It's beginning to look like there's an economic shipwreck dead ahead. That plunging stock market is the wealthy passengers, trampling the children as they rush headlong toward the lifeboats. The nation's capital, the bridge of our ship of state, lies abandoned.
The officers have gone to their quarters, the wheel's left unattended, and nobody's trying to turn the ship around. If you're not sounding the alarm, you aren't paying attention. And it looks like a lot of people aren't paying attention.
Rough seas
Sure, this month's jobs report is slightly better than the last couple of months, but that just means the drowning passengers are a couple of inches closer to the surface. That's not much comfort to them, since they're still drowning, but it seems to cheer up the ship's officers. Now that Congress has concluded its debt-ceiling deal they've all gone home.
The president's economic advisor, Austan Goolsbee, is plaintively whispering the words "unemployment insurance" to their receding backs, but it wasn't important enough to be included in the deal. And the "bipartisan" mantra forced Goolsbee to mention two free-trade deals in the same breath. That's like throwing a brick to a drowning sailor, rather than a life preserver.
Of course, the jobs figures would be heartening if they meant that things were moving in the right direction. But there's no reason to believe they are. Real unemployment, as opposed to the official number, is still devastating. Today's improved numbers aren't nearly enough to make up for increases in the work force, much less to make a dent in real unemployment. And the misguided debt deal is about to cost us millions more jobs.
The illusion of good news is actually a problem, since it relieves our leaders of the political pressure that's needed before they stir themselves into anything resembling action.
Scrambling for the lifeboats
The rest of our little ship's in equally lousy shape. We had the worst run of stock prices since the worst of the crisis in 2008. It has looked perilously like a new disaster several times during the course of the week. And we're not in the clear yet. The market rebounded slightly, but it's still way down. The waves are crashing over the stern, and European instability could bring on another crisis at any time.
Investors understand that the debt-ceiling deal makes new spending on jobs and growth more difficult, and yet doesn't do much to stabilize the government's finances, so they're convinced things are going to be grim for the foreseeable future. In fact, it's gotten so ugly that high-dollar corporate investors are hoarding cash rather than investing the money. That's putting a strain on banks, who have to insure their deposits. One bank has already started charging its clients for keeping large amounts of cash in their bank accounts.
What's next -- a 2% surcharge for paying cash rather than using a credit card? (Ssshh. Don't give them any ideas.)
Investors aren't convinced that the government has solved its own deficit problems. And it hasn't. The best way to stabilize the government's finances is by taxing the wealthy at more normal levels, investing in growth, and then addressing spending issues once people are back at work and a) paying taxes and b) not in need of government help.
Down in the fo'c'sle
The real misery isn't in the captain's quarters, of course. It's down in the fo'c'sle, that forward part of the ship where the ordinary sailors live and work. That's also the part of the ship that hits an iceberg first. That's where unemployment is deep and ongoing, where middle class families have lost most of their wealth, and where those in need are about to face devastating cuts.
What can be done? The Federal Reserve could step in right now and make more cash available. It could create a fund to be used for specific types of lending. The Fed did a lot of unconventional things in 2008, after all, including a quick legal maneuver that allowed Goldman Sachs to be treated as a bank. Where there's a political will, there's a way.
So why can't the Fed do some new unconventional things in order to meet its other mandate -- the one that says it needs to keep unemployment low? Or it could act more conventionally, as Dean Baker suggests, by raising inflation and easing some of the crushing debt faced by homeowners. Why doesn't it do any of these things? Because the reverse is also true: Where there's no political way, there's no way. Remember that when the talking heads tell you that Ben Bernanke's hands are tied. It's not true.
Thar she blows!
Jamie Dimon, CEO of JPMorgan Chase, said it more plainly than anyone else. He patronizingly told the country that he explained to his tiny daughter that financial crises are something that happens every five to seven years -- and, he no doubt added, "only to other people.' Their lifeboat is secure and ready. How's yours?
Five-to-seven year cycles are pretty much the norm in under-regulated banking economies like the one Dimon and others are successfully fighting to retain. On our economic ship, most of us are merely ballast. And since the last crisis was three years ago, wwe're likely to be deep in the middle of this ongoing jobs and housing crisis when the next wave hits. And instability around the world is making it seem as if that next crisis could come earlier than expected -- perhaps much earlier.
