Quiet Distress Among the (Ex) Rich

While the wealthy don’t get much sympathy on this website, the restructuring of the economy to save the banks at the expense of pretty much everyone else has hurt some former members of the top 1% and even the 0.1%. And it’s also worth mentioning that some of the former members of the top echelon occupied it when the distance between the rich and everyone else was much narrower than it is now.

The fact that economic distress has moved pretty high up the food chain is a sign that this recovery isn’t all that it is cracked up to be. Even though the media is awash in stories of how much stronger the economy is getting, I see all sorts of counter-indicators locally: more restaurant and retail store closures than during or at any point after the crisis (and pretty long store vacancies), reports from my hair salon that business is not all that great, and my gym offering hefty discounts on renewals for the first time. Perhaps NYC is in a mini-downdraft, but that would be the reverse of the pattern in recent years, where thanks to the tender ministrations of the Fed and Treasury, the city has weathered the downturn better than most of the US.

A cohort that is in quiet distress is women who were divorced 15 or more years ago. Conventional wisdom is that London is a great city for woman to go through divorce, and New York is a lousy one. I have no basis for validating that statement. But regardless, the assumptions in handing out settlements back then, that the ex wife would be able to earn a decent return on her investments and land at least an adequately paid job when she was done receiving alimony, are out the window now. So women who thought they’d gotten enough to be able to raise their kids and live comfortably, or at least adequately, are now scrambling in their mid 50s to mid 60s to figure out how to survive, when reinventing yourself at that age is an against-the-odds proposition.

Here’s a story from someone I’ve known for the past three or so years (details disguised). We’ll call her Karen. She is from a wealthy family, sent to private school in Europe, attended an Ivy League college in the mid 1970s and got a graduate degree in math from one of the top programs in America. She married someone also from a wealthy family who is now a billionaire. Karen wound up inheriting almost nothing because the very successful manufacturing business that her grandfather built was run into the ground by her father.

Karen got divorced in her late 30s, which was about 20 years ago. She gave up a lot in the settlement to get custody of her children (long shaggy story as to why that was the case). She moved into a modest apartment and now is in an even more modest apartment (and it’s rent stabilized, so it is also cheap for what it is). She got another graduate degree (not an MBA, a useful one) that with her math/statistical chops should have positioned her well to get work when she was done raising her kids and the ailmony ran out.

She found, when she hit the job market in 2009, that no one would hire her for sort of positions that her training qualified her for. It was not clear how much of that was due to age discrimination or just the hyper-competitive state of the market. She managed to get herself hired by a series of new or newish ventures. The compensation either had a large sales component or “on the come” component. She wound up leaving each one, and even though she’d be the last to put it this way, having heard these situations evolve, in each case it was about an ethical issue. For instance, in one she was asked to misrepresent the company’s services to prospective customers. She tried hard squaring that circle and was still meeting her sales targets but the owner took umbrage at her refusal to adhere closely to his basically dishonest sales pitch. For another, she was working on the FDA process, and disagreed with management’s approach of marketing to the FDA as opposed to complying with the data disclosure requirements.

After each of these jobs fell apart, and she was getting near the end of the alimony runway, she was panicked. She also supports her brother (she pays the taxes and maintenance on her half of a house they inherited without charing him rent). She was seriously looking into cleaning apartments.

To her surprise, her ex-husband did not cut her off completely; he’s paying her a greatly reduced amount. And she has landed a job as an adjunct professor teaching calculus at a local school. She says matter of factly, “I thought with my two graduate degrees I’d be able to earn $80,000 a year. My market value is between $23,000 and $30,000.” Keep in mind that what she makes as an adjunct is what she’d make cleaning five Manhattan apartments a week.*

So with her bargain basement rental and the stipend from her ex, she has enough to get by and enjoy some small luxuries, like going to London once a year to see her daughter who is in school there.** But the adjunct job is no party. Some of the students are openly hostile to taking math from an older woman, and last term, when one of the instructors pulled out of teaching a course, she got bagged to take on far more in the way of teaching (as in both number of lectures and number of students) than goes with her pay.

In her circle, which I infer consists of people she kept in contact with from her school days, plus people she met through her children’s schools, she says she knows of no one who is not in worse shape than they were a few years ago (this includes her billionaire ex) and many are in moderate to acute stress. For the other divorced women she knows, even if they aren’t in trouble now, they can see that their assets won’t last them the 20 to 40 years of life expectancy they have, and they see no way out of their box. One of her other friends who isn’t as educated and resourceful as Karen needs to send more money to her mother and was making a serious effort to get apartment cleaning work. Another has a house she was renting out for income, but the local market changed and she was suffering a lot of vacancies. She’s been refusing to sell the house because “she can’t afford to take the loss” which really means psychologically she can’t face up to the idea that she has less in the way of assets than she thought she had.

A sign that of broader underlying stress among the supposedly well off: those in Karen’s circle say that the word in the charity circuit is that donations are down this year.

The problems that Karen and her friends face isn’t their fault. Just as it’s easy to demonize the poor who don’t have jobs as deserving of their fate, when most of them want to work and many had good records before the economy was rearchitected to remove a lot of decent jobs and leave people scrambling for those who remain, so to it is easy to demonize the better off who similarly had the rules changed on them when it is too late for them to do much to change course. Just as many of the people who are desperate for work made choices that seemed sound, or defensible mistakes, so Karen and her friends weren’t profligates. They got what should have been enough for them to live on if they didn’t overspend. And Karen is quick to decry women who partied too much or lived too high, so for the most part, that isn’t a big driver of the quiet panic around her.

Thanks to ZIRP and QE, these women face the same problem as retirees, just at a somewhat higher starting point. The equation among the downwardly mobile wealthy was that if you had more than a million dollars, you could put it in muni bonds, earn 3-5% after tax, and that plus Social Security and a paid-for house meant you had nothing to worry about unless you got a really costly ailment. So allowing for personal risks and the possibility of needing to support family members, a couple of million dollars would be ample to live off your income and not touch your principal, which also meant you could leave an inheritance to your kids.

No longer. Now to get 2% in munis, you have to go out to a ten-year maturity, which means you are taking real interest rate risk. And if you are no longer able to earn enough income off your principal, you either have to cut way down to live off what it yields now, or if that is still not enough, to chip away at your principal. That means you are faced with the underlying terror of the real odds of being peniless in your old age. Those who are still in the labor force and have lousy personal balance sheets can keep that eventuality at bay by virtue of how just getting through the day occupies the mind plus the belief, whether true or not, that they can keep working until they drop. Retirees and the de facto retired, like these divorced women, have the high odds of an eventual financial train wreck much more in their faces. And with our society becoming more mercenary and callous, they are unlikely to be able to rely on the charity of others if that occurs.

So as much as many of you will probably see these women as undeserving of sympathy, their story is the same as that of many middle aged and elderly people: not enough in the way of assets to see them through their likely lifespan, with their problem due largely to the inability to earn a decent income from savings under ZIRP. The fact that there are many people who are desperate now does not lessen the plight of those who are long financial distress futures. Everybody has his own personal rate of financial decomposition. The case studies in this post have the time and financial savvy to see their decay profile and its implications earlier than many others do.

____
* Going rate is $100 to $150 for a one-bedroom, depending on size of apartment and how much the cleaning person does (a big variable is whether laundry and pressing included; ones with more bedrooms and more than one bath obviously command higher rates). Conservatively allowing for $120 an apartment, 48 weeks a year, and no Christmas bonus (pretty much everyone does give a bonus, generally an extra session’s pay) is $28,800 a year. But the work is not as steady as a day job.
** Before you start moralizing that she should leave NYC, she is keen to get out but it is unlikely to get her overhead down much. The cost of owning and operating a car is a big offset to the savings on housing.

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158 comments

  1. Nonanon

    I cleaned houses for 5 years after college. I made $300/wk nearly tax free, $15k/yr, owned a vehicle and had no debt. Now I make $84k working in the public sector, and have zero equity thanks to my own stupidity. I can only pray I make it to retirement and pay off my debt before I die.

    1. Stelios Theoharidis

      I have a recommendation for your friend. I don’t mean to be patronizing but a possibility for her currently would be to do private general tutoring as well as specialized tutoring for young adults and college students for the big exams, SAT / GMAT as well as your randoms having difficulties with advanced mathematics necessary for Engineering degrees, etc. It may not be excellent pay but it could be a step up or a supplement to what she is making presently. Unfortunately that is what a lot of teachers have to do to supplement their income. It is a shame that we pay teachers so little.

    2. Ljamin

      “So as much as many of you will probably see these women as undeserving of sympathy,”

      The “many” would be younger men who don’t have a clue about the social conditions that limited a woman’s choices 20+ years ago – and for that matter, STILL DO, as younger women are discovering.

      Our first priority had to be our children. Losing them was often the price of “real” liberty.

      Women in these conditions are the last lambs led to sacrifice on the alter of the testosterone god. They certainly do deserve our sympathy for this final injustice.

  2. pretzelattack

    but i thought the answer was to get useful degrees (sarcasm). 20 years of schooling and they put you on the day shift….

  3. Clive

    The big (not so secret) secret where I “work”: in order to climb the greasy corporate pole (and thus move from the absolute bottom rung of what now only just qualifies as Middle Class — and even then it is very precarious — and into something more like being well off and even then not really “rich” by historical measures) you have to be prepared to be dishonest.

    The dishonesty required takes many forms. Some, like the heroine of the story, Yves’s friend above, involves firstly a) breaching some compliance requirement or other the b) covering your tracks and making a good fist of hiding the evidence. Some requires (again, similar to the above tale) mis-selling — and this too will necessitate not being caught and coming up with methods of protecting your employer. A variation is being a paid fall guy (or fall gal) and taking the flack for failures caused by others (more senior) or by a patently doomed strategy. Finally, there’s a living of sorts to be made by being able to entrap others to do the wrongdoing (of course, how you do this necessitates you coming up with an effective approach since you won’t find that in the company’s Standing Operating Procedures.)

    The middle class is thus being criminalised (or at the very least required to act unethically or risking civil prosecution) as a price of entry.

    The only escape is to try and get higher up the pyramid where the rewards are of course greater — but this is a minor consideration. Because the real motivation is that the closer you get to the c-level the more protection you get.

    Bit of an extreme analogy perhaps, but now I know how they found people willing to be concentration camp guards.

    It will all end eventually, but the when, how and why I can’t quite fathom out yet. End it will, because it simply can’t go on indefinitely like this.

    1. Jim A

      At some level this is a pernicious effect of (allowing/encouraging/rewarding/Sgt Schultzing) a criminal upper management. Corrupting those below them validates their own morality. They have NO patience for those who won’t “go along to get along” or “play the game.” Another reason why the masters of the universe running things for whom fraud is a way of business and fines and lawyers are a cost of business need to be inside jail cells.

  4. Northeaster

    A couple observations: First, if she is a woman, it appears she has that going against her. Second, as people live longer, growing older, possibly working longer, we’re now competing against our parents and grandparents for jobs. There’s simply not enough “good” jobs for the professional workforce. Don’t get me started on the H-1B either, three Ph. D’s in the past three months, two Asians and one from England. Obviously there isn’t a single Ph. D American candidate looking for work in chemical/pharma right?

    http://research.stlouisfed.org/fred2/graph/?g=UgY

    If the student loan data is any indication, there’s a whole lot of “older” folks going back to school, only problem is there are not many jobs for them either. The delinquency rate for 40-49 is astounding, as is the amount of debt for 30-39.

    http://www.newyorkfed.org/studentloandebt/

    These alone would not give me pause, but combined with everything else going wrong, the dystopia is here, today. I should have started a list of the amount of co-workers who have spouses over 40 looking for work that can’t find well paying professional jobs. Survival mode it is.

  5. 6th-generation Texan

    In spite of your genuine sympathy and best attempts to explain/excuse your friend’s plight, Yves, I have a feeling that this story is going to generate a tsunami of schadenfreude among most of your readers.

