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Jobs Report Sign of Deeper Economic Trouble
The Federal government's jobs report for June shows the country sliding further into an already historic recession. With 467,000 jobs disappearing, bringing the official unemployment rate to 9.5 percent, wages down, and more workers than ever stuck in part-time jobs that don't adequately cover the bills, Americans are hurting. Credit is tight and spending down, leaving little hope that we can borrow and buy our way out of the current economic slump.
The situation calls for a big new round of government stimulus spending. Economists Dean Baker, Paul Krugman, and others are calling on President Obama to try to force a more ambitious stimulus plan through Congress. "Just to be clear, I'm well aware of how difficult it will be to get such a plan enacted," Krugman writes in the The New York Times, anticipating criticism from the Administration insiders like Rahm Emanuel. (In a New Yorker profile earlier this year, Emanuel was quoted as saying that Krugman and other liberal economists are basically right in their criticisms of the too-timid Obama approach to issues like stimulus and tax cuts, but that it's easy to criticize the President when you don't have to get anything past the Republicans in Congress--"How many bills has he passed?" Emanuel asked of Krugman.)
I interviewed another critic of the Obama Administration's centrist economic team for the forthcoming issue of Progressive, William Greider, author of the definitive book on the Federal Reserve Bank, Secrets of the Temple, and, most recently, Come Home America. Greider also has critical things to say about Krugman: "He can't let go of all the bromides he has absorbed over many years as a professional economist," he says, tarring him with the same brush as Robert Rubin and Alan Blinder.
"I think the Establishment, including people like Robert Rubin and Alan Blinder and others, have come part of the way to reality in which they recognize that globalization as they've sold it is not paying off for people, and that portends a growing popular resistance. Combine that with the present financial crisis and that's going to drive that home even more in popular understanding. But they can't go that next step," says Greider.
The bigger problem with the U.S. economy, Greider points out--beyond the need for stimulus and worker retraining-is the toll taken by globalization and the hollowing out of our manufacturing base.
"I think we will keep going down in those terms until this country gets a political leadership that says, 'You know what, it is nuts to run huge trade deficits year after
year and pretend that that's OK. It is nuts to imagine that a large, advanced, industrial economy, can prosper without manufacturing.'" he says. "Nobody else in the
world does that. Why do we imagine that the U.S. can? It is nuts to become indebted to our trading partners so we can buy more of their stuff. You lay all those things on the table and it is not unreasonable to say this is going to end. . . . When that happens, if enough people understand that there are ways to come back-not to be number one again, but to just become a viable, prospering economy that more or less includes everybody. That's what the goal ought to be."
Interestingly, Greider has spoken with Rubin and others, and recorded their admission that the religion of global trade has its flaws: that workers here and abroad are not reaping the great benefits the prophets of globalization claimed that they would. But their prescription for reform are far too modest, he says. They can't go the extra step and talk about completely renegotiating trade deals and remaking U.S. manufacturing. Instead we continue to pour bailout money into the Wall Street casino economy, and hope for a turnaround. It's time for the Establishment to acknowledge that their whole approach to economics has to change, he says.
"What you can't get from a lot of those people is a candid acknowledgement of that," he told me. They will say, "'Well, yes, the steelworkers have lost jobs and people have sufferend and that's too bad.' But-this applies to a lot of Democrats in the Congress-they find it very hard to step back and say, 'But this is not about the steelworkers or the autoworkers or others who have been disparaged and wiped out by globalization. It's about the U.S. economy. The fact that this economy is gradually losing strength-partly because of globalization.' That's pretty heavy."
If there is one thing that will start turning things around, it's pressure from Americans who are seeing their jobs dry up.
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40 Comments so far
Show AllRuth has certainly laid out the facts and the disagreements between parties concerned. The truth is it is to late to turn this runaway train around. We will hit the wall sooner than when we think. One thing to not do is to listen to Wall Street. Those folks live in a fantasy land that will soon come to an end. To bad. But it is historic. The failure of a good idea that succumbed to greed and stupidity.
