Reasons Why The U.S. Economy Is Not Recovering

[No DUplicitous DUpe]

Reasons Why The U.S. Economy Is Not Recovering
(posted with permission from: http://economiccrisiswritings.blogspot.com/2011/05/why-us-economy-is-not-recovering_22.html)

Investors are counting on consumers leading a rebound of the U.S. economy, but it’s not happening. On Wall Street Friday, retailers such as the Gap, J.C. Penney and Ralph Lauren had their stocks sell-off because with the rising price of cotton, new clothes are becoming too expensive for many people living on tight budgets.

More importantly, Walmart, by far the biggest global retailer is telling investors and stock analysts that their U.S. customers are being hurt by the rising costs of food and gas and other essentials and are highly selective and tightly limited in what they buy. Most Walmart customers, like most of America lives paycheck to paycheck and they have maxed out their credit. Many of them have lost their jobs or are fearful they will lose their jobs. Some of them have lost their homes.

Most of what Walmart and other U.S. retailers sell is made overseas, so we as a nation are dependent on China and other foreign makers to loan us money to buy the products they produce for American companies. While OPEC also sells us oil produced overseas for U.S. global giants such as Exxon and Chevron. As we manufacture relatively little other than weapons, our balance of trade is in the toilet and circling the drain as our dollar grows weaker.

Meanwhile, Democrats and Republicans are arguing over raising the debt ceiling, which THEY WILL DO after pontificating in front of the cameras like peacocks preening their feathers because otherwise the government can’t pay its bills. But reality is that even with a higher debt ceiling, the government must still borrow and print to pay its bills, as it is rapidly sinking into the quicksand of overwhelming debt. As interest rates rise, and they will, that debt will become a staggering burden to the American people.

This is the harsh reality our government is not sharing, in the hope consumer spending, which is 70% of our economy, will postpone a financial Armageddon, an Armageddon which is preventable if only we will change our course and do it now.

[redwitch]

1. I was told today that the minimum wage is too high.

And that is why my son can't find a summer job.

[Harmony Blue]

6. I would question the sanity of anyone that argues the min wage is too high

Furthermore, many have had to take a pay cut to work multiple min wage part time jobs instead of one full time job in their field of expertise. This is the America I am seeing. I am seeing people choosing to put back milk if they can't afford to buy it, and milk has very important nutritional value, especially for kids. This is the America I am seeing. I watch in wonder as I see more and more beaten cars showing up in the parking lots because people are discriminated against because of a supposed "credit score" and must settle for whatever they can find. The used car business is dried up because people are holding onto their cars longer. This is the America I am seeing. Some of the homeless are not begging for money outside of McDonalds now, but for food or a job. This is the America I am seeing. Instead of breaking the circle of poverty, the radius of it is growing and engulfing the youth who seemingly have few options in terms of finding their first job, and the sky rocketing tuition costs. This is the America I am seeing.

[Name removed]

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[johnaries]

26. "The Fed is evil". That's a Libertarian talking point. nt

[Name removed]

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[Name removed]

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[Hippo_Tron]

53. And the more the dollar is worth, the fewer US goods are sold overseas

The problem isn't inflation. The problem is inflation and no accompanying cost of living adjustments.

[happyslug]

37. Actually the amount of M-3 Currency is DOWN, M3 is the broadest measure of "Money"

The Federal Government has several different definitions of "Money" (As while as Unemployment). This reflects how money is used and "created" (just like unemployment is defined differently for different purposes). Traditionally the different definition of "money" are called M0, MB, M1, M2 M3 and MZM.

M0: In some countries, such as the United Kingdom, M0 includes bank reserves, so M0 is referred to as the monetary base, or narrow money.

MB: is referred to as the monetary base or total currency.<8> This is the base from which other forms of money (like checking deposits, listed below) are created and is traditionally the most liquid measure of the money supply. The Federal Reserve uses MB for its definition of "money"

M1: Bank reserves are not included in M1.

M2: represents money and "close substitutes" for money. M2 is a broader classification of money than M1. Economists use M2 when looking to quantify the amount of money in circulation and trying to explain different economic monetary conditions. M2 is a key economic indicator used to forecast inflation.

M3: M2 +large deposits and other large, long-term deposits

MZM: Money with zero maturity. It measures the supply of financial assets redeemable at par on demand.

http://en.wikipedia.org/wiki/Money_supply

As you can see M2 is what is used to estimate inflation, but on the short term (i.e. less then a Six months to a year). As to long term inflation from the 1970s till 2006 M3 was viewed as doing a better job of predicting what long term inflation will be (since 2000 the Fed has turned to a measure of inflation that EXCLUDES Food and oil. The rationale is the prices of Food and oil is to volatile to be a good judge for what is the "Core" Inflation i.e. REAL inflation. While technically Core Inflation is NOT a measure of Money in circulation, the adoption of the concept lead to the drop of use of M3 money in the US Federal Reserve. The problem is, there are other ways to get what is M3 and several private parities have done so.

