The Hunger Games Are Coming…

Financial FAQs

Was the Sandy Hook Elementary School massacre the sign of an apocalyptic future? Or the Aurora Theatre shootings by a cold-blooded killer?

The Hunger Games is a riveting portrayal of how the young see the modern world, where a privileged elite has a “Stalin-like” control over who lives in plenty or poverty in a post-apocalyptic North America. Author Susan Collins has said it “tackles issues like severe poverty, starvation, oppression, and the effects of war among others.”

And the young just coming of age are not far from the truth. A vision of decline and limited opportunity fills the daily news. Declining resources and global warming could cause future wars, says the Pentagon. America has become a war zone with school children no longer safe and more than 10,000 gun-related deaths per year. Even Social Security and Medicare may not be available for future generations, say its Trustees.

In fact, a record number of Americans are already living below the poverty line, while University of California economist Emmanuel Saez found the top 1 percent of households garnered 65 percent of the nation’s income growth from 2002-07, the beginning of the recession.

And that is the problem. The U.S. doesn’t suffer from a scarcity of needed resources, or the means to finance adequate social services. It has been suffering from a redistribution of the wealth upward over the past 30 years that is no longer available to finance those means.

While overall household incomes (and consequent economic growth) have been steadily declining, the wealth of the top income brackets has been as steadily increasing. And the result is what the young see—a vision of scarcity in the real world that isn’t real. Modern industry has conquered the means of production. Rather, such scarcity results from a conscious policy by a politically powerful minority that demands more benefits for them while cutting benefits for all Americans.

The result is wages, money that flowed to employees of firms, fell to a record low of 43.5 percent of GDP, while corporate profits are the highest on record. It is a level of inequality and redistribution of resources matched by a few of the poorest countries in the world. The U.S. level of inequality has been ranked just above some of Africa and Asia’s poorest countries by the CIA’s World Fact Book.

Ms. Collins has said her stories were inspired in part by TV reality games, with their fight for survival, as well as the Iraq War, a war over the control of resources. But the popularity of The Hunger Games, or Survivor and all the TV reality shows is a testimony to the present reality for millions of Americans. One reason this young adult fiction remained 100 weeks on the New York Times’ best seller list was that it does mirror the modern reality for many, where starvation and the fight for survival still exists.

That is certainly true in the developing world, but shouldn’t be true in the United States of America. The adults have badly made a hash of the modern world, says The Hunger Games. They have created poverty in the land of plenty, and so are not to be trusted.

The adults lied about the Iraq War, when they covered up the knowledge that there were no weapons of mass destruction. Adults also lied about the benefits of tax cuts for the wealthy. It made everyone else poorer. Their policies created 5 successive recessions since 1980. The Great Recession happened because adults ignored or broke existing laws and regulations in order to enrich themselves. The adults have made a hash of governing because they strove to break down the government’s power to govern.

The Hunger Games is a cry that adults can no longer rule their world wisely. So beware, adults. The young are watching you.

Harlan Green © 2013

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Mortgage Quality Highest in Decade

The Mortgage Corner

Record low interest rates and low prices, are making housing more affordable than ever. This is also helping lower default rates, as average credit scores have soared, and Debt to Income Ratios used to quality borrowers have plunged since the end of the Great Recession. This tells us that the Fed’s efforts to hold down interest rates until at least 2015 is producing results.

The National Association of Realtors’ Housing Affordability Index showed that housing affordability is expected to set a record in 2012. The trade association is forecasting that its index of housing affordability will hit a record level of 194 in 2012, up from 186 in 2011, when the prior record was reached. NAR data go back to 1970.

A reading of 100 means that a household with median income would have exactly enough income to qualify for buying a median-priced existing single-family home. A level of 194 for last year means that families had almost double the income needed for buying a median-priced existing single-family home. However, skeptics might note that NAR’s index didn’t fall below 100 even during the recent bubble. Indeed, the last time the index reached under 100 was in 1985, when mortgage rates were in double digits.

