The American People Are Angry- Sanders

Republicans extend the Great Recession

A group of financial capitalists, represented primarily, but not exclusively by the Republican Party, looted  the banking system  in 2008/2009 and caused the Great Recession costing millions of people their jobs and their homes.  Now the same people are set upon doing it all again.  The all cuts budget imposed by the Republicans will make the recession longer and worse than it needs to be.

Meanwhile, Back in the Real Economy N.Y. Times. Opinion. July 30,2011.

The economy is in trouble, and Washington — fixated on budget slashing at a time when the economy needs more spending — seems determined to make matters worse.

…Indeed, they are bound to worsen if Congress approves deep near-term spending cuts as part of a debt-limit deal while letting relief and recovery measures expire.

We will leave it to the historians to figure out how both political parties, and many Americans, became convinced that austerity is the road to recovery. History provides evidence that it is not, including the premature budget tightening of 1937 that reignited the Depression.

For now, it is clear that the traditional drivers of recovery — consumer spending and residential real estate — have failed to rebound, with the latest report showing consumers extremely cautious about spending on anything and the housing market stuck at its post-bubble lows.

Weak demand leads to slow growth, and slow growth leads to high and rising unemployment, which then reinforces weak demand and slow growth, and so on, in a vicious cycle from which the economy, obviously, has found no escape.

The Lesser Depression

By PAUL KRUGMAN. NY Times.

These are interesting times — and I mean that in the worst way. Right now we’re looking at not one but two looming crises, either of which could produce a global disaster. In the United States, right-wing fanatics in Congress may block a necessary rise in the debt ceiling, potentially wreaking havoc in world financial markets. Meanwhile, if the plan just agreed to by European heads of state fails to calm markets, we could see falling dominoes all across southern Europe — which would also wreak havoc in world financial markets.

We can only hope that the politicians huddled in Washington and Brussels succeed in averting these threats. But here’s the thing: Even if we manage to avoid immediate catastrophe, the deals being struck on both sides of the Atlantic are almost guaranteed to make the broader economic slump worse.

In fact, policy makers seem determined to perpetuate what I’ve taken to calling the Lesser Depression, the prolonged era of high unemployment that began with the Great Recession of 2007-2009 and continues to this day, more than two years after the recession supposedly ended.

Let’s talk for a moment about why our economies are (still) so depressed.

Who will pay for the Great Recession ? You and I

 Robert L. Borosage

President, Institute for America's Future

Who Gets Hit With the Tab for the Great Recession?

Wall Street excess and conservative deregulation (by law and lassitude) blew up the economy, causing the Great Recession. The bankers were bailed out. Working families took the hit from the downturn -- in lost jobs, lost savings, weakened pensions, declining home values, pay and benefit cuts.

The recession blew a large hole in public finances at every level. Tax revenues plummeted. Expenses -- from unemployment insurance to food stamps to public health -- rose. Public pension funds suffered investment losses. States and localities face severe deficits with a mandate to balance their budgets. At the federal level, the recession doubled the national debt, and drove deficits up to 10% of GDP (much of this the result of plummeting tax receipts).

Governor Scott Walker and a gaggle of Republican governors assault the right of workers to bargain collectively in states across the country. Teachers get laid off as school budgets are cut across the country. Colleges hike tuitions and shut down course offerings. Public workers face furloughs, layoff, cuts in health care and pension benefits. Congress is tied in knots about how much and what to cut. And Republican and bipartisan pressure to go after Social Security and Medicare is escalating.

We should be very clear about what unites these stories, for these struggles will say much about what kind of America emerges from the rubble of the Great Recession.

Who gets stuck with the bill for the Great Recession?

From the tea party Republican caucus to the Obama White House, leaders of both parties have moved from worrying about the recovery to worrying about how to pay for the costs of the Great Recession. With 25 million Americans in need of full time work, this is bipartisan folly. With Japan melting down, the Middle East erupting, energy and food prices soaring, housing prices and starts sinking, states and localities enacting brutal budget cuts, it is callously irresponsible, risking a double dip recession that will explode public deficits.

The Safety Net and the Great Recession

The safety net and the recession 
By Lawrence Mishel 
October 8, 2009

"Some claim somehow that the recovery package isn't working by simply pointing to continued job losses. I consider this peculiar, especially from those who favored the policies that actually caused the recession to begin with," EPI President Lawrence Mishel said in testimony to Congress on October 8, where he proposed a five-part strategy for creating and preserving jobs, and stressed that the causes of today’s high unemployment pre-date President Obama.

"I consider President Obama to be in the situation of having inherited a burning apartment building. He proceeded to gather all the available fire trucks and douse the fires in half the floors. Yet his critics complain that the other floors are still on fire. Even worse, those critics are the ones who started the fire. And they want to withdraw the fire trucks."

