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Economy
In reply to the discussion: STOCK MARKET WATCH -- Monday, 3 December 2012 [View all]Demeter
(85,373 posts)10. Financial Firms Have Been Hollowing Out America for Decades -- We're on the Verge of a Debtpocalypse
http://www.alternet.org/financial-firms-have-been-hollowing-out-america-decades-now-were-verge-debtpocalypse?akid=9745.227380.qcE9KP&rd=1&src=newsletter754008&t=14&paging=off
... It goes by the name of austerity. However, it didnt just appear in time for the last election season or the lame-duck session of Congress to follow. It was dug more than a generation ago, and has been getting wider and deeper ever since. Millions of people have long made it their home. Debtpocalypse is merely the latest installment in a tragic, 40-year-old story of the dispossession of American working people. Think of it as the archeology of decline, or a tale of two worlds. As a long generation of austerity politics hollowed out the heartland, the quants and traders and financial wizards of Wall Street gobbled up ever more of the nation's resources. It was another Great Migration -- instead of people, though, trillions of dollars were being sucked out of industrial America and turned into financial instruments and new, exotic forms of wealth. If blue-collar Americans were the particular victims here, then high finance is what consumed them. Now, it promises to consume the rest of us.
Scenes from the Museum
In the mid-1970s, Hugh Carey, then governor of New York, was already noting the hollowing out of his part of America. New York City, after all, was threatening to go bankrupt. Plenty of other cities and states across what was then known as the Frost Belt were in similar shape. Yankeedom, in Careys words, was turning into a great national museum where tourists could visit the great railroad stations where the trains used to run. As it happened, the tourists werent interested. Abandoned railroad stations might be fetching in an eerie sort of way, but the rest of the museum was filled with artifacts of recent ruination that were too depressing to be entertaining. True, a century earlier, during the first Gilded Age, the upper crust used to amuse itself by taking guided tours of the urban demi-monde, thrilling to sites of exotic depravity or ethnic strangeness. They traipsed around rag-pickers alley on New Yorks Lower East Side or the opium dens of Chinatown, or ghoulishly watched poor children salivate over toys in store window displays they could never hope to touch. Times have changed. The preference now is to entirely remove the unsightly. Nonetheless, the national museum of industrial homicide has, city by city, decade by decade, grown more grotesque.
Camden, New Jersey, for example, had long been a robust, diversified small industrial city. By the early 1970s, however, its reform mayor Angelo Errichetti was describing it this way: It looked like the Vietcong had bombed us to get even. The pride of Camden... was now a rat-infested skeleton of yesterday, a visible obscenity of urban decay. The years of neglect, slumlord exploitation, tenant abuse, government bungling, indecisive and short-sighted policy had transformed the citys housing, business, and industrial stock into a ravaged, rat-infested cancer on a sick, old industrial city. That was 40 years ago and yet, today, news stories are still being written about Camdens never-ending decline into some bottomless abyss. Consider that a measure of how long it takes to shut down a way of life...MORE
...Detroit. Once, it had been a world-class city, the countrys fourth largest, full of architectural gems. In the 1950s, Detroit had a population with the highest median income and highest rate of home ownership in urban America. Now, the motor city haunts the national imagination as a ghost town. Home to two million a quarter-century ago, its decrepit hulk is now home to 900,000. Between 2000 and 2010 alone, the population hemorrhaged by 25%, nearly a quarter of a million people, almost as many as live in post-Katrina New Orleans. There and in other core industrial centers like Baltimore, death zones have emerged where whole neighborhoods verge on medical collapse. One-third of Detroit, an area the size of San Francisco, is now little more than empty houses, empty factories, and fields gone feral. A whole industry of demolition, waste-disposal, and scrap-metal companies arose to tear down what once had been. With a jobless rate of 29%, some of its citizens are so poor they cant pay for funerals, so bodies pile up at mortuaries. Plans are even afoot to let the grasslands and forests take over, or to give the city to private enterprise. Even the public zoo has been privatized. With staff and animals reduced to the barest of minimums and living wages endangered by its new owner, an associate curator working with elephants and rhinos went in search of another job. He found it with the city -- chasing down feral dogs whose population had skyrocketed as the cityscape returned to wilderness. History had, it seemed, abandoned dogs along with their human compatriots....
MORE
The FIRE Next Time
Meanwhile, for more than a quarter of a century the fastest growing part of the economy has been the finance, insurance, and real estate (FIRE) sector. Between 1980 and 2005, profits in the financial sector increased by 800%, more than three times the growth in non-financial sectors. In those years, new creations of financial ingenuity, rare or never seen before, bred like rabbits. In the early 1990s, for example, there were a couple of hundred hedge funds; by 2007, 10,000 of them. A whole new species of mortgage broker roamed the land, supplanting old-style savings and loan or regional banks. Fifty thousand mortgage brokerages employed 400,000 brokers, more than the whole U.S. textile industry. A hedge fund manager put it bluntly, The money thats made from manufacturing stuff is a pittance in comparison to the amount of money made from shuffling money around.... The ascendancy of high finance didnt just replace an industrial heartland in the process of being gutted; it initiated that gutting and then lived off it, particularly during its formative decades. The FIRE sector, that is, not only supplanted industry, but grew at its expense -- and at the expense of the high wages it used to pay and the capital that used to flow into it.
