One thing I've noticed: banks threaten to increase monthly fees, etc. because their income will go down but the retailers are silent about direct effect change in this law will have for consumers.
I have mixed feelings. I was all for it until I realized, frankly, that it may end up costing me money. Not much, but then I watch every penny in fees.
When the stores are in the right, why don't they try to convince the public to support them, instead of just appealing to the politicians and regulators?
is either picked up on or more unfortunately rewritten without credit in the MSM. But scream from the rooftops we should beecause the jobs crisis is so bad, it's literally pulling down the rest of the economy, never mind it's obscene.
You're right and on top of it, we have absolutely inane agenda items going on, mostly by crazy GOP and based on their corporate and special interest donor requests.
It is excruciatingly clear that almost nobody in politics really cares about the unemployed, especially the long term unemployed who are so desperate and so unwanted by employers right now.
What is not clear to me is why. After all, if we take the unemployed and underemployed plus their immediate relatives, we must be talking about close to 100 million voters who are or may be being personally affected by unemployment.
How many relatives in the next 5 years (the minimum amount of time it will take to return to full employment) will be stuck taking in their unemployed/underemployed parent/child/sister/brother/cousin, etc., when they are finally flat broke and all but homeless?
Do the long term unemployed and their relatives truly not know what awaits? If not, I would think they'll know soon enough.
The president and Congress are completely silent about the prospects of the long term unemployed. If I were a Republican running in 2012, I'd sure attack Obama about this a hundred times a day. Frankly I wish the Republicans would start howling and pointing fingers now, it might actually help us unemployed.
It is crazy, disturbing and inexplicable that in this age of the Internet and 24/7 news coverage, I'd say more than 95%+ of the country is unaware of the true situation concerning unemployment.
And I count the unemployed among the ignorant too. Heaven only knows how few of the 99ers even realize there's a current bill (HR 589) that would give them another 14 weeks of benefits. [There were two bills about adding extra weeks in 2010 that hardly anyone seemed to know about, either.] Do even 10% of the people who would be eligible for HR 589 know about it? -- I doubt it. That's one reason it hasn't passed.
Remember, the labor participation rate is at lows not seen since women stayed at home and believe me, those dropping out are not doing so because they are wanting to be homemakers.
Right now we have GOP arguing over the debt ceiling, out to attack social safety nets. This should be issue #1 for 2012.
We need a few articles on getting the corruption money out of DC. It's so corrupt at this point, elections are a joke, an illusion. That's why we have no programs and the economy sure is slowing down and I'm wondering if we're heading to another double dip, I may have to whip out those NBER definitions for recession and depression again.
Regardless, the economy has sucked for over a decade, in reality, the housing bubble just covered up the offshore outsourcing, labor arbitraging mess.
I did on facebook will soon do so with my distribution list. It's all about the jobs.
Imagine what would happen if 10 million of the 15 million members of the current workforce were put to work?
There would be more tax revenues, more spending, saving, etc. The chart below is just U-3. If you took U-6 and added up all of thethose who wanted work but couldn't find it, there would be may be 16 - 17 million new workers. Use the Hudson Valley project for the infrastructure defects that must be fixed and you can put a lot of people to work in real jobs.
Why not now? If not now, will be ever be able to pull it off.
How do we quantify this as sucking the life blood out of the economy, in terms of historical data, percentages.
I know you are right and EE's esp. it's this "herd" mentality, they all rush in to "invest" in some "predetermined" EE, such as Brazil and it's almost like a "fad" so what are their real returns? I imagine China is absurdly profitable, but what about Vietnam which I think was EE du jour, Thailand, we know what happened there, I think Russia in a way was also at the first collapse....
Then, securitization is the scourge of the Earth, they turned people's homes into baseball trading cards and we're seeing the fall out from unstable home prices to the fraud going on with foreclosures.
It's more profitable to trip someone up and foreclose than to help them get current on their payments.
I think the Fed, and thus their models, have many problems with the banking sector.
1) The sector is more bifurcated than ever before. There are thousands of community banks that were shut out of the home mortgage securitization process by the big guys, and so they concentrated on commercial real estate. They are now saddled with a heavy load of non-performing CRE loans, which is impairing lending to all their customers, including individuals.