    Your current article on the “legalization” of insider trading (among many others over the last few years) displays how thoroughly corrupt the entire American financial and legal systems have become, and I’d bet the house that most “ordinary” citizens would lay the blame squarely at TPTB in DC and NYC — and are finding grim satisfaction that members of the “elite class” responsible for this disastrous state of affairs are now beginning to reap what they have sown. Karma is indeed a bitch, and one can only hope that after the coming deluge the arrogant once-rich will be joining their poor and former middle class compatriots in the bread lines and tent cities.

    That is, those once-rich who manage to evade the tumbrels and avoid becoming decorations dangling from lampposts…..

    1. Yves Smith Post author

      This woman had been a full time mother. Via having an advanced math degree and a second science advanced degree at the age of nearly 60 was able to find work.

      Tell me what karma was involved? Her grandfather was rich before the country became widely criminal and her ex inherited a successful business (not Wall Street related) and managed not to screw it up and make some improvements. How are they responsible for the current state of affairs? You ascribe more power to them as individuals than they have.

      I don’t have the impression that her ex is involved in politics; she’d almost certainly have mentioned that if he had been or was now. I have the impression that he is a private guy and not ostentatious for someone at his level (as in more old money rich than new money rich in his behavior, as indicated by it not occurring to him to cut her off completely when he was entitled to).

      One thing I have noticed over time is that strategically located individuals can do a tremendous amount of damage. For instance, literally one person is responsible for the transformation of the ratings agency industry from a quasi guild with people of an academic temperament who were happy to have modest pay and stable jobs and do analytical work (and a cohort of juniors who used the firms to get training and bootstrap themselves into better jobs) to one that was money-driven and all too happy to prostitute itself for profits. To blame people who didn’t cause the train wreck for the sins of others is every bit as misguided as to blame all poor for the behavior of the stereotypical welfare queen.

      1. Banger

        We should avoid blaming as default position. We all suffer and do what we can. Your friend and the people in ratings agencies are part of grand historical flows and we are, generally, unable to “read” them since we are hung-up on “individuals” who are largely dust in the wind–even if one or two people make great historical changes as in your ratings industry story–if it wasn’t them it would have been someone else. Innovations are often “in the air.”

        1. P Walker

          As they say, capitalism does make whores of us all.

          Then again, I have no sympathy for these people nor for the middle class. As the supposedly most educated generation in history they’ve been remarkably bad at figuring out what most people have seen coming for a long time.

          The middle class implemented the policies that have undermined their own interests and did so as the costs were only applied to those at stations lower than them. So, white collar could screw over blue collar by shipping their jobs overseas at the behest of inhuman capital. What they did to others is now being done to them.

          They can cry me a river.

          1. jrs

            But did they really implement the policies that have undermined their own interest? What? Trade agreements? NAFTA, GATT, etc.. Those strike me as a MAJOR factor in what have undermined their interests. But were those ever actually popular? Should they have voted for Pat Buchanan over Bill Clinton?

            I mean I find significant chunks of the current middle class dislikable (they hate protest and I don’t mean just don’t participate in I mean hate etc.), and yet I also think they are basically powerless.

            1. P Walker

              Yes, they were. The paid intellectual classes, highly educated to the point of uselessness, were those that sold the snake oil to others. They became the paid handmaidens that designed and implemented the desires of the paymasters in exchange for a steady paycheck.

              Now, people will say that the academe isn’t the entirety of “the middle class”, and that’s true, but don’t forget how unionized labour, themselves besieged, allowed other parts of society to be sacrificed in their stead. For example, witness the two-tier labour system at General Motors now.

              Our economic system is a Nash trap that’s hellbent on destroying itself.

        2. Yves Smith Post author

          While some decay may have been inevitable, the ratings agency guy really is personally responsible. By all accounts (I know people who knew him shortly after he joined one of the major firms), he was the stereotypical Sammy Glick type operator, except the modern version is worse. Played people off against each other. Spread rumors. Hoarded information. Savage internal backstabber.

          He was the one to push his firm, and the industry, into aggressively soliciting structured credit business and in currying favor with the issuers to get more business, as in find ways to look the other way to give better ratings.

          As he rose to run his firm, he’s also developed an industry-wide reputation for bullying. It’s as if he were Lord Voldemort. People are afraid to use his name (I could use it, I know it, but he’s the sort who is insanely litigious). He not only fires people with great abandon, he will hector employees in every interaction with them and use the word “fire” multiple times in a paragraph. I’m not making this up. I have yet to hear of a more openly sadistic corporate bully in a position of leadership.

          1. Jim A

            Yay, an individual CAN make a difference? Of course in a reasonable corporate culture, somebody like that would end up sidelined once it got to the point that NOBODY would take his calls….

          2. bdy

            Thanks for this comment. There is no such thing as a corruption-proof system. I love Bill Black pointing out the criminogenic current state of affairs, but the existence of leadership positions will always be criminogenic. The best reason to change the system is because systemic upheaval is one way throw the bums out that are screwing things up, not because of any inherent flaws that may or may not exist – Jefferson’s Democracy as once-a-generation revolution.

            Too much big picture and we forget that, as your comment suggests, “grand historical flows” are always the result of individuals leveraging power toward bad decisions. Holding those individuals accountable is the only way to prevent cruel innovations “in the air” from poisoning us. So prosecute white collar fraud and crimes of state, shun our friends when they over-extract rent or price-gouge from a favorable position (hang out with any doctors?), and say “wait-a-minute” when someone suggests that abuse of power when everyone is doing is the same as just getting by.

      2. Ulysses

        “To blame people who didn’t cause the train wreck for the sins of others is every bit as misguided as to blame all poor for the behavior of the stereotypical welfare queen.”

        What you say is very true, yet I fear not many people are willing to uncover the realities and to show compassion for individuals. I still have many friends in elite academic circles in the U.S., the U.K., and Italy. Only a handful of them are doing what I would consider enough to improve the world outside their ivory towers. Yet, the rest of them are decent, hard-working people doing their best to contribute as scholars and teachers.

        In a time of outrageous injustice, more is needed than basic decency and honesty. Those of us unwilling to lie, cheat, steal, etc.– who are not yet ground down into the dust of abject misery– are called to denounce this unjust system and to fight openly against it.

        “A scientist has to be neutral in his search for the truth, but he cannot be neutral as to the use of that truth when found. If you know more than other people, you have more responsibility, rather than less.”

        — C.P. Snow

        To tell people that if they’re not part of the solution they’re part of the problem may be logically false, but it feels true on an emotional level. I know that such a feeling is what inspires my own mother, who could simply enjoy her retirement from life as an academic now that she is in her late 70’s, to contribute a significant amount of time and effort into teaching math– to inmates at a maximum security prison an hour’s drive away from where she lives.

      3. Spring Texan

        Those who don’t have sympathy for this woman are as clueless as the wealthy who don’t have sympathy for the poor. I have LOTS of sympathy for her and the many others like her; what a difficult position, that she has done nothing to deserve. Thanks, Yves!

      4. jgordon

        Yet you, myself, and your friend all live in a society that commits astonishing atrocities all over the world and rapes the planet to sustain itself. To say that someone in our society was motivated, hardworking, and resourceful is to say that someone was especially good at contributing to the destruction of our planet by being a good cog in the evil machine. Why should she or any of us have expectations of “living the good life” for “working hard” and “doing the right thing”.

        Of all the organisms living on the planet earth, humans are the only ones stupid enough to pay rent. That statement seems glib at first, but the more you think about it the more profound it becomes. We simply believe things, or have been tricked into believing things, that are simply not correct and consequently our conception and expectations of reality do not have a good correlation with how the world really works. Rather than feeling anything in particular for the downwardly mobile, I would rather see them as having a new opportunity to get in harmony with nature now that they’ve been jettisoned from the upper echelons of the industrial project–should the choose to exploit it.

        1. bdy

          Name another top predator in the history of predation that had to work a 50 hour week. We should be Lions basking in the sun twenty-one / seven.

    2. abynormal

      8 years ago my daughter asked, “how big is this mom?’ i pointed to the wall atlas above her head and informed her it will be drastically rearranged. 8 years later ive informed her ‘they’ will die in the ditch beside us…hopefully a bit earlier and uglier due to the stresses of sadism they practice!

  6. ptup

    Sorry, but, this argument reeks of class snobbery, that, well, just because of one’s status in the world and “education”, that one could just hit the ground running (OK, maybe walking briskly) at an age when the rest of us have accumulated thirty years or more of hard won experience. Those are the people I have pity for, the 53 year old living an almost upper middle class existence, getting up at six every weekday morning and maybe weekends, riding that train, playing the game and producing with maybe three weeks off, and then discarded like the recycling when no longer needed, and soon staring at minimum wage or disability just to survive before old age benefits kick in, which are pretty pathetic, anyway. Or, the poor old people past working age who are receiving pensions from Detroit or the multi employer plans just altered yesterday in the new spending bill, who thought the 25,000 a year would keep them somewhat comfortable in old age with SS, and probably still don’t know how they are screwed until they open an envelope a few months down the line.

    I’m just stunned, though, that the Republican party has so many supporters and growing as this cancer spreads. I know, I know, the Dems have played a major role in killing the middle class, too, but, at least they aren’t so blatant and obvious, and well, cruel about it. There has to be a breaking point, sooner or later, right? I mean, it’s one thing to give up the Lexus for an old beat up Honda, but, when we soon have what may be millions of old people maybe dying literally in the streets (I really think this is not hyperbole. Half of all Boomers will only have SS to live on, and most of the other half not much more), I hope the general public puts down the remotes and phones and finally rebel, at least in the voting booth, if not the streets.

    1. Yves Smith Post author

      Her math degree is from one of the very top math department. This is like having been in the physics department at Princeton. Her math chops are extremely serious despite her never held down a job on a steady basis. You miss that part. She’s not your average college educated housewife. That on her resume gets the attention of people in STEM field, which is where she had (more specifically) targeted herself. And the logic of her second master’s degree, which I won’t go into because it would be too revealing, made sense as a package (as in a serious data/statistical analyst in a field with good underlying demand).

      Frankly, your ire is utterly misplaced. $80K in NYC is like $45K everywhere else. Pay in most jobs is inflated to reflect the cost of living here. Her income hopes weren’t unreasonable.

      What you fail to get, and what I spelled out CLEARLY in the post, but your resentment gets in the way, was that 20-30 years ago, it was completely reasonable to assume that a college educated woman who had a been a full time mother would be able to find a job and and a not terribly paid one at that. The divorce settlements of that era all assumed it. They’d be office managers or work in a personnel department, or be the administrator/receptionist in a doctor’s or dentist’s office.

      The problem is not her or people like her. The problem is the way the economy has been restructured to crush labor so that workers are desperate and elbowing each other rather than uniting to demand better conditions. Too few jobs and too many people who need employment is a great way to undermine worker solidarity.

      1. ptup

        “The problem is not her or people like her. The problem is the way the economy has been restructured to crush labor so that workers are desperate and elbowing each other rather than uniting to demand better conditions. Too few jobs and too many people who need employment is a great way to undermine worker solidarity.”

        Agreed.

        But, as a product of the working class who has experienced class discrimination all my life in NYC and burbs after getting a decent education, and still do, I have to admit, I have no tears for the fallen wealthy. Back of the line.

        1. Clive

          Your arguments are a basic retread of the “deserving versus the un-deserving” poor ones which have been repudiated since Victorian times. And with good reason, too.

          1. ptup

            Wow, you have to read a little Dickens after writing that comment. You are not familiar with the Victorian period, I see.

            1. Clive

              I am sufficiently familiar with it to know that it was (in terms of poverty) characterised by an attitude that some people were deemed poor because they had brought it on themselves (and so not to be subject to any sympathy or relieve) where as other were deemed poor because they were victims of mere misfortune.

              This attitude was superseded in more enlightened times (like I thought we might live in now, but I am obviously going to disappointed here) because it is a classic false dichotomy. If you choose to classify the poor — or, like the subject of the woman in Yves’s article those with genuine reason to fear poverty — as having contributed to their predicament (or not) then you have to come up with a system of how to classify them in which bucket. But once you have a system you have to apply it or else it’s not a system.

              But then the system you’ve just created ends up controlling the thing it was only supposed to be assessing. And then people argue about which system is “right” or “wrong”. All of which reduces the possibility of actually solving the underlying problem.

