Recession – Who Cares?

The soothsayers have slaughtered the ox and are examining the gloppy entrails for signs: Rising unemployment, a falling dollar, weak consumer spending, the credit crisis, a swooning stock market. Could there be something wrong here? Could we actually be approaching a, god forbid, recession?

To which the only sane response is: Who cares? According to a CNN poll, 57 percent of Americans thought we were already in a recession a month ago. Economists may complain that this is only because the public is ignorant of the technical – or at least the newspapers’ standard – definition of a recession, which specifies that there must be at least two consecutive quarters of negative growth in the GDP. But most of the public employs the more colloquial definition of a recession, which is hard times. If hard times have already fallen on a majority of Americans, then “recession” doesn’t seem to be a very useful term any more.

The economists’ odd fixation on growth as a measure of economic well-being puts them in a parallel universe of their own. WorldMoneyWatch’s website tells us that, for example, that “The GDP growth rate is the most important indicator of economic health. If GDP is growing, so will business, jobs and personal income.” And the latest issue of US News and World Report advises, “The key… for America is to keep its economy growing as fast as possible without triggering inflation.”

But hellooo, we’ve had brisk growth for the last few years, as the president always likes to remind us, only without those promised increases in personal income, at least not for the middle class. Growth, some of the economists are conceding in perplexity, has been “de-coupled” from mass prosperity.

Growth is not the only economic indicator that has let us down recently. In the last five years, America’s briskly rising productivity has been the envy of much of the world. But at the same time, real wages have actually declined. It’s not supposed to be this way, of course. Economists have long believed that some sort of occult process would intervene and adjust wages upward as people worked harder and more efficiently.

And what about the unemployment rate? The old liberal faith was that “full employment” would create a workers’ paradise, with higher wages and enhanced bargaining power for the little guy and gal. But we’ve had nearly full employment, or at least an unemployment rate of under five percent, for years now, again, without the predicted gains. What the old liberals weren’t counting on was a depressed minimum wage, impotent unions, and a witch’s brew of management strategies to hold wages and salaries down.

Now if those great and solemn economic indicators – growth, productivity and employment rates – have become de-coupled from most people’s lived experience, then there’s something wrong with the economists, the economy, or both. The clue lies in the word “most.” We have become so unequal as a nation that we increasingly occupy two different economies – one for the rich and one for everyone else -- and the latter has been in a recession, if not a depression, for a long, long time. Not all economists can bring themselves to admit this.

I suspect that America’s fabulous growth in productivity is another illustration of the disconnect between economic measures and human experience. It’s been attributed to better education and technological advances, which would be nice to believe in. But a revealing 2001 study by McKinsey also credited America’s productivity growth to “managerial innovations” and cited Wal-Mart as a model performer, meaning that we are also looking at fiendish schemes to extract more work for less pay. Yes, you can generate more output per apparent hour of work by falsifying time records, speeding up assembly lines, doubling workloads, and cutting back on breaks. Productivity may look good from the top, but at the middle and the bottom it can feel a lot like pain.

When employees are squeezed hard enough, then you have the possibility of a genuine recession as technically defined. People buy less, so growth declines, to the point where even the economic over-class has to sit up and take notice. This is happening in Japan, where a recent Wall Street Journal headline announces: “Growing Reliance on Temps Holds Back Japan’s Rebound: Firms Increasingly Add Part-Time Workers; Spending Power Lags.” The U.S., where consumer spending accounts for 70 percent of the economy compared to a little more than half in Japan, is even more vulnerable to a downturn in personal consumption.

What is this fixation on growth anyway? As a general rule of biological survival, any creature or entity that depends on perpetual growth is well worth avoiding, lest you be eaten alive. As Bill McKibben argues in his book Deep Economy, the “cult of growth” has led to global warming, ghastly levels of pollution, and diminishing resources. Tumors grow, at least until they kill their hosts; economies ought to be sustainable.