2) The big banks are a mess. They have been consolidated into only four players, of which Citigroup and BOA are likely zombie banks propped up by distorted accounting rules. Wells Fargo may be in that camp as well - it has the worst accounting disclosure so it is hard to tell. JPM Chase looks healthy but like the others you never know as long as mark to market of their "investment" assets is suspended. Either way, none of these banks is lending, which suggests they remain fearful of loan losses on existing assets, and can't find creditworthy customers given their tightened credit standards.
3) The securitization process that constituted the core of the shadow banking system has not and probably cannot be revived. That takes out 30% or more of credit from the economy, which means we are trying to generate 2011 growth on a 1995 credit platform or maybe earlier (1990 arguably, which is when securitization began).
4) Before securitization, banks held on to almost all of their loans to maturity. They are clearly not willing to run such risks these days, or if they are it is for far fewer customers, which means the banks will not step up to replace the credit lost in the securitization process.
5) The investment banking industry has collapsed and left only two players - Morgan Stanley and Goldman Sachs, both of which were converted to commercial banking status to remain alive. However, both of them refuse to act like commercial banks and create a loan portfolio. Hence, another lost opportunity for credit creation.
6) The big banks refuse to adjust their expectations on profitability in the new environment. If we are back in a 1990's credit environment, ROEs should be on the order of 8% - 10%. Instead banks fully expect to earn 15% to 25% ROEs, which means they are forced to assume excess leverage, keep their loan loss reserves at artificially low levels, depend on bogus accounting standards to hide losses, and continue their games of equity extraction, asset stripping, and rentier activities (see High Frequency Trading) as a means of producing income that exceeds by far what could be earned on a basic loan portfolio. In other words, loans are still very poor earners for executives expecting $15 million annual bonuses, and so banks refuse to book them.
7) The Fed, if it isn't owned outright by banks through regulatory capture, is at least clueless on how to reform the banking industry. Congress, which is owned by the banks, is uninterested in fundamental reform.
Now how you put all this in a model, I don't know, but let's look at a very interesting irony here. Corporations have been engaging in global labor arbitrage for nearly 25 years, shifting jobs away from industrialized countries to emerging markets. As this cycle plays out over time, logically these corporations should see their ROEs shrink to levels typical of companies in less developed economies, which must deal with poorly educated work forces, high costs of pollution (including bottlenecks in the transportation network), costly government bureaucracy driven by bribes and other corruption, and rigged political and legal systems. Now, notice how these conditions are increasingly being applied in developed countries, the US being a prime example, where the political system is increasingly distorted by campaign financing corruption, the legal system is being subverted in favor of corporate interests at the highest level, pollution standards are weakening, and the labor force is being dumbed down. In such an environment, a corporation can achieve 15% or high ROEs consistently only if it turns itself into a crony capitalist enterprise. CEOs have to become like Carlos Slim, and instead of being faceless managers, they take the company private and become entreprenurial owners. The leveraged buyout system is essential for this process to work, but it is currently constrained by the lack of credit. Therein lies the irony. Without credit the process that was in place up until 2008, of converting industrialized economies into third world economies, is stalled. Companies will have to settle for old-fashioned, mediocre returns and minuscule bonuses if they can't get the credit machine revived.
Here too, I don't know how you model this. Just make sure the models remove a huge part of credit availability, and reduce expected corporate returns. Also, if corporate returns are reduced, so too will be investment returns, so make sure your model adjusts downwards the contributions pensions will play in the economy.
You are so right Numerian, But there are some proposals out there to change the definition of a corporation to include loyalty to the U.S. and U.S. national interest. But even Mom and Pop are manufacturing in China these days. To make things worse, China now has know how, in other words, they are delivering better and faster for Mom & Pop than U.S. small manufacturing is.
Horizon Project, Ralph Gomory and others have talked about changing the definition of business entity C corp. extensively..
but since corporations own/run D.C. I don't know how that's possible.
