Category: The New Depression

Life from the margins

~ susie ~ 15 Comments

So I’m sitting here while watching Jamie Dimon do his ritual apology in front of the Senate Banking Committee, and I have a tea towel tied around my head to hold the ice bag. I woke up with a throbbing headache, something I don’t normally get, and I’m pretty cranky about it. I’ve also had a stiff neck for three days, and while I do have some muscle relaxers, I can’t take them now because I’ll be useless for the rest of the day. (Thought: Why does Sen. Richard Shelby dye what little is left of his hair? It looks like he uses brown shoe polish. Is it because he’s convinced it makes him look younger to the lobbyist-supplied hookers? You don’t see Jamie Fucking Dimon dying his gray hair. The man may be a crook but he’s a confident one!)

Richard Shelby may be the Senate’s worst speaker, and that’s saying something. No, I take that back. Tim Johnson is even worse.

As the hearing started, a group of foreclosure protesters confronted Dimon, telling him to “face the people you foreclosed upon.” It sounded like some of the Very Important People in the room were laughing at them. Well, why wouldn’t they? No one’s going to steal their houses, or take their jobs.

This morning I found out I didn’t get one of the jobs for which I was interviewing. I didn’t think I would, and didn’t want to work there, anyway. But I need a job, and really soon. It’s all I think about, really. (That might have something to do with the neck.) I’m so worried.

I’m also trying to figure out if the yogurt I ate for dinner gave me the headache. It’s the sinus-y kind, where the entire upper half of my face and the top of my head hurts – hence, the ice pack on the head.

This is not a good day, and this is not a good country anymore. I have to figure out how to swim through it all.

UPDATE: Just to top thing off, just got a $100 ticket in the mail from one of the city’s red-light cameras. I feel like Job.

What we’ve lost

~ susie ~ 8 Comments

As James Carville famously said, “It’s the economy, stupid.” And if people don’t start to feel things getting better, it makes it that much harder to get a win this year. Fortunately, polling shows that a substantial number of voters, even those who are unhappy with Obama, still blame most of the problem on Republican obstructionism—because with numbers like this, he’ll need every vote he can get:

The average American family lost 38.8 percent of its wealth from 2007 to 2010, with the biggest losses concentrated among households with the most assets tied to their homes, a Federal Reserve study shows.
Median net worth declined to $77,300 in 2010, an 18-year low, from $126,400 in 2007, the central bank said in its Survey of Consumer Finances. Mean net worth fell 14.7 percent to a nine-year low of $498,800 from $584,600, the central bank said today in Washington.

“The impact has been a massive destruction of wealth all across the board,” said Lance Roberts, who oversees $500 million as chief executive officer of Streettalk Advisors LLC in Houston. “What you see is an economy that’s really very, very stressed for the bottom 60 to 70 percent of the population that’s struggling just to make ends meet.”

The declines in household wealth in the course of the longest and deepest recession since the Great Depression have held back the consumer spending that makes up about 70 percent of the economy. Fed policy makers led by Chairman Ben S. Bernanke meet next week to consider whether the central bank needs to add to its record stimulus after employment grew at the slowest pace in a year in May.

The Fed has already taken unprecedented steps to boost the economy as it battled the 18-month recession that ended in June 2009, slashing its key interest rate almost to zero and purchasing $2.3 trillion in debt to lower long-term borrowing costs. Even so, the jobless rate has stayed above 8 percent since February 2009, compared with the central bank’s long-range goal of 4.9 percent to 6 percent.

“Although declines in the values of financial assets or business were important factors for some families, the decreases in median net worth appear to have been driven most strongly by a broad collapse in house prices,” Fed economists wrote in the report released today.

Paul Krugman is tired of you people

~ susie ~ 2 Comments

As anyone who’s ever owned a car probably knows, money serves the same function for the economy as oil does for the engine of your car. We all know what happens when you let the car run out of oil (there’s a very good reason why they call that dashboard warning signal an “idiot light”). You know you can add a tiny bit of oil and get the engine working again, but you’re a damned fool if you don’t put in the full amount ASAP.

Those of us who know basic car maintenance can be, yes, a little bit annoyed with people who don’t understand how to take care of their own vehicle.

And that’s what Paul Krugman’s been talking about for four years now. The Bush administration, followed by the Obama administration, didn’t use enough stimulus oil and the engine of the economy has slowed to a crawl. (Hey pal, don’t you see that flashing IDIOT LIGHT?)