Apocalypse aside, the mantra of growth has deceived us for far too long. What it translates into is: Don’t worry about the relative size of your slice, just concentrate on growing the pie! Now, with a recession threatening even more suffering for those who are already struggling, may be the perfect time to get out the pie-cutter again. Too bad that the one leading Democratic candidate who promises to do so now appears to be on the ropes.

Comments

[blue8064]

There is a particular measure that I believe is needed to help the poor, but that does not seem to be on any politician's agenda as far as I can tell. Although it probably will not solve all problems, it would be a good place to start. It certainly ought to have higher priority than further tax cuts for the rich such as repealing the estate tax. If we are indeed in a recession, this measure would be even more important now.

Specifically, the DEPENDENCY EXEMPTION needs to be converted from a tax deduction into a 100%-REFUNDABLE TAX CREDIT, and the CHILD TAX CREDIT needs to be made 100%-REFUNDABLE. Indeed, all tax breaks for children and dependents need to be made 100% refundable tax credits. The standard deduction might also be converted into a 100%-refundable tax credit. This should be done at both federal and state levels.

That way, even those who earn too little income to owe any income tax would still get the full benefits of these tax breaks. Since these middle class tax breaks already exist, the only cost would be the incremental cost of extending them to the lowest incomes. Such merely incremental costs ought to be affordable. There should also be less risk of unintended consequences, since we already have some idea how these tax-breaks function in real life.

Unlike conventional means-tested welfare, child and dependent refundable tax credits would help the working poor, as well as those not working. Additional earned income would not mean a dollar for dollar reduction in benefits. The refundable tax credits would offset the Social Security tax, as well as the income tax. This is extremely important to the working poor, since most low-income workers owe more Social Security tax than income tax.

More generally, the size of child and dependent refundable tax credits would depend exclusively on the number of children and dependents one has a right to claim. One's income and/or assets would be completely irrelevant, as would one's marital status. Therefore, unlike conventional means-tested welfare, although they would be available to those not working, they would not punish work, savings, or marriage.

In other words, the incentives for both the poor and the middle class would be very much the same. Since there would be no means-testing, extending existing middle-class tax breaks to the poor ought to avoid the most perverse incentives of means-tested welfare, which tends to punish work, savings, and/or marriage. This is the main advantage to this approach for a safety net for the poor.

Child and dependent refundable tax credits could be an alternative or a supplement to raising the minimum wage. Unlike a higher minimum wage, employers would not bear the entire cost. Therefore, there should not be the problem of employers refusing to hire the so-called "low-skilled" people, which is the main reason given for opposing a higher minimum wage.

Yet low wage employees would still get more take home pay, which is the main purpose of a higher minimum wage. Since there are limits to raising the minimum wage, given the risk of employers refusing to hire the so-called "low-skilled" workers, supplementing low-wages with negative income taxes will clearly still be necessary, even with a higher minimum wage.

I should mention that low-wage jobs are not necessarily as unskilled as we often seem to think. Specifically, I have noticed that we often seem to forget that dealing with customers is a skill. Even many low-wage jobs involve dealing with customers. When one considers that some customers will be nasty, and that dissatisfied customers may stop doing business with the company, and possibly spread the word to others, it seems to me to be awfully risky to take for granted the skill of dealing with customers.

Moreover, skill deficiencies here cannot always easily be remedied by more education and training. Most standard education and job training do practically nothing about deficiencies in social intelligence. This is especially a problem for high-functioning autistics. They are often intelligent enough to get advanced degrees, but lack the social intelligence to do most jobs requiring those advanced degrees. Even worse, since their chief skill deficiencies are things that most people seem to learn without being taught, they are often completely unaware of what they do not know.

Although the Earned Income Tax Credit provides some benefits as far as it goes, it is ABSOLUTELY NOT a substitute for my proposal to convert the dependency exemption from a tax deduction into a 100%-refundable tax credit, and make the child tax credit 100%-refundable. The Earned Income Tax Credit is available only to those who are working; it provides NOTHING AT ALL to those who are not working.

