Now that the all-important events such as Victory Over Labor Day, Obama's Sell-out Speech, and Exploit the 9/11 Dead on 9/12 Day are all past, we can get back to the real news, which is:
Hallelujah! The Trillion-dollar Tribulation is ended! Happy days are here again!
At least, that is what is being touted in the Federal Reserve's Beige Book. The majority (11 of 12) of the Fed's economic regions indicated positive economic progress among the businesses queried about their profit prospects. Only the eggheads - the economists - really understand what is going on at the moment, which is that this good news is only temporary. So when Obama comes on television Monday and brags about the economic good he's done, ignore that man behind the TelePrompTer curtain!
Because the current positive economic numbers reflect the recent and meager public stimulus efforts of the Obama administration, there is doubt about how well the economy will continue once the effect of the CARS program fades out and the next wave of problem mortgage foreclosures looms. The economists warn that consumers will have to spend money to keep the rising slope as currently aligned, but with increased unemployment forecast for the foreseeable future, that isn't expected to happen. We'd do well for Christmas to include a lump of "clean" coal for everyone. We'll call it a "Diamond in the Rough"! But I digress.
Even those who are attempting to to hype the investors by spinning labor gold out of rotten economic straw are pulling their punches, noting that "the jobless are falling off the government's radar because their unemployment benefits have expired." More of a Main Street stimulus plan would have helped here — a lot! No consumption, no prosperity for all.
But don't let that little bit of sorry news deter Rick Santelli's "real Americans" from their revels! Wall Street has managed to bell the federal cat before any meaningful reform could be imposed on them. That way, any "fines" they may now incur in violating the trust of their clients would maybe only amount to a busy month's worth of expense account meals at the Bull Run Restaurant around the corner — including bar tab and tips. The Good Life Lives!
And Santelli's real Americans do have plenty to party about. Just in California alone, My Budget 360 reports that 76.8% of adjusted gross income increases realized in 2006 and 2007 went to the top 20% of California personal income taxpayers while the employment rate in the Golden State is dropped to a 30-year low. What this means in simple Tea Bagger American is that the wealthy aren't suffering the negative effects of the crashing economy that the economists see affecting the rest of us. With a U6 unemployment rate of over 20% in California, even these Toppers should be able to notice the empty strip malls and half-completed business complexes dotting the desert as they trip the light fantastic to drop another million on the Vegas crap tables. But then, "real" people can only see other "real" people. They can't see the rest of us. We're "indivisible", without liberty and justice at all. We'll go away if we're ignored long enough.
.jpg?t=20120209092158)
Article comments
— go to most recent comments1 - Glenn Contrarian
Realist -
You're into grand conspiracy theories, aren't you? Because if you weren't, you'd never have posted this:
"Obama will build us more workhouses and prisons, and he'll send more of us off to new wars fought only for the glory and profitable aggrandizement of the military-industrial corporatocracy."
There is NO evidence whatsoever to back up these assumptions...but if one listens to you, one can just about hear the whup-whup-whup of the black helicopters (or maybe even the Black Panther helicopters) just over the ridge.
When it comes to the burden of the recession borne by the little people like thee and me, it would do you well to do some objective research, and read some objective history. Why?
Because every recovery from recession (or depression) in America's history since at least the beginning of the 20th century has certain factors in common. These are:
1 - Greatly-increased government spending (i.e. 'stimulus'). The biggest example of this is not the Obama stimulus...but our national build-up before and during WWII - all of which was financed by governmental deficit spending.
2 - Taxes were raised in order to provide that government spending which created millions of jobs every time...because regardless of what GOP Chairman Steele says, the government does create jobs, both public and private.
3 - The unemployment rate never, ever, ever drops right away following a recovery by Wall Street. The unemployment rate always begins to drop one or (more often) two years after the recovery by Wall Street...and if you'll think about it, this makes perfect sense - because businesses don't recover overnight, and they don't gear up for increased production overnight, and they don't expand overnight, and new businesses don't start overnight.