            2. Yves Smith Post author

              There is a LARGE academic literature on the deserving v. undeserving poor. It goes back to the Poor Laws. The original Poor Law was not punitive in intent; its 1834 revision reflected the rise in bourgeois values and an explicit view that the poor who could work would effectively be punished by giving them crappy work to make sure they had incentives to find what we would now call private sector employment.

              http://en.wikipedia.org/wiki/Act_for_the_Relief_of_the_Poor_1601

              http://en.wikipedia.org/wiki/Poor_Law_Amendment_Act_1834

              http://www.socialwelfarehistory.com/programs/poor-laws/

        2. Spring Texan

          It is by humanity and sympathy that we can unite against the divide-and-conquer games that are so effectively played over and over and OVER again by those in power; but some on this site are not ready to do that!

      2. McMike

        I hear that a lot. Is it really true – that New York has some sort of cost line drawn around it where it is literally 45% more expensive than the rest of the country?

        I would rather not see people driven out of their home place wherever that is. But does it really take twice as much money to live in NY versus, say, Chicago (let alone San Fransisco) – where there is no rent control, where you may still need a car, where Rahm and Daley have fully crapified education and pensions, etc….

        1. Yves Smith Post author

          The taxes here alone necessitate higher pay levels.

          Look at what cleaning women make. $20 to $25 an hour.

          A friend’s 30 year old was recently got a job here. She looked hard for an apartment. Mind you, she’d actually managed to sock a lot of saving away sharing a house with other women in Brentwood (as in she had previously been able to live in a tony neighborhood in LA).

          She was going to take a 300 foot studio for $3000 a month to be in Manhattan because she didn’t want a long commute. I didn’t hear if she got lucky and managed to snag something better but I’m highly confident she would not have paid less in rent.

          1. ptup

            As Mayor Koch said once, probably on a bad day, You have to pay a lot to be able to walk to work. I always wanted to live in Manhattan, never could. There are plenty of places close to Manhattan on public transit lines that may not be acceptable to the fashionable or status conscience, but, they’ll do. Trust me.
            This may be why a lot of the upper middle class is having these issues. It’s costs a lot to maintain a certain lifestyle, money best spent elsewhere, literally. I know a lot of people driving cars and taking trips above their means, still, six years after a shock that I thought most would be affected by. I guess not. As I said, it’s not going to be very pretty as the Boomers die off, in shabby MacMansions and rusty BMWs.

            1. Yves Smith Post author

              With all due respect, you need to get more current on what has happened to rentals here. Russians accounted for over 70% of the real estate purchases in Brooklyn in the last year, and they don’t rent out properties. The inventorying of housing in Brooklyn, plus the fact that it is now “hot”, means anything other than housing on way out train rides in Brooklyn is at pretty much the same level in Manhattan. The gentrified parts of Queens like Williamsburg are cheaper but not by much. You can live close in sorta cheaply in Long Island City, but there aren’t remotely enough services. You can’t even get groceries.

              Further out Queens is probably the best bargain, and that’s still a 40-50 minute commute. If you live in the burbs (as in commute on the Metro North) you need a car, so forget about any net savings, plus you are usually talking the commuter train + a subway, so an hour plus commute.

              1. ptup

                Well, then, Denver. Portland. Austin. Baltimore. Philadelphia. I think the old inner ring of Boston is OK, on the T. Sorry, but, yeah, you’re right, it’s much worse than when I was younger, but, you know, it’s always been above my head, even in the dreaded drop dead late 70s. It’s a trophy city, home to the great robber barons of the 21st century. It’s not getting any bigger, just gets taller.

                Just seems masochistic and plain dumb, financially and otherwise, to try to live there in some sort of comfort on relatively little money. The only thing that works for normal people is an ancient rent controlled apartment, and then saving the rest. Or an inheritance, of course.

      3. Tom in AZ

        As much as I rant about the predators at the top of our food chain, I have a lot of sympathy for this woman. I see a lot of this desperation among folks I interact with at a lower rung on the ladder. People of have been honest, tried to raise families, provide for them. Do the right thing. And slowly getting crushed. And for the guy who has no sympathy, well aren’t you a special one. Bless your heart, as my southern aunts say…and good luck with getting in ‘harmony in nature’. But I’m sure that’s her fault also.

    2. Banger

      Compassion is always good poor people born poor are not more virtuous (do we even know what that is?) than downwardly mobile rich. Reverse class snobbery is as its opposite. We’re all fucked even if we aren’t in a bad place economically–our cultural situation is horrible–we suffer from too much stress and too much denial and too many drugs.

      The Republican Party thrives on tribal hatreds of small-minded people and America is full of small-minded, self-righteous and highly judgmental people. People go out of their way to condemn anyone who colors outside the lines they have, through a mixture of fantasy, myth, cultural stereotypes created. Everyone goes into making judgements about their pet-peeves. Americans are still in a highly fragmented and illogical way not unlike the denizens of Hawthorne’s world, or Twains–we are still Puritans shaking our fingers at other people–sometimes those fingers hurl massive explosions too.

      1. James Levy

        I do have one criteria for my sympathy: did you learn anything on the way down? If life has brought you low and all you can do is blame the poor or foreigners or “government”, then I am sorry, I have no sympathy for you. If falling down the ladder has taught you to value those once “below” you and see the world empathically, then I can extend my empathy to you. I have no idea from what Yves wrote if this woman is, was always, or has failed to become, a person who cares about others not as fortunate as she. If she does, then I feel very sorry she’s in a tough spot; if she doesn’t, then it’s simply a question of reaping what one sows.

    3. rusti

      Those are the people I have pity for, the 53 year old living an almost upper middle class existence, getting up at six every weekday morning and maybe weekends, riding that train, playing the game and producing with maybe three weeks off, and then discarded like the recycling when no longer needed, and soon staring at minimum wage or disability just to survive before old age benefits kick in, which are pretty pathetic, anyway.

      The Bill Moyers post from yesterday, and the anecdote from this post illustrate that the lower echelons of the 1% or .1% have more in common with the people you describe here than they do with the hyper-rich oligarchs normally discussed here. At the very least, they’re trending in that direction.

      I’m just stunned, though, that the Republican party has so many supporters and growing as this cancer spreads. I know, I know, the Dems have played a major role in killing the middle class, too, but, at least they aren’t so blatant and obvious, and well, cruel about it.

      I was reading the comments under the NYT article that was today’s “Must Read” from Links and this comment seems to echo a lot of those sentiments about how this wouldn’t be the case if only people had voted Democrat. But Clinton was the one who signed on for NAFTA and Obama is using the limited political capital he has to try and push the TPP through. When Republicans are in office at least the Democrats are theoretically obligated to make some noise about it and slow the inevitable crawl of regression.

      1. ptup

        I know, I cringe at those comments on the NYT when an article like that shows up, and so many NYT readers think it’s a black/white, Rep/Dem issue, and probably Hillary will make the world all nice and comfy for us, just like Obama was going to change Washington in any way, hahaha. But, I’m assuming that they are somewhat aware of current events, you know, following things, since they actually read a paper, so, how can they delude themselves over and over? I mean, the Boomers are a large voting block that will absolutely need SS and Medicare to just survive in old age, and they still fall for this stuff? Or, well, maybe they’ve just given up, since, what, only about a little more than 30% bothered to vote last month?

        1. jrs

          Te boomers probably figure SS and Medicare will only be cut for all those younger than boomers. And they may well be right.

    4. diptherio

      I don’t read this as class snobbery at all. What it does show is how quickly one can tumble down the economic ladder, even starting out from a relatively privileged position. There aren’t many lifeboats left in this economy, for anybody, is my take-away.

      And while I admit that I have more compassion for the “never rich” than for the “ex-rich,” I don’t assume the once wealthy are bad people or deserve to be crushed by poverty. Most of them (excepting the sociopaths who want to run everything) have been fed the same line of BS as the rest of us, and believed it–just like the rest of us. It is possible to end up on the wealthy side of things through no fault of your own, and without being a criminal…we should keep that in mind. What we need is more solidarity–among the ex-rich, the never-rich, and the don’t-want-to-be-rich, imho.

      1. jgordon

        “Most of them (excepting the sociopaths who want to run everything) have been fed the same line of BS as the rest of us, and believed it–just like the rest of us”

        Well that’s as good a distillation of the reality of our society as any I’ve seen yet. Yet believing BS does have consequences. For example, if you believe that cutting down a forest and displacing/killing its inhabitants is a good idea because it will make you a lot of money, the consequence of that belief may be a flooded, radioactive world in a couple of decades–with your descendants clustered around the arctic circle dying of cancer.

        1. James Levy

          One thing I learned from reading Marx is to ignore the morality of the individual capitalist. Some are good people, some awful, many in between. What they don’t want to own up to is that the system forces them to cut corners, ruin lives, devastate communities, and despoil the planet. It’s an eat or be eaten system when push comes to shove. During fat times decent men and women among the capitalists can and do try to make life better for their workers and for the communities their businesses function in. But during lean times they are all jackals or they go down to jackals. It’s the nature of the system.

          1. not_me

            YES!!!

            But instead Progressives create a system that encourages legal theft, government-subsidized private credit creation, and then pass unenforceable laws to “balance” that immoral subsidy as if to say “Here’s a license to steal; now be good boys and don’t abuse it.”

  7. not_me

    So as much as many of you will probably see these women as undeserving of sympathy, their story is the same as that of many middle aged and elderly people: not enough in the way of assets to see them through their likely lifespan, with their problem due largely to the inability to earn a decent income from savings under ZIRP. Yves Smith [bold added]

    The equal redistribution of the common stock of all large corporations should not interfere with their efficiency one bit.

  8. ambrit

    Like the above commenters, I too left a semi decent job over the internal stresses generated by the Greshams’ Dynamic that is the modern work environment. (Semi decent in that it offered a less than fully crappy health package and livable salary for the cost of later in life living. If we didn’t own our house outright, we’d be f—-d.) I had several run ins with ‘management’ over just such issues of honesty and customer manipulation as Clive mentions above. This being at the retail floor level. The rot has spread from the top on down to the bottom. Don’t the Orientals have a saying that, “The fish rots from the head?”
    A clearer case of internal decay and slow collapse one couldn’t find.
    The biggest regret to be gleaned from all this is the realization that Obama and the Democratic Party had the right campaign in 2008. Hope is what the public needed. Hope of better times, which assumed some sort of real and effective change was to be implemented. Now that the essential dishonesty of the political elites of both wings of the governing instrumentality are visible to all, the publics’ fealty to the system as a whole is in jeopardy. Repression and coercion can hold things together for just so long. At some point in the future, even these will fail their tasks. What comes next is the main question.
    As an aside, Phyllis and I know several people and families who are presently living with relatives out of necessity. Most of these people or families have jobs that would have allowed them some sort of self respect twenty or thirty years ago. We know one husband and wife who live in their car. He gets work on an itinerant basis because his trade, auto mechanic, is becoming piece work based. Not only is he being squeezed financially, but no decent apartment complex will rent to them without “stable” work histories. The other kind of apartments available to them are creating a system wide ‘double bind.’ Since they ‘cater’ to a shorter length of stay clientele, the apartment management charges a premium which usually results in rental charges being close to the local going rate for larger units in better condition. In such conditions, is it any wonder that poor people can’t come up with the first, last, and deposit that the ‘better’ complexes demand? Don’t even get me started on Section 8 housing here in the Deep South. All I can say is; if you want your child to grow up to be a criminal mastermind, move into one of these h___holes. (Assuming he or she lives long enough to ‘grow up.’)
    The misery any one of us sees first hand depends on our circle of friends and acquaintances. Misery is still misery. The defining limit for me is when ones ethics and morals become knowingly compromised. The process of succumbing to the Greshams’ Dynamic in life is called dehumanization for a very good reason. When we cease to be fully human, we fall back to the level of the beasts. The Elites had better not lose sight of the fact that beasts are wild and unpredictable and will often turn and bite when you least expect.

    1. Banger

      Great comment! You see things so clearly.