I would agree that the culture of make believe will soon find that there was never any truth to what has been called manifest destiny. It was simply an excuse to murder their way into dominating the land , creating the irredeemable and unsustainable world culture we now afflicted by.
Man-in-first Dustiny (& cheers to Tim Finnegan).
Actually, unfortunately, she hasn't. If that was her intention, she has written a remarkably bad article.
She has done nothing to distinguish between the views of economists like Krugman, Baker, Galbraith, and the Chicago School types like Rubin. She hasn't even bothered to present their arguments. All she has done is get a couple of quotes from 2 people. This is a typical example of remarkably bad journalism.
For the past 20-30 years, economic thinking has been thoroughly dominated by the Chicago school: cut, cut, cut, government spending, taxes. And cut some more. Privatise everything: utilities, (natural) resources, public transport, education, health. And privatise some more. Deregulate, deregulate, deregulate. And deregulate some more.
Economists like Krugman for the past 20-30 years have been viewed with amused condescension by the Chicago school economic establishment.
Writers like Coniff, and Greider, who try to dumb down arguments, and lump all of those economists like Krugman with the "establishment", actually help the Chicago school types, in that they convince people that all the economists are part of the "establishment", and thus, to be ignored.
Sorry, your attempt to demean Greider does not hold water. The man has been able to examine the effects of official economic and monetary practices on the working classes for years. He is in a league with writers such as Naomi Klein in his effort to lay bare the control held by Wall Street (which includes the NY Fed) over Washington regardless of which party holds power.
You make a remarkably bad troll.
q
Sorry, your defense of Greider does not hold water. Maybe he might do a better job if he can recognise the huge gulf between the economic views of Rubin and Krugman. If he can't distinguish between the economic views of Rubin and Krugman, and if can't recognise the gulf between the economic views of Krugman and the economic establishment, then he, and his defenders like you, should expect to be criticised.
You have a huge problem with reading comprehension.
I agree, Greider is quite incorrect to lump Krugman with Rubin. I'd have expected Greider to know better.
Lines like "Interestingly, Greider has spoken with Rubin and others, and recorded their admission that the religion of global trade has its flaws:" are almost idiotic. Rubin and his 'associates' have robbed the US economy blind, they are billionaires becoming trillionaires, and soon they will own everything of value in the US. What are the 'flaws', from their perspective? What is amazing is that the struggle between the financiers and the citizenry has been going on at least since the repeal of the corn laws in 19th century England. I don't think the financiers have ever lost.
As long as Goldman Sachs is running the US then nothing will change. The comfort of Wall Street bankers will always take priority over the good of the country.
I watched Michael Mann's "Public Enemies" last night. Nothing has changed since the 1930's. Our government still works to protect moneyed interests at the expense of everyone else.
q
You sound like you read Frank Rich's July 5 op-ed BEFORE it was written. What you say is very obvious and true. There is a new article in today's NYT that describes a new Obama plan to limit the potential for disaster by overly large banking interests. As always with Obama, it sounds hopeful.
Globalization may have ignited the economic conflagration, but overproduction and overconsumption are the real culprits. Automation--not just cheap labor--makes overproduction inevitable and overconsumption is an insult to the planet. The goal can never be restore the failed system that created social inequalities and ecological devastation. Instead, we must remake society such that all individuals receive basic shelter, food, and medical care as well as a sound education. Such a system will never occur at the national level, nor at the state, but only within communities. We must buy locally, eat locally, and enjoy the amenities of our own towns and cities. Really, it is not a sacrifice to do such things, but a beneficence. We will get through these difficult times and emerge as finer people on the other side.
When asserting, "Automation--not just cheap labor--makes overproduction inevitable," you make an interesting point. It makes sense, however, only in conjunction with "cheap labor," otherwise consumption could infinitely expand--assuming humans are gluttons, which economists do assume and I think is ridiculous. What you need to argue is production--not just automation and cheap labor--makes economic decline inevitable. A mercantilist valuing of production at the expense of compensation will result in overproduction. Certainly this would account for the business cycle. Accepting this, then a market economy is inherently inefficient, wasting resources on "excess" production--viz., goods which cannot be consumed by a disproportionately undercompensated labor force.