Do you know why the status of and governance of the American people is sometimes called the "ship of state"? I found out when I tried qualifying as a lee helmsman on the USS Ranger (CV 61) back in '84 - you can steer an aircraft carrier, but if you try to steer her too quickly or erratically, it's almost impossible to point her in the direction she needs to go.
And so it is with the American presidency: the president cannot simply wave the magic wand of legislature and change the country overnight. It takes time - years - to effect major changes. Look how long it took (and is still taking) to bring equal rights to all Americans. Teddy Roosevelt was the first president to support universal health care...but do we have it yet?
Steering the ship of state also means that while you do care about the welfare of the junior enlisted down in the boiler rooms, you can't just *poof* make their lives better...but you have to make the changes first in the lives of the senior officers who are responsible for the livelihoods (and lives) of those junior enlisted.
So it takes TIME, Realist - and the bigger the ship of state (we're at 300M crewmembers now), the longer it takes to make the changes that need to be made.
THAT is what is real.
2 - Ruvy
Aw Glenn. Yer spoiled! Even if that whole article was made out of whole cloth, what a cloth! Can you write that well? I sure as hell can't!
Give the man credit where credit is due. He should have gotten paid serious money for that article. Instead he puts it out here for nothing to get your piddling complaints. While you are at it, you can watch this video. This is my kind of economist. He cusses and makes it all so very clear, that I'll forgive him his Bronx accent. And before you complain that he can't be right, dig this. He predicted the 87 crash, the dot.com crash, the candidacy of Ross Perot and a whole slew of other events.
3 - Ruvy
By the way, Glenn, if you are going to lecture on economic history, you better get your facts straight.
In what was called the "Great Depression", the United States was a creditor nation with a manufacturing base. Personal debt was low - as credit cards didn't exist, and lots of folks who had bought iceboxes and washing machines on the installment plan had to painfully watch as they were taken out of their homes when they couldn't make the payments. In addition, even after Roosevelt pulled in all the gold coins and gold-backed currency, the dollar was still backed up by a gold reserve.
Today, there is no manufacturing base in the States. This was true two years ago, too, when I warned of an impending collapse in the States in comments to articles here. In addition, the United States is a debtor nation, with personal debt running to the thousands of dollars on average. There is no spending your way out of this. Your money has no backing. And gold? Gold is $1,000 an ounce, not $15 or $35. So spending funny money that has no backing will only devalue the currency until you can use $100 bills to wipe your rear end after an upsetting intestinal episode of the runs.
And just as a Parthian shot for you, as strip malls start to empty out because businesses are shutting down, what will happen when commercial real estate starts to crash in value in about 9 or 10 months?
4 - Doug Hunter
"as strip malls start to empty out because businesses are shutting down, what will happen"
Simple we'll just fill em with ACORN offices and planned parenthood clinics. The genius economists that support wasteful government intervention can prescribe a proper program whereby half the unemployed get paid to dig holes and the other half to fill them.
5 - Clavos
the wealthy aren't suffering the negative effects of the crashing economy that the economists see affecting the rest of us.
This is true. Boats in the $150K range (what I call working man's boats) haven't been selling for months, but sales of those those priced at $1M+ never even paused.
6 - zingzing
clavos: "$150K range (what I call working man's boats)."
these are all pleasure boats, yeah? so is that meant with some sarcasm?
7 - Glenn Contrarian
Okay, Ruvy -
You're telling me to get my facts straight on economic history...show me even one recession since 1900 (including the Depression) in which the three common factors I listed did not apply.
And FYI - the same factors are still true of our now-debtor nation, because we pulled out of two major recessions since 1990.
C'mon, show me just one example, okay? And while you're still griping about the stimulus package, you can consider what happened to Japan after their economic crash in the early 90's - they tried a whole range of austerity measures...and spent an entire decade trying to dig themselves out of that recession. They call it their economic 'lost decade'.
Just show me one good example that proves me wrong, okay? Just one....
8 - Glenn Contrarian
zing -
Clavos might be referring to low-end commercial fishing boats and the like. Those might well be called 'working man's boats'.
9 - zingzing
that's why i asked if they're all pleasure boats.