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Graph: WSJ Marketwatch

This is while average credit scores for so-called conforming loans purchased by Fannie Mae and Freddie Mac started rising in 2008 and remain high. In the third quarter, the weighted average credit score of single-family mortgages purchased by Fannie reached 761, while the score was 762 for Freddie-acquired loans. Those levels are up from the 730s in 2008. Consumer confidence in the housing sector grew last month, marked by continued positive attitudes toward home price, rental price, and mortgage rate expectations, according to Fannie Mae’s December National Housing Survey results.

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Graph: WSJ Marketwatch

While credit-score standards have increased post-bubble, debt-to-income ratios have been falling. For home-purchase loans, the weighted average debt-to-income ratio at the time of origination is currently around 34 percent, down from a bubble high of about 40 percent. “The average debt-to-income ratios are back to basically the early 2000 levels for reasonable, sustainable mortgage payments,” said Mark Fleming, chief economist for analysis firm CoreLogic. “Apart from credit scores maybe being a little bit too tight, all of the other aspects of the traditional metrics on which you underwrite mortgage loans are really back to reasonable and tried and true levels.”

Continued price improvement is dependent on interest rates maintaining their lows for a sustained period. Fed Chairman Bernanke has promised to maintain such low rates until the unemployment rate has declined to 6.5 percent, which won’t probably happen until 2015, as I’ve said.

More mortgage relief is also coming from the $8.5 billion settlement with 10 major loan servicers. The firms involved in this agreement are Aurora, Bank of America, Citibank, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo. Roughly 3.8 million borrowers whose homes were in foreclosure in 2009 and 2010 will receive cash compensation under the settlement, with payments ranging from a few hundred dollars to potentially as much as $125,000 in a small percentage of cases. Those eligible are expected to be contacted by the end of March, regulators said.

Harlan Green © 2012

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January Housing Inventory Declines 24 Percent

The Mortgage Corner

The surest sign that property values will increase this year is the large decline in homes for sale. This is in part due to increasing sales, with existing-home sales up some 6 percent, year-over-year. But there is also a sharp decline in the so-called shadow inventory of homes in mortgage default, as well as outright foreclosures.

According to the deptofnumbers.com for (54 metro areas), overall inventory is down 23.9 percent year-over-year in early January, and probably at the lowest level since the early ’00s. This Calculated Risk graph shows the NAR estimate of existing home inventory through November (left axis) and the HousingTracker data for the 54 metro areas through early January.

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Graph: Calculated Risk

According to the NAR, national inventory declined to 2.03 million in November down from 2.11 million in October. This is the lowest level of inventory since December 2001. Inventory is not seasonally adjusted, and usually inventory decreases from the seasonal high in mid-summer to the seasonal lows in December and January as sellers take their homes off the market for the holidays.

Gary Wood’s December Santa Barbara MLS data also show signs of less inventory for sale. In December 2012 escrows remained strong with about 90 down from 98 in November and the median list price on those escrows went up from $811,850 the previous month to over $900,000, so we may be seeing prices rising substantially this year. But closing periods are falling. For instance, the $550,000 to $599,999 price average sale period averaged just 9 days, while 6 other price ranges closed within 20-30 days.

Continued price improvement is dependent on interest rates maintaining their record lows through 2013, of course. But Fed Chairman Bernanke has promised to maintain such low rates until the unemployment rate has declined to 6.5 percent, which won’t probably happen until 2015. So that will also stimulate the building of more new housing. Some of it will be rentals, as vacancy rates are tumbling. It is also depending on more new households forming. And economists are predicting that household formation could almost double in coming years from its low during the recent recession.

Harlan Green © 2012

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Unemployment—Why Still So High?

Popular Economics Weekly

What will bring US back to full employment is a very big question among economists. The problem is that the 155,000 per month nonfarm payroll average in 2012 isn’t enough to either absorb new entrants, or those that have lost jobs during the Great Recession.