New taxes needed for firefighting and schools

Even though residents in the foothills turned out to denounce health care reform, today they are benefitting from the work of a socialist project, state tax funded firefighters and equipment. Governor, tea baggers, are you listening? The Sacramento Bee on Sunday has an editorial on the positive aspects of the state economy. A problem with this analysis is that only part of the California and U.S. economy are showing signs of improving – the corporate finance sector. There is no evidence of a growth in jobs. So, we probably are headed for another job less recovery in which the well off will profit. What caused this economic crisis ? Major banks and corporations looted the economy creating an international meltdown. Now, they have been rewarded with bail out money. We have cuts in parks, nurses, libraries, .School children did not create this crisis. Foster care children did not create this crisis.

Meanwhile the anti tax crowd roars, - No 
New Taxes. I hope that they do not live in a fire zone.
This is not just another business cycle, this Great Recession is different. Read, “No Return to Normal”, by James Galbraith in the Washington Monthly.
Or his new book, The Predator State: How Conservatives abandoned the Free Market and Why Liberals Should Too.

Unemployment picture

Recovery Act saving jobs, but long-term unemployment highest in 70 years
August 7, 9:08am
The July unemployment report released this morning by the Bureau of Labor Statistics detailed the 19th month of the recession, showing that 247,000 more jobs were lost in July but unemployment was little changed, declining 0.1 percentage points to 9.4% as 422,000 people dropped out of the labor force. The number of workers who have been unemployed for over six months increased by 584,000 to 5 million, so that now over one-third of this country's 14.5 million unemployed workers have been unemployed for over half a year.

The pain in the real economy is clearly deepening, but it is doing so much more slowly than during the winter months, when the economy regularly shed around 700,000 jobs. The American Recovery and Reinvestment Act is now providing a significant boost, most likely adding 3 percentage points to GDP growth in the second quarter, which likely created or saved around 720,000 jobs. The job losses in July would likely have been nearly double without the impact of the recovery act.

"The recovery act is now creating hundreds of thousands of jobs but you can’t put out a house fire with one hose. Additional policy interventions by Congress are desperately needed to provide relief and generate jobs, including an immediate extension of federal unemployment benefits for the long-term unemployed," said economist Heidi Shierholz. "Weekly earnings didn't grow over the last six months, so we can see it will be difficult to generate growing consumption and a robust recovery," said EPI president Lawrence Mishel.
From Economic Policy Institute.

The Great Recession to last years: Krugman

Krugman


SEOUL, South Korea (AP) -- The United States may emerge from recession as early as this summer, though further job losses mean a "depressed economy" could last as long as five years, Nobel Prize-winning economist Paul Krugman said Tuesday.
"I think it's quite possible that industrial production in the United States and perhaps in the world as a whole will bottom out sometime in the next few months, that GDP growth in the United States will be positive in the second half of the year and maybe a little bit later than that in Europe," Krugman told a global financial conference in Seoul.
Krugman said that he would not be surprised if the U.S. recession, which began in December 2007, ended in August or September this year. But job losses were likely to continue into 2011, meaning "the period of a depressed economy" could last until 2013 or 2014, he said.
Krugman, who teaches at Princeton University, won the Nobel Memorial Prize in Economic Sciences last year for his analysis of how economies of scale can affect international trade patterns. He also writes columns for The New York Times.
The U.S. economy, the world's largest, contracted a worse-than-expected 6.1 percent on an annualized basis in the first quarter. Americans increased purchases of cars, furniture and appliances, but businesses cut back spending and exports had their biggest drop in 40 years. The U.S. unemployment rate hit 8.9 percent in April and many economists expect it to reach 10 percent by year's end.
Krugman said that while economic indicators from around the world are improving, they suggest that the pace of economic decline has only slowed.
"I share the optimism that the worst of this may be over," he said, also noting a stabilization in financial markets. "What's really hard, however, is to say when does this go beyond stabilization to an actual recovery."

The Great Recession

The Great Recession
by Matthew Rothschild

January 2009 Issue

The economists were the second to last ones to figure out we're in a
recession. The last one was George Bush himself, but he doesn't care.
He's been phoning in his job for months now anyway.

But people who were losing their jobs, people who were losing their
homes, and all those who've seen their retirement accounts lose 40
percent of their value—they all know we've been in a recession for
some time.

And it's not just any recession.

This one's a whopper. It's likely to be the roughest recession in
forty years, at least. And it's going to last a lot longer than its
predecessors.

This is what happens when the idolatry of the free market prevails
over common sense, when greed skims over the lessons of 1929.

We wouldn't be in the Great Recession today if Bill Clinton and Robert
Rubin hadn't deregulated the financial industry.

We wouldn't be in the Great Recession today if Alan Greenspan and Ben
Bernanke and Henry Paulson hadn't let the housing bubble expand to the
popping point.

We wouldn't be in the Great Recession today if the Bush Administration
had bailed out homeowners instead of just bankers.
But here we are, right smack in the middle of the Great Recession, and
now it's on Barack Obama's plate.

At least he's talking some sense. Since winning the Presidency, Obama
has been upfront with the American people about the need to engage in
massive deficit spending in 2009 and 2010 to rescue the economy. This
is a basic Keynesian prescription, although for many it is a hard
medicine to swallow, especially after the debt Bush has run up in
Iraq. But swallow we must.