However, my proposal to convert the dependency exemption from a tax deduction into a 100%-refundable tax credit, and make the child tax credit 100%-refundable would provide some minimal income even to those who are not working. This difference is critical. In today's harsh job market, fundamental human rights require that some minimal income be available even to those who are not working. This is even more true if the economy is indeed in a recession.

To counter tendencies to blame the victim, it is time to insist that, just as accused criminals are innocent until proven guilty in the eyes of the civil law, poor people ought to be presumed to be deserving, until proven otherwise. In addition, even poor people who can be proven to be at fault still ought to have any rights that a convicted criminal would have. This is especially true of rights that even convicted cold-blooded murderers have. However, even during recessions, the unemployed are still presumed to be personally at fault without any proof of guilt. That ought to be totally unacceptable, and ought to be challenged in court.

I find it impossible to see how welfare for the poor could be an unaffordable tax burden as long as we are providing for convicted murderers at taxpayer expense, no questions asked. Specifically, if convicted murderers are provided food and shelter at taxpayer expense in their jail cells, how can one object to providing taxpayer support to others in need? This includes illegal immigrants as well. Surely, cold-blooded murder is a much greater evil than laziness or immigrating illegally.

Similarly, as long as there are questions about the appropriateness of executing convicted murderers, I find it impossible to see how it could be just to have capital punishment for laziness or illegal immigration, especially if guilt has not been proven. Deliberately setting limits on access to food or other basic necessities of life is the practical equivalent of capital punishment. Even if capital punishment is appropriate for cold-blooded murder, it would still seem to be unjust to have it for laziness or illegal immigration.

Therefore, time limits on eligibility for both welfare and unemployment compensation ought to be challenged in court on the grounds that they violate the principle of innocent until proven guilty, and the penalties (capital punishment by starvation or lack of some other basic necessity) are totally disproportionate to any wrong done. This means that the deliberate cutoff of welfare or unemployment compensation to those who need them ought to be considered cruel and unusual punishment and therefore unconstitutional.

Speaking of illegal immigration, we need to question the moral justice of our immigration laws. Offhand, it would seem that any man-made law that attempts to deny basic human rights to any human being for any reason would be contrary to God's commandments. In that case, attempting to enforce such a law would be morally evil; it would have also been morally evil to pass such a law in the first place. As far as respect for the rule of law is concerned, God's commandments ALWAYS come first.

A genuine lack of sufficient resources to provide for the poor or illegal immigrants would, by definition, necessarily mean insufficient resources to provide for convicted murderers as well. This is not only a question of fairness. If jailed criminals have more right to the basic necessities of life than the poor, there is an incentive for those in need to deliberately commit crimes specifically in order to ACTIVELY FORCE the taxpayers to pay the costs of supporting them in jail. The tax dollars that we spend on jail sentences for criminals prove that we as a nation CAN AFFORD to provide welfare to those who need it.

This means that in order to really abolish the welfare state, it will be absolutely necessary to have capital punishment for practically all crimes, not just the most serious crimes. There is simply no other way that those who deliberately commit crimes in order to actively force the taxpayers to pay the costs of supporting them in jail, as described above, can be stopped. Indeed, this is probably why most crimes seem to have had capital punishment for most of human history before the 20th century more often than not. In those days, society simply could not afford the costs of jailing someone for a long time, especially since doing so would encourage more people to commit crimes.