The WPA worked at a time when manufacturing was in the hands of a local company. These companies might export their products but they almost certainly did not have overseas subsidiaries that competed with their US operations. If the government wanted to create jobs, it could provide incentives to corporations to do so, and create rival structures of its own if corporations weren't willing to do so. People on the right still think we live in that era, when companies created jobs for Americans. On that theory, if you want jobs to be created, you need to work through corporations, feeding them endless tax breaks while all the time they are engaged in the modern corporate practice of global labor arbitrage.
Even medium to small size companies in the US now engage in this practice. How many one-product manufacturers and machine tool companies, hardly multinational names, have moved their operations abroad?. We have several right around my neighborhood, including Radio Flyer, which used to make kiddie wagons out of one plant only, and 10 years ago moved everything to China. The plant stands idle other than for the corporate executive offices.
We have to wake up to the fact that it is no longer possible to create jobs in any country by relying on the corporate structure. Corporations of most any size now can play the global labor arbitrage game. They have no allegiance to their community or their country. They always talk like they do, because part of the arbitrage game is to play state against state, and city against city, for any jobs that can still be done in America. But even here, the number of jobs at a Chrysler plant these days, for example, are a fraction of what was necessary 25 years ago, the pay runs about $8 - $11 an hour, and the benefits are non-existent and fobbed off on the government and taxpayers.
Face it: corporations are the enemy of job creation in America. This is certainly true in manufacturing and is now spreading directly into service industries. The only places that will be unable to participate in global labor arbitrage are certain store-front service providers, like restaurants, nail salons,and health clinics. That's where the jobs are. Oh yes, there is Washington D.C., home to the government/military job complex, but even here the expansion is coming to an end - the debt capacity of the US government is beginning to recede, not expand.
Your WPA recommendation is a good idea because it gets around the corporate model, but if government is the only source of job creation in the future, we cease to have a capitalist system (actually, maybe that has already happened, since over 20% of all disposable income now comes from the government).
If we want to get back to the happy days of corporate job creation, we need to wait until the global labor arbitrage game plays itself out. But by then, you and I will be trying to feed our families on salaries of $5,000 year, just like the Chinese "middle class."
First, thank you for the time and effort you put into this superb article. Second, the way you shed light on the inner workings of the Fed and it's fractious existence is a real eye opener. I am struggling with my next article that is going to review the QE and QE2 aspect of our stagnant economy and have been reviewing the Keynesian economic and IS/LM model's to get a better handle on why this failure occurred. Many video's and article's portray Ben Bernanke as a failure and ill trained for the position he holds but truth be known the spin that's resonating from all my research is this:
All the models employed by the Fed have had one stonewall that has stymied any possibility of success - Greedy, self-serving and hideous robber baron bankers.
The multiplier effect of the IS/LM model (circular flow model) assures that if the demand for their product exists and construction laborer's wages ignite a growth in consumer demand and spending then quantitative easing should have invigorated our economy. The one missing component for success to occur was that the banking community needed to be gracious to their benefactors for assuring they remain breathing, working, social pillars and lend money. Alas, they are at best indignant and at worse criminally liable for stealing U.S. taxpayer money. Both for accepting quantitative easing funds and then QE2 qualitative buy back of toxic debt by the Fed to bolster their confidence to lend to the public then turning their backs on us; the taxpayer and the Fed alike. Now with the Fed trying to slap some sense into this sector with the purchase of 10 and 20 year bonds to lower the interest rate on them and eliminate the 2.75% interest providing an easy(and safer) solution to pay back the remaining toxic assets on the books opening the door for a double dip recession. What are we to do with this knowledge and the realization that Republican's and Democrats are in this power play mode?
They're not doing business with Goldman Sachs and especially not with the IMF. We have a government here that told IMF to stuff it on demanded austerity programs. That makes two along with Iceland.
Their neighbors, the Greeks, are getting the royal treatment from the EU and the Goldman touch of death also. The best thing the Greeks could do is get over the "centuries of conflict" b.s. and make Turkey an active trading partner and ally. They won't but they could.
And how about this: "The Central Bank dropped maximum monthly interest rate for credit cards to 2.26 percent from 2.44 percent for Turkish lira transactions." You think this government cares about the citizens? I'd say YES they do.