M3 supply of money has been DROPPING since 2009 at a rate NOT seen since 1929-1933 and that indicate DEFLATION is what is going to occur NOT Inflation:
http://www.telegraph.co.uk/finance/economics/7769126/US-money-supply-plunges-at-1930s-pace-as-Obama-eyes-fresh-stimulus.html

http://www.marketoracle.co.uk/Article19843.html

http://www.shadowstats.com/alternate_data/money-supply-charts

In fact it appears the Fed is trying to undo the drop in M3 Money Supply by increasing M1 for M1 is in relativity the only Money Supply item that the Fed does control. Thus the Fed is trying to cause inflation to avoid DEFLATION on the simple grounds, deflation is ten times worse then inflation (compare the 1930s, the last time we had long term DEFLATION, with the 1970s with its massive inflation, both were rough periods but the 1930s were much harder then the 1930s).

[Hannah Bell]

54. and tight money = reduced economic activity, period.

[On the Road]

58. Thank You, Happyslug, That Was Very Instructive

and makes perfect sense. It also isn't the kind of thing the Fed wants to broadcast.

But, on the chart from the Shadowstats link, hasn't M3 rebounded since mid-2010?

[happyslug]

85. As it did at various times in the 1930s, then return to decreasing

It is rare for anything to drop in value for ever, sooner or later a large group of people will believe it has bottomed out and re-enter the market to go after what they think is low cost goods. When that happens M3 increases. The problem in the 1930s is that would last a few months, then return to dropping in value.

What other countries did (Germany and Japan were two such countries) is to embrace inflation to counteract deflation. The average German income dropped almost a third from 1933 till 1939 when WWII began. Most of this do to inflation, but Germany had a booming economy do to the inflation Germany under Hitler embraced (and proceeded to conceal by lying about the numbers, thus by 1938 it was becoming clear that people had lost income and Wanted the lost to end, thus Hitler was willing to risk war in exchange for popular support at home for what he was doing. This lead to Munich and a year later WWII.

The US also increase military spending in the late 1930s, both to get people working AND to build up the Military (The First Battleships since WWI were started in the late 1930s for example, followed by the Iowa Class Battleships and then the Essex class Carriers, through the Essex class carriers were NOT to be finished till the start of 1943). After 1938, unlike Germany the US concentrated at not only getting people working, but trying to improve people's lives (I recently went to Penn Photo, a Penn State Web site which contains aeriel photos from the late 1930s, the early 1950s and the late 1960s, it is an eye opening to how much construction of highways were being done in the late 1930s, it was massive, the post WWII highway construction is minor in comparison, in the 1950s and 1960s you saw the building of the Interstate Highway System and other massive four lane highways, but in the 1930s you see a massive construction of two lane highway were previously had been only dirt roads. Each road was thus smaller in the 1930s then in the 1950s and 1960s, but much more miles and more affect on the National Economy.

My point is that M3 went up and down in the 1930s, but more do to stimulus spending then anything else. When congress believed the stimulus had done its job, Congress stop spending money, construction stopped and the economy turned downward and with that decline the M3 amount dropped. When Congress admitted its mistake and started a new Stimulus program, Construction restarted, the economy started to turn around and M3 went up. Finally after 1938 the Economy stopped going into decline as the stimulus spending ended showing the Depression was over. M3 amounts continued to increase, then WWII started and we were under a different set of economic stress.

[coalition_unwilling]

59. Think you meant to conclude that "the 1930s were much

harder than the 1970s". Thank you for pointing out that the Fed has been largely combatting the scary threat of a deflationary spiral since 2008 with only limited success to show so far. (This is the Fed's 'good' an earlier poster demanded - the Fed regulates growth and contraction in the money supply.)

Your post also captures a larger truth. People who owned houses during the 70s did not do badly at all from the high inflation, as their housing values tended to keep pace with and even exceed the annual increase in CPI. Inflation chiefly hurt those on fixed incomes. Even when stagflation was at its worst during Carter's term, unemployment peaked at roughly 7%. Contrast that with January, 1933, when adult unemployment crested at 25% and there was definite price deflation.

Thanks for doing what you can to counter the Fed-o-phobia so often manifested here by folks who porbably could use a course or two in introductory economics.

[Hannah Bell]

67. Or with this recession when UE has been at around 9% for about 2 years.

And when the main thing holding up prices, other than the fed & similar efforts, is the near monopoly power of many corporations.

The only price that's not being supported = the price of labor. That's being allowed to deflate, & it's meant high profits in some areas.

[Name removed]

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[redwitch]

16. It was about the dumbest and most infuriating thing I have heard.

And I do question the sanity of the person who said it.

[Sirveri]

12. The only way the min wage is too high is if rent and food are too expensive.

I'm not sure how a person can survive on min wage in some areas, unless they're working 80 hour weeks and have a room mate.

[phasma ex machina]

18. The price of everything's too high. That's the cost of the inflation that funds imperialism.

That's why America can no longer afford to manufacture its own cars or much of anything.

[Name removed]

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[phasma ex machina]

50. The military spending on that chart's bogus and only serves to illustrate the American military's

skill at hiding the cost of maintaining a shadow empire in the name of "defense."

[LooseWilly]

72. funds imperialism. and comes up with some spare change for entitlements...

If the country got rid of the "entire defense department"... we could fund entitlements several times over... it just had to be said.

[redwitch]

74. bullshit. nt

[fascisthunter]

104. that is a lie

[Name removed]

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[fascisthunter]

109. I mistakenly replied to your other post

I think your data that you are using to bolster your arguments is way off and very, purposefully misleading.