      One of the great unknown tragedies of American life is that the ability to re-invent yourself has all but disappeared. Everything is now done on the basis of your permanent record. I know people who have had difficulty finding steady work so they can’t rent anything anywhere. When I was growing up you could have all kinds of trouble–get fired skip out on landlords, not pay bills and then travel across the country or even the state and start again and build a life. You can’t do that now. If you step out of line the system dismisses you. I have an intelligent young friend (former Occupy protester) who can’t find work because he traveled around a lot and has been supporting himself dealing enough illegal drugs (mainly pot and LSD) to get by–he doesn’t want to do that but no one will hire him because of the way he has lived and the way he looks (non-servile).

      For all its vices, the USA was once relatively free–I chose to live here rather than elsewhere (I was in a position to live in Europe in my youth), in part, because I knew I could always re-invent myself in America.

      1. ambrit

        There must be many good examples of art works that describe this shift in our culture, but Jack Kerouacs’ first novel, “The Town and the City,” followed by his ‘Beat’ works does a good job of it for me.
        Imagine trying to be a Merry Prankster today!
        Even as a child, I felt the sense of unlimited possibilities my parents enjoyed when they moved to America from the U.K. That’s the Hope and Change people expected from the Democrats. They now know in no uncertain terms that they were lied to. This betrayal is benign in comparison to the treatment they will experience from the Republicans after they vote them into power in the present cycle. I am seriously afraid of reading one morning soon that a “State of Emergency” has been declared and the Constitution “temporarily” suspended. All to protect the Nation of course.

        1. sleepy

          “I am seriously afraid of reading one morning soon that a “State of Emergency” has been declared and the Constitution “temporarily” suspended. All to protect the Nation of course.”

          If that happened though, would life be any different that morning than it was the day before?

          I think it’s already occurred.

          1. ambrit

            Most “Traditional” cultures are aware of the value of “Form” in social relations. The illusion of traditional forms being followed gives a sense of continuity and inclusion. The boundaries of conduct and power are visibly delineated. The Feudal social relationship was specifically enacted as a mutual pact. Each owed specific duties to the other. When the traditional forms are officially abrogated, both parties to the prior social contract are released from their bounds. Agreed that the Elites have quietly abandoned their responsibilities from the social contract. With the forms of the Constitution and Legality still being invoked, the Elites can compel the “lower orders” to fulfill their side of the bargain. Simple social inertia guarantees that. By abandoning the pretense of fealty to the Forms that the Social contract has taken, (the constitution, democratic republican government, the rule of law,) the Elites will be formally releasing the “commons” from their side of the Social Contract. The probable result will be a reversion to some sort of Rule of Force. This being a big world, the present Elites cannot guarantee that they keep exclusive control over the methods of compulsion and oppression. When you throw ‘Double of Nothing,’ do not be surprised if you end up with nothing. The odds are not all in one sides favour.

          2. art guerrilla

            um, i *think* you were being sarcastic, but you do know that we technically STILL ARE under a State of Emergency as declared after nine one one ? ? ?
            it has been renewed approx every six months since that time…
            i bet if you asked 10 people, 9 would not realize that factoid…

            1. ambrit

              Good heavens! I had forgotten about that.
              The next question is, why has no one used this renewal process to start a political anti-power play? The renewal can’t be by acclimation, can it? Is it set up to be one of those opt out tricks?

    2. Spring Texan

      Loved your phrase of the “Gresham’s dynamic”. Yes, this is the fundamental corruption that is influencing ALL of our work and jobs. It is really hard to get a job that doesn’t make you sick (fortunately, I now have one, but it’s not like everyone is going to get one and the question of what compromises to make and which not to is sickening and difficult).

  9. Banger

    Good story, Yves. I’m with you here–reminds me a little of the movie Blue Jasmine though your friend is obviously more virtuous (aren’t all female math-heads virtuous?).

    I find comments condemning people of any category as members of a category offensive–even when I do it myself. What the world needs now is love/compassion not more shaking of fingers. When you stop and hear people’s stories (I hear a lot of them) suddenly you open up to the right-wing Fox News watcher–you see the charm, the tragedies, the lessons learned of that person and the ongoing journey. The attitudes that Fox delivers to its viewers are not just merely propaganda but reflect deep resonances in American culture particularly in the South.

    My point is that we need to talk to people rich, poor, of various backgrounds and stories and move away from preconceptions based on their attitudes or current and past status. Occupy fizzled out in large part because so many people judged these young people for their dress and appearance–even now. I know people today that condemn my young anarchist/musician friends for the way they look they automatically make judgments about them and some of these people doing the condemning are really nice otherwise.

    I knew, at one time, a woman who was a “trophy wife.” She was beautiful and had a graduate degree in English–she didn’t love her very rich husband so she separated from him and found out how hard it was to get by–so she just went back to him because she had young children. Was she wrong? Was she taking the “soft” approach? Maybe, but who are we to judge?

    In the end we have no intellectually defensible systems of ethics and so we get judgment on the basis of mere prejudice.

  10. McMike

    Her story is too much like my sister’s to not feel sympathy (albeit with the decimal in a different place, and my sister’s ex is a narcissistic sociopath), but still….

    I can’t resist

    PS. It’s not much better out there for un-divorced fifty year old men.

    1. jrs

      There’s age discrimination for all. But being single and being female do increase chances of poverty (not that the person in the story sounds headed for real poverty though).

  11. Carolinian

    She could always move to sunny South Carolina with its low cost of living. Many from the North do so. You could probably have a very nice house here for the cost of a one bedroom apartment in Manhattan. It seems to me you are saying that her social existence, not her physical existence is in peril. One doesn’t have to be unsympathetic to say that living in one of the most expensive cities in the world could be a factor in her difficulties.

    The truth is that we Americans, and not just the one you describe, are still tremendously rich by world standards. Things are going to get worse, and we are all going to have to adjust our expectations.

    1. Banger

      You are, of course right–but to move from the people and life you know and support system you have come to rely on is not easily done when you’re older. I’ve done it and it hasn’t been easy–but I was filled with such revulsion for Washington and what it has become I had to get out.

    2. Spring Texan

      but you missed that she does not have an apartment to sell, she rents and the rent is controlled. Yves is right that the car expenses would probably eat up the savings given that she has no property to sell to buy the new house.

    3. jrs

      I think it’s maybe short term wise and long term foolish to move to a heavily red state. Red states are “not safe for children or other living things” – not safe for adults either, look how easily they will lock people up etc, even worse than in general in the U.S.. And you find your young adult kid who took a wrong turn and used drugs or something, facing brutal treatment before you know it. Of course there are blue states cheaper than NYC.

  12. Jim Haygood

    ‘Now to get 2% in munis, you have to go out to a ten-year maturity, which means you are taking real interest rate risk.’

    It’s a real problem. All ways of enhancing yield increase risk (junk bond investors are feeling the pain this week).

    One approach is to add a 20% mix of REITs, which currently yield about 3.5%. REITs are just as volatile as stocks. But mixed in moderation with bonds, the overall portfolio risk can still be tolerable.

    A second strategy, which efficient market theorists say is impossible, is to actively adjust fixed-income maturities. Longer maturities have been the place to be this year. If the Fed ever actually raises rates, one may have to retreat to the short end temporarily, until the economy crumbles again. See 1937-1938 for the prequel.

    Bonds, comrades. They can be your friends too.

    1. jgordon

      The greatest risk of all is having the false believe that our system is not prone to collapse. When people ask me how to invest I tell them to acquire useful skills–such as growing plants or playing music-and to stock up on plenty of seeds, solar panels, and ammo.

      The old truth that will gain resurgence in the coming years is that the only things you can trust are those you can lay your eyes on, and that the only people you can trust are in your family and community. Everything else is a fictional scam.

      1. jrs

        It’s hard to say how they will be able to survive as musicians after the collapse if they aren’t good enough to survive as musicians now. Like it’s going to get easier then? Strikes me as pure fanciful delusion. Now of course there is nothing wrong with music as an avocation, but that’s not exactly investment, self-development perhaps, but not an investment.

        1. jgordon

          Happy to explain: entertainers are always welcome wherever they go. If your only skill is telling good stories or playing music you’ve got a huge leg up on others. Those who can’t see the social aspect of a collapsing economy and deal with its implications aren’t going to survive very long regardless of how much gold and ammo they may accumulate.

  13. steviefinn

    Maybe decent human beings should stick together – stereotyping any group from any vantage point doesn’t help. I wish her well, as I wish the millionaire friend of mine, who has been screwed by bankers & diagnosed with Parkinson’s disease. Our problems are caused by bad people & they come in all classes & races which is why revolutions scare me, because they tend to operate by scapegoating through mob rule, led by those who encourage it, which is a foundation for the same evil in a different form.

  14. PQS

    I won’t add to the pile on, not because I’m more virtuous, but because I’m not sure it helps in understanding or even my own emotional release…..and of course I agree that the downward mobility is affecting everybody, although not everybody equally, nor evenly distributed across the country. I did note the comment that donations are down in the charity circuit. We in the NW noticed that as well – several big churches that have regularly hosted Alternative Gift Fairs just didn’t do it this year, which was a little odd.

    OTOH, we are burning up the world up here building apartments, apartments, and more apartments. They’re not cheap, though, and “rent control” is a dirtier word than “pollution” to our tender ears.

  15. Vatch

    “Some of the students are openly hostile to taking math from an older woman”

    Well, that’s more than a little bit creepy. Sexism AND ageism.

    1. ambrit

      Sounds like a bunch of clueless sods. Real professionals don’t care what sex, race, or dimension you’re from, as long as you can do as you advertised. Plus, “openly hostile” to the person who will determine your grade sounds like a severe lack of socialization to me.

  16. MartyH

    A gratuitous comment after all the excellent (and not so much) material above. We recently had the good fortune to be able to bring an old friend and co-worker (a highly experienced, older woman with a proven track record in our industry). She was within weeks/months of foreclosure and behind on taxes and unable to find meaningful work yet she was living within an easy commute of the NY city market. Our move was hardly an act of charity as she fits a critical spot in our team-mix and started making a significant contribution immediately.

    When we create a job, we are already over-worked with real, not bureaucratic or imaginary things to do. We do not grow to justify the salary or ego inflation of our management/supervisory team (tiny as it is). Our contribution to the global economy is more significant than our revenues and (tiny) profits might indicate. It is our impression that we all need more real jobs producing real value and hiring more well qualified members of our personal networks and local communities and not more hypothecation of imaginary assets and Parkinsonian bureaucratic bloat.

  17. Dino Reno

    I’m more of a nuts and bolts kind of guy. Rather than focus on class, what could or should she have done differently given her circumstances? She could have remarried, but that would have been the end of her generous alimony.
    Having chosen not to remarry, she could have used the time to pursue a professional degree.
    Given her math skills, accounting seems like a logical choice. Women in professions are less subject to discrimination than women in the open job market. They also have more status in the business community. With her accounting license she could have worked at a firm or done books part time at home. There is a wide range of opportunities available. Part-time of full-time, employed or independent, she would be much better off today.

    Unfortunately, she let her time and money run out. Now she has to take what she can get. Rather than fault her for her planning and decisions, let her story serve as an object lesson for those with productive year still ahead and who find themselves in a similar situation. We live in a cruel system that requires constant vigilance concerning one’s personal circumstances.
    I also want to recognize the fact that her husband is deserving of special praise for taking care of his daughter and going above and beyond the call of duty for supporting his ex as she struggles now to make ends meet. She must be a good person or this would not be the case I can assure you.

    1. Lambert Strether

      If you see that a lot of nuts and bolts have the same defect, you look to the manufacturing process; you don’t full out your file and start working on the threads of an individual bolt. In other words, the class of all nuts and bolts, and the process that produces them, is exactly what a truly nuts and bolts guy would look at.

      1. Dino Reno

        Any ties to the CIA because you really tortured that analogy? I get it. You think the system is to blame.
        It is unfair, but that’s the hand we’re dealt and we need to take the necessary precautions. It’s much easier to fix one person’s circumstances than to overall the entire structure. One nut and bolt at a time…until the system can be retooled.

        1. Lambert Strether

          Hey, a torture joke! Pretty funny. I mean, not funny at all, since it tends to dull the senses and the mind to the real problem. As does your comment immediately above, and your first comment. What next? A rape joke?

          With distraction like yours, the “until” will never come, of course. So do continue to file the threads of your bright shiny object!