[Colin]

Greetings,

After having lived in Chicago for the past few years, I feel that I am ready to express how I feel about "dividing up the pie." I would like to give the poor, ignorant masses exactly nothing. That is right, "0". I wake up at 6 in the morning and go to work, and I will damned if I will give one penny to help those ignorant, lazy bastards. Go visit a public school in the city. I work there. The students listen to I-Pods and tell all their teachers to "f--- off." I don't have any sympathy anymore. They have a faulty culture, and they are low I.Q. They don't believe in hard work, or education, and they don't deserve health insurance, better schools, or anything. They deserve to wallow in their own lousy neighborhoods that they have created/destroyed. If we lived in less enlightened times, I would gather them up to go break rocks for a few years and learn a work ethic. Barbara and the rest of the enlightened should spend a little time living among those poor huddled masses. Maybe then they would figure out that most people are getting just what they deserve. Most people in the ghetto and on welfare are either a) lazy or b) studpid with no value of education. Now we are bringing in the ignorant masses from the south and we have created a huge underclass. I like living in gated communities, and I don't want my kids living among those who don't value education. I want to shelter them from unhealthy cultures. It is not about race; it is about work ethic, and family culture. Why should we split the pie? They will just buy drugs, etc. Look at the cases where they have built brand new highschools. The ghetto kids just do the same nonsense in a nicer building. Giving money to the poor is not the answer. How do you change someone's morals or values, you can't. The underclass will just continue to grow. Poor people aren't just good, intelligent people with no opportunity. They are uneducated (proud of it), usually violent and may be criminal. People writing in from Canada simply don't understand how deep it goes. I would be more than happy to take them on a tour of the beautiful, cultural city of Detroit anytime. Detroit is the epitome of a modern diverse city. Go visit and then write me back about the value of cultural diversity. Also, visit during the night. That is when the true charm of the city comes out. Just like Paris after dinner..ha ha. Communism failed, and no one wants to share. Are we all created equal? This is survival of the fittest. This is how human beings have lived for thousands of years. Life is not fair, and no, human beings are not kind animals. Grow up all of you, and face reality. Some will succeed and most will fail. It has always been like this throughout history. If you are smart and crafty, you will succeed. If you are lazy and stupid, you will grow old waiting for the government to give you handouts. I thank you for your time.

Colin

[barbsright]

Colin, you do have a point. There are people who can do well given the right options, but lets face it there are a lot of crooks out there too. Barbara speaks to hard working people, like me and my friends, who have very limited options despite solid educational and employment histories. The people who you deal with may be termed incorrigible. Perhaps it is time for you to get a new job.

[oldbogus]

We've not had “full employment”; the underemployment level has been between 8% and 9% for most of the W years. The gummint falsified the records as they also did the inflation rate to make things look rosy.

Growth of some kind is required to keep capitalism afloat. The entire system of capitalist propping up of "investors" is a Ponzi scheme just like the "bubbles" which we've seen. Eventually there must be an adjustment; the longer the adjustment is delayed, the more drastic it becomes.

[diane nilan]

I should have been an economist instead of a homelessness activist. I predicted the economic demise, specifically the foreclosure mess, years ago when I worked with families who became homeless thanks to predatory lenders.

What's going on in millions of homes across the country will equal or surpass the destruction of Katrina, though more subtle than the slimy floodwaters. By the time it happens those in charge will find out that our safety net wasn't really there in the first place and we will have a rise in homelessness far greater than even I can imagine. Who would want to be president of this country???!

[Sheila]

I agree with diane nilan. Whenever I see the nation's low unemployment levels cited, my jaw drops. Anybody who's been out here slogging knows that MOST people who lose their jobs don't register at the Unemployment Office anymore. That's because, for one convoluted reason or another, they don't QUALIFY for unemployment benefits. Most of America's jobless aren't even in the records.

[Tim Worstall]

"Economists have long believed that some sort of occult process would intervene and adjust wages upward as people worked harder and more efficiently."

Not an occult process, no. Economists tend to call the process "a market". As productivity rises a company can make higher profits by employing more workers. Thus they go and hire more. Other companies do the samething and thus wages rise as companies are competing with each other for that extra labour and those higher profits.
There's nothing occult about this, it's simply how the labour market works and it's well explained in the basic economic literature and textbooks.

