Wealth Inequality is Increasing

The Pew Research Center has just published the results of a study indicating that the rich have gotten richer since 2007 and the poor have gotten poorer (Pew Research Study).  The lowest 93% of individuals by net worth are worse off now than they were when the recession started, while the richest 7% increased their wealth by about 21%.  In the comments sections of articles that I've read on the subject, most of the rhetoric was aimed at the Republican party and their scheme to lower taxes only for the rich.  As a matter of fact, the problem is with the relationship between the rich and the government, but taxes aren't the main issue here.
Taxes hurt everyone, especially the poor.  Raising taxes will not help poor people any more than it would help the rich.  Yes, the rich would get less rich, but what guarantee do disenfranchised Americans get from the government that this tax money will be returned to them?  The answer is that they don't, and history is a testament to the fact that governments generally squander most of the tax money they receive due to corruption and incompetence.
If the rich have money, they will spend it on things, just like everyone else.  They will typically give the money to someone who is productive in return for some product or service, who will in turn do the same with the money, and so on.  In this way you're rewarded if you are productive in some way.  In the taxation way, you are punished for being productive, and the money disappears into the government black hole with a one way sucking sound, never to be seen again.  The poorest never saw any of that money that was promised to them by the politicians who raised the taxes for that purpose.  Taxes have increased for the rich and social welfare programs have seen increased funding for several decades now, but somehow it hasn't resulted in a reduction in poverty or wealth equality.
The really big problem, however, is in the relationship that rich people have with the Federal Reserve and other centralized economic meddling by the U.S. Government.  The Federal Reserve's inflationary policies were what caused the housing bubble in the first place, giving essentially free loans to investors who bought extremely risky assets (real estate, stocks, bonds,credit default swaps and other derivative financial instruments) with the money.  When people realized what was going on and stopped buying these now-overpriced houses, stocks, bonds and derivatives, the market crashed and many investors lost a lot of what they had borrowed to buy those assets.  But the Federal Government decided that larger entities, like the banks that made the risky home loans, should be bailed out and reimbursed for their losses that they caused , while smaller investors were told to take a long walk off a short pier.  In addition, the government decided that not only was their inflationary policy not the cause of the problem, but that we needed more of it.
So since the Fed was handing out free dollars this whole time, and all the time giving more, why didn't everyone get richer?  There's more dollars, so they should be easier to come by, right?  Well, the theory was that if you gave the banks money to make loans with, they would in turn give cheap loans to companies and individuals, who could then use the money to do something productive with, thus stimulating the economy as a whole.  The problem with this is that the banks didn't loan the money out, because they now realized that it would be moronic to again give loans to people who couldn't afford them for things they wouldn't use to be productive with (and therefore would have no means to pay the loans back, because their salaries wouldn't cover it).  Instead, they took the money and invested it back into the stock market and pumped up stock prices.  Not only that, but they did the same thing to commodities, houses, and more.  Because the markets went up, those investments made the banks and other investors money, and these rich guys all got richer.
Where did that leave the rest of us then?  It left us with higher prices for things like gasoline, home heat, electricity, food, housing prices and rents, college tuition, medical bills and more.  The biggest part of the problem with all of this is that the Federal Reserve's liquidity never reached its intended destination, and wages never went up, and in the most recent recession, have actually gone down.  People have less money and have to pay more to live.
This doesn't sound like a great formula for stimulating the economy to me, and it perfectly explains why we've seen a period of increased income inequality over the 70 years or so since our peak in the 50s and early 60s.  Inflationary monetary policy, social welfare programs, increased (unnecessary) regulation and higher taxes are what is driving this death spiral that the U.S. economy has found itself in.

Are the FAA Air Traffic Control Furloughs a Political Stunt?