The Obama administration, surprise, surprise, was with the U.S. Chamber of Commerce arguing that employers who use illegal labor shouldn't be punished and esp. that nasty AZ shouldn't be allowed to enforce any laws...
So many the answer is to get Democrats to take on even more corporate lobbyists positions and then sue all the way to SCOTUS. I really wonder if the Bush administration had been on the side of the U.S. cheap labor of Commerce they would have lost.
Is it an anomaly that the "conservative" supreme court actually ruled against corporate power and corruption and pissed off the big money boys at the U.S. Chamber of Commerce? A big positive turnaround from the "Citizens United" best big government that big money can buy decision.
That said, of course due to the health lobbyists, real cost reduction won't happen and that's the real problem, we pay the most and get one of the least of any other industrialized nation.
I put a couple of good articles in the Saturday reads on this.
Farrell doesn't get the same treatment as Paul Craig Roberts. Arguably, Roberts goes further than Farrell. He called the neocons Jacobin's (I'm sure they can look it up on Wiki). He pointed out that Bush was a war criminal. And Roberts has been clear in his rhetoric - bringing down the country is intentional for very specific purposes on the part of those he accuses.
I think you're right on why Farrell is allowed to stay in MSM. You said, "Entrepreneurs like Murdoch, caught up as he is in advancing his interests through special deals and lobbying, nonetheless like to hedge their bets."
It is a hedge. And that's precisely why Farrell and Stockman make it all about balance sheets. There's not one ounce of humanity in the two pieces. I'm not saying that they're not concerned, personally. But in their world, it's all about a change in fiscal policy and the behavior of those in charge.
If a grass roots uprising takes place, Murdoch will be there to staff it with people who forget why governments exist - for the welfare of the people.
When I said, we can't afford to live within our means, I was serious. We don't have the dollars to solve the life and death problems facing us. But if we don't solve the problems, what use are the dollars?
"The question is why were some so eager to extend credit or run up deficits knowing they were creating an unsustainable situation? Who are the predatory lenders?" The big banks, Fannie Mae, propelled by Wall Street. I think your answer is in your earlier statement, "All democratic government is targeted. Decisions will be made by those who extended credit." Those who extend the credit are ending up running things, even if the credit is bogus.
I think much of this is simply personal greed on the part of CEO's and traders to enrich themselves and their clients in the moment. The way it is working out, however, is as you say - they're in charge, ultimately.
While I agree with their critique, the Democrats were in there full force. They have a point, however, on the start of the crisis. In the 1980's, the Republicans knew what the third rail was, entitlements. They were still using the Nixon doctrine of piecing off the seniors against the rest of the population. It wouldn't take a brain surgeon to figure out that exactly what happened would happen. The Republicans of old were never going after entitlements and never going near defense. One could argue that defense is the bigger problem since it's a much smaller contribution to the economy, hence, a greater deficit buster.
As for Ryan, if it's just a numbers game, he's off too but closer, marginally. But it isn't. Here's what he does to Medicare, by turning it over to the rivals of Wall Street crooks, the US private insurance industry.
By doing this, here's what seniors have to pay, based on OMB numbers:
This chart is conservative since it exscludes "other Provider payments" - out of pocket, deductibles, etc. Even so, when the plan kicks in, people 6 will pay 35% of their income to cover medical costs, much higher than today. They'll have to give up health insurance. They'll get sick and die. Ryan's proposal is about as practical as Stockman's tax cuts.
But, as you correctly point out, it is a bipartisan affair. I'm just reading Gretchen Morgenson's new book. She starts out during the Clinton administraiton with Robinson's antics at Fannie Mae. That's ground zero for the housing bubble and our troubles today.
Together, the Republicans and Democrats are a terrific wrecking crew.
He and Stockman lay it out. I really like the term Anarchists to describe the way Wall Streeters behave with the country. As for Stockman, it's never too late to repent. He doesn't need to do this and it doesn't help him much. I admire him for that.
it's small shops that get whacked with all of the fees, the large retailers probably have deals with "profiling" consumers or some other such stuff.