Most macro economists know this. Only investment of more money grows a sluggish economy. And that requires more than the Fed’s printing of money (which at least keeps interest rates low), but isn’t in itself a direct catalyst for investment programs. It requires Congress and more expansionary fiscal policies to create jobs programs that will directly improve economic well-being. Until that happens, this will be a limpid recovery.

We know government spending tied to specific programs works because the $787 billion ARRA stimulus package of 2009 created or preserved as many as 3 million jobs. Had it been continued, say economists such as former Obama Chief Economic Advisor Christina Romer, we would have a much lower unemployment rate today.

December nonfarm payroll employment rose by 155,000, and the unemployment rate was unchanged at 7.8 percent, the U.S. Bureau of Labor Statistics reported Friday. The change in total nonfarm payroll employment for October was revised from +138,000 to +137,000, and the change for November was revised upward from +146,000 to +161,000.

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Graph: Calculated Risk

The crux of our problem? The Labor Force Participation Rate was unchanged at 63.6 percent in December. This is the percentage of the working age population in the labor force. The participation rate is well below the 66 percent to 67 percent rate that was normal over the last 20 years, although a significant portion of the recent decline is due to demographics, according to the Labor Department, as birth rates decline and the labor force ages, reducing the labor supply.

So how to put more Americans back to work? Keynesian and Neo-Keynesian macro economists, such as Paul Krugman, know the answer. He has said, for instance, “If the American Jobs Act, proposed by the Obama administration last year, had been passed, the unemployment rate would probably be below 7 percent.”

Create programs that put money back into the pockets of those consumers who spend it—mainly the 80 percent who earn wages and salaries. They are the drivers of aggregate demand, the amount of money actually in circulation that produces ‘things’. Most of the income gains since 2000 have shifted to the top 10 percent who spend considerably less as a percentage of incomes. Or, it has remained in corporate coffers with their record profits, rather than reinvested domestically—precisely because of the slack demand.

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Graph: CBPP

So we are back to the chicken and egg argument. Which comes first? We know the historical answer. Chickens aren’t laying more eggs because consumers are eating less eggs. And that’s because they can’t afford to buy more eggs. So farmers cut back on egg production.

Meanwhile, the public sector has been badly neglected—repair of roads, bridges, schools, the research and development of new technologies, to name a few. There are jobs waiting to be filled that only public revenues can finance, in other words. So there is no reason to allow the further deterioration of the ‘things’ that benefit all Americans, regardless of income level.

Harlan Green © 2013

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Happy New Year—A 2013 Recovery!

Popular Economics Weekly

Any doubts how dependent the rest of the world is on U.S. growth was dispelled on ratification of the ‘fiscal cliff’ bill by Congress. The world’s stock markets rallied on the news. The DOW was up + 2.35 percent, Europe’s FTSE + 2.19, Hong Kong’s Hang Seng + 2.98 percent, and so forth.

With the ‘fiscal cliff’ no longer a cliff (thanks to Congress finally listening to voters), 2013 might be the year of full recovery from the Great Recession. Real (after inflation) U.S. Gross Domestic Product is up 2.5 percent from its pre-recession highs, with only China’s growth rate higher since the Great Recession. This is in spite of various catastrophic events—such as Hurricane Sandy and the debt ceiling debate yet to come.

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Graph: Econoday

Details are still vague on all details of the final fiscal cliff negotiations, but we know it preserves the tax rates prevailing at the end of 2012, except for those individuals earning more than $400,000 and households earning over $450,000. It also allows taxes on capital gains and dividends to go up, and extends benefits of the unemployed. Additionally, the Senate bill delays the onset of the “sequester” — the swift, automatic spending cuts — for two months.

The increased tax revenues will boost growth in 2013. Why? Northern Trust’s retired Chief Economist Paul Kasriel said in his blog what many economists are saying—that the additional revenues will boost private sector growth.

“The Treasury is going to collect higher taxes from me and either transfer them to you or buy something from you. In other words, an increase in tax revenues will not ‘suck’ spending power out of the economy, but rather redistribute that spending power.”