          NOTE I have a habit of reading what people write carefully. Sorry that grates on you.

        2. cripes

          @dino rino
          Except when it isn’t.
          Individual solutions to systemic problems is a case of minnows swimming against the tide. A few get through and the rest are swept away.
          But it makes nice copy for self improvement articles in O magazine.

          1. jrs

            Yes but it’s hard to be optimistic about systematic change in a society as absolutely abhorrent and awful as the U.S. Would you try to reform the Weimer republic? And the Weimer republic was of course very intellectually alive in many ways, a lot of virtues the U.S. doesn’t have, of course those virtues lost and the rest is history.

            I mean one can want a better society, and do what they can when they can, but while your deploring torture (the real thing), half the country is cheering it. While your saying we need to get out in the streets to protest the criminality of this system, half the country is sneering at protests being the equivalent of criminality.

            And it’s somehow irrational if people decide, most sensibly if they can to leave this awful country, but if they have personal reasons for not doing so then to focus on making the best they can of their own lives?

    2. jgordon

      “let her story serve as an object lesson for those with productive year still ahead and who find themselves in a similar situation.”

      If you were to be shown that our society uses more overall energy, material, and biological inputs than it produces, would you admit that being a useful member to society is a deductive activity rather than a productive activity? And why should you want people to live a deductive lifestyle?

    3. jrs

      She got a graduate degree supposedly in a practical subject. If that didn’t work it’s hard to say what would, unless she was deliberately seeing say accounting jobs as too good for her or something. And you are seriously suggesting she should have married for the money? Good grief man!

      I’m a practical person too, if one has opportunities for better and one wants them one should take them, and never mind class! Do mind ethics though, ethics matter, don’t’ become a torture psychologist for the money. But I’m also a realist and recognize a run of really bad luck can make those efforts moot.

    4. Larry Headlund

      Given her math skills, accounting seems like a logical choice.

      There is very little overlap between the talent and skills of a mathematician and the talent and skills of an accountant. Accounting is not a logical choice.

      Women in professions are less subject to discrimination than women in the open job market.

      According to Yves she was in the professions: two post-graduate technical degrees.

      With her accounting license she could have worked at a firm or done books part time at home.

      Unless they are in a different world, what accounting firm is hiring, license or no, an inexperienced person in their late fifties? The low end of big business accounting is prime outsourcing/off shoring territory. As for doing the books for small businesses, there is this thing called Quickbooks.

      The point is that 20 years ago her expectations were much different. She made reasonable choices based on what was known at the time. The world was changed.

      The comparison with the article on the Vanishing Male Worker is telling. The tale of blue collar workers derailed by an injury later in life is familiar to anyone who has been around the occupational rehab field. Construction work has always been boom and bust. The difference is that there is no bottom. For all the talk of how the males are choosing not to work the prime number is there are twice as many males in the demographic out of work than there are available jobs for the whole country. They are telling themselves there will be a job for them when they get desperate to comfort themselves.

      1. Yves Smith Post author

        Law schools are actually showing FALLING enrollment, down a whopping 15% for the most recent enrollment year, because there are similarly too many graduates relative to the sort of jobs on offer that will pay enough to recoup the cost of education. And look what is happening to doctor pay and autonomy. So much for the value of the once vaunted professions as a bastion of security.

        1. ptup

          Easy to understand when half of law grads can’t find employment in the profession in any form, and it costs easily 100,000 grand from a decent school.

          Indians are lawyering over the internet, btw.

        2. RUKidding

          Exactly, and with the drop in legal work across the field – resulting in big declines in student enrollment in law schools – there’s a concomitant drop in a lot of other work in the legal field: paralegals, legal assistants/secretaries, law firm/school administrators, law librarians, law professorships and on “down” to the “lower levels,” such a janitorial staff and so on.

          I work in the legal field (not an attorney). My job is secure today but who knows what tomorrow will bring. I have friends at all levels in the legal field who’ve lost jobs through downsizing and more happens every day. Some attorneys can manage to hang up a shingle and maybe cobble together their own job, often at greatly reduced income. Government professional jobs are hard to come by these days. Law librarians and affiliated law library workers are downsized and laid off, unless they develop additional skills to be viewed a necessary, etc.

          And yes, law firms are outsourcing various types of legal work – legal research, brief writing, etc – to our friends in India, who have similar legal training and good English skills – thus yet again bringing down wages for what jobs are left.

          It’s a viscious cycle and hard to tell what skill set or degree will magically keep you employed or aid you in locating that next needed job. Nothing is safe anymore. I’ve watched quite a few of my friends who work in the legal field lose jobs. Some were of a certain age, had been thrifty and saved, and so were not hurt too badly by a “forced retirement.” Others continue to struggle.

          It’s a cold cruel world these days. Good luck to us all. Karen’s not the only one in a precarious position.

  18. Brooklin Bridge

    I’m very moved by the lucidity and sense of enlightenment I feel coming from and inspiring this article. I wish this could be what everyone sees when they open their news paper, or read or view their blog and if they can not read it with the same clear sight in which this was written, then that they could at least read it as if they were from Mars.

    The other day, when Diptherio included a link to a once successful reporter who had worked for the WP and was quietly without bitterness describing falling into poverty, I got a brief hit from the negative emotion of wondering what sort of reporting that guy had done at Wa Po – perhaps the propagandist kind that has helped so much in getting us to where we are? – and if this guy wasn’t getting exactly what he deserved. Some such sentiment is normal and to be expected, but holding the guilty accountable even just in our imagination does not have to mean wallowing in blood lust – and here we are not even talking about the guilty. If there is to be any hope at all for this country at least, it won’t be from the dry well of revenge.

    1. Carolinian

      Sounds like you are saying “let’s not play the blame game.” Revenge has its points, but obviously doesn’t apply to the woman in Yves’ post.

      1. Lambert Strether

        I’ve made a ton of bad decisions, some for the best of reasons (“… paved with good intentions”). When I was growing up, the penalties for mistakes were not as brutal and lethal as they are today, at least for people like me, and penalties still existed for those who are elite, or service the elite, which they no longer do, as we see in (a) banking, (b) police work, and (c) torture. I don’t think it’s a coincidence that the latter two are all about compliance.

    2. katenka

      “The world offers us correction more than consolation” — I had the good fortune to be *corrected* by running into this Lichtenberg aphorism as a (very analytical, with all the down sides to that you can imagine) teenager. I remind myself of it regularly so I do not forget.

  19. ftm

    I don’t know about blaming this on QE. A number of articles on this site lament the fall in interest rates and the incomes of those relying on bond holdings as if that should be a primary factor in setting monetary policy. This view ascribes far too much power to monetary policy and asks monetary authorities to address a problem they are ill equipped and not charged to deal with — how to deliver sufficient incomes to those living on their stock of fixed income holdings .

    The economy is stagnant because the fiscal apparatus is run by rubes who don’t understand the importance of fiscal policy and due to their corporate affiliations are unable to enact trade policies that assist domestic employment . If there was sufficient demand in the economy via expansive fiscal policy and effective trade policy, rates would be higher because companies would actually need to finance real investments.

    1. Jim Haygood

      ‘This … asks monetary authorities to address a problem they are ill equipped and not charged to deal with.’

      Well, you’re right about the ‘not charged to deal with’ bit. Nothing in ‘full employment and monetary stability’ says savers are entitled to positive real yields.

      But as for ‘ill-equipped,’ the Fed exerts near-total control over short-term rates, and under QE has explicitly intervened in longer term rates by purchasing Treasuries.

      As an economic bad, negative real yields for savers pale in comparison to the damage done when stock market bubbles implode. We’ve seen this movie twice: 2000-2002 and 2008 (which alarmed even grizzled veterans).

      You can pencil in the popping of Bubble III somewhere in the 2015-2018 period, as well as the Fed’s reaction: ‘No one could possibly have foreseen this exogenous shock.’

      1. MyLessThanPrimeBeef

        On the other hand, the Fed is super-militarized to fight any pre-nascent wage inflation.

        They have all the best tools money can buy.

  20. DJG

    I’m reminded of a few things as I read the main posting by Yves and the comments. A few commenters mentioned being against suffering, being against making others suffer. (Hence my outrage at the years-long torture revelations and Obama’s insensitivity to human lives.) It is important to keep in the forefront of one’s thinking that suffering does no one any good. (Hence the discussions of austerity on this site.) Further, I am “impressed” by the ingrained sexism of society, which has limited the woman’s maneuverability. She stays home to raise children–how uneconomical. We wouldn’t want to remunerate her for that. She has degrees in classic disciplines: math being one of them. It’s a good thing that she didn’t have aspirations to become an astronomer! What if she was a scholar of Mycenaean Greek! As an additional corrective, I suggest Edith Wharton’s House of Mirth, which tells the distinctly chilling tale of Lily Bart, who puts off making a proper marriage for too long, is forced to lead a semi-parastical existence within her extended family in “Old New York,” and unravels. Recently, I saw a staged adaptation of the book here in Chicago, and somehow, giving Wharton’s lines to actors made the situation all the more venomous.

    1. jrs

      Yes live every moment of your existence for the economy. Don’t just make practical compromises that have long been made (stay at a job you don’t much like until you find something better and avoid massive debt for something you can foresee will never pay it off). But live every last minute of your life for the economy. Never take time off, certainly not to travel, but not even to care for young children or dying parents. Never study something just because you are interested in it or love it, even if you can afford to. Conversely you can’t just quit school because you have a bachelors and find formal education stifling. Everyone needs to spend their lives getting at least a graduate degree in SOMETHING PRACTICAL these days. Don’t marry someone who isn’t at least equal to you in earning capacity, but be sure to marry, and never divorce no matter that it isn’t working.

      And for all this you will win? Nothing! If you have a reversal of fortune people will STILL blame you! It must have been that money you wasted on a camping vacation 10 years ago …. They have to blame you to feel safe see … A form of ontological anxiety I guess …

      And for this you will lose? All contact with your soul. With any part of you that isn’t FOR the economy, even in your spare time when you aren’t working. But this loss comes at quite a cost, it will haunt you.

      Are you satisfied?
      By your civilization, a saddled broken horse
      Pulling a cart load of premonitions, to manure the road
      Of others peoples visions?
      This cultures vultures will pick the bones
      Of YOUR DECISIONS
      — The Fixx “Are you satisfied?”

  21. John

    As George Carlin said, “There’s a club and you ain’t in it”. That is particularly hard for those who were once card carrying members. I know a few. But life goes on and people adapt. Genteel poverty is not the worst thing in the world. I’m a southerner and they do that well, except when it turns mean and bitter.
    At least she’s not starting from the mean streets of Aleppo or Baghdad or in a freezing tent on the Turkish border with winter coming on.
    With Imperial decline and oligarchic renewal in full force in America, these stories will just keep on coming.
    As far as the class thing is concerned, I know for a fact that from the first country day school cotillion to the club mixers where she got that math degree, she was programmed to go for the TFB and not the shy nerdy math geek of modest background. And family CW probably had her voting for Reagan in 1980. But that is all class programming and it’s hard for anyone to get out of such deep programming.
    Plus she has kids who hopefully love her and will take care of her.

    1. John Mc

      My problem with this response is that their is kind of unpacked hierarchy driving the conversation towards an individualistic lens of analysis —–> love Carlin here, but he was not so much attacking individual’s responses to loss, but rather he was saying the whole system is rigged, if you take his content from that performance in. He spends a great deal of time elaborating (using an phunny phallic elephant reference to boot).

      Comparing one person’s experience to another on an individual level, gets us stuck in the details, hierarchy and incomplete information of neoliberalism’s worst aspect ——> meritocracy/individualism memes. We lived during a time of systemic and predatory extraction. We should have empathy for this impacted by while directing our anger at those who look to exploit it (meme’s about fascism by corporate CEO, kristallnact, etc. as well as those in the media who do their bidding – like Sorkin).

    2. lindaj

      “At least she’s not starting from the mean streets of Aleppo or Baghdad or in a freezing tent on the Turkish border with winter coming on.”

      I reserve my sympathies for those in the above situation, mainly because my government caused their problems. If Karen has been out there on the barricades trying to change the system seated in DC that is destroying the world, then I respect her for that. If not … I have friends in dire straights that are fighting in their 70s and 80s. That is the way forward.