One thing I've noticed: banks threaten to increase monthly fees, etc. because their income will go down but the retailers are silent about direct effect change in this law will have for consumers.
I have mixed feelings. I was all for it until I realized, frankly, that it may end up costing me money. Not much, but then I watch every penny in fees.
When the stores are in the right, why don't they try to convince the public to support them, instead of just appealing to the politicians and regulators?
is either picked up on or more unfortunately rewritten without credit in the MSM. But scream from the rooftops we should beecause the jobs crisis is so bad, it's literally pulling down the rest of the economy, never mind it's obscene.
You're right and on top of it, we have absolutely inane agenda items going on, mostly by crazy GOP and based on their corporate and special interest donor requests.
It is excruciatingly clear that almost nobody in politics really cares about the unemployed, especially the long term unemployed who are so desperate and so unwanted by employers right now.
What is not clear to me is why. After all, if we take the unemployed and underemployed plus their immediate relatives, we must be talking about close to 100 million voters who are or may be being personally affected by unemployment.
How many relatives in the next 5 years (the minimum amount of time it will take to return to full employment) will be stuck taking in their unemployed/underemployed parent/child/sister/brother/cousin, etc., when they are finally flat broke and all but homeless?
Do the long term unemployed and their relatives truly not know what awaits? If not, I would think they'll know soon enough.
The president and Congress are completely silent about the prospects of the long term unemployed. If I were a Republican running in 2012, I'd sure attack Obama about this a hundred times a day. Frankly I wish the Republicans would start howling and pointing fingers now, it might actually help us unemployed.
It is crazy, disturbing and inexplicable that in this age of the Internet and 24/7 news coverage, I'd say more than 95%+ of the country is unaware of the true situation concerning unemployment.
And I count the unemployed among the ignorant too. Heaven only knows how few of the 99ers even realize there's a current bill (HR 589) that would give them another 14 weeks of benefits. [There were two bills about adding extra weeks in 2010 that hardly anyone seemed to know about, either.] Do even 10% of the people who would be eligible for HR 589 know about it? -- I doubt it. That's one reason it hasn't passed.
Remember, the labor participation rate is at lows not seen since women stayed at home and believe me, those dropping out are not doing so because they are wanting to be homemakers.
Right now we have GOP arguing over the debt ceiling, out to attack social safety nets. This should be issue #1 for 2012.
We need a few articles on getting the corruption money out of DC. It's so corrupt at this point, elections are a joke, an illusion. That's why we have no programs and the economy sure is slowing down and I'm wondering if we're heading to another double dip, I may have to whip out those NBER definitions for recession and depression again.
Regardless, the economy has sucked for over a decade, in reality, the housing bubble just covered up the offshore outsourcing, labor arbitraging mess.
I did on facebook will soon do so with my distribution list. It's all about the jobs.
Imagine what would happen if 10 million of the 15 million members of the current workforce were put to work?
There would be more tax revenues, more spending, saving, etc. The chart below is just U-3. If you took U-6 and added up all of thethose who wanted work but couldn't find it, there would be may be 16 - 17 million new workers. Use the Hudson Valley project for the infrastructure defects that must be fixed and you can put a lot of people to work in real jobs.
Why not now? If not now, will be ever be able to pull it off.
How do we quantify this as sucking the life blood out of the economy, in terms of historical data, percentages.
I know you are right and EE's esp. it's this "herd" mentality, they all rush in to "invest" in some "predetermined" EE, such as Brazil and it's almost like a "fad" so what are their real returns? I imagine China is absurdly profitable, but what about Vietnam which I think was EE du jour, Thailand, we know what happened there, I think Russia in a way was also at the first collapse....
Then, securitization is the scourge of the Earth, they turned people's homes into baseball trading cards and we're seeing the fall out from unstable home prices to the fraud going on with foreclosures.
It's more profitable to trip someone up and foreclose than to help them get current on their payments.
You've got multiple articles in these comments!
I think the Fed, and thus their models, have many problems with the banking sector.
1) The sector is more bifurcated than ever before. There are thousands of community banks that were shut out of the home mortgage securitization process by the big guys, and so they concentrated on commercial real estate. They are now saddled with a heavy load of non-performing CRE loans, which is impairing lending to all their customers, including individuals.