And this is just what is needed to stimulate higher growth. The additional revenues flow to US consumers who will spend it domestically, thus creating more jobs. US national and local governments spend directly to benefit constituents, in other words, whether in education, infrastructure, the social safety net, or research and development.

The fiscal cliff deal also extends the child tax credit and the college tuition credit for five years, individual and business tax extenders for two years, and the Medicare “doctor fix” for one year. The Alternative Minimum Tax will be permanently fixed. The agreement also extends the farm bill for one year.

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Graph: Calculated Risk

So the additional tax revenues mean 2013 should be the year that our governments no longer act as a drag on growth. State and local governments have been a drag on GDP for twelve consecutive quarters. Although not as large a negative as the worst of the housing bust, this decline has been relentless and unprecedented. The good news is the drag appears to be ending.

Harlan Green © 2012

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Our Tragedy of the Commons—Austerity That Doesn’t Work

Popular Economics Weekly

There is a longer term fiscal crisis that current budget negotiators are ignoring. It is called the Tragedy of the Commons — the long term neglect of common resources and facilities used by all, including our air, water, and public infrastructure, thus allowing them to deteriorate to conditions that require enormous sums to fix in the future.

All of the ‘fiscal cliff’ discussions have centered on how to cut government spending on public programs or raise enough revenues to diminish the current deficit that was created by too much borrowing over the last decade — to pay for two wars, the Bush tax cuts, and consequent Great Recession that diminished revenues further.

But in fact there would be a much smaller deficit if instead the negotiations included reversing the neglect of our public resources and services. That is where we can immediately gain back some of the approximately $6 trillion in output lost due to the Great Recession. Most economists agree that up to three million jobs were created or saved in 2009-10 just from the $830 billion ARRA spending enacted by President Obama when he took office.

How much more growth could we gain from fixing the $2.2 trillion in deferred maintenance on our highways and bridges — the estimate by the American Society of Civil Engineers? The ASCE report, Failure to Act: The Economic Impact of Current Investment Trends in Surface Transportation Infrastructure, found the nation’s deteriorating surface transportation infrastructure will cost the American economy more than 870,000 jobs, and suppress the growth of the country’s Gross Domestic Product by $897 billion by 2020. Conducted by the Economic Development Research Group of Boston, the report shows that the nation is facing a funding gap of about $94 billion a year compared with our current spending levels.

Most economists know how to stimulate a greater demand for those ‘lost’ goods and services. Economists call it aggregate demand, demand that is powered by a combination of consumer plus government plus capital expenditures. And there is very little domestic capital investment at present. It is being hoarded by corporations, or invested overseas.

Study after study has shown that economic growth reduces deficits, rather than spending cuts, per se, as evidenced by Great Britain’s conservative government focus on cutting government spending. Austerity has just increased their deficit, and put them in danger of losing their AAA rating, said the New York Times‘ Adam Davidson.

“The British economy, however, is profoundly stuck. Between fall 2007 and summer 2009, its unemployment rate jumped to 7.9 percent, from 5.2 percent. Yet in the three and a half years since — even despite the stimulus provided by this summer’s Olympic Games — the number has hovered around 7.9. The overall level of economic activity, real G.D.P., is still below where it was five years ago, too. Historically, it’s almost unimaginable for a major economy to be poorer than it was half a decade ago. (By comparison, the United States has a real G.D.P. that is around a half-trillion dollars more than it was in 2007.)”

The term Tragedy of the Commons was coined by Garrett Hardin in a 1968 article. He said that problems that fall into this category have no technical solutions. They require changes in human attitudes and behavior, such as sustainable development of our common resources, rather than neglecting them. And that creates jobs that give more bang for the buck.

Three-fifths of all jobs lost during the Great Recession paid middle-income wages, while those created during the economic recovery pay low wages, according to a new study by the National Employment Law Project, largely because of the huge cutback in public and private investment. Both economic forces and government budget cuts are causing this deficit of good jobs, according to the study, as we have discussed in past articles.

