“The long-term trend is toward a small group of financiers, chief executives, professional athletes, entertainers, and other earnings titans pocketing much of the wealth generated by society.”
After the largely forgotten two wars we are currently waging (Iraq and Afghanistan in case you forgot), this wild distorting of America – Corporate America has best quarter in US history as real unemployment rate soars – would seem to also merit being treated as a crisis. But is it? Are we paralyzed in the face of such gross insults to the country?
Please share widely!
Two years ago I posted a controversial remark (yes, I did) about “what recession?”. I was soundly beaten to a pulp due to my insensitivity to the problems. To a degree, I still feel the same way. I’m not saying we don’t have millions of people in very bad condition, foreclosures at higher than anytime in history… virtually every metric tells the tale of how bad off we are.
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p>However, at the risk of feeling like Eric Burden of the Animals in the sixties singing “…don’t let me be misunderstood”… There are still millions of Americans who are doing very well. I understand the thrust of your diary is the financial elite ( group of financiers, chief executives, professional athletes, entertainers) are doing quite well, both so are others. Unemployment might be 10% but that means 90% of the workforce is still working. Foreclosures are at all time highs, but people are still not selling their homes for pennies as they did in the nineties. There aren’t tremendous bargains out there as you would imagine.
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p>Again, I’m not trying to start a fight by insinuating that everything is wonderful, but what I am saying is the market rebounded from the 6,500 levels back to 11,000. People still in their homes (which is the majority of people) have been able to refinance to astronomically low rates. A friend of mine called me this morning from Universal Studios in FL and he he paid $82/each for the five of them. He said he refused to pay an extra $70/ticket for the “express pass” to allow you to wait in far shorter lines, but he said they were a huge amount of people who did pay the extra. He also said the park was jammed.
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p>Now I know the lower end of the income scale is hurting badly, I do a lot of volunteer work. I also know the lower middle income group is also hurting and my only point it is not only the high end of the scale which is doing well.
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p>I wish we were doing more to help the ones who are hurting to get better. We need a large scale, no a ULTRA large scale “work” program to put people back to work. Propose ideas even if they are stupid on the surface. How much are we paying for unemployment to a person per year? Couldn’t we have created a program where employers could hire these unemployed people and only pay half their salary for a year while Unemployment paid the other half? Please don’t rip that idea apart as I have not thought of the unintended consequences. I just think we need to do some things differently to jump start things.
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p>Can anyone remember any recent activities for putting Americans back to work? Have I missed something over the last few weeks?
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p>And another thing, let’s fix the credit situation. If they want housing to increase, then relax the iron grip on mortgages that they have imposed. We had a very bad situation in mortgages because of lax practices and I think the pendulum has swung too far in the opposite direction. Relax lending so people can buy houses, let the housing market rebound, let the foreclosed properties be sold by banks to new consumers…
A more accurate picture is almost always higher because the official figure doesn’t take into account those who have given up, not eligible for unemployment, or underemployed. There’s also a legitimate comparison to the norm to consider, which is part of why 5% unemployment is considered “full employment”. Plus I believe even during the Great Depression unemployment officially peaked at “only” 25%, which by your logic means 75% were employed and therefore things were great for a supermajority of the country.
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p>How about the Bush tax cuts? Those are in place because tax cuts create jobs – so they say. That’s already a pretty costly program, yet we have taken a tremendous downward spiral in job creation. However the top 2% are still doing quite well and continue to gain wealth. They have found other ways to increase their wealth other than investing in America.
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p>You talk as if you have wealth, and you have said a few times that you are doing OK and know many others in your income group that are. You have received benefits from the tax cuts. At the very same time, others are giving up their life to fight the Bush wars. People can honor our country and give up their breath and body for it, yet the top 2% whines about a 4% tax increase that they won’t even notice is missing. It really gives great insight into a persons character, not necessarily yours, who will not willingly give up 4% of their abundant wealth while other men and women are dying in American wars. The people paying the highest taxes of all are our combat soldiers; some are paying with their life.
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p>Instead of telling us that we should nevermind about the crisis in America because you and many like you are doing so well, why don’t you create a job. I have no clue what your net worth is or what your income is, but if you earn 275,000/yr, maybe you could take 50,000 of it and create a full time job paying $18./hr with benefits. That way, your net income would be 225,000/yr and you would not have to worry about a tax increase. Then if everyone with your income status did the same thing, our worries would be over. I think our current tax policy is preventing job creation because there is no need to write off payroll as an expense. Taxes are low no matter how much profit is made.