[Name removed]

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[fascisthunter]

108. the numbers on defense are bogus and that goes for the site you link to

pure right wing anti-government garbage.

[unkachuck]

15. we're not poor enough, we need to be poorer....n/t

[Samantha]

40. People who cannot afford to pay employees a decent livable

wage cannot afford to be in business. And if they choose not to close their doors, they should find a way to do the work themselves.

This line is pitiful really, and people have used this one or something close to it as an excuse to underway its workers.

Sam

[Sirveri]

77. I prefer, if you aren't willing to do it yourself for the wage you offer.

Then why should you expect your neighbors to do so?

[Samantha]

98. Works for me

But I have said the words I mentioned in my post to Republicans over the last eight years, and probably will continue to do so. I am so furious about the way the American way of life has been denigrated by the low wages we see today. They count on the fact if you have no job, become desperate, and a job opens up for $10 an hour, and you have to do the work of two or three people, you will take that job because you have no choice. And it is working.

$10 hourly in the Washington, DC metropolitan area does not cut it. Property taxes, utilities and transportation are expensive here (even public transportation). The only way one can survive on this type of wage would be to live in a house with 12 other people, which of course violates the zoning restrictions.

It used to be wages were tied to the local economy. Housing in rural areas costs less because there are fewer jobs in rural areas and they tend to pay less. Property taxes are thus less. What the Republicans want to do is make a one-size-fits all workers' pay scale that makes their corporate sponsors happy and wealthier. We see the consequences of those efforts in front of eyes today.

Sam

[jmowreader]

41. According to "minimum wage is too high" adherents...

the minimum wage is too high if it exists at all.

If the government were to allow employers to have a two-week "testing period" where they didn't have to pay the testees, half the employers in America would do it--after the two weeks was up they'd fire the testees, and people would volunteer to be tested!

[NYC_SKP]

2. The past economic model (of consumption) is unsustainable. If we aren't buying enough...

...then good, we should eschew those past behaviors.

Retailers like Ralph Lauren are losing ground?

Oh My! And a financial Armageddon?

They, and we, ain't seen nothin' yet.

[customerserviceguy]

17. Part of the unsustainability of the past model

is rising home prices, allowing people to continually refinance their credit card debt into their home mortgage. When rates were falling, they could do that without seeing much of a bump in the monthly mortgage payment, and they would lose all of those minimum monthly payments on a slew of plastic cards.

Of course, many families would just charge them up to the hilt again, and repeat the process. That's not only dead, it will probably never, ever come back.

[quaker bill]

33. Here is the basic problem with this analysis

Consumption is part of any economic model. If we consume nothing, then nothing need be produced. People don't get employed making stuff no one buys.

Now wrap this notion around increased productivity. Due to automation, the people who produce things to be consumed, now produce far more of them per worked hour. This results in one of two things, either alot more stuff to be consumed, or alot fewer hours of employment to make the same pile of stuff.

Since consumption has been declining, far fewer worked hours are needed to meet demand with supply. Income needed to consume is tied to hours worked. Wages for those hours worked are tied to labor supply.

Labor supply can grow in 2 ways, by adding people, or reducing the need for labor through increased productivity, we have been doing both, both depress wage growth.

To prop up consumption in a lower wage environment, retailers have worked to reduce costs, by both further productivity increases and outsourcing, this further depresses wages in a vicious cycle.

The eurpoeans have dealt with this far better by using higher wages and shorter work weeks. The shorter work week keeps the labor market tighter, thus supporting higher wages.

Unless the labor / management scheme is rearranged in a massive way, consumption is the only means to increase employment.

Of course, the republican plan, lower wages, fewer benefits, longer work weeks, and longer careers, is precisely the wrong solution.

We would be far better off increasing benefits and reducing the retirement age. We actually do not need that many workers anymore and delaying their retirement is only keeping younger folks underemployed. A further choice is a 32 hour work week, this would nearly instantly employ virtually everyone looking for work. Consumption is not the problem, policy pointed toward ever declining wages and benefits is.

[Name removed]

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[NYC_SKP]

42. We used to consume far fewer goods, and they were built to last longer, and made here.

We now live in homes twice the size as two generations ago, with four times as many clothes and six times the pairs of shoes, and garages filled with crap.

The shit we're convinced we need we do not, and these are the products I'm talking about.

The past/present model depends upon ever increasing consumption and is unsustainable, and increasingly so, so we're going to see an end to it sooner or later.

We don't disagree, I'm just looking a bit further down the road, maybe.

:patriot:

[dkf]

46. What is the point of lowering the retirement age when hardly anyone has saved enough to retire?

In any case the biggest stumbling block to retirement is healthcare. It's also the greatest obstacle to a solvent US balance sheet. We have systemic problems that need to be fixed before we can talk about early retirement.

[wickerwoman]

60. +1

The real problem is that employers have been increasing "productivity" for 30 years by getting fewer and fewer people to work longer and longer hours without benefits, then pocketing all of the proceeds and externalizing all the costs of laid off workers and retirees with no pensions.

It's crazy that when you do have a job you're expected to work 80 hours a week until you're burned out and they can throw you on the scrapheap and meanwhile there are four or five other people out of work because you're doing six peoples' jobs for one person's salary.