We need for our congressional negotiators to correct this Tragedy of the Commons. The workers are there, already trained, in both the public and private sectors. Such investments can no longer be put off, or the fiscal cliff could become a bottomless pit that damages economic growth for decades to come.

Harlan Green © 2012

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Housing Prices In “Sustained Recovery”

Popular Economics Weekly

The S&P/Case-Shiller Home Price Index October headline was “Sustained Recovery in Home Prices”, as housing inventories continue to drop, while the latest estimates of household formation for young adults in particular are as high as 1.3 million per year of new households to be formed in coming years.

The S&P/Case-Shiller Home Price Index, a leading measure of U.S. home prices, showed home prices rose 4.3 percent in the 12 months ending in October in the 20-City Composite. Anticipated seasonal weakness appeared as twelve of the 20 cities and both Composites posted monthly declines in home prices in October.

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Graph: Calculated Risk

The 10- and 20-City Composites recorded respective annual returns of +3.4 percent and +4.3 percent in October 2012 – larger than the +2.1 percent and +3.0 percent annual rates posted for September 2012. In nineteen of the 20 cities, annual returns in October were higher than September. Chicago and New York were the only two cities with negative annual returns in October. Phoenix home prices rose for the 13th month in a row. San Diego was second best with nine consecutive monthly gains, said the Case-Shiller report.

And Housing Economist Tom Lawler via Calculated Risk estimates upwards of 1.3 million households annually could be formed over the next couple of years, due in part to pent-up demand and normal population growth.

Most of the evidence for rising prices comes from the huge drop in housing inventories. New-home sales’ inventories are down to 4.7 months in today’s release of new-home sales, levels we haven’t seen since the 1980s. This Calculated Risk graph dating back to June 1963 shows months of supply at historically low levels, which means an impending supply shortage.

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Graph: Calculated Risk

New home sales were up 4.4 percent to an annual rate of 377,000. New home sales have slowly been building up momentum this year, while existing-home sales jumped 5.04 percent, and showed a similar drop in for sale inventories to 4.8 months.

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Graph: Calculated Risk

Total Existing-home sales rose 5.9 percent to a seasonally adjusted annual rate of 5.04 million units in November, and are 14.5 percent higher than the 4.40 million-unit pace in November 2011. Sales are at the highest level since November 2009 when the annual pace spiked at 5.44 million.

Other indicators, such as declining vacancy rates show a similar lack of adequate housing inventories. This means that new home construction will have to essentially double in upcoming years to satisfy the need.

Harlan Green © 2012

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Home Sales Surging

The Mortgage Corner

Total existing home sales are accelerating, and prices are rising along with declining inventories. Sales that include single-family homes, townhomes, condominiums and co-ops, rose 5.9 percent to a seasonally adjusted annual rate of 5.04 million in November from a downwardly revised 4.76 million in October. They are 14.5 percent higher than the 4.40 million-unit pace in November 2011. Sales are at the highest level since November 2009 when the annual pace spiked at 5.44 million.

NAR chief economist Lawrence Yun said there is healthy market demand. “Momentum continues to build in the housing market from growing jobs and a bursting out of household formation,” he said. “With lower rental vacancy rates and rising rents, combined with still historically favorable affordability conditions, more people are buying homes. Areas impacted by Hurricane Sandy show storm-related disruptions but overall activity in the Northeast is up, offset by gains in unaffected areas.”

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Graph: Calculated Risk

The problem now is inventory, as months of supply have been falling as lenders work off their shadow inventory of defaulted properties. Supply fell sharply to 4.8 months at the current sales rate from 5.3 months in October which was already a multi-year low. The number of existing homes on the market, at 2.03 million, is the lowest since 2001.The good news is that it is boosting home prices.

The national median existing-home price for all housing types was $180,600 in November, up 10.1 percent from November 2011. This is the ninth consecutive monthly year-over-year price gain, which last occurred from September 2005 to May 2006.

October FHFA home prices, a better measure of affordable homes with Fannie Mae or Freddie Mac conforming loans were up a better than expected 0.5 percent nationally after remaining virtually unchanged in September. On the year, the index was up 5.6 percent after increasing 4.1 percent the month before.

