The time of checks and balances, which were healthy and alive, is not today. You probably know this. You can see from the graph above, from CalculatedRisk, how bad things are.
What you might not know is that since 1973 for 90% of the US population there has been no real economic wage growth. Today you can predict, accurately, what economic class someone will die in by observing their birth class. The economic mobility in the US is far below that of European countries.
“The slow economic strangulation of … millions of other middle-class Americans started long before the Great Recession, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300.
The trend has only been getting stronger. Most economists see the Great Stagnation as a structural problem – meaning it is immune to the business cycle. In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 – the first ever instance where most Americans were worse off at the end of a cycle than at the start. Worse is that the long era of stagnating incomes has been accompanied by something profoundly un-American: declining income mobility.”
I was profoundly moved by this reporting. In this region it is clear we are in a “structural recession”. There is no comparison for this downturn, even the Great Depression does not represent the permanent lack of jobs or meaningful opportunities for millions of Americans. The lack of media coverage, other than meaningless sound bits ending with a feel good, soft focus, closing paragraph, is pathetic.
Of course we arrived at this point as a result of careful, and criminal, financial regulation and activity. In hindsight, other than having the worst person in the worst position at the worst possible time, everything might have worked out. Count Dracula ran the blood bank, which was a major problem. If you want to read a luncheon interview with Alan Greenspan, still confused by it all, check this Financial Times article.
Mr. Greenspan now rejects his tax breaks for the super wealthy. Of course the Republican Party, of which he is a member, found him a useful fool for a period of time and now discounts completely his opinions. I think he is personally responsible for the burning of trillions of dollars of personal wealth as a result of essentially unregulated financial pyramid schemes.
Be sure to read ‘Alan Greenspan: the pre-Fed years” at the bottom of the article.
Need more of the same?
For the gray-beards you might remember David Stockman who was Director of the Office of Management of Budget during the Reagan administration. Mr. Stockman was someone who looked pretty and youthful for the cameras while pushing voodoo economics and helping destroy our country economically. He was an idiot while in office. He seems to have reconsidered some of this in his NY Times editorial “How the GOP Destroyed the US economy”. (Don’t wait for the editorial “How David Stockman aided the GOP in Destroying the US economy”. )
This New York Times story shows the sadness and desperation as people lose, permanently, their place is an economy. Here is the story.
As usual Dr. Paul Krugman has an excellent editorial, along with his colleague Mr. Bob Herbert. Both are important and should be carefully reviewed. I thought about both for sometime today. They show that the economy is being tanked to focus money into a very few pockets. There has never been anything like this before in the US. This is a template for a corrupt corporate state.
I am sorry to say that people will have to suffer more economically and mentally before there is any change. Both the Financial Times and NYTimes are on this. Catastrophe is a strong motivator.
“The austerity measures that were supposed to fix Greece’s problems are dragging down the country’s economy. Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. ”
This is what the end of a country looks like. Get out your history books and review where the last Great Depression really took off first (hint, it’s the other side of the pond). This is a terribly sad story.
Young people in Japan had adopted to a post-bubble outlook. The decrease in the economic positions between Japan and China to some extent reflect this. Here is an excellent editorial looking at this from a Japanese perspective.
This is already happening to those approaching retirement in the United States. They have significantly cut their spending in the face of low savings, very low interest rates on savings, and giant loses in the stock (gambling) market. Here is the firedoglake article.
p.s. The clown patrol at the WSJ will be the last to realize what is happening. I’ve given up on that paper and carefully read the Financial Times.
At the same time there are permanent changes being made to the American landscape as a result of The Greatest Depression:
“The bad news is that you have been the victims of a terrible swindle, denied an inheritance you deserve by contract and by your merits. And you aren’t the only ones; victims of this ripoff include the students who were on your left and on your right in high school but didn’t get into Cal, a whole generation stiffed by mine. This letter is an apology, and more usefully, perhaps a signal to start demanding what’s been taken from you so you can pass it on with interest.
Swindle–what happened? Well, before you were born, Californians now dead or in nursing homes made a remarkable deal with the future. (Not from California? Keep reading, lots of this applies to you, with variations.) They agreed to invest money they could have spent on bigger houses, vacations, clothes, and cars into the world’s greatest educational system, and into building and operating water systems, roads, parks, and other public facilities, an infrastructure that was the envy of the world.
This deal held until about thirty years ago, when for a variety of reasons, California voters realized that while they had done very well from the existing contract, they could do even better by walking away from their obligations and spending what they had inherited on themselves. “My kids are finished with school; why should I pay taxes for someone else’s? Posterity never did anything for me!” An army of fake ‘leaders’ sprang up to pull the moral and fiscal wool over their eyes, and again and again, your parents and their parents lashed out at government (as though there were something else that could replace it) with tax limits, term limits, safe districts, throw-away-the-key imprisonment no matter the cost, smoke-and-mirrors budgeting, and a rule never to use the words taxes and services in the same paragraph.”
Here is the entire piece, I have read it carefully and several times. This is important. Don’t wait for the media to catch up with this anytime soon.
I am very concerned with the obvious trend that most states are in the process of de-funding public higher education. Colleagues are convinced that between one half to two thirds of US universities will disappear in the next 20 years. I cannot share this radical perspective, but the trend is very obvious.
A detailed list of cuts at Washington State University (as a representative example). This sort of exercise is being repeated throughout the United States.
Check the web page for an eliminated department. The locust generation took this, future generations will pay significantly to rebuild this department. The cost of a “new program” let alone a “new department” in university systems today is significant. I think this is a permanent loss to the citizens of Washington State.
Many Ivys tanked their endowments, through amazingly stupid investments, to an extent never before seen in the history of the respective universities. Here is an example from Yale. Another example from Cornell, Stanford, and Harvard. Once again, there are no comparable percentage loses, in the entire history of the endowments, that can be compared with these. My take is that unregulated greed has robbed the future of these fine universities. Don’t wait for anyone to be held accountable for anything, apparently our country does not work that way anymore.
This will all have a permanent and negative result for our country. If you look at the American university system, the Bush administration did almost everything perfectly wrong in terms of supporting it. In hindsight they worked to destroy it. Probably as a society our most precious gift to the future has been terribly harmed.
Excuse me for being cynical, but this policy was similar to the active destruction and attack of the union labor movement during the Reagan admin; go after the political opposition and let the chips fall where they may, regardless of the long term (or short term) costs. Reagan, Bush H. and Bush W. all actively attacked our university system. To take one example, Bush H. notices that those commies at MIT have a long term NSF funded and world famous magnetic laboratory, setting new records with respect to magnetic field strength and technologies. Oh no, how to “fix this” . Take a shill, appoint a commission, ignore the input from scientists and then defund MIT and move this multimillion dollar federally supported research lab to, wait for it, wait for it, Florida. A political game. I felt terribly sorry for the technical people and scientists involved.
I didn’t even bother to include Florida in describing university defunding, it’s a terrible situation there (and Arizona).
Need more information about the importance of the university system to our country? Please read the book “The Great American University” by a former Provost of Columbia, and watch this CSPAN interview.
It is hard to express my feelings regarding this collapse of the promise of higher education in the United States. Simply unbelievable. Greed and ignorance.
Ita cado America