When you have a problem with your engine, the solution isn’t to drain the rest of the oil.

For those four years, I’ve watched Krugman try to explain things reasonably, trying not to offend people. He had the liberal’s fatal flaw: “This is just a matter of giving people the right information and obviously, then they’ll want to do the right thing.” I’d sit and watch, thinking, “When is he going to realize they’re trying to destroy the government and he has to stop giving them the benefit of the doubt?”

Seems like he’s finally reached that point. Good!

Comparing employment collapses

~ odd man out ~ 2 Comments

Krugman:

…For all its woes, Japan has never experienced the kind of employment collapse we’ve suffered. That’s the sense in which we’re doing far worse than the Japanese ever did.

So as I said, in a way Japan is no longer a cautionary tale; it’s still a lousy story, but compared to us it almost looks like a role model…

Pressure

~ susie ~ 9 Comments


But you will come to a place where the only thing you feel
Are loaded guns in your face
And you have to deal with pressure!

Rough day. I’ve been applying and interviewing all over the place — and while people may be hiring, they are making applicants jump through a LOT of hoops, which is no fun. And then I find out that the place where my son’s worked for 10 years is closing. So not only is he getting booted out of his apartment, he won’t have anywhere near enough money to get another one – and he was already sharing with two other people.

And I feel really, really bad that I’m not in a position to help him. I suppose he’ll figure something out eventually, but still, I’m feeling pretty bad about this. In addition, I’m running out of money myself and I wonder if I’m ever going to get another job. Sigh…

Krugman: Occupy movement ‘enormously productive’

~ susie ~ 3 Comments

Paul Krugman is doing the rounds on his book tour (I saw him speak here Tuesday night – yeah, I’m a dork, I got him to autograph my copy) and here he is on Democracy Now! to pound the drum for government spending. Oddly enough, Krugman’s been accused of supporting austerity cuts, which just isn’t true. For an hour, all he did was talk about how the government needed to spend our way out of this.

AMY GOODMAN: Well, for the remainder of the hour, we’re joined now by one of the world’s leading economists, Paul Krugman. He is a Nobel Prize-winning economist, an op-ed columnist for the New York Times, also professor of economics at Princeton University and centenary professor at the London School of Economics. His latest book is End This Depression Now!

Paul Krugman, welcome back to Democracy Now!

PAUL KRUGMAN: Good morning.

AMY GOODMAN: How do we end this depression now?

PAUL KRUGMAN: Spend. I mean, it’s really—it’s actually—the economics is really easy. If we were to spend more money at the government level, and actually, at this point, largely, just rehire the schoolteachers, firefighters, police officers who have been laid off in the last several years because of cutbacks at the state and local level, we would be a long way back towards full employment. Other things to do, we could talk about monetary policy, debt relief for homeowners and students. But the core of it is, right now, there just is not enough spending, and we need the government, which can do it, to step in and provide the demand we need.

AMY GOODMAN: To say the least, you’re going against the accepted dogma on all television among the so-called leaders of our country. Spend? In a time when the government has the debt the size it has?

PAUL KRUGMAN: Right. So you can always say, “Oh, you know, $14 trillion.” Everything about the U.S. economy is huge. Investors don’t think it’s a problem. Investors are willing to lend the U.S. government money at 1.8 percent interest. This is not the time. I’ll be all for worrying about the budget deficit once the—once the economy is off the bottom. But it is not off the bottom. We are in a depression. This is the time to spend.

AMY GOODMAN: Where do you get the money?

PAUL KRUGMAN: Borrow it, and then repay it later in better times, which is not at all—that may sound funny, but that’s exactly what we’ve done in the past. That’s exactly—how did we get out of the Great Depression? We got out of it by—actually, we got out of it before World War II, but thanks to the spending that preceded World War II, thanks to the military buildup. A little factoid people may not know, just this morning: Which of the major economies in the advanced world grew fastest in the first quarter of 2012? The surprise answer is Japan. Why is that happening? It’s because Japan is now spending a lot of money reconstructing after the tsunami. And that spending is driving rapid growth in Japan right now. We could all be doing that.

AMY GOODMAN: Let’s go to Mitt Romney for a moment, the presidential candidate’s economic plans and his critique of the Obama White House. This is what he said Wednesday at a campaign stop in Iowa.