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Graph: Econoday

Distressed homes – foreclosures and short sales sold at deep discounts – accounted for 22 percent of November sales (12 percent were foreclosures and 10 percent were short sales), down from 24 percent in October and 29 percent in November 2011. Foreclosures sold for an average discount of 20 percent below market value in November, while short sales were discounted 16 percent.

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Graph: Econoday

LPS reports that delinquencies continue to decline. The total delinquency rate has fallen to 7.03 percent from the peak in July 2010 of 10.57 percent. A normal rate is probably in the 4 to 5 percent range, so there is a long ways to go. The in-foreclosure rate was at 4.08 percent. There are still a large number of loans in this category (about 1.96 million).

“The market share of distressed property sales will fall into the teens next year based on a diminishing number of seriously delinquent mortgages,” said the NAR’s Yun.

Well, it does look like 2013 will fulfill predictions that housing will be in full recovery. The Fed has said it will hold interest rates at record lows through 2015, so what more could prospective home buyers wish for? Maybe a few more new homes under construction.

Harlan Green © 2012

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Q4 GDP Growth Improving

Financial FAQs

We are seeing faster economic growth in the fourth quarter, even after the upward revision of Q3 GDP growth to 2.7 percent from 2.0 percent. The reason? The 146,000 jump in November payroll jobs, soaring retail sales, and the Fed’s determination to maintain QE3 with $45 Billion per month in bond purchases for several more years, if necessary, to boost employment. 

This is in spite of Hurricane Sandy that shut down much of the east coast. We can therefore expect that Q4 growth might exceed 3 percent, putting us back on the path to a more normal growth pattern.

Retail sales is leading the growth. Motor vehicle sales rebounded 1.4 percent after a 1.9 percent decrease in October.  Earlier in the month, unit new motor vehicle sales pointed to an even stronger increase but the Commerce Department’s sample size is not as good and all Personal Consumption Expenditure spending may be even stronger.

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Graph: Econoday

And industrial production rebounded in November with notable help from Hurricane Sandy and a boost in auto assemblies, up 1.1 percent, following a decline of 0.7 percent in October (originally down 0.4 percent).  The market consensus was for a 0.3 percent gain. Capacity utilization for total industry rose to 78.4 percent from 77.7 percent in October.

The bottom line is that manufacturing has seen sharp swings over the last two months due to Hurricane Sandy.  But net for the period, this sector is still soft.  The clearly positive news is that consumers are out shopping for new cars, which is good news for manufacturing.  It suggests that while consumers are in a bad mood about the pending fiscal cliff, potential tax increases, they are spending despite survey recorded glum views, said Econoday .

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And inflation is falling.  Year-on-year, overall CPI inflation came in at 1.8 percent versus 2.2 percent in October (seasonally adjusted). The core rate eased to 1.9 percent in November from 2.0 percent the prior month.

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Lastly, the Federal Reserve just announced a new policy at its last FOMC meeting of the year.  It voted to continue with QE3, the $45 Billion in securities’ purchases per month until either the unemployment rate falls to 6.5 percent from its current 7.7 percent, and/or inflation tops 2.5 percent per year. 

Since it looks like inflation has been subdued, and the Fed believes it will take until 2016 to bring down the unemployment rate to its new target, the Fed could maintain easy credit for several more years, which is the best of all conditions for economic growth to continue.

Harlan Green © 2012

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Gun Violence Has Too Many Causes

Popular Economics Weekly

The tragic Newtown, Connecticut elementary school mass shooting is just the latest in a string of mass shootings that have contributed to more than 1 million dead by guns over the past decade in the U.S.—an average of almost 11,000 per year.

This is when no other country in the developed world has had more than 400 documented gun killings in a year, outside of wartime. The problem in understanding the causes of such mass shootings may be that much gun violence has many causes that make it difficult if not impossible to understand in isolation.