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p>Please stop trying to use Disneyworld as a guide to the health of our economy. Most people go once in their lifetime. There are all sorts of special deals that can make the trip very affordable. Perhaps many of them are in foreclosure, have given up, and now have plenty of money to spend since they are no longer paying their mortgage. I can’t say that I blame them. When life hands you lemons, make lemonade.
The tax cuts went into effect in 2001.
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p>As recently as 2008, unemployment was 5 percent. For most of the Bush years, it was at statistical ‘full employment’.
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p>No single solution works forever.
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p>BTW – Amber and I had a lively discussion about creating your own job instead of waiting for an employer to come along and give you one. I still think it’s the right solution for millions of those unemployed.
A significant portion of the apparent economic growth during that period (2001-2008) was worthless paper gain based on the lies of the secondary mortgage scam. Enron’s stock looked pretty good just before its crash too.
The tulip bulb inflation of the stock market of anything that had ‘on-line’ in its description. Only solid companies with useable premises like Ebay and Amazon came out of the hundreds that created the same kind of ‘worthless’ gain based on ‘lies’.
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p>But we were discussing employment.
There might have been “irrational exuberance” to use Alan Greenspan’s words, but the dotcoms weren’t cooking the books and preying on people.
… eh… bubble.
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p>Anything that had (has) ‘online’ in it’s description succeeds or fails at about the same rate as brick-n-mortar business.
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p>Tho’ in appearance much like a bubble, the 90’s and early oughts were more rightly called a ‘boom’. There was underlying value to be had, but, as in any business, no guarantees (entitlement) to success.
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p>The boom, then, (as now, the bubble) came crashing down in no small part due to unsavory characters in charge some of the worlds largest piles of (private) cash like Bernie Ebbers, or WorldCom, (still in jail) and Ken Lay (deceased) and Jeffrey Skilling (status: incarcerated) both of Enron fame. Like Bernie Madoff and the merry AIG pranksters, along with the Lehman Brothers, BearStearns Circus, they were the victimizers of deregulation… Albeit, I’ll grant on a much smaller (sic) scale.
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p>Seems these lessons are doomed to be repeated until somebody gets hurt…
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p>There were frauds and honest brokers caught up in both.
…between the people sitting atop the huge piles of cash and using their exalted position to move the markets hither and yon and those trying to build their own pile of cash from scratch.
“Boom and bust” is not the same as “scam and collapse.”
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p>Over-eager investors chasing quick profits from markets they know nothing about, combined with “entrepreneurs” who are only too happy to move money from wherever it was into their own pockets is part of the American “free market” mystique. In my view, this best describes the dot-com boom and bust.
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p>We can see that, in microcosm, in the AI boom and bust of Kendall Square and Cambridge. A significant part of the urban real estate that now lines Mass Ave and Main Street in Kendall Square was built to house the burgeoning AI suppliers that were going to transform our world. Except, of course, that the fundamental premise didn’t work. There wasn’t anything unethical about that; the practitioners truly believed they could do it. They were simply wrong. A generation of investors were eager to be first in the game and didn’t mind putting their funds at risk.
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p>The bubble of 2001-2008 was fundamentally different. The financiers knew that they were committing fraud. They knew that the holders of those secondary mortgages couldn’t possibly maintain their payments — that’s why they bundled them into creative debt instruments. The entire enterprise was based on fraud and deception, and it was enabled and encouraged by a receptive Republican administration that itself was premised on fraud and deception.
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p>The two phenomena were different. If you seek parallels to the 2001-2008 bubble, better examples are Enron, Bernie Madoff, and the S&L collapse.
… caustic cynic that I am…
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p>… am willing to credit collusion of this scale to the perps of the bubble. But you’re making the point obliquely.
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p>As much as we would like to cure criminality and the wider-spread incompetence and cluelessness, indeed simple garden-variety bullheaded aggression, we’re already in a losing position if we pitch the ball in this manner…
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p> The glue that holds us together in the face of this aggression is… wait for it… regulation. And so I say, again, that the signature failing in this debacle isn’t criminality (as that ALWAYS happens) but regulation. If mortgage brokers were regulated better this would not have happened. If insurance brokers were regulated better this would not have happened. If the banks were regulated better this would not have happened. If the regulatory agencies were staffed and funded better, this would not have happened. If we had not weakened the regulations this would not have happened.
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p>It doesn’t make much sense to blame the skunk for his stink. He’s just being a skunk. Likewise bankers, mortgage brokers and wall street hot-shots are going to be greedy. So let’s regulate so that this greed don’t hurt people.