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It is fitting that this article be written on July 4th, the birthday of the United States. The famous phrase, "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness," gave us a doctrine that would separate us from the rest of the world. The Declaration of Independence lays the groundwork of a way of life to be envied by others worldwide. This was stated in 1776, but can it be honestly stated today? Are we treating everyone equal? Is everyone given an equal opportunity for this good life? Remember that we have a government of, by, and for the people of this United States. Is this idea of happiness a dream or reality for most of our citizens? Are we still on course to pass on this concept of the American dream to our children? Think about it. What direction are we on, and what direction do we need to be on? We survived a Civil War where over 600,000 of our citizens were killed on the plains and valleys of our country, and slavery was abolished. This was a savage sacrifice of life in the name of democracy. Women secured the right to vote, and the Civil Rights movement finally led us to believe that we were on track to a real democracy. But were we? The two World Wars unified the country against other countries threatening our way of life. However, the Vietnam and Iraq Wars have done the opposite. In both times of war and peace it has been the middle class that has been the guiding force that has enabled our power elite's attempts to fulfill its objectives. What has the middle class received in return? If you feel that the country prospers based on the phrase above from our Declaration of Independence, wouldn't you agree that the needs and success of our middle class would and should become a priority of our society? Are our country's priorities in line with the needs of all our citizens or are they satisfying the needs of the power elite. Yes, everyone should have the incentive to prosper, but not at the expense of penalizing the middle class. What voice is the middle class playing in our current economic dilemma? If you took a close look at the middle class, what would you find? The middle class has been decimated, but not obliterated. In today's world we really have to apologize to the middle class for using and abusing this class of people who are the backbone of our country. If you look back to 1980 when congress turned its back on usury and gave the banks a green light to charge ridiculous interest rates on its customers, it shows how lax our representatives were to the needs of the mass of citizens of the middle class. As a result credit cards with 29.9% interest rates have been commonplace. The repayment schedules have been structured so that the average citizen will take on more debt as there is little demand to pay down the debt. The banks then found increased penalty fees as a new source of


revenue which further increased the debt burden on its customers. All of this is legal. Of course, the average person could have opted not to participate in this predatory process of debt accumulation. However, the saturation of multiple credit card applications soon captured the fantasy of its intended audience. After the middle class reached a debt saturation point, the focus seemed to shift to students. Now, consumer debt is at levels that have handcuffed most of the participants. With the predatory interest rates and high late fee schedules many are struggling to stay afloat. More recently the bankruptcy laws were changed making it harder for individuals to write-off their bad debts through bankruptcy. Again, this was done for the protection of financial institutions recouping their bad debts. All this was calculated based on corporate profit and not on individual well-being. The same can be said about the meltdown of the real estate market. There was a great marketing push to allow people to buy and refinance homes with predatory loans that would ultimately become intolerable for the borrower. People qualified for loans with inadequate ability to repay their loans. Others with better credit over extended their credit limits. Some loans were outright fraudulent while others contained interest acceleration clauses that would trap the borrowers, forcing them into foreclosure. With the repeal of the Glass Steagal Act a little over a decade ago banks became conglomerates where there was no longer any separation of commercial and investment banking. The real estate mortgage loans were packaged into investment collateralized debt obligations that were sold to people and institutions around the world as high quality investments. The financial institutions were rolling in money. Needless to say the rating agencies are also to blame for the catastrophe that ensued when these loans began defaulting resulting in these investments going sour. The higher ratings allowed the financial institutions to offer these investments at lower interest rates which resulted in giving them greater profit margins. The investors were duped as the bottom fell out of the overall real estate housing market. Greed has fueled the economy for many years. Between 1973 and 2003 the real per capita of Gross Domestic Product in the USA rose seventy-three percent. At the same time hourly compensation rose only thirteen percent. It is evident the middle class was not participating in this economic growth. For decades the middle class economic growth has stagnated. Yes, their credit card balances increased, and they most likely refinanced their homes a few times to take equity out to maintain their standard of living. All this was a false sense of prosperity. You should understand that our current economic crisis was many years in development. It is my position that bailing out the financial institutions that caused our current economic crisis was not the right approach. My feeling is that no institution is so big that it cannot be allowed to fail. Perhaps, it would have been better to break up these huge conglomerates through bankruptcy proceedings. The trillions of dollars may have been better spent creating jobs and restoring the livelihoods of millions of middle class citizens. Our government is already involved in too much of our lives to allow it to also take stock ownership in our private sector. These are my common sense conclusions based on information that has reached the media. These are conservative points of view, but I am not a conservative or liberal. I am in favor of some form of government subsidized health insurance so the forty-seven million uninsured (our middle class) and more under insured can afford the health coverage that they desperately need,


including people with pre-existing conditions. This is a liberal point of view. The large amount of money from the health industry going to lobbyists to sway our representatives opinions will make it very interesting to see if the public good has greater priority. The health related cause of bankruptcies needs to stop. To accomplish this, everyone needs proper health insurance. Again, the middle class needs cannot be set aside. We currently have a middle class over its head in debt, high unemployment, a declining manufacturing base, having their homes in foreclosure, and minimal or no savings to fall back on. As the middle class goes the economy follows. A few hundred dollar one time stimulus to the middle class or buying equity in major corporations does not directly help the middle class in the immediate term. It is not top down economic theory that will work. It is the opposite or bottom up policies that immediately affect the middle class that will create the necessary change. Put the middle class back to work, and the economy will stabilize itself. With almost 22 % of the children in the United States living in poverty it is hard to state that our nation is the example for stability and success. Bear in mind that the top one percent of earners of income are receiving twenty-one percent of all income. This means that the income elite are receiving a disproportionate percentage of overall income. In a free society we should not complain with this. However, has it been the natural economic forces or a manipulation of these forces that has caused this imbalance? I think the latter. Just look at the compensation packages of fortune 500 company's upper management. The salary packages have become obscene. It is not only corporate management. The non-profit sector also has its salary imbalances. The news just reported on a pastor even receiving a compensation package of $600,000 a year. This overall mindset has set the economy upside down. Besides putting our middle class back to work, it must also change its ways of day-to-day living. No longer must it seek debt as an alternative to maintain a lifestyle. It ends in disaster. On the contrary, it must seek ways to establish various sources of income to eliminate debt and allow compounding to work as a positive force. We must improve our school system to better educate our middle class to give it the tools to work, prosper, and raise the overall prosperity of the nation. Because of the hole we have dug to put the nation and world in its current economic dilemma it will take time to right the wrongs and make the words from our Declaration of Independence a way of life.

Ed Lupton is the author of the book, "Discover Living - A Writer's Journey" which is available at http://www.discoverliving.com. This website is the action plan of the book. By following the four principles I wrote about, each of our lives can change to a life full of enrichment. Review this article on my blog at http://blog.discoverliving.com/28/the-middle-class-dilemma.

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