    3. jrs

      There’s no guarantee the marriage to “the shy nerdy math geek of modest background” would have worked any better and wouldn’t have ended in divorce, though if one wants to be cynical perhaps the alimony would have been less.

  22. John Mc

    Two complexly intertwined issues here at play.

    When I read this, I feel tremendous empathy for “Karen”, not because of the amount of her former bank account, social resource networks or her advanced degrees in STEM. Instead, I feel empathy for her that she exemplifies a specific kind of vulnerability in our culture, which is better at selling than following through on commitment. Based upon a brief read here of her life events (and this is only small snippet based on Yves perspective), none of us are removed from that much from marriage dissolution, family business decay, ambiguous job market for skilled workers, gendered or ageists resistance in male dominated fields, personal sacrifices in custody cases, the work-stress loads of subsistence work in academia (I, too, am an adjunct), and lastly the changing financial environment of ZIRP/QE/ not to mention the risk creep of the investment world combined with diminished options for families on a fixed income.

    In what world is it sane for investors to see stocks as sources of income, and bonds as volatile/risky. *** This was David Rosenberg’s thesis in 2012. It is at these intersections of human experience where our financial selves are most easily exploited. When you look at each of the systems which was supposed to be there to support Karen (just in case), and subsequently what has happened to her and millions of Americans (foreclosures or average 1.8 million who file for bankruptcy each year), there is a big need for empathy and support. Barb Ehrenreich nailed this one years ago —–> it truly is a battle between the WITT’s & YOYO’s.

    The points which should incur the greatest amount of empathy from all audiences here

  23. reason

    The real culprit, is an overvalued dollar not the ZIRP, that is just a response to the depression. General returns won’t rise unless stock market yields rise first because investment in real production in the US is profitable. People should read more of Dean Baker.

    1. susan the other

      But we can’t all trade out way out of this mess. Likewise we can’t all compete our way out of this mess. It’s the system. It is completely exhausted. And what a tangled mess. Savers need an 8% return and can’t even get 2%. And all that debt should be forgiven but that would really leave pensioners, etc. destitute. I think if we ever achieve a planned economy this whole lesson of economic interdependence should preclude repeating it in another fantastic virtuous capitalist world where everything pays for everything else in a neat little circus. The only people doing well these days are the wealthy people who have money outside the circus. So the first order of a planned economy should be that all people have money outside the circus. And the first rule should be that all people deserve to have control over their own financial security. Not filthy rich. Just not the victims of another unbelievable giant screw up.

  24. Eleanor

    Exellent discussion. The problem described here is pretty much the one retired people have. With current interest rates, it’s not possible to make money off safe investments. So you either take risks you don’t want to take or eat into capital — and realize that the capital isn’t going to last long enough. Then you start to think that living out your full life span might be a poor idea.
    America is full of people who did what they were told to by the system: worked hard, bought a house, took care of family, supported the consumer economy. Women from fairly affluent families stayed home to care for children, which used to be encouraged. (I have also known women — and men — from families that did not have a lot of money who stayed home. The family took a reduced, one person income in return for giving the kids a better childhood. Want to find childcare for an autistic kid, by the way?) None of it worked, unless you were lucky. That’s what Yves is saying. People made responsible decisions and they were screwed. The system isn’t working for anyone except a tiny, tiny minority.

  25. Working Class Nero

    Great essay. I think it is important to challenge your reader’s preconceived notions from time to time.

    And these examples just go to show that social mobility is only good if you are on the bottom of the heap.

    Her strategy now should be to exploit her ex-husband’s social connections. For example instead of teaching at the tough school she could tutor upper-class kids struggling with math. In our community there is a retired Latin / Ancient Greek teacher who is in huge demand for home tutoring (those subjects are big here). Luckily we have locked her in for a few hours every week, and going by her rates, she must be doing fairly well. She says with her teacher’s pension and side work she even manages to help a poor family on the side (and I believe her). But of course we don’t have New York-level living costs.

    The other possibility is to get a gig at a posh boarding school somewhere in New England. It’s pretty boring living though.

    Plenty of my friends are getting into their fifties and in my profession (architecture) at that age, if you are not in senior management, you are pretty much soon to be history — especially if you have kids. So I have lots of conversations with various friends about what we are going to do when that inevitable arrives one day, or hopefully to jump ship before that day arrives. The last place you want to be after turning 50 is in the corporate private sector.

    By the way, for house cleaning, we have it made here in Belgium because those and similar services are subsidized by the government in order to combat the black market. We pay 9.00 EUR an hour for service vouchers and the cleaning people end up with a salary of 22.50 EUR an hour plus benefits. Maybe that’s what I’ll be doing once my company manages to kick my ass out of a job!

    http://en.wikipedia.org/wiki/Service_voucher

  26. RUKidding

    Thanks for sharing your friend’s story. I wish her all the best. It is an interesting insight about divorced women, in particular, whether of her higher class status or even someone more middle class. The assumption was – and at one time it was true – that such college educated women, having taken time off work to raise kids (not a lazy or feckless thing to do, but very important work), should be able to get at least a decent-paying, secure job later once the kids grow up.

    Now? Not so much. There are other stories of divorced women in this age group living lives not just of gentile poverty but of abject poverty. Your friend is fortunate that her ex is a decent man and recognizes her plight and is willing to share. Not everyone in his shoes would do that.

    I don’t see your friend, and others like her, as villains to be dissed. It’s a sign of our times and noteworthy. Doesn’t matter much how well off you have BEEN; where are you at now? Many who had good jobs at one time lost them through no fault of their own and now really struggling. I see it only getting worse from here.

    The sad thing is that citizens still indulge themselves in viewing those who struggle financially as being “less than” and unworthy and lazy and all the rest of the negative attributes. Some of that is out of fear – fear that they, themselves, may end up in the same position. So easy to indulge oneself in negative judgments to make oneself feel superior and more worthy.

    I wish somehow such situations, as terrible as they are, would result in citizens awakening from their stupors and realizing that the masses have much more in common with each other, that we could work together to try to make some real changes for ourselves. Indulging ourselves in Us v Them politics is a dangerous drug that has addicted far too many citizens. Neither branch of the UniParty is doing bupkes to make improvements for anyone but the .1% and above. More and more citizens will continue that downward slide, and unless citizens rise up, it will get worse.

    I’ve lived in third world countries. It’s not a pretty sight, but it’s what the .01% intends to happen here, whilst laughing all the way to their off-shore accounts and getting hard ons from the cruelty of it all.

    1. TheraP

      I’ve begun to think that what we have in this country now is a Caste System, whereby certain groups, whether minorities, so-called aliens, the unemployed, the under-employed, those who labor with their hands, and those who have slid down the economic or social ladder for whatever reason, are castigated (notice the “caste” in castigated), blamed! They’re deemed deserving of their position.

      Raped by the system, they’re blamed for that! Which is a convenient way of evading the social ills which are a contributing factor. Nothing like kicking someone when they’re down, is there?

      Thanks for your comment!

    2. jrs

      I’m not so sure of that, I mean the economy is bad, but I think women have always known the risk of taking off time to raise children and of divorce. It was a large part of the drive behind early feminism. Women were left destitute by failed marriages and they learned real fast the risk of relying on a man for their income even if the marriage seems happy. So women wanted the career opportunities men had to protect them from that, didn’t want to just be stuck in the low wage pink collar. And for awhile that worked. But now the opportunities are so bad for men and women that women are sliding back to square one, if they divorce and take time off to raise kids, even if they have skills and education.

      1. RUKidding

        It’s a mixed bag and not black & white. True that many women wanted to rise up in the workforce and not get stuck at a certain level. Those women mostly had to hire nannies or whatever to look over their kids and continue working full time. But there was a phase when there was a reasonable expectation that a highly educated woman could take some time off to raise kids and have a reasonable expectation of getting back into the work force at a “decent” wage level. Such women, true, could rarely expect to rise up to the corner office, but they did have some assurance that a living wage could be earned.

        That, for me, is the difference. Now finding a living wage is a huge effort, and everyone’s expectations have had to be reduced. I’m not sure what Karen’s expectations were in terms of salary and standard of living, but it appears that she’s made some reductions in her standards/expenses and still finds it a challenge to make ends meet. I think that’s the crux. It didn’t used to be this way. Now it is.

      2. Yves Smith Post author

        Things have changed more in 40 years than you seem to recognize. She is a couple of years older than me, and women were just starting to go into the workforce. Her and my cohort was only a half generation behind the real trailblazers like Brooksley Born. My father (who went to business school very late, he was the oldest guy in his class) was in the first HBS class that admitted women, the class of 1965. I had a lawyer whose mother was the first woman in the state of Connecticut to get a mortgage on her own, no man co-signing. The year? 1971.

        The point it that there was no track record of women having worked (as anything other than teachers and nurses) to set expectations. And the expectation then was still that women would get married and have kids and not necessarily careers. Women like me who were career-focused were a small minority. And divorce was still frowned on then too, so the assumption that a woman with kids might have to support herself wasn’t a risk that was part of the collective consciousness either. Hence the frame “risk of taking time off to have children” would simply not have occurred to women who wanted to have children back then. The “you can have it all” myth was prevalent then, it wasn’t until the mid-later 1980s that the idea that women had to make tradeoff became widely recognized.

  27. AJ

    Yves,

    Thank you for this site. I sincerely appreciate the writing, the links, and, most of all, the intelligent conversation amongst the commentators. I can think of no other site that’s more enjoyable and informative.

    I am sorry for your friend, but really I am fearful for my children. Where are we headed as a people? Who will have the unique courage and the right opportunity to change this system that has become so corrupted? I just don’t see improvement without complete and utter collapse first.

    AJ

  28. John Yard

    With only this article to go buy, it seems that much of this woman’s ‘plight’ is/was her sense of entitlement . I have relatives living in the upper east side of NYC – shadow of the Met – who have run through fortunes, and are bitter because they can’t maintain an upper class NYC lifestyle. This is not social injustice.

    1. Yves Smith Post author

      She is not bitter. That is completely your projection. And she did not “run through a small fortune”. She saved out of her alimony and did get a little from her inheritance. If she works into her later 60s and can avoid going into what she has put away, she should have enough to retire on.

      She considers herself to be successful by virtue of raising two children who turned out fine. Her observation is that many parents in what used to be her social stratum don’t watch their kids closely (as in know what they are up to and who they are seeing) and rely overmuch on the “help”. The result, with all of the money and temptations, is that many wind up with addictions or bad coping skills.

      1. SC

        But Yves, be serious here. This woman wasn’t born yesterday. What was she thinking 5 years ago or 10 years ago or 20 years ago – that all she had to do was just get another degree and then a job would be waiting for her in her late 50s or early 60s? We all want to work until our late 60s but guess what – no one wants us no matter how skilled and talented and special we are. Businesses have been gutted of people who are in their 50s and beyond so when interviewing for professional slots one’s odds are not good when talking to 30 year olds who know nothing but are there because they are young and cheap. The solution for your friend is to find a job outside of Manhattan if she really wants the money and financial security. This idea of cleaning houses is ridiculous – it talks to her wanting people to feel sorry for her which I find a little disgusting as she is making herself sound like a princess who has been wronged. This princess needs to wake up. She needs to understand what her priorities are – is it financial security which means a relocation or is it Manhattan and maintaining her current life style and going further downhill from there. There are no guarantees in life but I guess she never got that memo.

        1. Yves Smith Post author

          Huh??

          The evidence is overwhemingly that people get jobs through personal connections. Many jobs are never listed because they go to candidates already known by the employer. And you also forget that graduate programs do organize recruiting for their graduating class. And they jobs she had that didn’t work out were in the $50K to $80K range, so her plan was not as off base as you indicate.

          Her odds of getting a job outside NYC at anything better than WalMart level which is another notch down in income. are absolutely nada. For your implicit claim to having street smarts, I’m surprised you don’t get that.

          You are projecting when you keep talking about her current life style. What about “she has a super cheap apartment and doesn’t have to own a car” don’t you understand? Unlike most people here, she does not have a big nut to cover.