The one fly in the ointment is that this relationship breaks down when productivity is growing faster than GDP itself. Companies find that the increase in productivity allows them to increase their production without having to hire new labour. Thus there's no competition for labour and no wage rises.
This is what has been happening over the past few years: productivity rising faster than GDP. However, here's the good news. Rises in productivity have slowed, to less than GDP rates, and so wages are on an uptick. As, indeed, over the past year or so they have been.
To repeat, there's nothing occult about this, it's a well known feature of the labour market.

[Osipov]

Colin, for your sake, I hope your world never crumbles . . . yours or your children's . . . There but for the grace of God go I.

[Anarcissie]

Barbara: '... What is this fixation on growth anyway? ....'

Because the present system allocates benefits in a highly unequal manner, more according to luck and power than anything else, something must be done to assuage or deflect the natural resentment and envy of those who get the smaller shares of the well-known pie. Otherwise, slacking, sabotage, or even rebellion may result.

Among the solutions are those which provide versions of "You'll get pie in the sky bye and bye." The religious version is known as "You'll get pie in the sky when you die," but there is also the secular version, usually called "Growth", which promises that those who submit and work hard will get something in the future sometime.

Apparently this sort of thing works, because instead of forming unions and cooperatives and otherwise taking care of their own business, the workers mostly keep worshiping and electing great leaders and keep believing in the mighty institutions they lead and, of course, keep on being disappointed and cheated by them.

Maybe humans are just wired that way, and it's tough luck. In any case, no president or other great leader is going to change it. We have to do it ourselves, or it's not going to happen.

[cookie]

Barbara - I first discovered your books when I picked up Nickeled and Dimed, a good read from a human interest perspective. I found your blog and forums about a year or so ago and have been following in “lurker mode.” However, I feel that I have to comment on your latest blog “Recession – Who Cares?”

You said

“According to a CNN poll, 57 percent of Americans thought we were already in a recession a month ago. Economists may complain that this is only because the public is ignorant of the technical – or at least the newspapers’ standard – definition of a recession, which specifies that there must be at least two consecutive quarters of negative growth in the GDP. But most of the public employs the more colloquial definition of a recession, which is hard times. If hard times have already fallen on a majority of Americans, then “recession” doesn’t seem to be a very useful term any more.”

As one of your commenters “Oldbogus” remarked, the government has been falsifying the figures for some time. This is widely known by most economists and also by many investment bankers. This has only belatedly come to John Q. Public’s dawning notice as the figures grow ever more patently ridiculous. There is a large industry that has developed that delivers more accurate data for commercial and academic use. However, some of that information is available to the general public. If anyone is interested in reading about this in more depth, I recommend www.shadowstats.com. This site requires a paid subscription to access real-time data and statistics, but there are a lot of explanatory articles posted on there for free.

Yes, we are in a recession – both in a technical sense and as people (accurately) perceive it. The Administration is actively channeling Groucho Marx “Who are you gonna believe? Me or your own lying eyes?” Although officially-released government figures still show a positive up tick in the GDP, actual data has been negative since the fourth quarter of 2004. For example, the officially-reported GDP is 2.84% for the third quarter of 2007, but using data calculated using pre-1983 government methodology shows that the fourth quarter GDP was at minus 2.35%. Inflation officially reported at under 4% is actually around 12%. The Bureau of Labor Statistics employment figures are widely derided as absurdist fantasy. They are not based on actual job count but rather on hypothetical job growth. In December, the BLS reported a net gain (adjusted) of 18,000 jobs. All independent indicators showed the volume of help wanted advertising plunging and unemployment benefit application surging. The BLS also is required to report on the Household Survey – which goes out and actually counts the households with jobs. Let me quote directly from their official website:

The number of unemployed persons increased by 474,000 to 7.7 million in
December and the unemployment rate rose by 0.3 percentage point to 5.0 percent. A year earlier, the number of unemployed persons was 6.8 million, and the jobless rate was 4.4 percent.