BRILLIANT summation!!!
as the Asiatimesonline.com writer HEnry CK Liu also puts it:
"LOW wages globally - dictated by the "free market" ideology - can not sustain consumption of production...if people cannot earn sufficiently to buy what they and populations produce ...this creates artificial scarcity and economic injustice....global structure is currently dominated by the so-called liberal-market ideology promoted by the USA intertwined in a cabal of "capital'friengly" Supply-side economic dogma....this is not Trade - it is Enslavement.
but national governments...if they are to protect their people from the attacks of Money Capital against Labor...must create a global CARTEL of LABOR to balance against the Global Cartel of Capital in existence....".
The joker is actually interest. There isn't enough money to pay for all the goods and to service interest as well.
Check out Major Douglas and Social Credit which is an attempt to square the circle.
Globalization is a nice theory if everyone plays by the same rules; and of course, that does not happen at all. The major case-in-point is China, whom practice their own form of export-driven Mercantilism, as does most of the rest of East Asia (the EU does so to an extent as well). Add in the corrosive effects of global corporatism, and the USA is truly screwed economically for a long time. The only real motivation the rest of the world has in keeping the USA from collapsing is all the debt they are holding which would become nothing better than toilet paper if America turns into a redux of Weimar Germany circa 1923.
I totally agree with you NateW; there are so many things that seem to work flawlessly on paper. Also, in addition of holding a lot of debt none of these countries want to lose the USA as the big consumer of their exported goods, even if it means keeping it on an economic artificial breather. Who cares about the health of the US so long as it keeps buying and is capable of paying interests? How long can this be sustained?
America's export is her military
How about including military spending's contribution to our economic troubles? Surely that bloated expense is part of the problem.
camus13
When will the time come when good journalist stop using US figures for Unemployment and Cost of Living.
These are LIES they have been fixed to deliever good figures for what ever idiot President is in Office.
We do not count people as unemployed when their benefits run out. Cause............they have stopped looking for a job. Yea sure.......Please gives us people who do not live inside the Beltway some brains.
Cost of living is worst. If they count steak and the cost of steak goes up they switch to hamburger. Cause that what the people do........they think. But it sure helps the figures.
Almost every figure has been fooled with beginning with Ronnie followed by Big Bill right down the line.
O.K. They LIE but do people who write for the Progressive have to follow the line? They should not.
Watch C-Span call in some morning and see how stupid the American public is because they believe the lies.
Liars figure, figures lie.
We are currently deflating several bubbles which were created in the early 1980s by Reagan and friends.
Before Reagan, the US had well-regulated and financialy boring banks; we had well-reglated and financially boring insurance companies; well-regulated securities markets that dealt primarily in stocks and bonds, with limited options for crop insurance.
Since the 1980s we have encouraged unrealistic expectations.
Anybody should expect 10%, 20% 30% returns from a wide group of financial instruments. Even boring old mortgages from the neighborhood savings and loans can return 30% (CMOs).
If one asset class can't return 30%, we can create a whole new asset class or tweak existing asset classes to provide a higher return. Just think, your home can double in value in less than 5 years - that's almost 15% a year.
So ...in order to fix the current economic crisis, we need new ways to re-inflate the bubble. Maybe we can use energy credits - maybe we can have turbo energy credits?
Guess what folks; we have run out of ways to re-inflate the bubble. The latest effort - called a stimulus - has failed.
If we took use "normal" growth rates and take everything back to the early Reagan days, we can estimate where prices really should be.
The Dow should be around 4000 (currently 8500). Home values should drop another 40 - 50%. With accompanying deflation, we will not be able to produce our way out of the problem without lowering wages and raising taxes.
Can't happen - look at Japan in the early 1990s -
Japan, however, had the rest of the world to balance things off. We do not have that luxury.
Time to buy some cheap farm land in Africa and go back to nature.