[provis99]

3. here's why the economy isn't recovering.

Because the country is run by selfish, monstrous right wing assholes and corporations who want to squeeze every dollar out of ordinary Americans until there is no more.

But that's just my opinion.

Somedays, I think Robespierre was right...

[Johonny]

5. I agree economy recovered for those on top

Stores that sell to the top incomes actually doing well. We are allowing wealth to concentrate into a selective few people who physically can't spend enough to overcome the lack of spending from everyone else. Trickle down economics slows down growth in recovery periods and lack of regulations leads to bigger crashes. US needs to invest in job creation and needs to raise taxes on higher incomes to pay for it. It is really that simple.

[Name removed]

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[Zoeisright]

34. Huh? Haven't you been paying attention?

http://www.electionnews2008.com/glass-steagall-repeal-caused-subprime-disaster.htm

http://www.electionnews2008.com/glass-steagall-repeal-caused-subprime-disaster.htm

Jesus Christ.

[fascisthunter]

105. seriously?! You Really Asked that Question?

regulations keep powers in check!!!! They also help conserve our environments, our worker's rights, and our market from corrupt individuals. If you don't understand this, you probably listen way too much to conservative propaganda.

[closeupready]

78. Yes, it is that simple - and those who clamored for extending the Bush tax cuts will

continue to fight tax hikes on the upper income wage-earners with every fiber of their beings.

[Name removed]

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[socialist_n_TN]

79. WEll, if you're right I only see one solution

NATIONALIZE THEM ALL! All the big industries are nationalized, without compensation, and run in a planned economy (at least the general welfare industries) for the common good at little or no profit. Whatever profit that IS made goes back into the general fund to finance social programs for folks that need them. Couple that with a 90% top tax rate on wealth that's ALREADY held by the capitalist exploiters AND a decrease in defense spending to the point where it really is defense and not imperialism and we've solved the problem.

N'est pas?

[Name removed]

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[socialist_n_TN]

91. Of course you would think so. You prefer the libertarian

paradise model. I have JUST the country for you. NO GOVERNMENT AT ALL TO WORRY ABOUT! Great climate!

Somolia! I'm SURE there would be NO problem with the government if you wanted to set up your libertarian paradise there. They wouldn't tax you or interfere with y'all in any way because they don't exist.

[socialist_n_TN]

92. However if you want to "compensate" the holders

just wait until the market collapses and the stock prices drop drastically, and THEN buy them out. Or give them 5/10 year bonds for the BIG stockholders and cashout the smaller one. That's compensation. Like the SS bonds.

[Name removed]

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[socialist_n_TN]

96. The original document or the one with the amendments?

Black folks only count as 3/5 of a person? Women's suffage? Before Prohibition or after?

Look you're the one with an obviously libertarian view of economics. Any reason not to compensate large shareholders of "general welfare" (how's that for Constitutional?) industries with 30 year bonds that can't be cashed out early and at that time will be HEAVILY taxed?

[Name removed]

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[socialist_n_TN]

111. You are the one talking about "compensation"

being in the Constitution. So I say nationalize the "general welfare" industries and compensate shareholder up to a certain amount of holdings in cash. That takes care of the small investor. Then compensate the rest with 30 year "special" government bonds that CANNOT be cashed out early and are HEAVILY taxed when they ARE cashed out.

This would bring these "general welfare" industries under the people's control and allow for a time frame to make them work FOR the people. The taxation would redistribute the wealth stolen from the working class BACK to the working class.

[Name removed]

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[socialist_n_TN]

115. Everybody's complaint about nationalizing industries

is compensation. I just gave you a compensation plan using specialty bonds for the people (government) buying out "general welfare" industries and running them FOR the people.

[Distant Observer]

4. The US still creates value, just less and less over time. And Rep want stagnation

Economic stagnation is in the political interests of the Repugs.

Everything they do at this point is to achieve that goal, so it is almost impossible to
achieve any reasonable compromise that truly promotes economic recovery.

[Name removed]

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[johnaries]

29. Please educate yourself. The Federal Reserve has helped avoid

Depression not just once, but several times throughout history.

[LooseWilly]

49. How so?

Please provide a synopsis, at the least, or better yet a quick summary of said "helpings" with supporting links.

If the Fed only decides monetary policy... how does such policy (mostly raising/lowering of interest rates, as I understand it) do anything more than ameliorate/exacerbate economic woes?... How is interest rate manipulation sufficient, unto itself, to avert a Depression?

[girl gone mad]

68. Absurd!

The Federal Reserve was directly responsible for the recent crisis, and they have completely failed in their dual mandate.

[girl gone mad]

69. Quantitative easing is not "printing money".

It amounts to an asset swap, nothing more. No new money is created and no new money is making its way into the real economy.

Quantitative easing did increase liquidity at the banks, which fueled some of the speculation in commodities and equities. But what happens when the risk on trade shuts down? We are certainly not going to be looking at any lingering inflation.

You should spend less time parroting idiotic right wing talking points and more time learning economics.

[No DUplicitous DUpe]

117. Exactly!

Well put!