2) The big banks are a mess. They have been consolidated into only four players, of which Citigroup and BOA are likely zombie banks propped up by distorted accounting rules. Wells Fargo may be in that camp as well - it has the worst accounting disclosure so it is hard to tell. JPM Chase looks healthy but like the others you never know as long as mark to market of their "investment" assets is suspended. Either way, none of these banks is lending, which suggests they remain fearful of loan losses on existing assets, and can't find creditworthy customers given their tightened credit standards.
3) The securitization process that constituted the core of the shadow banking system has not and probably cannot be revived. That takes out 30% or more of credit from the economy, which means we are trying to generate 2011 growth on a 1995 credit platform or maybe earlier (1990 arguably, which is when securitization began).
4) Before securitization, banks held on to almost all of their loans to maturity. They are clearly not willing to run such risks these days, or if they are it is for far fewer customers, which means the banks will not step up to replace the credit lost in the securitization process.
5) The investment banking industry has collapsed and left only two players - Morgan Stanley and Goldman Sachs, both of which were converted to commercial banking status to remain alive. However, both of them refuse to act like commercial banks and create a loan portfolio. Hence, another lost opportunity for credit creation.
6) The big banks refuse to adjust their expectations on profitability in the new environment. If we are back in a 1990's credit environment, ROEs should be on the order of 8% - 10%. Instead banks fully expect to earn 15% to 25% ROEs, which means they are forced to assume excess leverage, keep their loan loss reserves at artificially low levels, depend on bogus accounting standards to hide losses, and continue their games of equity extraction, asset stripping, and rentier activities (see High Frequency Trading) as a means of producing income that exceeds by far what could be earned on a basic loan portfolio. In other words, loans are still very poor earners for executives expecting $15 million annual bonuses, and so banks refuse to book them.
7) The Fed, if it isn't owned outright by banks through regulatory capture, is at least clueless on how to reform the banking industry. Congress, which is owned by the banks, is uninterested in fundamental reform.
Now how you put all this in a model, I don't know, but let's look at a very interesting irony here. Corporations have been engaging in global labor arbitrage for nearly 25 years, shifting jobs away from industrialized countries to emerging markets. As this cycle plays out over time, logically these corporations should see their ROEs shrink to levels typical of companies in less developed economies, which must deal with poorly educated work forces, high costs of pollution (including bottlenecks in the transportation network), costly government bureaucracy driven by bribes and other corruption, and rigged political and legal systems. Now, notice how these conditions are increasingly being applied in developed countries, the US being a prime example, where the political system is increasingly distorted by campaign financing corruption, the legal system is being subverted in favor of corporate interests at the highest level, pollution standards are weakening, and the labor force is being dumbed down. In such an environment, a corporation can achieve 15% or high ROEs consistently only if it turns itself into a crony capitalist enterprise. CEOs have to become like Carlos Slim, and instead of being faceless managers, they take the company private and become entreprenurial owners. The leveraged buyout system is essential for this process to work, but it is currently constrained by the lack of credit. Therein lies the irony. Without credit the process that was in place up until 2008, of converting industrialized economies into third world economies, is stalled. Companies will have to settle for old-fashioned, mediocre returns and minuscule bonuses if they can't get the credit machine revived.
Here too, I don't know how you model this. Just make sure the models remove a huge part of credit availability, and reduce expected corporate returns. Also, if corporate returns are reduced, so too will be investment returns, so make sure your model adjusts downwards the contributions pensions will play in the economy.
You are so right Numerian, But there are some proposals out there to change the definition of a corporation to include loyalty to the U.S. and U.S. national interest. But even Mom and Pop are manufacturing in China these days. To make things worse, China now has know how, in other words, they are delivering better and faster for Mom & Pop than U.S. small manufacturing is.
Horizon Project, Ralph Gomory and others have talked about changing the definition of business entity C corp. extensively..
but since corporations own/run D.C. I don't know how that's possible.
