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Surprise: No Jobs Means No Consumer-Led Recovery

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Joanne98 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-23-09 02:27 PM
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Surprise: No Jobs Means No Consumer-Led Recovery

The financial elites are all worried that consumer spending isnt increasing. Maybe they should have thought of that before they shipped all the jobs overseas. Then we wouldn't have inflicted all that suffering on members of their own class trying to get by on three hundred thousand a year. Sample suffering:

Being a mother on her own in married suburbia requires courage. One night, Steins is invited to a cocktail party and as usual she stands alone on the doorstep of the magnificent house and rings the bell, suspended in that endless moment of waiting until the door opens and the host appears.

The latest sign of problems for consumers was the news this week from the Wall Street Journal about the increase in home foreclosures:

While foreclosure starts have slowed on the subprime loans that ignited the mortgage and banking crisis, loans extended to borrowers with good credit are deteriorating at a faster clip as falling home prices and mounting job losses weigh on more households.

Gee, theres a surprise. People without jobs cant pay for 30-year fixed-rate mortgages. They cant even pay their credit card debt. The WSJ tells us this:

Capital One Financial Corp. said on Monday that its 30-day delinquencies increased in July from June and its lending charge-offs loans it doesnt think are collectible also climbed.

Of course, that contrasts with the reports from Citi and Bank of America, saying that the rate of delinquencies declined somewhat in the second quarter. And here, BAC, Citi and JP Morgan Chase are saying oh yes things are getting better. It doesnt seem to have made any difference in BACs financial condition. Reuters reports that BAC lost $1.62 billion in the second quarter on credit card operations. The default rate is up to 13.82%, an almost unimaginable number.

As new rules restricting abuse of credit card holders start to phase in, banks are increasing their fees and interest rates. As Jon Stewart puts it: The banks arent making money despite the fact their customers are broke, theyre making money because their customers are broke.

Several years ago, we took a boat across the Bay of Naples from Sorrento to Naples. The water was beautiful and blue, and thick with plastic bags, plastic bottles, and trash of many colors the whole way across. Im sure each jerk who threw an Orangina bottle into the Bay figured it would disappear, no problem. But it didnt.

Im sure every single Wall Street consultant who advised a business to outsource work to Bangalore or China thought the jobs would be replaced. Im sure every company that sent jobs to non-union shops in the South thought those Ohio and Massachusetts jobs would be replaced. Or maybe they just didnt care about those people they put on the street and on the dole. But the jobs didnt come back, or if they did, they paid less for more work.

Now if the Bay of Naples were in France, there would be a boat that swept the Bay every day, and a bunch of people would have jobs running and repairing that boat. The people would have a beautiful bay to enjoy, and their lives would be better because of it.

The masters of Wall Street and their corporate clients have trashed our finances and the productive sector. Since they control Congress, there wont be any one cleaning up their mess

http://firedoglake.com/2009/08/23/surprise-no-jobs-mean...
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RagAss Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-23-09 02:29 PM
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1. The jobs went to India. Let the Indians jump start the economy !
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Deja Q Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-23-09 03:01 PM
Response to Reply #1
8. They went to other places too. The media hypes the I-word more than anybody else.
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rhett o rick Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-23-09 03:45 PM
Response to Reply #1
11. We have meet our assassin and his name is "free trade". nt
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ixion Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-23-09 02:42 PM
Response to Original message
2. Exactly. The only reason the so-called 'jobless' recovery ploy worked last time
was because of the housing bubble, and people using their homes as ATM's. Not a chance of that happening this time around. There will be no 'consumer-driven' recovery.
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RB TexLa Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-23-09 02:44 PM
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3. There is no requirment that we have a recovery, it will happen but we don't have to make it happen
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Deja Q Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-23-09 03:00 PM
Response to Reply #3
7. Life is what we make of it. It won't happen until people spend money.
Economics 101...

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rhett o rick Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-23-09 03:45 PM
Response to Reply #3
10. There is no longer a basis for a strong economy. We need jobs. nm
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Trajan Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-23-09 02:45 PM
Response to Original message
4. Fuck-n-ay ....
That is EXACTLY the problem we face ....

This is EXACTLY why the economy tanked in the first place: Not enough jobs paying enough money to keep the Great Ponzi scheme cycling around .... Twas corporate greed, centered around wage suppression, that causes such economic degeneration on a global scale: The need to soak up greater profits at the expense of worker wages didn't lead to an improvement of the economy as a whole, but instead strangled the flow of money transactions from consumers to producers, which is the REAL machine of growth and profit ....

With consumer spending making up some 2/3rds of the entire national economy; one might understand the connection between the greed of those who seek diminished labor costs at any price, and the long term degeneration of the economy as a whole for regular citizens who are born, raised and schooled in a society that values work and who expects a reasonable return for their contributions in the workplace ....

The 'race to the bottom' of labor costs has an ultimate price to exact on the system itself ....

Wages ARE stimulus .... They drive the whole boat .... without decent wages; nobody benefits ...
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Tierra_y_Libertad Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-23-09 02:49 PM
Response to Original message
5. No jobs = no consumers. No consumers = no jobs = no recovery.
On top of that, the banks will only loan to people who have jobs and don't really need loans. And, the people who are still "consuming" are shopping at WalMart for stuff they can afford.

It's a Catch-22 non-recovery. Either no jobs or lower paying jobs. Which means fewer consumers buying fewer things.
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valerief Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-23-09 02:55 PM
Response to Original message
6. I think it'll be a credit-default-swap recovery. nt
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rhett o rick Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Aug-23-09 03:43 PM
Response to Original message
9. The problem with unregulated capitalism is the golden egg goose will eventually be killed.
Capitalism and the golden goose are in their death throes in the United States.
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