We should have all hands on deck right now, repairing this economic wreck and fortifying ourselves for the coming threat. But the government has turned the wheel into the storm, gone below decks for a drink, and decided to hope for the best. We're headed into the teeth of a disaster, and the soft murmurs of the political class are nothing more than the sound of the orchestra playing "Nearer My God to Thee."
Follow Richard (RJ) Eskow on Twitter: www.twitter.com/rjeskow
Dean Baker: The S&P Downgrade Market Plunge Myth
Try sreaching USAID at usaspening.gov and see the Trillions of BORROWED MONEY committed to helping poor in other countries while we kick grandma into the streets !
www.usaspending.gov
www.recovery.gov
www.data.gov
And, if memory serves, Obama came into office with large majorities in both the House and Senate. So cook up some other excuse for this utterly failed president.
In the 4 days before the U.S. went into run Sadam out of Kuwait a lot happened. G.W. Bush's company was in the Houston Bankruptcy Court but suddenly an Offshore Oil Drilling Contract appeared in G.W. Bush hands from Omman ! Wow never bid on a Contract that was NEVER offered Publicly for bid but WON the bid !
But now we know Bush never won in 2004 with the votes from Ohio sent to Tennessee and flipped for Bush to win. Roger Stones actions leading a Group of men to break in the doors of the Dade County Election Recount Office that stopped the Re-count letting the Supreme Court decide the Election shows a TAKE OVER OF AMERICA from the Military Industrial Complex .
Who can break into an Election Office and NO COPS come ? Fla State Troopers disappeared 30 Min before Roger Stone and the men showed up and NO COPS answered the 911 call !
If we wish to think of a recession in a sociological as opposed to an economic framework, a recession begins when jobs become harder to find. It ends when it returns to the point where it began in terms of job availability.
We've grown used to accepting the economic view as the 'correct' one without bothering to consider others. Congress, meanwhile, views just about everything in terms of 'reelect-ability'.
The following graph is instructive. For those who wish to look at it closely, a comparison of the period of the last four recessions should prove instructive. Consider, if you will, the one which will follow our present one.
http://cr4re.com/charts/charts.html
* neologism.
We know what to do and the baggers are
ignoring the past.
We are all soggy toast.
The vast potential of technological miracles are waiting for people with the skills and training to find them. But instead of investing in people, we are cutting them off from opportunities to grow and learn and prosper.
I have a masters degree from a top school. I am the son of a machinist. I was able to pay my way through school by working and with some help from family and loans. But that was a university strongly supported by taxes. My children can not afford to attend college and I can not afford to help them. There is no use in taking on the massive debt of education when there is no job market available to get them experience in a real field.
My taxes have gone to cruise missiles instead of my children. And America is the real loser in that deal.
huggs Becky
try this and type in USAID and search. Then scroll down the page and look at the $75 TRILLION DOLLARS committed to Forgien Aid.
what if the USA stopped all Forgien Aid for a few years ?
We borrow money to feed people in Forgien Countries so that Country can support Corrupt Governments Officals ?? Nah let's not !
Israel gets the most, around 3.2 million dollars. Eqypt the second most.
Huggs Becky
PS Before posting I went and found this country-by-country breakdown on foreing aid. BTW: If they gave anything like ONE trillion dolars in foregin aid we should be on the streets rioting! http://www.vaughns-1-pagers.com/politics/us-foreign-aid.htm
Great line, R.J.
And having government pay for it through either raising UI premiums or raising taxes or adding to the deficit ought really help the jobs market...NOT!
The public demanded, and our spineless politicians supplied, a fruitless effort to alleviate the pain of our profligate private spending spree by implementing a public spending spree. And it's only made things worse.
No good deed goes unpunished...
You are talking in vague weasel words to make your argument sound more authoritative. That is unsound reasoning you provide no actual evidence or backup.
http://0.tqn.com/d/politicalhumor/1/0/Q/B/4/Ransomblican-Party.jpg
And as to investment in real infrastructure, wasn't that the stated intent of the stimulus bill? Yes, I know if went instead to pork barrel projects but c'mon!
As far a solar panels, sorry, but they're simply NOT cost effective at the current cost of fossil fuels. Unless/until the government wants to start taxing fossil fuels, thereby raising the cost of energy for everyone (especially hurting po' folk) and slowing our economic growth, solar is not a sensible investment or greedy capitalists would be doing it.