The WPA worked at a time when manufacturing was in the hands of a local company. These companies might export their products but they almost certainly did not have overseas subsidiaries that competed with their US operations. If the government wanted to create jobs, it could provide incentives to corporations to do so, and create rival structures of its own if corporations weren't willing to do so. People on the right still think we live in that era, when companies created jobs for Americans. On that theory, if you want jobs to be created, you need to work through corporations, feeding them endless tax breaks while all the time they are engaged in the modern corporate practice of global labor arbitrage.
Even medium to small size companies in the US now engage in this practice. How many one-product manufacturers and machine tool companies, hardly multinational names, have moved their operations abroad?. We have several right around my neighborhood, including Radio Flyer, which used to make kiddie wagons out of one plant only, and 10 years ago moved everything to China. The plant stands idle other than for the corporate executive offices.
We have to wake up to the fact that it is no longer possible to create jobs in any country by relying on the corporate structure. Corporations of most any size now can play the global labor arbitrage game. They have no allegiance to their community or their country. They always talk like they do, because part of the arbitrage game is to play state against state, and city against city, for any jobs that can still be done in America. But even here, the number of jobs at a Chrysler plant these days, for example, are a fraction of what was necessary 25 years ago, the pay runs about $8 - $11 an hour, and the benefits are non-existent and fobbed off on the government and taxpayers.
Face it: corporations are the enemy of job creation in America. This is certainly true in manufacturing and is now spreading directly into service industries. The only places that will be unable to participate in global labor arbitrage are certain store-front service providers, like restaurants, nail salons,and health clinics. That's where the jobs are. Oh yes, there is Washington D.C., home to the government/military job complex, but even here the expansion is coming to an end - the debt capacity of the US government is beginning to recede, not expand.
Your WPA recommendation is a good idea because it gets around the corporate model, but if government is the only source of job creation in the future, we cease to have a capitalist system (actually, maybe that has already happened, since over 20% of all disposable income now comes from the government).
If we want to get back to the happy days of corporate job creation, we need to wait until the global labor arbitrage game plays itself out. But by then, you and I will be trying to feed our families on salaries of $5,000 year, just like the Chinese "middle class."
First, thank you for the time and effort you put into this superb article. Second, the way you shed light on the inner workings of the Fed and it's fractious existence is a real eye opener. I am struggling with my next article that is going to review the QE and QE2 aspect of our stagnant economy and have been reviewing the Keynesian economic and IS/LM model's to get a better handle on why this failure occurred. Many video's and article's portray Ben Bernanke as a failure and ill trained for the position he holds but truth be known the spin that's resonating from all my research is this:
All the models employed by the Fed have had one stonewall that has stymied any possibility of success - Greedy, self-serving and hideous robber baron bankers.
The multiplier effect of the IS/LM model (circular flow model) assures that if the demand for their product exists and construction laborer's wages ignite a growth in consumer demand and spending then quantitative easing should have invigorated our economy. The one missing component for success to occur was that the banking community needed to be gracious to their benefactors for assuring they remain breathing, working, social pillars and lend money. Alas, they are at best indignant and at worse criminally liable for stealing U.S. taxpayer money. Both for accepting quantitative easing funds and then QE2 qualitative buy back of toxic debt by the Fed to bolster their confidence to lend to the public then turning their backs on us; the taxpayer and the Fed alike. Now with the Fed trying to slap some sense into this sector with the purchase of 10 and 20 year bonds to lower the interest rate on them and eliminate the 2.75% interest providing an easy(and safer) solution to pay back the remaining toxic assets on the books opening the door for a double dip recession. What are we to do with this knowledge and the realization that Republican's and Democrats are in this power play mode?
They're not doing business with Goldman Sachs and especially not with the IMF. We have a government here that told IMF to stuff it on demanded austerity programs. That makes two along with Iceland.
Their neighbors, the Greeks, are getting the royal treatment from the EU and the Goldman touch of death also. The best thing the Greeks could do is get over the "centuries of conflict" b.s. and make Turkey an active trading partner and ally. They won't but they could.
And how about this: "The Central Bank dropped maximum monthly interest rate for credit cards to 2.26 percent from 2.44 percent for Turkish lira transactions." You think this government cares about the citizens? I'd say YES they do.