Has anyone been reading the news lately about the staggering layoffs from the troubled financial industry? Fear not!! The official government figures report a net gain of 17,000 jobs in the financial industry in December.

I guess this posting makes me appear some kind of anal statistics and financial geek. Until six months ago, I never ever paid attention to financial news. It bored me beyond silly. I stuck 10% of my income in a 401K and a few hundred dollars now and then in a 2.5% savings account and just forgot about it, as I had for years. My job makes me move around a lot. I throw a lot of my old receipts into boxes and forget about it. However, my job regularly takes me overseas. And I have noticed how prices doubled or more in dollar terms in the past year or two, once I looked over my old receipts before throwing them out. How did this happen? I started to read up on this sort of thing. I turned off the reality shows and Home Shopping Network, quit reading National Enquirer and started paying attention to MSNBC and Bloomberg. What I have seen scares me.

I am just a working shmuck. I don’t have millions in the stock market. I am not a day trader but I am now a regular reader of the financial news sites because I think of them as straws in the wind. They say a vicious hurricane is brewing and the breeze has just started to freshen. The present recession is going to deepen sharply, we will soon see the advent of hyperinflation as the government tries to dig out from under $50 trillion worth of debt and a steeper depression than the 1930’s may be on the table.

Regards

[Larry In Lethbridge]

I think Americans need to adjust the level of consumerism down a bit and stop being so bloody greedy.

Looks good on you that your currency is in peso status and is being driven further down the tubes. Ha Ha

Serves you all right for electing such a wise prez like Shrub Bush twice !!!!

And you thought everyone looked up to Americans ?

[TLFoster]

When the quality of jobs for the middle class are drastically lowered to the point that having a degree can eliminate you from the potential job pool, when corporate America is so concerned about the bottom line that it continues to out source as many jobs as possible, and as the government continues to deny the existence of a problem because corporate profits, in the short-term, continue to rise, then how can the American public sustain its spending on goods and services? The answer is, "It can't!" Wake up folks! Corporate American, in particular the over-paid executives, are sacrificing the long-term good of the nation in order to get their fat separation packages and to Hell with the rest of the workforce.

[Colin]

Also, why have sympathy for people who are so stupid that they elected Bush twice? They elected a man who cut the taxes for the rich, and left the poor to suffer. Most Europeans think that Americans are morons, and probably 90% of them are. The poor are so ignorant they don't know how to vote. No matter who wins the Democratic ticket, the rednecks out in the wastelands (anywhere outside of major city) will vote for the Republicans. You just watch. It makes me sick. What kind of democracy do we have when 90% are functionally illiterate. There are maybe, and I mean maybe 10% that know what is going on, and most of them are too busy working, with no vacations. There is no hope. I am sorry about this. It is unfortunate, but America was always just about making more money, which is a primitive goal at best. We were doomed to fail basing a whole society on money. Sad, sad, sad. Many of us should move to Europe or Australia, or even Canada. It should be another 20 years until they follow us down the toilet. Diversity of culture is a nightmare. Jungles are diverse and dangerous. Where are the safest areas in America? Where are the areas with the best educated people? They aren't the most culturally diverse areas, I can tell you that. This is the fall of Rome. We are adrift, and things are only going to get worse in the future.....
Colin

[Angelia Sparrow]

The only thing I agree with Colin on is that it is Rome all over again.

Feckless leaders. Circuses (not even bread) for the masses. Disasterous foreign wars, which bring back new diseases (talk to some vets of Gulf I. Mom-the-Nurse has told me horror stories of her Guard friends)and invaders right to our doorstep.

The middle class is being increasingly squeezed by slave labor (immigrants and oursourcing) to the point where those I know who can are leaving.

All we're missing is a military coup and feudalism.

But I suspect those will be answered by Blackwater and the returning soldiers from Iraq (camps are in place and clergy are being trained to help get people into them) and corporate serfdom.