[customerserviceguy]

10. The real estate market's failure to hit bottom has also been a factor

As long as there is a backlog of foreclosures, there will always be banks desperate to sell off nonproductive assets, at fire sale prices. Higher fuel prices make commuting from a far-flung suburb to the city a worse deal, and that depresses housing prices in the communities in the second or third ring of suburbia.

Higher interest rates mean that even people with good credit, and there's less of them around, will have a tough time paying even what house prices have become depressed to, as more of their possible payment needs to go to interest, rather than principal. This has the effect of driving down what they are able to borrow to buy a house, and that depresses housing prices.

I've seen a number of economic cycles come and go, but the recovery of this one has to be as slow as the one that got us out of the Great Depression. We really don't have a WWII to drag us out of the current economic doldrums.

[Auntie Bush]

11. I economy isn't going to recover because corporations WANT it to fail.

Simple logic. The economy fails...Obama fails! Corporate Republicans in control!

[Name removed]

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[Hannah Bell]

56. it was already failing under bush. corporations may want the us economy to fail,

but not so that republicans can get in.

[ProfessionalLeftist]

13. No DECENT-PAYING jobs - NO recovery.

Period. And who is doing anything about the problem of no decent-paying jobs?

NOBODY.

[applegrove]

19. Plus CEOs want to expand around the world and they are not dependant on

the American buyer often anymore.

[Name removed]

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[applegrove]

23. I think the US dollar is going down in value.

[Name removed]

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[applegrove]

30. Oh right you are. I need to start reading the Economist again. I'm getting rusty.

[forestlake123]

32. if you have a problem with what i said then

please explain

[applegrove]

47. No it was me. You said the dollar inflates and I read your meaning wrong.

:hi: (I seriously do need to start reading the Economist again).

[socialist_n_TN]

80. So true........

EXPROPRIATE THEM ALL! People owned run at no or low profit! That gives jobs to a lot of people AND takes care of the greed. No profit = no greed.

[StarsInHerHair]

97. so explain Ireland to me-they have VERY LOW TAXES & are VERY FRIENDLY

to businesses............




so why'd they just get their Banksters bailed out? twice? Why are Irish people leaving in huge numbers looking for jobs?


couple of links

http://www.businessinsider.com/irelands-youth-are-already-beginning-a-mass-exodus-from-the-country-2010-11

http://www.channel4.com/news/irelands-election-who-can-stop-the-exodus

http://www.guardian.co.uk/world/2011/jan/20/ireland-exodus-workers-thinktank

http://theweek.com/article/index/212558/irelands-exodus-by-the-numbers

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/2790524/Free-enterprise-in-Europe-hangs-on-Irelands-EU-vote.html

http://www.tradingeconomics.com/ireland/ease-of-doing-business-index-1-most-business-friendly-regulations-wb-data.html

[Distant Observer]

21. This trend has been in place for 30 years. Lack of industrial policy in US mean nothing

could be done to effectively reverse it.

Obama has tried to voice a policy. But cannot implement it in the current political environment.

[forestlake123]

25. What the US needs is to start Manufacturing more of the stuff we use here

Instead of buying it from China, but all the regulations are just pushing companies to manufacture elsewhere

If you were a greedy company

would you go somewhere with more regulation or less?

the free market would have regulated and stopped banks from causing the housing bubble

but the Fed and Fannie and Freddie just enabled the greed to be so much more

and if you want an explanation I will be happy to provide and have a productive debate

[LooseWilly]

52. The "free market" helps create bubbles, it does not regulate/stop creation of bubbles.

Regulation of banks (disallowing non-transparent derivative trading—by requiring a rigorous valuation/"transparentification" process for valuing mortgage backed security derivatives prior to allowing trading of same) would have made it impossible to sell off the high-risk mortgages by simply bundling them into an incomprehensible derivative and paying an accounting corp. to say they're "swell"... and without this mechanism for moving bad loans off the books of the lenders the bubble would never have occurred (because the lenders wouldn't've lended in the first fucking place, if they were gonna be stuck with the statistically probable defaults to come).

Thus... the "free market," i.e. market without regulations, led to the derivative swapping and the ensuing bubble and the inevitable crash... while regulations would have prevented the bubble, without which there wouldn't've been a consequent crash.

The Fed enabled the entire process, by failing to fulfill its supposed role as a regulator. Theoretically, it is supposed to know the industry, and be the arm of "self-regulation" of the industry, in the industry's own interests... or at least so Greenspan always pontificated.

The Fed was a failure and a demonstration why de facto insiders such as itself can't be relied upon to regulate anything.

Fannie and Freddi were participants with government backing... but by the reporting I've seen (an article in Vanity Fair mostly, though I'd be willing to entertain any documentation to the contrary)... Fannie and Freddie got into the mortgage backed derivative market late... but after seeing the Lehmans and Goldmans making so much crazy money off the shite... they went in deep. They certainly aren't blameless...but the notion that they in any way precipitated or initiated the bubble or the crash is rather irresponsible... they simply failed to notice that they were jumping into the 21st Century version of a Snake-Oil market.

I'd be interested in hearing your "explanation"... to the contrary.

[Name removed]

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[girl gone mad]

70. THe derivatives market in 2008 was probably the least regulated market in human history.

Any idea how that worked out?