The Obama administration, surprise, surprise, was with the U.S. Chamber of Commerce arguing that employers who use illegal labor shouldn't be punished and esp. that nasty AZ shouldn't be allowed to enforce any laws...
So many the answer is to get Democrats to take on even more corporate lobbyists positions and then sue all the way to SCOTUS. I really wonder if the Bush administration had been on the side of the U.S. cheap labor of Commerce they would have lost.
;)
Is it an anomaly that the "conservative" supreme court actually ruled against corporate power and corruption and pissed off the big money boys at the U.S. Chamber of Commerce? A big positive turnaround from the "Citizens United" best big government that big money can buy decision.
Frankly, I never have looked at them but most interesting considering the state of their neighbor.
Did they also blow off Goldman Sachs on any "loans"?
That said, of course due to the health lobbyists, real cost reduction won't happen and that's the real problem, we pay the most and get one of the least of any other industrialized nation.
I put a couple of good articles in the Saturday reads on this.
Farrell doesn't get the same treatment as Paul Craig Roberts. Arguably, Roberts goes further than Farrell. He called the neocons Jacobin's (I'm sure they can look it up on Wiki). He pointed out that Bush was a war criminal. And Roberts has been clear in his rhetoric - bringing down the country is intentional for very specific purposes on the part of those he accuses.
I think you're right on why Farrell is allowed to stay in MSM. You said, "Entrepreneurs like Murdoch, caught up as he is in advancing his interests through special deals and lobbying, nonetheless like to hedge their bets."
It is a hedge. And that's precisely why Farrell and Stockman make it all about balance sheets. There's not one ounce of humanity in the two pieces. I'm not saying that they're not concerned, personally. But in their world, it's all about a change in fiscal policy and the behavior of those in charge.
If a grass roots uprising takes place, Murdoch will be there to staff it with people who forget why governments exist - for the welfare of the people.
When I said, we can't afford to live within our means, I was serious. We don't have the dollars to solve the life and death problems facing us. But if we don't solve the problems, what use are the dollars?
"The question is why were some so eager to extend credit or run up deficits knowing they were creating an unsustainable situation? Who are the predatory lenders?" The big banks, Fannie Mae, propelled by Wall Street. I think your answer is in your earlier statement, "All democratic government is targeted. Decisions will be made by those who extended credit." Those who extend the credit are ending up running things, even if the credit is bogus.
I think much of this is simply personal greed on the part of CEO's and traders to enrich themselves and their clients in the moment. The way it is working out, however, is as you say - they're in charge, ultimately.
While I agree with their critique, the Democrats were in there full force. They have a point, however, on the start of the crisis. In the 1980's, the Republicans knew what the third rail was, entitlements. They were still using the Nixon doctrine of piecing off the seniors against the rest of the population. It wouldn't take a brain surgeon to figure out that exactly what happened would happen. The Republicans of old were never going after entitlements and never going near defense. One could argue that defense is the bigger problem since it's a much smaller contribution to the economy, hence, a greater deficit buster.
As for Ryan, if it's just a numbers game, he's off too but closer, marginally. But it isn't. Here's what he does to Medicare, by turning it over to the rivals of Wall Street crooks, the US private insurance industry.
Killing Us Quickly - Ryan's Medicare Proposal
By doing this, here's what seniors have to pay, based on OMB numbers:
This chart is conservative since it exscludes "other Provider payments" - out of pocket, deductibles, etc. Even so, when the plan kicks in, people 6 will pay 35% of their income to cover medical costs, much higher than today. They'll have to give up health insurance. They'll get sick and die. Ryan's proposal is about as practical as Stockman's tax cuts.
But, as you correctly point out, it is a bipartisan affair. I'm just reading Gretchen Morgenson's new book. She starts out during the Clinton administraiton with Robinson's antics at Fannie Mae. That's ground zero for the housing bubble and our troubles today.
Together, the Republicans and Democrats are a terrific wrecking crew.
He and Stockman lay it out. I really like the term Anarchists to describe the way Wall Streeters behave with the country. As for Stockman, it's never too late to repent. He doesn't need to do this and it doesn't help him much. I admire him for that.
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