          1. SC

            Yes I was reading through the comments a couple of times and understand she is reluctant to move out of New York. But I find it hard to imagine that someone with her gifts in mathematics and her newer degree is not needed by an employer in another part of the country. My suggestion would be that she look into other markets and see if she can find suitable employment elsewhere. She can at least look and then decide. There are other cities that do not require cars.

            1. Lambert Strether

              Many people who are told to move have family or personal reasons to stay where they are — taking care of an invalid, for example, or medical services near where they are that are not available elsewhere. Or perhaps they can’t unload their house.

              Really, this “Say, why don’t you just move?” advice is not the sort of thing that most people aren’t able to think of on their own.

  29. TheraP

    A society should enable all of its citizens to find meaningful employment, no matter their age or sex or color. And I sympathize with anyone who is currently suffering due to all the inequities which, like moths, are knowing away at the social fabric.

    In our old neighborhood, the guy across the street had not worked in maybe 10 years, his wife is ill and on disability, his son has the same genetic condition, lives at home in his his 20’s and is also on disability. I assume they must have savings or inherited something as they still live in a very nice neighborhood. Then there’s the guy across the corner from us, who also was let go in his 50’s and hasn’t worked for even longer…

    Then there’s Jessie, who cleaned our apartment at the retirement community this morning. A black woman with a beautiful smile, working TWO jobs, supporting the son she had at 16 along with her youngest brother, whom she adopted when her mother died about 4 years ago. Tomorrow, she’s promised the boys, she’ll put up the Christmas tree, because tomorrow she works only one job. (she recently moved here from Chocago, to give her sons a better chance to stay alive and get a better education. She is worried about the future, raising two black men. At least she has benefits working here and a union.

    Let us weep and mourn for anyone deprived of a job or of a living wage!

  30. Bridget

    Housekeeping seems to be a pretty good gig. Even in Central Texas, where illegal immigrants abound and wages are on the low side, the going rate is $25 per hour. Back in the day when I last employed a housekeeper, she had a cell phone before I did! Plus a brand new pickup truck.

    If I needed the work, I wouldn’t hesitate for a minute.

  31. Sally

    A huge amount of corporate and idelogical money has gone into seducing us to the glory of the individual. This is not an accident. The atomisation and individualisation of society is paramount to our corporate masters. We as a species have forgotten there was a reason our ancestors lived in tribes . Namely, it is a hell of lot safer to live in the jungle in groups rather than on your own. It is a lesson we need to relearn because we are living in a modern jungle. A financial jungle where the predators are not lions and tigers but corporations. They will bleed us dry and then throw us aside.

    All forms of communal are now attacked. From trade unions to class action legal suits. Keeping us individual is the way to keep the elites rich and in control. We have to rediscover community, and society. There was a reason Thatcher said “there is no such thing as society.” We are not going to like it though. We all want to believe we can go it alone. But increasingly these stories show what happens when things go wrong. There is going to have to be a lot more of these stories before we change our priorities.

    1. Stratos

      Sally, you hit the nail on the head. Nearly every institution in this country has been re-engineered to separate and isolate people from one another. The media, in particular, has become a screeching wall of sound and demoralizing images separating people with fear, terror and anger.

      When is the last time any of us saw a movie or TV show set in the “future” that featured stable, healthy societies where the oldest people (or anyone) said things like, “the early 21st century were hard times, but we pulled together and got through it” or “we struggled together and built a more just society.”

      Working together is key. I’m heartened by the multi-ethnic, multi-class organizing among the young that’s sprung up recently over the issue of police violence. It’s early days yet for what will be a decades long struggle, but at least the young people are aware and active.

      1. RUKidding

        Remember Clint Eastwood’s Superbowl 2012 commercial – Half Time in America?
        http://www.bing.com/videos/search?q=clint+eastwood+detroit+commercial&FORM=VIRE2#view=detail&mid=F6B26DE3BE7B812208C5F6B26DE3BE7B812208C5

        The rightwing noise machine went nuts dissing Eastwood. How DARE he diss America and talk about COMMIE stuff like “working together”?? And the ad ended with “Imported from Detroit.” How DARE Eastwood support the horrid dreadful slacker Auto Unions in slacker Detroit??

        I was moved by Eastwood’s commercial, but he took a drubbing for it. No, we are not allowed to talk about how shitty things are, how we’ve been ripped off by the Oligarchs, and heaven forfend that the peons even consider the radical notion of “working together to make improvements.”

        Can’t have that. Sadly, too many citizens jumped on the bandwagon to diss Eastwood and were carefully taught to hate that ad.

        A shame. As long as we permit ourselves to be divided and pit against one another, the rich win and the rest of us lose, and lose big time.

  32. Lune

    Karen’s story raises an interesting point. For many years now (at least since John Edwards’ “Two Americas” campaign theme), people have recognized the divide between wage earners and investment earners. Basically, people who earn a living through wages, whether it’s minimum wage McDonald’s workers or million-dollar cardiac surgeons, are being ground down in favor of people who earn their money through investment income (stocks, bonds, real estate, etc. and their associated professions).

    What you’re pointing out now is that even in the investment-earning world, there is now a distinction between “traditional” investors (those who save some money and invest conservatively to meet future expenses) and “nontraditional” investors (those who profit off ever more sophisticated financial speculation, or from influencing government policy, or from outright criminality and fraud). The financial crisis destroyed the single biggest asset class most main street Americans have, namely their house, while the ensuing ZIRP destroyed the traditional means they had of gaining some rentier income, namely bonds and pensions.

    This is why I think ZIRP has been far more harmful than if the Fed let the banks take the hit on bad debts in the beginning and get back on a growth track. For someone making regular contributions to their investments (be it working people contributing to their retirement nest egg, or pensions, etc.) a one-time large decline in their principle does far less damage than a secular decline in investment returns, especially in the timelines needed for retirement planning.

    1. jrs

      Never even mind bonds and pensions (wait who has pensions anymore anyway?). It destroyed the means they have to earn incomes from savings accounts and certificates of deposit! This is destroying real small middle class players.

  33. NOTaREALmerican

    As the Elysium Class pulls away from the top 10% there’s going to be more “quiet distress” as services and bling that the top 10% has gotten used to sharing with the Elysium Class becomes unaffordable or falls into disrepair.

    A good example is transportation: When the Elysium class needed passenger trains we had lots of passenger train bling. When the airplane was adopted by the Elysium class, the trains weren’t needed, and there was a 20 to 30 year period of declining passenger train bling resulting in Amtrak. Now, there’s more and more private jets for the Elysium class and the top 10% need to pay for business & first class to get the bling it needs to stay comfortable.

    I guess eventually we’ll have Amjet.

  34. Chris in Paris

    Very sad story. There’s plenty of this going around for the over 55 crowd with great “qualifications” as we used to say. My awesome friend A, public school, Swiss finishing, speaks 6 languages fluently (not an exaggeration, many say it, few do it) was married to a rich guy who left her and her daughter to fend for themselves. Now she’s asking for money from her friends for health expenses. Nightmare.

  35. bunny

    So what can Karen DO today, or what might a person in Karen’s situation but say mid-50s, DO to adapt to our world? The distinction I am making is between what an individual can do to adapt versus what we can do collectively to change our situation.

    1. RUKidding

      Good Q; no real answer. Not so long ago, the “fall back” job was retail, which used to pay OK and maybe even offer some benefits. These days? Forget it. Hard to get hired full time and then usually no benefits. Most are forced to work very part time and weird hours that mean you can’t even get a 2d job to fill in the gap.

      From comments here, some paint a rosey picture of the new normal “fall back” job as house cleaning, which some appear to believe is quite financially rewarding. That has not been my experience with those I know who do this work – usually married women with a husband who works one or more jobs, plus often teenage and older kids also work to support the household (ie, not just working for their own fun stuff). May be different elsewhere but seems a bit suspect to me.

      Karen appears to have DONE a number of things to make herself better situated, qualified and marketable with very mixed results. I feel that her story is common especially for those 50 and above. I do have a friend (live in CA) who lost her job in the private sector 2 years ago. Mid 50s. More of a high level clerical worker, which I think inured to her benefit (IOW, I sometimes think it’s easier to obtain some lower skilled jobs than professional level work these days). It took my friend 13 months (she “benefitted” from the prior extension of Unemployment benefits, plus had enough to pay for COBRA, etc) to get another full-time job with the State. She has landed on her feet but was lucky to be located in Sacramento, where one can still obtain a govt job if one really works at it.

      Another friend also now works for the State (now in her late 50s), although she feels disempowered by this and somewhat ashamed. This other friend used to work for herself in a successful business in Los Angeles doing a variety of design work for the movie industry. She is creative and clever, but that type of work just dried up. She was left with no money (she admits to poor financial planning) and no work for a couple of years and had to live off of her family. Now doing ok and committed to working for the State for as long as she can, where she hopes to get her CalPers (yeah: that CalPers) pension.

      These 2 women did ok, but it’s a combination of their efforts and willingness to work for the state and the luck to get decent jobs. For someone in NYC? I have no idea.

  36. rps

    Fun Facts: Women’s Poverty in the United States, 2012. (Legal Momentum: The Women’s Legal Defense and Education Fund website): Adult women had a higher poverty rate than adult men in 2012 as they have had in every year since official poverty measurement began in the 1960’s. The poverty rate for women was
    14.5% compared to 11.0% for men. Women were 32% more likely to be poor than men, a
    decrease from the 34% gender poverty gap in 2011. There were 17.8 million poor women
    compared to 12.6 million poor men. 58% of poor adults were women. About one of every
    seven women was poor, compared to about one of every nine men. Single mothers were 81%
    more likely to be poor than single fathers, aged women were 67% more likely to be poor than
    aged men, and employed women were 31% more likely to be poor than employed men. **At every level of educational attainment women were substantially more likely to be poor than men.**

  37. Jeremy Grimm

    I find Karen’s story truly scary. If someone with this woman’s advantages is having trouble making ends meet, the lesson I take away is just how bad this economy and job market really is. If a woman with this woman’s advantages of intellect and education cannot find better employment of her gifts then gods help us all. This woman’s story puts to bitter lie the nonsense about a lack of STEM workers and the economic value of an education. It plainly shows that age and sex discrimination are as live and well as race discrimination. It puts to lie the idea our fates are decided on the choices we make; good choices are rewarded — unless we engage in the sophistry of defining good choices as choices that have good outcomes.

    Some of the comments above are chilling in their lack of empathy although they help me chastise my own tendency to suggest impossible remedies to my daughter and others I try to help get by. I recall the recent reading where a woman pointed out the folly of people slightly better off than she suggesting she ought to buy things in quantity when they are on sale. She explained how buying in quantity is a good idea — but only if you have enough extra after covering what you absolutely need right now.

    Karen’s origin in the upper classes serves to make her story all the greater tragedy in the dramatic sense of the word, and no less tragic in the usual sense. Until recent times the heroes and heroines of tragedy were kings and queens or at least lords and nobles. Her story is a modern tragedy because she has fallen through no fault of her own — no hubris beyond the same hubris compelling our belief we can avoid tragedy by making the right choices, the right compromises, move, or endure the right indignities.

    What of this woman’s husband, the billionaire? While his continuing to pay her a small stipend is laudable, would it greatly impact him to pay her a larger stipend? She is a person he knows. She is having trouble getting by with even a small modicum of the life she knew. I assume she is the mother of this man’s children. If the divorce were wrenching for him — even if he hated his now ex-wife — how can he lightly allow her to fall on such hard times? If this is an example of how the better among the rich take care of their own what possible hope is left for the rest of us?

    1. RUKidding

      For better or worse, the wealthy ex-spouse is doing a hella lot more than the majority of ex spouses would do. That’s reality. I know very very few who would feel that they owe anything to their ex, no matter what the circumstances are, and I know some who would actually ENJOY their ex-spouse’s financial distress and revel in it. We live in a cruel world. Divorces are often bitter. While some ex’s can be compassionate and help out, like this man, many would only crow that their ex was struggling and possibly hope that her circumstances get worse. I’ve seen such things.