[Name removed]

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[newspeak]

95. I've been lurking, but I just gotta respond

those countries, like Canada, who actually had banking regulations are not in trouble. Those countries who bought into our deregulated greedhead wall street con jobs are in economic trouble. Little Boot's major theme was allowing corporations to police themselves (his best buds), and basically allowing them to screw the plebes. And, those tax breaks for the rich and infamous have not trickled on the plebes-no jobs, while increasing the deficit under Little Boot's to the tune of 89%. Oh, and those tax breaks for the very wealthy have not helped our economy, especially since most of that money has been going over seas. Of course, we got lied into a major FUBAR war that has cost us billions, while allowing Little Boots and Darth Cheney's war profiteering pals to make a small fortune on us!

Now under the god Reagan and his trickle on shite, the deficit increased to approx. 128%. And now we have the repugs so worried about the deficit. Since they've done such a great job to increase it, I find it kind of sick that they're screaming about it now. Oh wait, what a great way of getting rid of those terrible entitlements that actually help people-especially those who need it the most, the sick, the elderly, the young.

If they had their way, they'd privatize every damn thing--the citizens in this country would have a gun to their head by every damn foreign or domestic corporation. More underpaid overworked employees, shitty service and little accountability with more corruption between politicians and corporate shiteheads.

Maybe you should actually do some reading on what some of our leaders have said about corporations and their influence-start with Jefferson, Lincoln, Eisenhower, and my hero, Gen. Smedley Butler.

Oh yes, and isn't a "well regulated commerce" mentioned in the constitution?

[Name removed]

100. Deleted message

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[newspeak]

110. well, maybe if you'd understand the strong arm tactics used

by the * administration, you'd get the name "Little Boots", especially when it came to war with Iraq, which the administration was salivating over before 9/11.

There is a reason we have regulations--many of us don't want to take a chance everytime we eat our food or drink our water. Maybe some of use don't trust mega corporations contaminating our food sources and drinking water or the air we breathe. Profit is over people-so basically we don't count, so who will represent us against those corporations who put profit first? Over hundred years ago, this country was ruled by corruption, nepotism-during the Spanish American war more soldiers died of contaminated food and faulty weapons than the enemy, and I see the same thing today. When Little Boots privatized services to the military, our military was served contaminated water twice, electrocuted showers and now health problems from contaminated air. Hey, but corporations, such as, KBR made a profit, that's all that counts. And, our taxes, supposedly paid to help build a country we destroyed, was used to build buildings that were uninhabitable-but hey, those corporations made a profit.

You talk about deregulating, it has further put this country into an economic quagmire. Yet, you want more of it. Nothing like Wall Street tanking the housing, then BETTING on our misery.

There is a reason we have entitlements, and things like Medicare, most of us have paid in most of our lives. We are number one in the world for the most cost for health care, and yet thirty seventh in the world for good care. One reason is because profit is first over people. Little Boots, with his pharma bill, which some real repugs were against, gave big pharma everything they wanted-medicare at one time could arbitrate for lower costs, that was off the table, also buying drugs, like from Canada (cheaper) off the table. He gave the pharma a captured consumer, while further increasing the deficit with his pharma bill-while seniors and the disabled wound up paying more.

A single payer, nationalized health care reduces costs, it allows corporations to save money on health benefit packages, and saves us money.

Worker safety, decent wages, safe water, food, air, drugs-these are things that should be regulated. Men and women fought and died for these rights, and yet, someone like Paul wants to deregulate? I agree with the above poster, maybe you should go to a country that has no regulations at all and see how things are going.

[socialist_n_TN]

82. Now that's just bullshit. I worked in the mortgage

business during the boom and ALL the problem loans were products OF the free market.

[Name removed]

87. Deleted message

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[unblock]

24. the middle class consumers we're counting on live in india and china.

corporate america is doing everything it can to screw the american middle class.

we're too expensive, so to hell with us.

once china lets to renminbi float, american business will be back like gangbusters. the only problem is that both the manufacturing and the consumption will be overseas. the stock market will boom, but the american middle class will be left in the dust.

we will become ever more segregated by class, rich people here will be ridiculously wealthy, and the rest of us will be competing nearly directly with the indians, chinese, and mexicans, for barely higher wages.

[johnaries]

31. Yep! That's why Wall Street and Corporations are doing quite well

while the average American is not. American no longer depend on Americans. First they out-sourced our jobs, then they out-sourced consumerism. They don't need us anymore.

[BuelahWitch]

38. I thought extending the Bush tax cuts was going to rebound our economy

:sarcasm: Will somebody tell those investors who think consumers should lead the way that we were told that the rich fat cats were going to create some jobs for us with their extended tax cut. How do they expect consumers to lead diddly squat when they aren't making money??

[GSLevel9]

39. smartest read all day... thx for posting. nt

[JDPriestly]

43. And in what ways would you change our course, No Duplicitous Dupe?

I agree that we need to change our course, and I have ideas about exactly how we should change it. But I would like to hear your suggestions.

[No DUplicitous DUpe]

48. Well, for starters...

...we need to end our three wars, slash our military spending in half, and raise taxes on the wealthy. And we need to promote conservation. This country wastes so much food, gas and energy, as well as the fact that we buy crap made in China that we don't really need. Oh yeah, also end the war on drugs and tax them as well. That's a start.
:hi:

[JDPriestly]

65. Yes. I favor import taxes to end the amount of money

we spend on Chinese junk.