But not if we look at the culture of violence that has made U.S. the most violent nation on earth. In fact, gun violence, as violence in general, has too many causes. Studies bear out that record income inequality, a poor social safety net and lax, almost nonexistent gun control laws all contribute to the U.S. record as the most gun violent culture in the world.

The Trayvon Martin killing illustrated this culture with the Stand Your Ground Laws being enacted in several states. And thereby we are beginning to see where the National Rifle Association, backed by some elements of Big Business, is leading this country—into a greater lawlessness, at the very least. For the Stand Your Ground Law enshrines the gangster code—shoot first and ask questions later.

As Paul Krugman said in a March New York Times Op-ed after the Trayvon Martin killing:

“Specifically, language virtually identical to Florida’s law is featured in a template supplied to legislators in other states by the American Legislative Exchange Council, a corporate-backed organization that has managed to keep a low profile even as it exerts vast influence (only recently, thanks to yeoman work by the Center for Media and Democracy, has a clear picture of ALEC’s activities emerged). And if there is any silver lining to Trayvon Martin’s killing, it is that it might finally place a spotlight on what ALEC is doing to our society — and our democracy.”

Krugman was exposing the links between corporations and the NRA that continues to push for guns to be worn by everyone everywhere, with or without background checks or even licenses.

Why the push by the NRA, and Big Business for more guns, as I said back in April? The reason most gun advocates and the NRA give, is that it is for the purpose of self-defense in an increasingly violent world. The NRA even asserts it decreases violence. But studies cited in an excellent book, Gun Violence: The Real Costs by Philip J. Cook and Jens Ludwig show that gun use tends to increase gun violence—i.e., there are almost 4 times more fatalities in gun-related robberies than other robberies with knives, clubs, etc.

And a study cited in the Justice Department’s National Crime Victimization Survey (NCVS) on home invasions found that just 3 percent were able to use guns against someone who broke in (or attempted to do so) while they were at home, when 40 percent of households have guns.

So it turns out guns are not very helpful in self-defense. Also overlooked is the fact that criminals are predators, and predators prey on the weakest and most vulnerable, not those who look like they can defend themselves. So really, does the agenda of the NRA to abolish all gun controls do more than reinforce the fear factor, the fear that your neighbor may be your assailant?

“But where does the encouragement of vigilante (in)justice fit into this picture?” asks Krugman. “In part it’s the same old story — the long-standing exploitation of public fears, especially those associated with racial tension, to promote a pro-corporate, pro-wealthy agenda. It’s neither an accident nor a surprise that the National Rifle Association and ALEC have been close allies all along.”

The culture of violence is not a pretty picture in our crowded cities in particular. Philadelphia averaged more than 30 gun-related deaths per month in 2011, when Europe as a whole had less than 300 per year. The last time U.S. gun violence was this high was during the Great Depression, when we had gangsters like Al Capone, John Dillinger, and Bonnie and Clyde.

English Sociologist Richard Wilkinson has brought this out in books and lectures, especially his TEDx lecture on the roots of violence and crime, in which he charts that countries with the most inequality in wealth are also the most violent countries. And surprise, the U.S. is now one of the most unequal countries—in terms of wealth and opportunities for wealth—in the world, as has been brought out by the CIA World Factbook. It is ranked 94th of the 136 countries ranked by the CIA for income inequality, next to Camaroon, Zimbabwe, which are some of Africa’s poorest countries.

There are many who will say that the deeds of a psychopath cannot be prevented. But is that the point when it is so ridiculously easy for an individual to purchase an arsenal without an alarm being set off? Why would anyone such as the Aurora, Colo. shooter need 6,000 rounds, for instance, said the New York Times?

“With a few keystrokes, the suspect, James E. Holmes, ordered 3,000 rounds of handgun ammunition, 3,000 rounds for an assault rifle and 350 shells for a 12-gauge shotgun — an amount of firepower that costs roughly $3,000 at the online sites — in the four months before the shooting, according to the police. It was pretty much as easy as ordering a book from Amazon.”

Do we need another reason to require reporting such weapon sales, other than for war?

Harlan Green © 2012

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