Politics or Necessity?
Recent FAA furloughs have begun to take effect due to budget "cuts" (they're not actually cuts, they're smaller increases in spending than was asked for) in Washington.  Stories have started to emerge about delays in air traffic due to the shortage of necessary air traffic control personnel.  Many people believe that this is just a political stunt handed down by the Obama administration to get the American public to reconsider its stance on the new budget restrictions.  Let's see if that's true.
The 2013 fiscal year budget estimates for the Federal Aviation Administration is freely available on the Department of Transportation's web page here: http://www.dot.gov/sites/dot.dev/files/docs/faa_%20fy_%202013_budget_estimate.pdf and will be referred to in the sections below.
Facilities and Equipment
The first section of the FAA budget proposal is Facilities and Equipment.  Most of the mentions in this section are for critical operational types of items.  No problems as far as I can see, except that much of the allocated spending will be on implementation of Automatic Dependent Surveillance that is of no immediate concern.  It's a part of what the FAA is calling NextGen Air Transportation System, slated to go live in 2020.  While it sounds like a great idea to invest money in this type of infrastructure to achieve future efficiencies in air traffic control, there is nothing about delaying the implementation of this type of technology that would immediately result in increased delays or safety concerns regarding current air traffic control.  Some or all of the money allocated toward implementation of NextGen technologies could be partially or wholly suspended without disrupting current services.  Since the FAA needs to cut only $600 million (http://www.faa.gov/news/updates/?newsid=71078) from its proposed budget in 2013, cutting the $955 million of expenditures slated for NextGen facilities and equipment would solve the FAA's budget problems and would even allow them to expand their workforce if necessary.
It's not necessary to look further into this budget to solve the furlough problem to see that the whole thing is a bunch of smoke and mirrors and is, in fact, a political stunt.  Certain items in the NextGen budget, like those related to ramping up capabilities to inspect and certify equipment, would be totally unnecessary anyway.  The airlines and manufacturers themselves should be responsible for covering their own quality control processes and costs, and that's all inspection and certification is essentialy.  These companies are privately owned businesses, and therefore shouldn't expect taxpayers to foot the bill for some of their expenses.  But since I'm not a big fan of the idea of cutting the implementation of technologies that are intended to increase the efficiency of the FAA in the long run, let's look elsewhere to see if there are more items that could be cut without disrupting service.
Research, Engineering and Development
Next on the budget is Research, Engineering and Development.  R&D is always good right?  Well looking a little further, it can be seen that the FAA is planning on doing research into "...propulsion and fuel systems, advanced materials research, and continued air worthiness."  Again, this type of research is the responsibility of the aircraft manufacturers to handle.  If they want R&D, they should pay for it themselves.  This is not to mention that adding the $180 million R&D budget cut to the tally, which would not disrupt current services, would put us at $1.135 billion in savings, almost double what the FAA needs to cut from their proposed budget increases.  But again, for reasons that I listed above regarding potentially increased efficiency, I'm not a big fan of cutting R&D to fix budget problems, so let's move on.
Grants-In-Aid for Airports
What's this all about?   Aren't the airports owned by the cities in which they are located? 
Why is it that the Federal Government has taken it upon itself to fund the airports themselves?  Shouldn't that be the responsibility of the owners?   This $2.4 billion that could easily be cut would put us up to $3.535 billion in budget cuts that would not affect immediate services, which is nearly six times what would be needed to keep all of the workers at their posts.  Yet they still claim that they don't have enough leeway in cuts to keep the most critical aspect of their operations, air traffic control, running at all times.
Conclusion
I could go on, as I've only hit the tip of the iceberg on areas that could be cut without doing furloughs, but it's not necessary.  The answer is now unequivocally yes, that the furloughs, and their relationship to the reduction in budget increases at the Federal Aviation Administration, are indeed a political stunt, or at the very least, gross incompetence.  Either way, I don't feel that the executive branch of the government, with the President at its helm, has represented its constituents very well here. 

San Diego Real Estate is Not Up-and-Coming

I've been hearing a lot of buzz lately around the idea that the San Diego real estate market is up-and-coming, but I must say that I disagree.  The prices here are inflated as compared to what people can afford.  The median household income in San Diego is $59,477 (http://www.deptofnumbers.com/income/california/san-diego/) which would put an average San Diego family in a position to afford a home that costs $178,431 at the high end (3x income). The median sale price for housing in San Diego is currently almost $400,000 (http://www.trulia.com/real_estate/San_Diego-California/market-trends/), which is more than twice what your typical San Diego family can fork over for their living situation, and this is totally unsustainable.

This is not to mention the shambles that the majority of these properties are in. Owners who can't afford the houses in the first place certainly can't afford upkeep, so they've all been slowly decaying for at least a decade now. Most of the places that I've rented over the years since coming to San Diego in 2006 would need something in the neighborhood of $50k invested just to bring them back to 100% again. They need wiring and plumbing work, some have termite damage, the foundations are sagging, the roofs, siding and windows need to be replaced, and more.  

In that case, these fixer-uppers shouldn't be selling for more than about $130K.   The San Diego real estate market is so out of sync with reality, it's a wonder that the previous crash didn't happen sooner. The only thing driving this uptick is speculation by "investors". Until housing prices go down by about half, or salaries double, this should not be looked upon as a recovery.

If the real-estate market isn't being pumped up from within (by people that live here and can afford to buy), then there are several sources that could cause these inflated prices to persist.  First, many of the people who got into these houses at 2007 prices haven't completed their final death throes into foreclosure or short sale.  It's a lot harder to kick someone out of their house if they stop making payments than just sending a foreclosure notice.  There are lots of rules that either prevent or delay foreclosure in San Diego.  Also, it's in the banks' best interest to take their sweet time on these foreclosures, because when they do finally foreclose, and sell them for what they're worth (not what they sold for during the housing boom), they have to claim those losses on their income statements.  These publicly traded banks, which must report quarterly, and whose quarterly numbers drive stock prices, will see those prices drop at the end of a quarter that they would execute mass foreclosure in.  Since many of the bank executives salaries are dependent upon high stock prices, they won't be in any hurry to do such a thing.  They're hoping that they can hold on to those properties until the market swings back the other way, foreclose on them then, and sell them at their formerly inflated prices.  When these properties finally hit the market, it's not likely that they'll sell at 2007 prices, but at something more in line with what your average family can afford now.

Next in line is the inflationary policies of the Federal Reserve.  When the federal government is paying investment bankers (with negative real interest rates) to borrow money, that money needs to go somewhere so that the bankers can get a return before they need to pay it back.  If they happen to put that money into a REIT (Real Estate Investment Trusts, which pool investor money to buy properties) or directly into properties, the prices artificially rise, creating a bubble.  

Exacerbating this problem is the fact that newly rich foreign investors from places like Southeast Asia and South America are enticed by the increases in U.S. real-estate prices, especially in touristy places like San Diego, so they come in and buy up properties with cash in the hopes of unloading them later at a hefty profit.  These people aren't buying property to live here, they just want to make a quick buck, and can't be counted on to keep prices high.

What this all means in the long run is that supply and demand will eventually win out.  If prices stay up or continue to climb, and the people who live here don't have salaries in line with what it costs to live here, they will just start to leave.  Since the pool of wealthy people in the U.S. is shrinking, it's not likely that people will move in from elsewhere to occupy these vacant spaces.  And without people to rent or buy these properties, the prices will have to come down.  We may not see a catastrophic crash like we did last time property prices started to climb into the stratosphere (or we might), but there will be another correction, and it won't be pretty.