Also, seems to me a buy-made-in-America-only-this-Christmas campaign.

Maybe that is something that our labor unions could sponsor that would have real political impact on the lives of working people.

[TBA]

75. About the wars

Weapons are the one thing we still do manufacture in this country. Not saying it is moral, but I think the wars (while increasing the deficit) also are keeping the economy afloat from a consumer perspective.

Slashing military spending may just shut down one of the few viable industries we have left.

(Not promoting endless war here. Just sayin' we are in a mell of a hess)

[immoderate]

83. Military spending returns nothing to the economy.

Tanks destroy people and things. They add nothing to the "market." Tractors, OTOH, are used in growing things, and transporting food and raw materials to markets, where they are processed and factored, providing work for tiers of laborers who add value to the goods.

Making weapons is a bad deal for an economy. :(

--imm

[No DUplicitous DUpe]

84. A mell of a hess is right!

Welcome to DU!
:hi:

[MadHound]

44. The top reason that our economy isn't recovering is jobs

With a nine percent unemployment figure, twenty million people unemployed or underemployed, and real world wages continuing to go down, the lack of well paying jobs is the chief reason why our economy is still in neutral.

This is followed by inflation, especially inflation in the oil and food sectors. Part of the cause for inflation is the fact that we're monetizing our debt, ie, printing money. Another reason is the rising cost of energy, due to issues such as peak oil, and especially energy speculators.

Food is costing more for several reasons. One is energy, our entire food production and distribution model is based on consuming lots and lots of oil. Another factor though is the use of corn, not as a food product, but rather as an energy source. This drives up the price of corn, which in turn drives up the price of virtually everything else. Next time you go shopping, look at each food item you get. Odds are, the vast majority of them have some form of corn in them.

Finally, inflation is also being fueled by rising labor costs in China. As China's economy grows and heats up, wages also go up, costs which are them passed along to us, the chief consumer of Chinese goods.

[defendandprotect]

62. Gas is still near $4 here in NJ today, though some stations down to $3.79 ....

and a head of celery at Delicious Orchards/NJ today was $2.69!!

[Trajan]

51. Its all about WAGES !

Look ..... Walmart, JC Penney, Ralph Lauren, et al .... I.E. EVERY damned corporate entity in America has strived, SUCCESSFULLY, to keep wages and benefits DEPRESSED ....

NOW they are surprised that no buyers are in the marketplace ? .... Well how do you fucking do !

They fought hard to make sure their profits maintained priority over family income, in a foolish bid to obtain the greatest short term gain ..... and now they reap the low wage hell most Americans have been suffering for decades .....

Does anybody know how to fucking COUNT in corporate America ? ....

NO buyers ... NO profits ....

Simple fucking math ....

Trajan feels like Jeremiah in the wilderness ... its wages ..... Wages ...... W A G E S ! ! ! ! !


Assholes

[Hannah Bell]

55. "the rising price of cotton" - is this why all the jeans in the stores are thin as tissue paper?

i finally bought some at a second hand store because they were thicker than anything else i could find. the ones in the stores would be frayed after a few washes, looked like to me.

[Horse with no Name]

57. I have to admit

I've pretty much bought nothing except necessities in the past couple of months.

The surplus is going in the tank.

[defendandprotect]

61. Obama working on two new trade agreements -- Korea and Colombia ...

which will suck yet more jobs out of US!!

PLUS, evidently the economists told Obama that what he was asking for re stimulus

was only 20% of what was needed --

and then Obama settled for even less!!

[RandomThoughts]

63. Race to the bottom.

To many consolidations that need to be broken up.

Broken two tier justice systems.

And.

I am due beer and travel money, and many experiences.

[LetTimmySmoke]

64. Until the outsourcing stops, the economy will never recover.

[SoCalDem]

66. Unless they are very wealthy, most people live on a "fixed income"

The paychecks of people are dictated by what hours are "given" to them. Even if one wants to work more, the bosses only dole out the hours the choose to. The deductions from the paychecks are not all that flexible, and what's left over is all that people have to work with.

Their fixed expenses keep going up, so the leftover money is where everything else gets paid for..

Not much left over, not much spending .

Service economies suck when a downturn starts because people can do without a LOT of "services"..and once the spiral starts, it spreads.

People don't HAVE to buy donuts, get their nails done, get haircuts, eat at restaurants, go to the movies, wander in and out of stores at the mall, take vacations, etc.

People in distress hunker down and pay down debt, pay rent/mortgage, car payments, buy groceries...they cut out as much of the rest as possible.

Truth-be-told, many (most?) of us could probably go a long time without buying clothes/shoes/coats.

[Yupster]

106. One more thing to go with yours SoCalDem

The low interest rates hurt in some ways too.

The wealthiest group of people in the US are older people.

They are also the most likely to be large CD investors.

They have their CD interest direct deposited into their checking accounts, and that $ 723 per month will show up in restaurants and mall stores.

Now instead of getting that $ 723 per month they're getting $ 14 per month as restaurants wonder why their numbers are down.

[SoCalDem]

112. interest on savings SUCKS..

We used to get 4-5% on our CDs and now we're lucky to get 1%

I used to renew them for longer terms, but lately the shorter terms actually benefited us..

