If you haven't yet, read Barbara Ehrenreich's excellent essay in the Times on the "already poor," for whom the recession means giving up not vacations or dining out, but medication or a place to sleep:

"The recession of the ’80s transformed the working class into the working poor, as manufacturing jobs fled to the third world, forcing American workers into the low-paying service and retail sector. The current recession is knocking the working poor down another notch — from low-wage employment and inadequate housing toward erratic employment and no housing at all. Comfortable people have long imagined that American poverty is far more luxurious than the third world variety, but the difference is rapidly narrowing."

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Yesterday's worker's rejection of the Boston Globe offer to cut salaries is just another example of the corporate use of pay cuts rather than layoffs to reduce the cost of staying in business. While keeping one's job despite a reduction in pay may be something of a relief, it has its down sides too.

Not only will workers feel cornered into accepting pay cuts due to the flagging economy and rising unemployment, the unemployment figures themselves may become less relevant than in the past as  barometers of economic health. These same workers may be keeping roofs over their heads but as their salaries decrease so will their spending.

Clearly there are no fabulous solutions as the economy contracts but it seems the model of spending our way into economic recovery has its flaws as does trying to save jobs at any cost.

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A recent Pew survey found that although fewer Americans consider their television, microwave, or tumble dryer a necessity in the current lean economic climate than in previous, fatter years, there's been no decline in the "necessity" of a mobile phone.

Michelle Singletary, finance columnist for the Washington Post, has been trying to convince people to give up their phones in favor of wiser investments, to no avail:

"Recently, I visited an elementary school on career day. I spoke to two classes: sixth-graders and fourth-graders. I knew without asking that the majority of the sixth-graders had a cellphone. I asked the younger children who ranged in age from 8 to 10 how many of them had a cellphone. Nearly every child's hand went up.

I was shocked and then not shocked.

As an experiment, I asked students in both classes to take out a sheet of paper and write a short note to their parents or guardians. I instructed them to ask: "Do I have a college fund?"

Then I dictated to the students the next sentence. They were to write: "If I don't have a college fund, please take my cellphone away."

As soon as I finished that sentence, the children in both classes hooped and hollered. A few admitted there was no way they would show the note to their parents.

See how it starts. I dare say not a single one of those fourth-graders (or sixth-graders) needed a cellphone.'

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A good piece in Newsweek about the reforms desperately needed in the credit-rating system if we're to avoid a second verse, same-as-the-first financial meltdown.

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Working from the premise that carbon is going to cost companies in future, Trucost plc has compared US equity funds based on their carbon impacts.

Simon Thomas, Trucost's CEO, says that as carbon costs rise - which they would under a cap-and-trade system if introduced in the US - then carbon intensive portfolios underperform portfolios that are less carbon intensive.

As the Wall Street Journal article points out, the real problem is that cap-and-trade as such does not appear to result in lower overall carbon production per dollar earned by corporations.

But if you are keen to act to counter climate change through your investments then at least steering away from carbon intensive sectors, or from carbon-inefficient companies within sectors, then that helps incrementally to increase the company's cost of capital.

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Oh, my.  Apparently AIG's bonuses were a mere speck in the corporate eye compared with the two-by-four that was the Merrill Lynch bonus extravaganza:

Huffington Post: "MERRILL LYNCH BONUSES 22 TIMES THE SIZE OF AIG"

"Dennis Kucinich sent out a round of letters to top Treasury officials Monday morning, questioning how much they knew about bonuses paid to Merrill Lynch executives that totaled $3.62 billion, nearly 22 times the total bonuses paid to AIG executives. The payouts made up more that 36 percent of the TARP funds the financial institution received from the Federal government.

Kucinich points out that unlike AIG, the bonuses were not locked in by preexisting contracts and were performance bonuses, as opposed to retention bonuses.'"

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There's a longstanding political idea that if a city or state taxes the wealthy at progressive rates, the wealthy will just up and move somewhere else.  Today the NYTimes has a nice piece debunking this idea, with actual data from New Jersey and California, both of which have modestly upped the tax rates on their highest brackets in recent years.  It appears that in each state, a tiny fraction of the wealthiest households did move out of state after the increased taxes, but that the overall gains to State coffers more than made up for revenue lost by their departure. 

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Now even those with "stellar" credit ratings can enjoy the same predatory practices that those with poor credit ratings have experienced for years, as credit card companies jack their interest rates and find creative ways to slap users with penalties and fees, such as reducing their credit limit below the amount they currently owe. 

Smart Money: "

“I certainly don’t feel like a valued customer,” says Echo Garrett of Marietta, Ga., who saw the rate on her 20-year-old Citi American Airlines (AMR: 3.31, +0.27, +8.88%) AAdvantage account jump to 19.99% from 10.9% earlier this year. Garrett’s husband’s Citi Hilton HHonors card got hit even harder, with the rate nearly tripling to 19.99%. “We’ve been good, longtime customers and there’s never been a problem with our accounts,” she says. “I just don’t understand.” Citibank spokesman Samuel Wang said the bank re-priced accounts whose rates had not changed for at least two years, to reflect ongoing risk. He declined to comment on individual accounts.

Jacking up interest rates is not only an easy way for card issuers to boost profits, but it also makes them look more financially sound amid rising defaults, says Richard Cripps, chief market strategist for investment bank Stifel, Nicolaus & Company.

Issuers may also be trying to get the most money they can out of consumers before new Fed rules go into place in July 2010 that prohibit them from raising interest rates on existing balances unless the cardholder is more than 30 days late with a payment. “They’re trying to put themselves in a better position to continue to profit,” says José Garcia, a senior researcher at New York-based economic think tank Demos."

In the current climate it looks safe to say that there will be further legislation outlawing many of the card issuers' favorite practices.  in the meantime, they'll take all the money they can shake out of their loyal customers.

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