("In a New Yorker profile earlier this year, Emanuel was quoted as saying that Krugman and other liberal economists are basically right in their criticisms of the too-timid Obama approach to issues like stimulus and tax cuts, but that it's easy to criticize the President when you don't have to get anything past the Republicans in Congress--"How many bills has he passed?" Emanuel asked of Krugman.")
WTF? If the DINOCRATS can't get stuff through now it's F'ing over. These people just use the GOPers as an excuse now. Truth is the Gopers are only half the problem the other half are the so called Democrats.
"Guess what folks; we have run out of ways to re-inflate the bubble. The latest effort - called a stimulus - has failed." This is your only statement that I take issue with. First, if only we could avoid re-inflating any bubbles that would be good. Secondly, the stimulus hasn't even kicked in yet, so it's rather early to say it has failed. Of course it will be more or less a failure because it's too small. There is however some small hope that they'll be able to push through something bigger and hopefully even better.
Before I nail Saint Krugman to the cross, I'd like to say he's gotten most issues pretty much correct. He predicted the deflation here in Japan and long ago listed the necessary remedies (sadly, still not adopted). But Krugman was a pom-pom waving cheerleader of NAFTA and Global Trade which I've always felt as a race to the bottom in the search for the least protected and most easily exploited worker. Now that America's industry and workforce have been eviscerated I note that Krugman has fallen strangely quite on the issue for the last year or more. And rightly so - free global trade was just a corporate jackboot in the face of the lower and middle class...
Conniff says '--beyond the need for stimulus and for worker retraining-'
There it is again! If only the stupid workers would learn how to do something productive then everything would be alright. But what exactly are we workers supposed to retrain to do?
Actually, what 'They' want is for workers to work for a reasonably daily wage such as would be paid in India or China. And all those benefits? Forget those. They are making the U.S.A. uncompetitive. Are 'They' right?
The Dims are here to rape us to death just like BHO and Larry Summers the Monster of Moscow...they are all paid by the same Corporations and richfilth animals...
The implied became predictable and then inevitable. When the mass hunger riots occur, the random violence will be met by the North American Division, e.g. staffed with "blooded troops" from Iraq...Our leaders, in the name of White America, silenced, imprisoned, or executed the leaders and the mass movements for economic and social justice so they would never have to face organized mass resistance ever again --- and they were right...
It's not important how much people suffer. It's only important how much the important people suffer.
It's a matter of class hatred. The rich hate the working class and their attitudes will never change unless they are forced to change. Unfortunately the beer soaked, propaganda burdened, sports distracted working man has lost his brain and courage and rather than demand that his self interests be met economically, sulks in his beer like a whipped dog. So much for American manhood huh!
NO, NO, NOOO! No more "stimulus." What are you stimulating - another year of debt accumulation? We need to tax the rich (at maybe a top rate of 100%) and distribute the wealth to those who will actually spend it, here and in other countries.
Right now, the banks have ALL the money. All of it. So naturally there isn't enough left over to have a functioning economy. Printing more money or borrowing from China to keep the illusion of an economy going won't work. We have to rebuild our productive forces. This requires getting the money back from the financiers and paying workers adequately.
Of course, this can't happen short of a revolution.
Senator Bernie Sanders proposed taxing the top 400 families in the USA to pay all bailouts last september when Pig Paulson and Boring Bernake were wailing about the economic crisis. Bernie was slapped down.
Ron Paul has 244 congresspeople in agreement to audit the fed. The fed and Goldman are in a panic, have hired former enron lobbyists and a slick agency plus a democratic party organization to grease palms or blackmail people into blocking the federal reserve transparency bill. There's a war going on in congress. The stink with Conyer's wife is no accident. Conyers is trying to help us so they try to sink him. Bastards, all.
Keep your eyes on the prize, folks. Single payer, progressive taxation and transparency AND transaction taxes on all wall street securities sales. And, of course, no more war profiteering allowed. The rest is propaganda to distract us.
This message is posted partly in jest. So far nobody has mentioned the fact that this crazy, fantastic, dazzling "globalization of Capitalist production" phenomenon was both the cause and consequence of the collapse of the USSR and the total destruction of the Chinese communist revolution and the Vietnamese communist revolution. Is this good or bad for America? For the world?