STILL MORE. GREAT SUMMARY OF WHERE WE ARE, AND HOW WE GOT THERE
... It goes by the name of austerity. However, it didnt just appear in time for the last election season or the lame-duck session of Congress to follow. It was dug more than a generation ago, and has been getting wider and deeper ever since. Millions of people have long made it their home. Debtpocalypse is merely the latest installment in a tragic, 40-year-old story of the dispossession of American working people. Think of it as the archeology of decline, or a tale of two worlds. As a long generation of austerity politics hollowed out the heartland, the quants and traders and financial wizards of Wall Street gobbled up ever more of the nation's resources. It was another Great Migration -- instead of people, though, trillions of dollars were being sucked out of industrial America and turned into financial instruments and new, exotic forms of wealth. If blue-collar Americans were the particular victims here, then high finance is what consumed them. Now, it promises to consume the rest of us.
Scenes from the Museum
In the mid-1970s, Hugh Carey, then governor of New York, was already noting the hollowing out of his part of America. New York City, after all, was threatening to go bankrupt. Plenty of other cities and states across what was then known as the Frost Belt were in similar shape. Yankeedom, in Careys words, was turning into a great national museum where tourists could visit the great railroad stations where the trains used to run. As it happened, the tourists werent interested. Abandoned railroad stations might be fetching in an eerie sort of way, but the rest of the museum was filled with artifacts of recent ruination that were too depressing to be entertaining. True, a century earlier, during the first Gilded Age, the upper crust used to amuse itself by taking guided tours of the urban demi-monde, thrilling to sites of exotic depravity or ethnic strangeness. They traipsed around rag-pickers alley on New Yorks Lower East Side or the opium dens of Chinatown, or ghoulishly watched poor children salivate over toys in store window displays they could never hope to touch. Times have changed. The preference now is to entirely remove the unsightly. Nonetheless, the national museum of industrial homicide has, city by city, decade by decade, grown more grotesque.
Camden, New Jersey, for example, had long been a robust, diversified small industrial city. By the early 1970s, however, its reform mayor Angelo Errichetti was describing it this way: It looked like the Vietcong had bombed us to get even. The pride of Camden... was now a rat-infested skeleton of yesterday, a visible obscenity of urban decay. The years of neglect, slumlord exploitation, tenant abuse, government bungling, indecisive and short-sighted policy had transformed the citys housing, business, and industrial stock into a ravaged, rat-infested cancer on a sick, old industrial city. That was 40 years ago and yet, today, news stories are still being written about Camdens never-ending decline into some bottomless abyss. Consider that a measure of how long it takes to shut down a way of life...MORE
...Detroit. Once, it had been a world-class city, the countrys fourth largest, full of architectural gems. In the 1950s, Detroit had a population with the highest median income and highest rate of home ownership in urban America. Now, the motor city haunts the national imagination as a ghost town. Home to two million a quarter-century ago, its decrepit hulk is now home to 900,000. Between 2000 and 2010 alone, the population hemorrhaged by 25%, nearly a quarter of a million people, almost as many as live in post-Katrina New Orleans. There and in other core industrial centers like Baltimore, death zones have emerged where whole neighborhoods verge on medical collapse. One-third of Detroit, an area the size of San Francisco, is now little more than empty houses, empty factories, and fields gone feral. A whole industry of demolition, waste-disposal, and scrap-metal companies arose to tear down what once had been. With a jobless rate of 29%, some of its citizens are so poor they cant pay for funerals, so bodies pile up at mortuaries. Plans are even afoot to let the grasslands and forests take over, or to give the city to private enterprise. Even the public zoo has been privatized. With staff and animals reduced to the barest of minimums and living wages endangered by its new owner, an associate curator working with elephants and rhinos went in search of another job. He found it with the city -- chasing down feral dogs whose population had skyrocketed as the cityscape returned to wilderness. History had, it seemed, abandoned dogs along with their human compatriots....
MORE
The FIRE Next Time
Meanwhile, for more than a quarter of a century the fastest growing part of the economy has been the finance, insurance, and real estate (FIRE) sector. Between 1980 and 2005, profits in the financial sector increased by 800%, more than three times the growth in non-financial sectors. In those years, new creations of financial ingenuity, rare or never seen before, bred like rabbits. In the early 1990s, for example, there were a couple of hundred hedge funds; by 2007, 10,000 of them. A whole new species of mortgage broker roamed the land, supplanting old-style savings and loan or regional banks. Fifty thousand mortgage brokerages employed 400,000 brokers, more than the whole U.S. textile industry. A hedge fund manager put it bluntly, The money thats made from manufacturing stuff is a pittance in comparison to the amount of money made from shuffling money around.... The ascendancy of high finance didnt just replace an industrial heartland in the process of being gutted; it initiated that gutting and then lived off it, particularly during its formative decades. The FIRE sector, that is, not only supplanted industry, but grew at its expense -- and at the expense of the high wages it used to pay and the capital that used to flow into it.
STILL MORE. GREAT SUMMARY OF WHERE WE ARE, AND HOW WE GOT THERE
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