10 - Clavos
No sarcasm, zing. They are pleasure boats.
I call them "working man's boats" because they're bought by people who depend on a salary or the income from a small business such as a dry cleaner or corner restaurant for their income and who have to take out a loan to buy the boat. These kinds of boats range in price from $100/150K through about $250K.
From $250/300K up to a million is a different client, usually a professional or a senior manager in business, an airline pilot, etc., and those boats are usually paid for with the buyer's own cash, without a loan. This client is well off, but not truly rich.
Above $1M to $5M is yet another level of client; usually a medium to large business owner, real estate developer, rock star, film star, sports figure, etc. These begin the level of clients who are usually pretty immune to the vagaries of the economy.
Above $5M are the really wealthy; people like Larry Ellison, CEO and principal owner of Oracle software and Paul Allen (Bill Gates' ex partner), both of whom have been engaged for several years now in a rivalry to own the world's largest yacht; Allen's current boat, Octopus, is 412 feet long, cost him $200M to build and costs him $384K a week to maintain.
11 - zingzing
"Allen's current boat, Octopus, is 412 feet long, cost him $200M to build and costs him $384K a week to maintain."
ugh.
12 - Dr Dreadful
Ah, just a pleasure dinghy, then. :-p
13 - Clavos
That's it Doc. A pleasure dinghy with two (count 'em, 2) choppers.
I could retire on the commission for selling that boat...
Anybody know Paul Allen's phone number?
14 - Ruvy
Glenn,
You produce your way out an economic depression/recession. The war production of WWII required industrial expansion (the war production for 'Nam, by contrast, did not). That industrial expansion laid the groundwork for the post-war prosperity. Initially, you borrow to pull off the production - but the loan gets paid back with interest. In the case of the government going deep into debt to finance WWII, the payments came in the form of the very generous (initially) GI benefits bill that got millions into home ownership and college.
In 1982, computers and the profits made thereby (and a hefty load of borrowing to kill future recoveries) pulled the US economy out of the Reagan-Carter recession. But the expansion in productive capacity was not as large as after WWII, so the lasting benefits did not really last.
In 1987, again computers and its immediate by-products and applications, like the internet, pulled the States out of the business recession that the '87 break in the market could have caused. Americans produced their way out of that recession even on a limited industrial base because of the tremendous profits to be made from computers. Again, the expansion in productive capacity was not that great, so the benefits reaped would not be long lasting. In addition, the computer business added something previously lacking in the business cycle - rapid obsolescence. So you could never really set down "permanent" productive capacity.
The United States never really got out from under the dot.com bubble burst. Everything since March 2000 has been accomplished on borrowed money, with the backing for the borrowed money becoming less and less secure each year. And now the chickens are coming to roost.
15 - Glenn Contrarian
Ruvy, Ruvy, Ruvy...
You produce your way out an economic depression/recession. The war production of WWII required industrial expansion (the war production for 'Nam, by contrast, did not). That industrial expansion laid the groundwork for the post-war prosperity.
And WHO paid for the war production and the industrial expansion that enabled it? The federal government using deficit spending. If we had not been in a war, this would have been called a STIMULUS! That was also the only time that we've been deeper in debt than we are now (relative to the GDP)...and thanks to the higher taxes (like the 91% top marginal tax rate) through the fifties and most of the sixties, we nearly paid it all off! Until Reagan came along, that is....
In 1982, computers and the profits made thereby (and a hefty load of borrowing to kill future recoveries) pulled the US economy out of the Reagan-Carter recession.
You're young, so you probably don't remember quite as well that the 'computer boom' didn't happen until the 90's. I think you'll find that at the time, computers weren't even in five percent of American homes.
You did mention the 'hefty borrowing' - yes, Reagan opened the floodgates of deficit spending (Cheney said, "Reagan proved deficits don't matter")...but at the same time he slashed taxes. This meant that America began living on credit cards but took a pay cut from its income that would have paid for the credit cards.
As you know, when you get a new credit card with a really high limit, you can live quite well for a while. This was known as deficit spending - and it pulled America out of the 81-83 recession. Today, such deficit spending would be called a "stimulus".