MITT ROMNEY: President Obama is an old-school liberal whose first instinct is to see free enterprise as the villain and government as the hero. America counted on President Obama to rescue the economy, to tame the deficit and help create jobs. Instead, he bailed out the public sector, gave billions of your dollars to companies of his friends, and added almost as much debt to this country as all the prior presidents combined. The consequence is that we are now enduring the most tepid recovery in modern history.

AMY GOODMAN: Your response to Mitt Romney, Paul Krugman?

PAUL KRUGMAN: Boy, you know, don’t even know where to start. I mean, Romney’s technique is that—since basically every word he says is a lie, including “a,” “and” and “the,” you never know where to start. But this is—the idea that the—first of all, that Obama is responsible for the large deficits is just not true. It’s overwhelmingly the result of the Bush tax cuts, unfunded wars and a terrible economic crisis that began, of course, under Bush. The idea that the deficits are what’s holding us back is all wrong. The deficits are in fact what’s keeping us afloat. If we had tried to balance the budget, we would now be in a full, full-on replay of the Great Depression. So it’s all nonsense. It’s—and, by the way, the idea of Obama as somebody who governs from the left, I mean, Obama is—Obama’s positions are those of a moderate Republican circa 1992. It’s not—he’s not a leftist. What’s happening now is you have a radical-right Republic Party.

AMY GOODMAN: Well, let’s talk about the Republicans, to House Speaker John Boehner, recently addressed the Peter G. Peterson Foundation’s 2012 Fiscal Summit.

SPEAKER JOHN BOEHNER: The failure of stimulus, a word people in Washington refuse to say anymore, has sparked a rebellion against overspending, overtaxation and overregulation. Americans who take pride in living on a budget recognize that we can’t go on spending money that we don’t have. And our economy is stuck in large part because it is stuck with debt.

AMY GOODMAN: House Speaker Boehner also advocated making long-term changes to programs such as Social Security.

SPEAKER JOHN BOEHNER: We can eliminate all the unfunded liabilities in Social Security, Medicare and Medicaid tomorrow, and the effect on the congressional budget 10-year window could be minimal. That’s because changes to these programs take time and need to be phased in slowly.

AMY GOODMAN: That’s House Speaker Boehner, who has also just revived the debt ceiling—the debt ceiling threat.

PAUL KRUGMAN: Yeah, so—boy, again, let’s leave aside the long-run budget stuff for the moment, and let’s just talk about—the idea that stimulus failed, it was never tried. Take a look at the actual track of government spending in the United States, and take into account the state and local governments as well as the federal, and what you see is, far from actually having a big increase in spending, we’ve actually had much lower. We’ve had austerity in the face of a recession, in a way that we have never had before since the 1930s. So it’s actually been the reverse.

And look, we’ve just done an experiment with what happens if you cut government spending sharply in the face of a depressed economy. That’s what’s been going on in Europe. It’s been going on in an extreme form. I’ve been saying, actually, we’ve basically had a large-scale human experiment, the kind that is banned under Princeton University rules, going on on the people of Greece, Spain, Portugal and Ireland. And the results are clear: it’s disastrous. It leads to very, very sharp economic contractions. Here, we’re having a minor version, though still terrible, of the Great Depression; there, they’re having a full-on replay of the Great Depression.

AMY GOODMAN: Contrast it with Argentina.

PAUL KRUGMAN: Ah, Argentina is an interesting story, because they broke all the rules. There are two countries that we talk about now, actually, people like me. One is Argentina. Argentina had something that was a little bit like the euro. They had a supposedly permanent commitment: one peso, one dollar. Became impossible, fell apart. There was a period of about six months of economic chaos, following, to be honest, then a rapid recovery. Argentina bounced back strongly because they were competitive again. The weaker peso made them able to export. You know, and they defied all the predictions of ruin.

The other story, which is more contemporary, is Iceland, which, in effect, did the same thing. Iceland, because of—the funny thing is, Iceland, the sheer scale of the financial disaster meant that they could not be orthodox. It was not possible. So they were forced to allow a devaluation, have some temporary controls on capital, repudiate some of the debt their bankers ran up. Iceland has a lower unemployment rate than we do right now. So, those are the stories that we should be looking to as examples that say this does not have to be happening.

AMY GOODMAN: So, right now, President Krugman—and that’s not making a mistake—what do you do starting today?
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