same can be said for interest rates. People forget that it hasn't been that long since we saw 7+% interest rates. The market said those rates were too high and "forced" them downward. As the economy came to life, the same market said that the rates were too low and "forced" them upward again.

Granted, there is an old saying that you could lay all the economists in the world end-to-end and they still couldn't reach a conclusion. However, in this case, the conclusion has to be that there are people on television trying to deliberately paint a false picture for an audience that may not know any better.

John- Are you mad?... (Below threshold)
Paul:

John- Are you mad?

You don't feel the middle class has the same standard of living as they did 20-30 years ago?

How old are you?

That would put us smack dab into the middle of the Carter years, with 20% inflation and unemployment creeping up. Gas lines 2 miles long and the country in a general state of (to coin a phrase) malaise.

If you were trying for satire then you have a point. If you were trying to make a real comment, you failed. Miserably.

Shoot even with the snow th... (Below threshold)
Just Me:

Shoot even with the snow the home prices in our area are still going up-it is that supply and demand thing-people have realized how cheap the houses were in our area of the state, and have been moving in in droves over the last few years, which has cause the home prices to go up.

If we wanted to buy our house right now, we wouldn't be able to afford it, because it has more than doubled in price over the last 4 years.

I think it is hard to take home sales, and generalize with them, it is all about the supply and demand in a specific region.

Paul,I agree with yo... (Below threshold)
tongancat:

Paul,
I agree with you as to the Carter era. I was born in 1970, but I still remember the long lines at the gas pumps and the general feeling of stress and worry that filled the adults in my life. I remember literally praying that Reagan would beat Carter so that things would get better. I also remember my parents with four children had a much harder time providing them with the basics than my husband and I seem to have doing the same with three children. There was rarely an extra dime back then for the 'extras'. If there are difficulties in providing for your family nowadays, it can often be directly related to our need to keep up with the Joneses, and our willingness to get into debt instead of saving and waiting for major purchases.


You know I don't remember l... (Below threshold)
Just Me:

You know I don't remember long gas lines during the Carter years, but I lived in a fairly small town. I remember the cost of gas being high, and I remember news reports about the lines etc, and my very, very liberal mom did not vote for Carter in 1980, I think that is the only republican she ever voted for.

You wouldn't expect CNN to ... (Below threshold)
Just Don:

You wouldn't expect CNN to report an income increase for all Americans in a positive way, would you?

By the way, before you buy that "big ticket" item expecting the interest to be tax deductible because you financed it with a home mortgage, you may want to contact your tax accountant.

Dobbs is Moyers in a nicer ... (Below threshold)
MMM:

Dobbs is Moyers in a nicer suit.

TUCKER: Now interest rates are rising and home prices are no longer increasing.

What the hell is this hack talking about? Jan 2005 avg rate was down .16 from July'04 and up an omagod-sky-is-falling! .09 from last January.

And home prices ALWAYS slow in winter.


TUCKER: In fact, the last month the median price of a home fell almost 5 percent.

Lost 5% in Jan, you say? Weh-hell then, some places are still up 30 to 40% for the year! (Seems [email protected] are too lazy to read their own company...)

http://money.cnn.com/pf/features/lists/nar_4q/

Also see nifty graphs: http://www.realestateabc.com/outlook/overall.htm


When you criticize Lou Dobb... (Below threshold)
Reality Geezer:

When you criticize Lou Dobbs statement that the middle class is doing just fine, it depends on what "you" think is a good standard of living. Standards of living are not measured by "money" alone, and some of us remember when there was some honesty and respect for others in our "standard of living".

To Steve L:I'm not... (Below threshold)
James:

To Steve L:

I'm not a professional economist, so try not to laugh too hard at the terms I don't know.

I'm pretty sure there's a technical term for a commodity whose demand is extremely inelastic, and gasoline is the cannonical example. The thing is, if the price of bread goes up, you can make your own, or eat more pitas, or shop for a different bakery or grocery store, or buy in bulk, or... the point is, you have options. If the price of gas goes up, you can a) buy a conveyance that doesn't run on gas, or b) move somewhere that you don't need a car to get around. Both of these are drastic and expensive measures. Sure, you can cut back on superfluous trips, but how many of us just go driving for the hell of it even when gas is "cheap"?

Anyway, the problem is that you don't have a lot of feasible/competitive non-gas alternatives (though, I hear that hybrid-electic cars are selling like proverbial hotcakes), you can't make your own (oil, that is), you don't have a choice where you get it (again, oil, that is), and you don't really have any way of getting a "cheap knockoff" (akin to buying "store brand"). Texaco marketers aside, gas is gas is gas. Opec basically has our balls in a salad-shooter.

The electric company could charge you 2 bucks per kilowatt-hour (I pay about 7 cents) and since they own the only power lines that run to your house (and I don't think it's realistic to have some other company run their lines in to compete), your only other option would be to install your own generator -- expensive to install, heavy on the polution and maintenance, and, funny enough, it runs on oil. Solar or wind power? Let's be serious and assume you're not trying to live in a house where all the electricity is used up powering a fan and a toaster oven. So the government steps in and says either that the power company has to charge less than such-and-such a rate, or that they have to create some sort of "power sharing scheme" where, while one company may own the lines, a bunch of companies can bid to "supply power to you".


Bottom line: gas is supplied monopolistically, so gas prices are much, much more likely to change because of the supply side than the demand side.




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