In 1987, again computers and its immediate by-products and applications, like the internet, pulled the States out of the business recession that the '87 break in the market could have caused. Americans produced their way out of that recession even on a limited industrial base because of the tremendous profits to be made from computers.
Dude - in 1987, less than one percent of American homes had access to the internet. That was the day of bulletin boards - and apparently I remember it a lot better than you do. Why don't you do a little research - 'cause if you do, you'll find that there was a little something called an "S & L scandal" that drove us into that recession...and it was exacerbated by something called "program trading" which was run by (gasp) computers!
Here's a quote from Forbes describing what happened in 1987: "After the Crash of 1987, many were predicting that a depression or severe recession would follow. They felt that the pattern would be similar to what happened after the crash of 1929. However, the Fed acted aggressively in 1987 to inject liquidity into the financial system and stabilized the situation. Those people who went to cash expecting a downturn missed some nice returns in the market in 1988 and 1989." (boldface mine)
What's "injecting liquidity"? Today, we would call that a 'stimulus'.
The United States never really got out from under the dot.com bubble burst. Everything since March 2000 has been accomplished on borrowed money, with the backing for the borrowed money becoming less and less secure each year. And now the chickens are coming to roost.
True...and false. The dot-com bubble was there because of overenthusiastic borrowers who would invest heavily in IPO's that no sane investor before or after the dot-com bubble would have touched.
But Bush was using credit cards and cutting America's income at the same time, so yes, the chickens are coming home to roost...and it took a hideously huge stimulus to save our economy (and the world's) from Depression and the horrors that can follow economic disaster.
When you research history, Ruvy, I recommend that you let the facts determine your political belief, rather than allowing your political belief to determine the facts.
16 - Dr Dreadful
You're young, so you probably don't remember quite as well that the 'computer boom' didn't happen until the 90's.
Oops, Glenn. Ruvy is about the same age as you, if not a little older. :-)
17 - Glenn Contrarian
Doc -
My mistake, then. My apologies, Ruvy, for that assumption.
But what I said about computers being in less than five percent of homes in '82 and less than one percent of homes having the internet in '87 still applies.
I do appreciate the correction, Doc. Thanks.
18 - Ruvy
Glenn,
I see you only read the little snippets you disagree with and argue against them, ignoring their context.
Let's try the whole quotes, shall we?
The war production of WWII required industrial expansion (the war production for 'Nam, by contrast, did not). That industrial expansion laid the groundwork for the post-war prosperity. Initially, you borrow to pull off the production - but the loan gets paid back with interest. In the case of the government going deep into debt to finance WWII, the payments came in the form of the very generous (initially) GI benefits bill that got millions into home ownership and college.
I acknowledged that the US government went deep into debt to produce armaments for the British, and eventually for themselves - and pointed out that the debt got paid in a number of ways. Lots of guys who never would have bought a house in the 1950's did so because they had worn a uniform in the 1940's. And all this fuelled even more productivity - and prosperity. I grew up in that golden era and never forgot it.
Had there been no war, Glenn, there would have been no reason for the government to invest so heavily in production - that would have been called "socialism", and never would have gotten past congress. Roosevelt would never have gotten the shining rep he did of pulling the States out of the Depression of 1929.
Bottom line - the United States government expanded productivity so as to provide a base to repay the deficits it ceated. Every bout of deficit spending - until 2001 - was based on that concept - even Reagan's drunken binge in the early 1980's.
My memory is a bit better than yours, Glenn. I learned how to use a computer in 1980, and to use a PC in 1983 - when you could still read "IBM-DOS" on the black screens because Bill Gates had not stolen the system from IBM yet. While the computers did not explode into homes, they did explode into offices - and selling business applications - like Visicalc, Lotus 1-2-3, Word and its predecessors were big business in those years. And while the internet did not explode into homes till 1990, when I finally bought my first home computer, the other innovations the computer introduced icreased productivity, and made real money. Loans got paid back - until the dot.com bubble and bust.