Obama may have to spend between $500 billion and $1 trillion to
forestall double-digit unemployment. What he spends that money on is
almost as vital as the aggregate amount. Fortunately, he is wisely
talking about repairing our infrastructure, sharing money with state
governments, and initiating a green jobs program. These expenditures
will give us the most bang for the buck, and they will lay the
foundation for long-term growth that is not so ruinous to our
environment.

Unfortunately, his economic appointments leave a lot to be desired. He
could have picked someone like Joseph Stiglitz or James Galbraith or
Dean Baker to head the Treasury and the National Economic Council. All
have been critics of corporate globalization. All are strong
proponents of reregulating financial institutions and reflating the
economy.

Instead, he chose Lawrence Summers to head the council and Timothy
Geithner to be Treasury Secretary. Both are experienced at ramming
free market policies down the throats of other nations. Both were
disciples of Robert Rubin when he began to deregulate the financial
industry as Clinton's Treasury Secretary in the late 1990s.

Summers served as chief economist at the World Bank from 1991 to 1993,
when it was foisting structural adjustment policies on developing
nations. And when he moved over to Treasury, he got Stiglitz fired
from the World Bank after the Nobel Prize-winner criticized such
policies.

"Spread the truth—the laws of economics are like the laws of
engineering," he said while at the World Bank. "One set of laws works
everywhere."
You can find this quote
in Naomi Klein's Shock Doctrine: The Rise of Disaster Capitalism, a
must-read. She points out how Summers ran roughshod over Russia's
parliament to impose economic shock therapy there in 1993, when he had
moved over to Treasury.

"The momentum for Russian reform must be reinvigorated and
intensified," Summers said, after the parliament had refused to go
along. Shortly after that comment, the International Monetary Fund
threatened to withhold a $1.5 billion loan. So Boris Yeltsin dissolved
and attacked parliament, abolished the constitution, and bowed to the
IMF's and Summers's demands. Summers kept the heat on, demanding that
"privatization, stabilization, and liberalization" must all be
completed post-haste, Klein reports.
The results were catastrophic. "Russia's 'economic reforms' can claim
credit for the impoverishment of seventy-two million people in only
eight years," Klein writes.

Summers also helped knock down Glass-Steagall, the wall erected in the
New Deal to keep commercial banks and investment houses separate.

Then as Treasury Secretary, Summers approved the deregulation of the
financial industry even further. He and Clinton signed off on the
Commodity Futures Modernization Act that removed oversight from the
credit default swaps and derivatives trading that have so imperiled
our economy.

Summers was Rubin's disciple. And Timothy Geithner is Summers's disciple.

Geithner got his start working for Kissinger and Associates, which
should be a disqualification in and of itself. So, too, should be
working for the IMF for Bush Jr., which Geithner did from 2001 to
2003.

In between, Geithner worked in the Treasury Department under Bush I
and Clinton, focusing on international economic affairs. In the late
1990s, he was responsible for overseeing the Asian crisis.

As Klein notes, the Treasury Department "was in no rush to stop the
pain." In fact, it used the crisis in Indonesia, South Korea, and
Thailand to force them to abandon policies aimed at self-sufficiency
and to impose policies that would open those economies to U.S.
corporations and banks. Never mind that the dictates of the Treasury
Department and IMF inflicted enormous pain. "In South Korea, 300,000
workers were fired every month," Klein writes. "In 1996, 63.7 percent
of South Koreans identified as middle class; by 1999 that number was
down to 38.4 percent."

Since 2003, Geithner has been president of the Federal Reserve Bank of
New York. He testified to Congress in March that he couldn't explain
what precipitated the financial instability we're in right now.

"What produced this is a very complicated mix of factors," he said. "I
don't think anybody understands it yet."

That's either a cop-out or a confession. Maybe he should have just
taken the Fifth. Because he's also been intimately involved with the
criminally negligent bank bailouts.

"His easy terms protected shareholders and executives but demanded
almost nothing from the failing banks for the public," William Greider
noted in The Nation. "Worst of all, the deals did not work. They have
failed to stabilize much of anything and are still putting Wall Street
preservation ahead of the national interest. Where is the evidence
that we can expect a different approach if Geithner is in charge? Or
even that he understands the true dimensions of this crisis?"

Another disturbing appointment by Obama was Peter Orszag to head up
the Office of Management and Budget. When he was on the campaign
trail, Obama accused John McCain of planning to cut Social Security
benefits.
Well, Orszag wants to do that, too.

In 2005, he co-wrote a paper called "Saving Social Security: The
Diamond-Orszag Plan." It calls for "a reduction in benefits, which
would apply to all workers age 59 and younger." The younger you are,
the more you'll get hurt.

"The reduction in benefits for a forty five-year-old average earner is
less than 1 percent," his plan says. "For a thirty-five-year-old, less
than 5 percent; and for a twenty-five-year-old, less than 9 percent."

Social Security is not in crisis. And there's no reason to be hacking
away at the safety net—especially if you're a Democrat.

Now is the time for a new New Deal, not for ripping up the old one.

At some level, Obama appears to understand that. But his economic
team—that's another story.

—Matthew Rothschild