So how can the Dow be flirting with 10,000 when consumers, who make up 70 percent of the economy, have had to cut way back on buying because they have no money? Jobs continue to disappear. One out of six Americans is either unemployed or underemployed. Homes can no longer function as piggy banks because they're worth almost a third less than they were two years ago. And for the first time in more than a decade, Americans are now having to pay down their debts and start to save.
Even more curious, how can the Dow be so far up when every business and Wall Street executive I come across tells me government is crushing the economy with its huge deficits, and its supposed "takeover" of health care, autos, housing, energy, and finance? Their anguished cries of "socialism" are almost drowning out all their cheering over the surging Dow.
The explanation is simple. The great consumer retreat from the market is being offset by government's advance into the market. Consumer debt is way down from its peak in 2006; government debt is way up. Consumer spending is down, government spending is up. Why have new housing starts begun? Because the Fed is buying up Fannie and Freddie's paper, and government-owned Fannie and Freddie are now just about the only mortgage games remaining in play.
Why are health care stocks booming? Because the government is about to expand coverage to tens of millions more Americans, and the White House has assured Big Pharma and health insurers that their profits will soar. Why are auto sales up? Because the cash-for-clunkers program has been subsidizing new car sales. Why is the financial sector surging? Because the Fed is keeping interest rates near zero, and the rest of the government is still guaranteeing any bank too big to fail will be bailed out. Why are federal contractors doing so well? Because the stimulus has kicked in.
In other words, the Dow is up despite the biggest consumer retreat from the market since the Great Depression because of the very thing so many executives are complaining about, which is government's expansion. And regardless of what you call it -- Keynesianism, socialism, or just pragmatism -- it's doing wonders for business, especially big business and Wall Street. Consumer spending is falling back to 60 to 65 percent of the economy, as government spending expands to fill the gap.
The problem is, our newly expanded government isn't doing much for average working Americans who continue to lose their jobs and whose belts continue to tighten, and who are getting almost nothing out of the rising Dow because they own few if any shares of stock. Despite the happy Dow and notwithstanding the upbeat corporate earnings, most corporations are still shedding workers and slashing payrolls. And the big banks still aren't lending to Main Street.
Trickle-down economics didn't work when the supply-siders were in charge. And it's not working now, at a time when -- despite all their cries of "socialism" -- big business and Wall Street are more politically potent than ever.
Cross-posted from Robert Reich's Blog.
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I have posted this idea before and I will again. End the flat tax on the wealthiest
Proposed For all income >= 40 x median income (MI)
Tax Rate = (TGI -20 x MI)/(TGI/2
TGI = Taxable Gross Income
TGI = Non capital gain income(NCG
Social Good Income = Rewards or Patents for significan
Taxable capital Income = CGI x (CGI/(NCGI
All Incomes
The USA is losing the Economic War! The USA must re-industr
The USA has lost the World Technology Leadership
The USA is Bankrupt! The USA is selling our privately owned land and other assets to pay for imported products (rather than have US citizens work to produce the things that we consume) and also to pay for growing US government expenses that are in excess of our federal tax collection
When the USA has no more privately owned land and other assets to sell to foreigners in industrial countries in return for freshly printed US T-Bills, Bonds, or other Securities
The USA is Committing Economic Suicide! The USA will become a third world nation when our US dollar loses all of its purchasing value.
It will be interestin
While I normally don't like government programs, it is clear that we need to fix our schools, roads, bridges, power grid, and rail system. Any trip to a European country and it is clear how far the US has fallen behind.
The USA has created an economic situation that US gold; US currency; stocks, title to US real estate, businesses
Sir Josiah Stamp
"Let me issue and control a nation's money and I care not who writes the laws"
Mayor Amschel Rothschild
"Whoever controls the volume of money in our country is absolute master of all industry and commerce, and when you realise that the entire system is very easily controlled
James A. Garfield, 20th President of the US, two weeks before his assassinat
" I believe that banking institutio
Thomas Jefferson
This is a documentar
http://vid
It irritates me when my banker refers to Banking, Stock Trading, Insurance and other financial businesses as "industrie
The Wall Street Stock Exchanges and Banks are essentiall
US Corporatio
Houston, Atlanta, Dallas, Chicago, or some other different location might be a better location for a clean new start.
Where are the neocon thinktank conference
Why aren't CEOs of mega, internatio
Oh... that's right. THEY'RE the one who got us into this mess in the first place. They and their GOP shills in the government who decided that deregulati
Funny how reality kicks in and proves their mythology a gigantic lie -- which affects not just a couple dozen people, but an entire planet.
How many things in your home will last more than five years?
How many of those things that will last more than five years were purchased within the past twenty years versus those that have been passed down to you from your elders?
Do you have an old tube television or a giant flat screen? (can you even buy an old tube tv anymore, or have our standards been set for us by the industry?)
How much of you own was made in a foreign country?
How much of the meals you eat are pre-packag
How many times a week do you eat out for convenienc
Do you have a vegetable garden? Do you have time to garden?
When your doctor doesn't provide a cure, do you go back and pay again, or do you demand your money back?
How many vacations did you take last year?
WE are THEY.
US citizens elected the congressme
There was an era in the 1960's when people living in Pasadena, Texas said that their refinery pollution smelled like jobs, money, food, housing, and college educations for their children.
I hope people are listening to you...
Combine these two ideas.
1. Kiva-ize the world. Kiva does microcredi
2. Institude a global guaranteed income floor administer
Nations that or corrupt or genocidal would affect the floor. Their victims would get enough to escape their deleteriou
If you agree I will let you in on my third idea.
Rewrite the Geneva Convention to outlaw any form of war that inflicts more harm on an enemy than has been already inflicted, The Bush war would have had a limit of around 3000 lives.
What do you think?
You know, I've found it's much much more difficult to have the vision and courage to come up with new ideas, however farfetched
I'll add another one and brace yourself. This one's way out there. We improve our technology as a species to the point were it can provide for our human needs, food, shelter, energy, education and comfort to the point where we can eliminate all forms of currency and move to a resource based economy. Whoa.
http://www
People are getting poorer and the rich, who may or may not be people, are getting richer, still, again, and still. By "still" I mean since Regan.
The other day I saw a couple paying for basic food with rolls of change. Is this the change we were promised?
This is the system you wanted. You cheered on the Reagan liars as long as you were involved. Now that you are not involved, it is Obama's or someone elses fault. What happened to the belief that the angelic, altruistic corporatio
The US Government essentiall
Without businesses providing jobs, everybody would have to live off of the land. Any family, tribe, country, etc. and its individual members can prosper or become debt ridden in accordance with their industrial behavior, government spending behavior, and/or other economic actions of the leaders of that family.
The only thing that will create/sav
Many entreprene
Maybe certain insiders have made money, but the indices are way down in inflation adjusted terms and always has been. The 90s were the most extended period of gain in the indexes. The vaunted 80s just kept up with inflation.
Once Main Street hopped on the bandwagon that is when the scam accelerate