Finally, you talk about the Fed "injecting liquidity" into the economy in 1987-8. Injecting liquidity (easing credit, and printing limited amounts of money) is not the same thing as handing $80 billion to a company to cover its losses, or billions more to car companies to cover their inability to produce, ect., etc.
There has been no "stimulus" package under either Bush or Obama; there has been the irresponsible burning of your money to no good purpose. Maybe you don't care if some politician hands a corporate mogul money so that he can cover his bad bets while you lose your home, but lots of other folks get enraged at such things - because it's unjust. Ideology has nothing to do with this. Justice - or rather injustice - does.
Wake up Glenn! Deficit spending is done against the productive power of an economy. When the economy has no potential to produce, you cannot afford to go into heavy deficits - especially with the Chinese, Russians and Arabs looking over your shoulder.
19 - Glenn Contrarian
Ruvy -
I meant that apology, btw.
Again, when it comes to the computers, before the 1990's that industry was still relatively small fry compared to the totality of Big Oil, Detroit, and the financial sector - not to mention Big Pharma, the HMO's, and the military-industrial complex.
And there are different means of stimulus - the WWII deficit spending went to manufacturing because that's what we needed to win. The 1987 'liquidity injection' went to, as you said, easing credit and the money supply - and the stimulus (at least the part that went to Wall Street) went for the same purpose.
Ruvy, on its face a 'stimulus package' that puts one far deeper in debt sounds like a bad idea - but I think you'll find very few Fortune 500 companies today that don't run a constant load of debt.
The fact remains that austerity measures (other than increased regulation) have never pulled us out of a recession, that our recessions have ALWAYS been preceded by massive tax cuts and deregulation, and injections of massive amounts of taxpayer dollars (in whatever form) and (usually) tax increases have been part of every recovery from recession we've made.
One more thing - I don't like our debt to the Chinese, Russians and Arabs any more than you do. But just keep in mind that before Reaganomics, our deficit was only a mere fraction of what it is now.
Higher taxes is not necessarily an evil thing. Remember that during the 1950's - America's economic glory days when we bestrode the world like a colossus - the top marginal tax rate was 91%.
20 - Clavos
I think you'll find very few Fortune 500 companies today that don't run a constant load of debt.
And you will also find very few that are solvent with a debt load that exceeds their ability to repay it, unlike the USA.
21 - Clavos
But just keep in mind that before Reaganomics, our deficit was only a mere fraction of what it is now.
And before Obama it was half what it is now -- in eight months!
22 - Clavos
Remember that during the 1950's - America's economic glory days when we bestrode the world like a colossus - the top marginal tax rate was 91%.
America's colossal status then was in spite of, not because of, that tax rate.
23 - Ruvy
Glenn, all this is nice, but you ignore the basic feature that allows all economic growth to proceed - productivity.
If your laws turn your bourse into a casino, close the damned casino or reform the laws. Obama (and Bush before him) have done neither. Pouring alcohol into a drunks mouth won't sober him up or cure him, and pouring money into Wall Street will not teach the idiots there not to gamble with it and lie to you.
Nothing your government has done has done anything to increase productivity - at all. And if you can't produce, you cannot produce your way out of economic disasters. That is a deadly reality you cannot challenge.
Your "hope and change" is a prescription for hoping you still have change at the end of the year, let alone four years.
Sorry dude. Here, (and in Canada) lying accountants are called corrupt thieves. In the States, they are called followers of the general rules of accounting. You have to stop lying to yourselves before you will get anywhere.
24 - roger nowosielski
A valid point.
25 - Glenn Contrarian
Clavos -
On the deficit...WHY is it so much higher now? Because of a stimulus package that was needed to keep us out of a depression. It was NOT because of starting illegal wars or giving tax cuts to the wealthy.
And I wish for once in your life you'd do some objective RESEARCH on the tax rates and their effect...because if the high top marginal tax rates are SO bad, dude, IIRC it didn't go below 50% until Reagan! If those high rates are as bad as you (and all of conservativedom) believe, we would have been in a depression for twenty years instead of being able to pay off the WWII debt.
But I'm learning something on BC - that conservatives HATE having to do objective research.