The year of the 1%ers

What bitter irony that in the year following the re-election of the most left-wing President in history, America's wealth and income inequality continues surging to new highs.

Real estate is re-bubbling, the stock market is skyrocketing, but job creation is slow and the new jobs tend to be low-paying and/or part-time.  Real median household income is still well below where it was a decade ago.

There are many reasons for the growing inequality.  At the top end, Fed easy money is at the top of the list for increasing stock and real estate wealth and incomes in banking, real estate development, and related industries.  The crony capitalist / corporatist regime in Washington D.C. is not far behind, with the Washington suburbs becoming one of the wealthiest areas in America based on buying and selling policies that rule the rest of us.

At the other end of the spectrum, automation and outsourcing certainly play a large role in the decline of the middle class.  But throughout history, jobs lost to technology have been replaced by new jobs in new industries.  Is this time structurally different?  The new Obamacare mandate certainly doesn't help.  Why would businesses hire more full-time employees with expensive Obamacare mandates when they can much more cheaply hire part-time, or even outsource or automate?  High consumer indebtedness, too, surely discourages business expansion, as there's no point making more products if the customers are maxed out.

What's the outlook for 2014?  Wall Street strategists see an acceleration in economic growth based on the housing rebound and the domestic energy boom.  That's certainly plausible, and even looks like the default scenario barring an unforeseen shock.  Rising health care costs due to Obamacare could certainly be one such shock, but would likely take more than a year to derail the recovery.  So a best guess for 2014 would be more of the same: Wall Street and Washington lobbyists getting richer, the middle class struggling under heavy debt loads and stagnant income.

Given that outlook, Charles Hugh Smith's timeless advice seems especially timely:

Debt is serfdom, capital in all its forms is freedom. The only leverage available to all is extreme frugality in service of accumulating productive capital.

Get out there and accumulate some capital. The outlook ain't getting any better for labor.