Consider the deaths of tens of millions in those military confrontations between the two camps which had produced no definitive results, this achievements of "Capitalist Golbalization" in ending an era in human history must not be overlooked. A new evaluation is needed. Perhaps it is best left to later generations of historians. The sacrifices of Americans and others in the next few decades must be seen in this light.
The "irrational exuberance" of Wall Street is not just "native", "congenital" greed. Margaret Thatcher's and Ronald Reagon's extreme Right-swing is no eccident. De-regulation of the fincancial world and economy did not happen in a vaccum. It has everything to do with the "intangibles" in the air that came First, from the confontation with the Chinese Communists', the Russian Communists' and others', and Second, with the abandonment of an ideology by the same adversaries.
Part and parcel of any 'stimulus' that might actually make a difference in overall societal health would be a massive grassroots effort to learn the basics of self-reliance: food growing, soil health, community-building, downsizing (radically) dependence upon the private car & monetized system, peeling away from electronic screens, having respect for/exercising and feeding our bodies with food that comes from lovingly tended gardens/farms (vs. factory farms) and likewise respecting the body of the planet, reducing consumption, learning (omg!!) how to share resources/talents/skills equitably, avoiding our culture's most wasteful abominable 'products' like bottled water and hyper-processed 'foods' and overpackaged entertainments like the plague they are...investing time and energy in getting well acquainted with the natural world that supports us and learning how to become part of it intelligently... UNlearning the cultural trance of instant gratification and measurable results and image cultivation/management...learning how to deal with/recycle our gargantuan waste, restore and preserve the purity (and prevent the privatization/commodification) of our water and common spaces and cease prostrating ridiculously before the altar of a MIC$$$ god rotting from the inside out and get serious about overcoming our delusions of separateness/superiority/inferiority and YIPES, i almost forgot - withdrawing every cent and every iota of human energy/creativity devoted to economic violence & warfare/empire building/hoarding and putting it into a cooperative network of planetary healing that relegates behind-closed-doors advantage/power-seeking/accumulation and corporate 'personhood' to the dustbin of history. can we be as intelligent as mycelium? which is the smarter species ultimately? the one that continually degrades or nurtures the web of LIFE? Okay I know this all sounds highblown and pie-in-the-sky, but the more people wake up, the more people wake up... it's a good kind of contagion...we're all trimtabs on this here rudder.
"Trimtabs on the rudder"
Excellent analogy. I'll wager that we HAVE changed the trim tab position and the rudder is swinging. The hysterical behavior of the media and most of the shills in congress is a sign that they do not want to acknowledge the paradigm shift reality. Sure. they won't quit. But we aren't going to sleep ever again with this apple pie and baseball bullshit mythmaking. We know our rich are ruthless, untrustworthy criminals and are to be henceforth treated with disdain. Every apologist for the rich is to be ostracised from polite conversation.
FRUGALITY IS FREEDOM
It is interesting to read articles on economics that do not discuss what gets purchased by whom from whom.
Am I missing something that relates to massive scale or The Mysteries of The Fed?
If I have a budget and money problems, maybe I do use credit. But if I do, shouldn't I use it to buy what I need and what I can use to work my way out of debt?
(Odious debt aside - and cheers to all you IMF victims!)
The trouble here is not so much that there is or is not government spending, it's that Bush and Obama and associates keep taking the butter-and-egg money and blowing it to hang with mercenary rowdies, shoot up other folks' countries, rape and torture, and gamble on Wall Street - foolishly, at that.
I don't want to trivialize these actions by comparing them to the foolishness of someone who's strung out and coked up, but this apparent sense that someone else will keep covering these debts has a similar feel to it.