When my mother passed away I was beneficiary of a life insurance policy she had with American Express, and I kept putting off filling out the paperwork, even though my siblings immediately took theirs (probably before the ink on the death certificate was dry).. They kept sending me papers to fill out and I kept "not doing it".. anyway 2 years went by and finally a guy called me & asked me to please sign ONE paper he was sending me so they could "settle" the insurance claim..

the reason? they were paying me 5.5 % interest..:rofl:

Those 2 years that I procrastinated, netted us over $2k in interest :)

no wonder they wanted me to fill out those papers:)

[divvy]

71. Nice Republican Talking points !

The ECRI predicts a slowdown in the global business cycle, but no recession. The stellar growth rates since the republican collapse are unsustainable. Suprise? no ... not really.

So, you recommend that the US defaults on its debt? Isn't that what the republicans want to see happen to the municipalities also? Do you even have the slightest comprehension what will happen if your dreams come true?

Why fear Al Queda? The republican party is doing a better job of destroying America.

[Romulox]

76. "Should I buy a Prius?"

:shrug:

[FrenchieCat]

81. Reasons Why The U.S. Economy Is Not Recovering.....

Fucked up piece of shit Republicans.

That's why.

It's really that simple.

[Vinee]

99. Nope. This is primarily a result of permanently extending MFN status to China

and cramming NAFTA down America's collective throat. Republicans aren't responsible for either of those actions. This is the giant sucking sound that Ross Perot spoke of.
edited for typo

[NNN0LHI]

102. I was laid off the better part of a decade long before MFN status to China, NAFTA and Perot

That happened about the time a lot of my fellow citizens began buying what I once built from import auto companies and their non-union transplants here in America.

Which led to my job and millions of other good jobs being shipped overseas or to a non-union shops.

MFN status to China, NAFTA and Perot had nothing to do with that happening.

And the people who drove them stuck out like sore thumbs. They thought they were being smart back then. But now the chickens are coming home to roost.

Long memory here.

Don

[Vinee]

116. we have lost 50,000 manufacturing jobs per month since China's MFN status was made permanent

in 2000. You might have been laid off before that but don't try to tell me that because of that MFN status to China and NAFTA have nothing to do with what is currently happening in America because they have everything to do with it. Furthermore, people started buying imports for a reason. US quality has come up but a lot of consumers were burned hard by US automotive manufacturers and the crap they produced back in the 70s-80s. My grandfather bought a brand new Vega back in the seventies. It quickly turned into a pile of rust that sat in the back yard for many years. You think he ever forgot about that pile of shit sitting in his backyard that he wasted his hard earned dollars on? You think he was alone? Hell, my old man retired from GM. He even bought a Japanese car back in the 80s.

[Jefferson23]

90. The Dangers of Deficit Reduction by Joseph Stiglitz

We could have had this man actually an advisor for the U.S., but no..instead we were given two failures aka Summers and Geithner.

NEW YORK - A wave of fiscal austerity is rushing over Europe and America. The magnitude of budget deficits -- like the magnitude of the downturn -- has taken many by surprise. But despite protests by yesterday's proponents of deregulation, who would like the government to remain passive, most economists believe that government spending has made a difference, helping to avert another Great Depression.

Most economists also agree that it is a mistake to look at only one side of a balance sheet (whether for the public or private sector). One has to look not only at what a country or firm owes, but also at its assets. This should help answer those financial-sector hawks who are raising alarms about government spending. After all, even deficit hawks acknowledge that we should be focusing not on today's deficit, but on the long-term national debt. Spending, especially on investments in education, technology and infrastructure, can actually lead to lower long-term deficits.

Faster growth and returns on public investment yield higher tax revenues, and a 5 to 6 percent return is more than enough to offset temporary increases in the national debt. A social cost-benefit analysis (taking into account impacts other than on the budget) makes such expenditures, even when debt-financed, even more attractive.

Finally, most economists agree that, apart from these considerations, the appropriate size of a deficit depends in part on the state of the economy. A weaker economy calls for a larger deficit, and the appropriate size of the deficit in the face of a recession depends on the precise circumstances.

It is here that economists disagree. Forecasting is always difficult, but especially so in troubled times. What has happened is (fortunately) not an everyday occurrence; it would be foolish to look at past recoveries to predict this one.

In America, for instance, bad debt and foreclosures are at levels not seen for three-quarters of a century; the decline in credit in 2009 was the largest since 1942. Comparisons to the Great Depression are also deceptive, because the economy today is so different in so many ways.

Yet, even with large deficits, economic growth in the U.S. and Europe is anemic, and forecasts of private-sector growth suggest that in the absence of continued government support, there is risk of continued stagnation -- of growth too weak to return unemployment to normal levels anytime soon.

http://www.commondreams.org/view/2010/03/11-7

[hobbit709]

93. Can't consume without income.

[blindpig]

103. Overproduction is endemic to Capitalism

All of that competition leads to a glut(see housing) of product which leads to layoffs which depresses sales which leads to more layoffs......This is world wide with national groups of capitalists using their governments to cure what ails them. Thus we see the reinstitution of a new colonialism as these groups stake out spheres of influence. We've seen this movie before, the eventual solution was WWI.