  38. Fool

    The older I get, the more I realize how much uglier people get as they age. (This gives me some gratification; “the grownups” once considered me ill-behaved). I mean, how shitty of a person does her ex have to be to allow her to live like that? Regardless of whatever happened between them years ago, she’s someone he once loved. That, years later, her suffering is not a burden — but the opposite — to him is reflective of the tragic state of our society’s moral values, particularly those it has rewarded “at the top”.

    1. sharonsj

      Fool, if a person is ugly, then they always had the capacity to be ugly. Age has nothing to do with it. I’m 71 and have plenty of compassion and, although I don’t have much money, I’ve helped out plenty of friends.

      From the story, this woman sounds middle class, not upper crust. And her story is quite common. I can count on one hand the people I know who are well off. Everyone else is scrambling to survive.

  39. jdog

    Woman may be book smart, but not savvy. Get out of NY, move to a state with no state income taxes. Perhaps her ego is clouding her common sense. And all the haters shouldn’t blame capitalism, millions of men and women with a lot less going for them than this woman have done quite well for themselves in this economy. The difference is their common sense came before their ego. I’ve seen many “highly educated” types in STEM from the top schools in the country not do so well in the real world because they thought their degree guaranteed them a comfortable middle class lifestyle but the reality is that degree just opens doors and gets an initial handshake, you have to hustle and prove yourself every day.

    1. Yves Smith Post author

      You miss she has very cheap housing here as well as a social network, which is critical to fining work at her age. And she was raising her kids here until recently, and she and her ex-husband both wanted them in elite NYC schools, which he paid for. Her kids were her top priority. Her choices are entirely sensible even if they are not yours.

      And she DID hustle. Pray tell how many women over 50 with no meaningful prior work experience get hired, much the less manage to get hired multiple times? She was promoted at one of her jobs (the one where she was pressured to mis-sell) before she was pushed out. Your comment is pure prejudice based on her bio.

      1. James

        That said, perhaps jdog is right. She should at least consider getting out of NYC and its ultra high cost urban environs.

        I don’t agree with the she needs to hustle aspect, as I think the idea of ‘speeding up to keep up’, especially if you’re over 50, is entirely overrated, but at the very least I always wonder why those “trapped” in big cities with all the attendant high costs don’t simply reject all that silliness. Or does the thought of fully committing to diving in the water with all the rest of us hayseeds out here really scare them all that much?

        And all that said, I fully empathize with her plight, as I’m close to being in similar circumstances myself; but then again, all the empathy in the world and a quarter won’t guarantee you entry into a homeless shelter these days, so what are we gonna do? Start by rejecting the D/R political duopoly for starters, and then get to work on dissolving the sham Wall St/DC/MIC public/private “government” complex after that. Sad to say, but it really has come to that.

        1. different clue

          The problem is that disemployment is just as high in most small cities, towns, etc.; and they are already full of people fighting or working to survive, people with their own defended-from-outsiders social and support networks, etc. If someone leaves behind all their minimum-survival networks in the Big City where they are now at, and is excluded from such pre-existing networks in the new “cheaper” location, and is unable to find work there; what has he/she gained by going there?

  40. craazyman

    sounds like she needs a 10 bagger.

    I can empathize. Who wants to work? I don’t. Laying around all day doing nothing except wasting time — that’s what makes life worth living.

    Cleaning somebody else’s apartment? WTF? Cleaning my own apartment is hard enough. I mean really. The toilet too? Jesus. That’s ridiculous. Wiping the shlt crust off somebody else’s toilet bowl. hahahahahah. OH man that’s bad.

    The problem with needing a 10-bagger is that, when you need it, you need it NOW. Not in, say 3 years. Three years is not long to wait, watching out every day for a 10-bagger. It’s actually pretty short. But when you need it each day for 3 years, that needing it more than 1000 times. That’s what wears you down, it’s not the “not having it” it’s the “needing” it.

    She could become a Bhuddist or a zen master. Or she could go on xanax. There’s got to be a way to get a 10-bagger pretty quickly, if you’re her, in her situation. Maybe in the options market or in precious metals tradiing. Maybe her ex can give her $1 million to play with. But only on the understanding that she’ll use her math skills to triple it inn a year or so and give him 30%. That sounds fair to me. Then she can work on getting rich and not on cleaning.
    .
    Her entire world is one 10-bagger away from beiing paradise of leisure and cultural sophisication, with daily activities such as laying around, gonig to the museum, talking about politics and economics and debating various mathematical problems over espresso at Greenwich village cafes.

    1. not_me

      Here’s potential 10-bagger or more:

      Proverbs 10:22
      It is the blessing of the Lord that makes rich, and He adds no sorrow to it. [bold added]

      So the bags won’t have crap in them either!

  41. different clue

    I wonder if we aren’t confusing modest affluence with wealth here. It reads to me like the person in this story was never wealthy to begin with. She was modestly affluent. Her grandfather apparently created a modest little bit of wealth which her father was able to attrit back to zero, taking just enough money out along the way to provide modest affluence for the family.
    Since she married real wealth, she got/gets to see what real wealth looks like, which must make the fall from modest affluence all the more painful. If the ex-husband has gone from being a multi-billionaire to being a uni-billionaire, then he has not suffered. And he is still really wealthy. Did the units-of-account by which his wealth is measured lose some “price” or “value” per unit? That would merely be the loss of paper wealth. If he still maintains his Overclass Position against the rest of non-Billionaire society, then he is still wealthy, and has lost nothing reality-based.
    I made $4,000/year or so for several years after college. I have scratched, gouged and clawed my way to the exalted income of $36,000 per year that I make now. We have some modestly affluent people in our family, so I know what modest affluence looks like. I think I know just enough to know that I have no personal idea or exposure to what Real Wealth looks like.

    1. James

      I feel ya. My personal experience tells me that $40K per year is going to me the new norm for “making it” here in the swamp of us normal folks, with $20K or less being the norm, if you’re lucky. Or about what I was making after a 25 year enlisted military “career,” which was largely tax free. After 25 years of “service” and a largely taxpayer subsidized undergrad and MBA, I was overwhelmed to learn that I commanded about what I earned upon separation from the military after adjustment for taxes and inflation, albeit with substantially less responsibility, authority, and autonomy. And needless to say, satisfaction.

      1. different clue

        Military persons expecting military pensions and civilian persons expecting Social Security will both and separately find their expected benefits under attack by Social Overclass pension-thieves. Hopefully the civilian and military future-retirees will figure out how to work together to protect eachother’s retirement survival against the same common Social Class Enemy.

  42. ween

    I almost feel sorrier for the daughter in London who not only has to witness her family’s downfall, and her own uncertainty about the ability to get a good life position/job even at a young age due to the crap state of the world, but who also has to realize that not even ‘marrying rich’ can save you anymore — if ever it did

  43. John

    Hard to feel sympathy for those who are better off then you.
    This woman has options.
    Many people in their 50s and 60s are going to be living in dire poverty as they age.
    If they are lucky.
    If they aren’t so lucky they will be on the streets and death will come soon enough.
    And I think that is the plan.
    The elites don’t want the Social Security and Medicare wasted on the old when they could be trillions richer by diverting and looting that money.
    Genocide by Poverty is their answer.

    1. different clue

      I am glad to see that others are beginning to consider the question: If the Global Overclass wanted to kill 4-6 billion people over the next 50 years and make it look like an accident, how would they do it?

      If we can understand all the possible accident-fields and darwinian filters they could devise for us, perhaps some of us could learn how to avoid the pre-arranged accidents and pass through the darwinian filters. Perhaps enough of us could assure our own and eachothers’ survival to the point where we would have some time and energy to devote to the problem of how to prevent and abort the survival of those Overclass members who seek our death-by-arranged-accident.

  44. greg

    First they impoverish the poor, making them poorer than they already are.
    Then they come after the working class, and impoverish them.
    Then they come after the lower middle class, and impoverish them.
    Then they come after the upper middle class, and impoverish them.
    And up the economic ladder, as one by one in order the very wealthy betray those who looked up to them, until only the very wealthy have any wealth, and they have it all.
    And then the economy collapses, and even the wealth of the very wealthy is destroyed. Is that their plan, and that they imagine the luxury cabins of the Titanic will survive their sinking it?

  45. Oregoncharles

    One problem for those who’ve always been affluent (taking “different clue”s point about nomenclature) is that they don’t know how to be poor. I’m being serious, and sympathetic: my wife and I are in a similar situation with very different details. Our saving grace is a likely substantial inheritance – eventually. Apparently I come from long-lived stock.

    For an example of skill at being poor: we depend heavily on thrift stores; aside from food, we rarely buy anything new. And we grow quite a lot of that – we’re also fortunate enough to own land. Both of those take quite a bit of time, difficult if you’re also working full time. We’re both more or less retired – less, in my case. when you’re poor, you don’t get to retire completely. And, of course, you have to make a lot of decisions about what to do without.

    In the case above, that would be New York, if at all possible. We don’t live in Portland, either.

    Overall, this is a very good example of what’s wrong with the economy, from a Keynesian angle: people like her, the modestly affluent, are the engines of the consumer economy.

    1. different clue

      I remember decades ago the Food Co op where I lived would put food too rotten-to-sell out behind the Co op
      before finally taking it to the dumpster. I used to look for “bargains” back there. Once I found about 20 pounds of broccoli with the heads all rotten and sorta slippery-slimy yellow-brown. But the stems still looked good. I took them home on the theory that the stems would still be as good as they looked and would only need peeling to get the stem-core broccoflesh within. And I was right.
      If a rotten pepper was really only 30% rotten, you could cut away the rot with an extra 10% margin of safety and still have 60% of the pepper. And so forth and so on.
      If it gets to the point where we have to fight squirrels over nuts in the park, those who learn to fight the squirrels most effectively stand the best survival chances.

  46. Jesper

    I think this is important:
    “She says matter of factly, “I thought with my two graduate degrees I’d be able to earn $80,000 a year. My market value is between $23,000 and $30,000.””

    People who’ve not been part of the job-market (looking for a job or hiring) tend to have very skewed views on the state of the job-market. Once unemployed then people get a reality-check.

    & her students might be less than respectful to her as they judge her and her abilities based on their perception of her success. If they see her as not being successful then they might not respect her or her teachings. A consequence of the belief in the existence of meritocracy…

  47. Bingo

    Fabulous article!

    Yves: please suggest to your friend to consider taking online adjunct teaching jobs. It is possible to make that work, even into the 6-digit a year area. I’ve been doing this since I moved to Europe, and it has worked fine for me so far. The advantage is that she will have zero BS to take from her superiors, since she will probably never talk to them as long as she fulfills the job demands (i.e., posting in discussions, grading on time, etc.). Nobody will discriminate her based on age either, since they will never meet her face to face. Of course, there are no benefits such as health insurance. As far as students are concerned, as long as you treat them with respect but completely detached, there will be very little BS to take. As an invaluable perk, she will get daily amusement from reading her students’ illiterate emails and papers. I am not kidding — most are functionally illiterate, and this even at the “better” schools if there is such a thing anymore.

    However, she has to accept the simple fact that American higher education is dead. These days, the vast majority of universities are diploma mills ripping off the student loan system. These degrees are worthless, and these young (and many not young) graduates will be forever debt slaves (you cannot discharge student loans in bankruptcy anymore), bagging groceries at Trader Joe’s for minimum wage. As such, the only purpose of these adjunct “gigs” (because they are not real “jobs”) is to partake in the feeding frenzy on the carcass of the American higher education system, in order to avoid living under a bridge. But, if she plays her cards right, stops thinking of herself as an “educator”, and treats this as a business she can eventually earn well. She can email me if she’d like more specific suggestions.

    I am sorry for my my cynicism, but this is reality.

    Julian

  48. Sam Kanu

    ** Before you start moralizing that she should leave NYC, she is keen to get out but it is unlikely to get her overhead down much. The cost of owning and operating a car is a big offset to the savings on housing.

    You dont have to move to rural Nebraska or whatever in order to cut your cost of living. You could also move to the outer boroughs of New York or greater New York area – and still be in a public transport-intensive area.

    Of course that would involve living among how shall we say “ordinary people”, which the unspoken problem this person and the rest of their class are facing?

    People need to recalibrate, recognise their previously unexposed prejudices and and consider what they are worth.

    Or maybe they should have cared how the 99% lived when they were in the 1% and a position to do something about it!

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