No, you haven't missed a thing. However, the news media is working overtime to convince us that the powers that be are doing the best they can. King Con and Goldman Sucks are very busy. Just to give a small examole of the gigantic, mind blowing mendacity going on, look hard at that 450,000 plus unemployment number. It's a lie and they even admit it if you read how they "subtracted" ONE HUNDRED AND EIGHTY SIX THOUSAND from the hard number they had. You see, they have this neat computer program that tells them that, theoretically, the economy created that many jobs during that month so, even though they have a hard number of 652,000 or so, they are perfectly, scientifically, statistically justified to subtract from the hard number. And get this. the breakdown of that 185,000 by percentage claims that about 20% of the jobs created were CONSTRUCTION jobs! And last month there were over 300,000 foreclosures. These people in what used to be our government just don't give a damn about us. There is a site called the international forecaster that goes off the deep end on the iluminati conspiracy every now and then but most of the time the articles tell exactly what is going on behind the scenes with names. That site has told me with plenty of lead time what is going to happen in the economy for the past 8 years.
"The situation calls for a big new round of government stimulus spending"
The utter stupidity of this statement is breathtaking. Never in history has this strategy been sucessful. Reccomending this strategy is bad economics and foolish ideology.
This administration admitted it misread the economy, why anyone here believes they haven't misread the whole enchalida is beyond me.
Its time to get some new thinking, some new ideas and some new leadership.
For Cannibals with RICH tastes:
MENU:
Paulson pork chops (pig out on lots of fat)
Wall Street Shark Meat (Geithner, Bernake, Blankfein, Summers, Rubin - kosher specials extra)
Diet plates for those on the Chicago School Strauss Austerity (Freidman or Greenspan chopped liver salad) served on a flat plate
NOTE: This entree leaves many people hungry. We suggest a war dish from farther down the menu. It's more filling than lead.
Mixed Meat Platter (congresspersons- Republican & Democratic delights- white and dark meat)
Lunch Meat Buffet (Warren Buffett special)
Billy Goat (Gates, that is)
Irish Stew (O'Reilly meat thoroughly tenderized with a sledge hammer for palatability)
War Smorgasboard (Rumsfield, Cheney, Bush, Bolton, etc.- served with RICE) LARGE SELECTION AVAILABLE
Do your part to reduce humanitys' carbon footprint. Eat a rich person today. The Official Governmental Study of Migratory Mammon Seekers has confirmed that one billionaire has the carbon footprint of 666 people with $40,000 or less in annual income.
DO YOUR PART. Eat their parts.
It's environmentally friendly!
Bon Appetitte!
The Ron Paul, Federal Reserve Transparency Act of 2009 now has 244 co-sponsors. A very upset Fed three weeks ago herded former Enron lobbyist Linda Robertson to payoff and pressure House members. Now the Securities Industry and Financial Markets Association has been brought into the fray to counter the populist backlash against bankers. The spearhead will be led by two former aides to former Treasury Secretary Henry Paulson. The plan is to target every representative in the House and unleash a multi-million dollar media blitz in city by city. A massive propaganda campaign has begun. Former treasury aides Michele Davis, a PR type and Jim Wilkinson, a former chief of staff are leading the charge. Engaged as well is Democratic polling company, Brilliant Comers Research & strategies.
SIFMA has 600 securities firms led by Goldman Sachs, JP Morgan Chase and Citicorp. The theme is lets work together. Yes, these are the firms that have looted American citizens of their hard earned wages for years.
Opinion Research found 34% of investors are angry and Share Owners.org 58% are less confident in the fairness of the financial markets.
All this wouldn’t be necessary if Treasury, the Fed and the major firms were not manipulating the markets.
The Fed, banking and Wall Street are responsible for the destruction of about 40% of worldwide wealth. Yet, they think they have done nothing wrong. They have disemboweled both residential and commercial real estate, which was in part responsible for a fall in the Dow from 14,100 to 6,600.
Bob Chapman
The International Forecaster
Yep, yep, and yep. Thanks for the link on the International Forecaster.
It may be "nuts" if you cared about other people, but what if you only care about yourself and, at most, maybe your crowd?
People losing their jobs? They are the losers. Folks successful at milking every drop? They are the winners--what do they care about tomorrow? They are intent on feathering their own nests at the extent of the "losers" to weather out the storm..and Obama is their boy.
After us, the deluge.