[J. X. Rodríguez]

colin: '... Where are the safest areas in America? Where are the areas with the best educated people? They aren't the most culturally diverse areas, I can tell you that. ...'

You are wrong about that. New York City is highly diverse, has a very high immigrant population, and has a low crime rate. Check the figures out for yourself -- they're public record.

[Tom]

The rich are deceiving themselves if they think they are going to escape this economic downturn "unscathed."
They have more to lose, so they will lose more. If it gets really bad, as some predict, all those big homes and so-called gated communities will become targets for the homeless masses of marauders that will roam like a large gang, preying upon any sign of wealth, to survive. These homeless gangs will be far larger than the police or the army (which are all made up of and actually come from of the working stiff class, so you can guess whose side they'll largely become when the revolution happens). We're in for bleak times folks, no matter who is elected (since they're all really working for corporate America, not us any more). Thanks go out to the Republicans and Democrats that fell in line with the Bush "plan." It looks like we're in for some real chaos in the coming year.

[roger]

colin:

"No matter who wins the Democratic ticket, the rednecks out in the wastelands (anywhere outside of major city) will vote for the Republicans."

" What kind of democracy do we have when 90% are functionally illiterate."

rednecks = illiterate republicans = knuckle dragging homophobes. it looks like you need to get out a little more. if we had 90% illiteracy in the wastelands, jefferson city and eugene and compton and bethelehem and branson and omaha would cease to function. its a good thing we rednecks have the literate, urban, sophisticated, erudite likes of you to salvage our sorry butts. otherwise we might make all manner of ill advised choices without your kind and wise advise. the murder rate in chicago. how is that working out for you.

[roger]

" But a revealing 2001 study by McKinsey also credited America’s productivity growth to “managerial innovations” and cited Wal-Mart as a model performer, meaning that we are also looking at fiendish schemes to extract more work for less pay. "

yes yes more fiendish schemes. and you get to revile walmart as a bonus. innovations might also include increased security for the prevention of employee and customer theft, decreased shipping and materials costs, on site employee counseling for employee drug addiction and mental illness, improved product selection. of course none of these considerations are nearly as salacious as walmart working old women seven or eight of nine hours without a smoke break and then docking their pay when they collapse. your acrimony toward business is astonishing.

[roger]

see this is what im saying. its a good thing we rednecks have you pedagogues to guide us along. this from the wasteland of tyler, texas:

http://www.tylerpaper.com/apps/pbcs.dll/article?AID=2008801110310

" When asked how eating a hamburger compared to cannibalism, Friedrich said all meat is from a corpse. "

[Barbara E]

Goldman Sachs says we are probably already in a recession: http://money.cnn.com/2008/01/09/news/economy/recession/?postversion=2008010918

[Anarcissie]

We could be well into a combination of recession and inflation. As cookie pointed out (thanks for the link, by the way!) the Federal government has found it advantageous to cook important figures like the CPI. If, instead of using dollars, you plot various dollar-denominated indexes like the Dow or S&P 500 against an important internationally traded commodity, like gold, silver, copper, platinum, crude oil, natural gas and so forth, you get a downward trajectory -- one that would be rather exciting in an airplane. Given that we are now in an election year, Bernanke is almost certain to try to avoid a crash by dropping interest rates, which is likely to intensify inflation and yet may not have much effect on the equities markets and real estate because of the large component of fiction in their evaluation. It is hard to tell because it is hard to get reliable information. Generally, when things are out of balance, putting off the correction makes the correction all the worse when it finally arrives.

People have made fun of the gold bugs for many years, but the gold bugs may have the last laugh.

[Kay Dennison]

Bottom line: The rich are getting richer and the middle class is shrinking. It's time to throw out the bums who have sold their souls to the corporations.

[Anarcissie]

But then what bums are you going to replace them with?

[Brian]

Everything on the Recession article is rightly correct so I wanted to focus on another aspect "accountabilility".
Absolutely no-one has even been charged of anything in the subprime debacle, the gross malfeasance and fraud involved in that kind of mortgage underwriting, the clever packaging scheme of raising junk mortgages totally lacking in any due diligence to the triple AAA bond status of U.S. Treasury bonds, the shipping off-shore to European and Asian banks of part of the risk based on these ratings, as well as to ambitious money market and pension funds thinking they could benifit with the big boys. The entire thing was a multi-layered fraud scheme as clear as broad sunlight in a cloudless sky, yet the SEC, the fed, the treasury, the Bush administration have done virtually nothing to fix accountability on the schemers who put this together. Further, they were paid huge multi-million dollar bonuses, some tens of millions, a few hundreds of millions, as they were figuratively "sacked" from the big banks and brokerages suddenly losing money on all the funny paper. Once again, corporate board rooms were immune and not held accountable by anybody. Only now is New York State and a Cleveland starting to utilize their legal and regulatory obligations in the manner. No-one is even talking about how this has sharply depressed the stock market right when working people were starting to put their retirement money back into the stock market in their 401k's and IRA's, and this in an age of eliminated pensions from their employers and a limited time to grow the money necessary to a semi-dignified retirement. So you had people fraudulantly and irresponsibly fill out mortgage applications to originators who winked and looke the other way to grow their businesses and bonuses. Then you had the bond rating agencies wink at the brokerages and banks who had them value this "paper" as perfect AAA with no more risk than a U.S. Treasury as they were paid by the banks and brokerages, who then sold it on the open market as great profitably low to riskless stuff so they could get more money to leverage the carry trade borrowing from the Japanese at 1% and then rolling that cheap money into US Treasuries paying 4.5%. Then to further their profits they "invented" whole new legions of leverage and risk management paper, swaps, default loans, cross holdings,etc etc from which they also acquired additional issuing and management fees. So they created fraudulant worthless financial instruments to levarage a Treasury and whole new industry of yet even more creative instruments till the cockroaches started coming out of the woodwork. When the first stories broke of a breakdown in the scheme they denied it, then said it was only a little thing, then suddenly started writing down first small, then large losses and said that was it. Then suddenly they admitted to even larger losses, systemic losses, possible bankruptcy just weeks after promising they would never go bankrupt. They sacked a few CEO's, started the long process of coming clean and cleaning up their balance sheets by posting losses, and still it goes on. One brokerage fired the CEO only to make him still a top manager with an 8 figure salary. This is what has been going on at the top while people on the lower end worry about a recession. If there is a recession, it won't affect the big banks and brokerages that much as they have already written puts and hedges against one and stand to even make money with these bets. And you can bet they will give huge bonuses once more to their top earners and all their managers, so for them very little has changed except a few have lost face or jumped to the next fast moving ship. There is just no Accountability. Yet let a poor man steal a carton of milk from an all night store and he will surely be handcuffed and hauled off to jail. A democracy doesn't do this to its people.

[wafranklin]

This government LIES, and many in this blog comments do not care. Unemployment statistics are lies, every syllable spoken or written are lies.

Unemployment, now perhaps nominally 5%, leaves out the ones who gave up looking (say 3-4 million), the war machine (3-4 million) and incarcerated (perhaps 2 million). That would make unemployment now as much as 15-18% of work age citizens. The CPI leaves out all the stuff which is skyrocketing, like gasoline.

I am tired of being the least bit nice to you folks who brought us this lying, scheming, corrupt, criminal regime which aims to do no less than absolutely demolish our civil rights. No you worry about crap like abortion and distracters fed to you by the right wing press controlled by the corporations which also put in Bush. We have really been a recession for a while. And why are folks more desperate for help, well dummies, it is because the average wage has not increased in 30 years, in fact decreased, while the cost of living continued to climb.

It is time for outright class warfare, in the street, constant and unrelenting. They will throw the police and troops are us, showing just what they have been preparing for. Which side are you on as the old union song goes.