We're in a Recession Because the Rich Are Raking in an Absurd Portion of the Wealth

[proud2BlibKansan]

Wall Street's banditry was the proximate cause of the Great Recession, not its underlying cause. Even if the Street is better controlled in the future (and I have my doubts), the structural reason for the Great Recession still haunts America. That reason is America's surging inequality.

Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation's total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America's total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928—with 23.5 percent of the total.

Each of America's two biggest economic crashes occurred in the year immediately following these twin peaks—in 1929 and 2008. This is no mere coincidence. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don't have enough purchasing power to buy what the economy is capable of producing. America's median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class can boost its purchasing power is to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn't pay their bills, and banks couldn't collect.

China, Germany and Japan have surely contributed to the problem by failing to buy as much from us as we buy from them. But to believe that our continuing economic crisis stems mainly from the trade imbalance—we buy too much and save too little, while they do the reverse—is to miss the biggest imbalance of all. The problem isn't that typical Americans have spent beyond their means. It's that their means haven't kept up with what the growing economy could and should have been able to provide them.

more . . . http://www.alternet.org/economy/147469/we're_in_a_recession_because_the_rich_are_raking_in_an_absurd_portion_of_the_wealth/

[babylonsister]

1. And rethugs want to continue the trend by maintaining the

tax cuts for the rich.

[AnArmyVeteran]

62. Stupid right wingers believe the bottom 50% are lazy drug addicts.

I wonder if right wingers will ever realize the are voting against themselves and their country?

[bergie321]

92. Most of them

Don't realize they are part of the bottom 50%.

[Warpy]

2. They're always so surprised when it happens, too

They seem to feel they can choke off the demand side completely and sill have a thriving economy just on the basis of their own spending, only they don't tend to spend. They hoard.

I knew the first time I heard St. Ronnie campaign on supply side economics that this was going to happen. It was inevitable. I'm only slightly surprised they kept the whole thing going as long as they did, floated on an ocean of debt which is now largely uncollectable.

I sincerely doubt anything will be done to reverse this until things are truly desperate in this country, that we nose down into a full blown depression. We might be there now, but they're still managing to lie about it and disguise the worst of it with the help of a corrupt, corporate press.

They can't fool all the people all the time, though, and unless they do all the right things soon, we're in for some extremely tough times.

[MichiganVote]

3. yup.

[TreasonousBastard]

4. Oh god-- not more of this. The "rich" are in some respects responsible, but this...

misses the point.

Ultimately, economies are driven by consumer demand but that's not all of it. The private sector has to invest capital in inventing and supplying goods and services to those consumers, and our industries have been woefully slack about it.

'Twas once a time when a business would throw a pile of cash into a good idea and watch the sales grow. No more-- that's too risky and the rewards aren't great enough. Better to sit on the piles of cash from legacy products and use the cash to buy out competitors or trade Euros if you want to see those quarterly profits keep up with expectations.

Nothing new about this, btw, everyone's been complaining about this since the end of WWII when our steel industry refused to invest in new technologies while Europe and Japan had to rebuild their destroyed mills and built them with the latest and greatest. We ceded consumer electronics, optics, and a whole bunch of other things to the Japanese because US companies refused to invest in the research for lower- to mid-end products.

And so it goes-- Bell Labs, Sarnoff Research Center, ITT Labs... all those great private research centers that gave us so much have become profit centers, if they still exist at all, and GE would much rather make jet engines than dishwashers.

All for the holy quarterly profit statement.

[Hannah Bell]

13. what crap. the top 1% of the country has more income than the bottom 50%.

we saw what they "invested" in for the last 10 years: bubbles & fraud.

[TreasonousBastard]

15. So what? Can you explain just how the Mars family, Bill Gates,or anyone else...

caused the disinvestment of major industries?

There's no question that wealth and income are critically unequal, but you have top show the actual causation. And don't forget that Investment in incubators and venture funds is almost entirely by "the rich."

[Hannah Bell]

18. of course i can. investment decisions & control of politics. duh.

you think it's just an accident that china produces most of the world's shoes & electronics?

who gives a damn whether rich people "invest" in "incubators" & "venture funds"? you seem to think incubators & venture funds are important. they're not.

[Dr.Phool]

88. We should just eat the fucking rich.

Probably get heartburn, but it would be worth it.

[JDPriestly]

23. The rich invested in risky financial instruments.

That is what caused the bubble and the crash. I certainly did not put any of my money into overpriced real estate or overhyped derivatives.

Wealthy people chased money. They had the money to invest and could have invested it in American manufacturing industries or products, but they chose not to because they could not make the outrageously huge sums of money they wanted to make by investing in real American factories, by paying American wages to prospective American consumers.

The top 1% could have bet their money on American workers and consumers. They didn't. So, yes, the recession is the fault of the disparity between the haves and the have-nots in America and that is the fault of the rich and the Bush tax cuts as well as other aspects of our tax code.

[Yupster]

37. Lots of middle class and poor

also put their money into overpriced real estate.

Lots of them are being foreclosed right now.

[JDPriestly]

66. But the amount of money that a middle class person (THE POOR DO NOT

HAVE MONEY TO INVEST BY DEFINITION) can invest is very limited.

The damage one middle class person can do to our economy is small.

The damage one very wealthy person like Bernie Madoff or some of the people at Goldman Sachs and Morgan Stanley and other large investment companies to say nothing of hedge funds can do is devastating -- and they can do that damage because they control such a huge, huge portion of the wealth.

When so much of the money, of the wealth, is concentrated in such a small percentage of the population, it skews the markets. In fact, when wealth is distributed in such an inefficient way, the entire theory of intelligent markets becomes irrelevant. The Chicago theory of economics flies out the window.

The rich take bets from each other to keep a semblance of volume and liquidity going on the stock market and in other markets. Of course, when, in a monopoly game, one person finally owns all the properties and has all the money, the game ends. I used to be a very good monopoly player. I had a streak in which I won every game I played for years. I know precisely how this works.

[Yupster]

85. And the poor bought many a house

with no money down loans too.

I think greed shows no class distinction.

[JDPriestly]

112. The bankers are strictly responsible for those loans.

The poor cannot give themselves loans. If they are that poor they can't qualify for a loan. If a banker gave a loan to someone who had no income or only a very low income, the banker should pay for the loss when the borrower defaults.

The only reason the banker gave that loan was to get a commission. The money for the commission came not from the person who borrowed the money, but rather from the bank that gave the loan. Poor people did not cause this. The bankers who were rich and gave such loans caused the problem. The poor do not cause recessions. They can't.

[robinlynne]

48. and taxes. the taxes the wealthy do not pay would have gone to porgrams which

help people and create jobs. and consumers. When money goes to the poor, that money is spent immediately and goes right back into the economy.

[lumberjack_jeff]

38. Yes, because there's no demand.

Instead of paying workers, they loaned them money.

There's no way out except that share of the economy back into the hands of consumers.

[Yupster]

17. self delete

x

[Overseas]

82. I agree. Those guys just haven't seen the data on the transfer of wealth

from the middle class to the top ten percent over the past few decades.

Trickle down has been more like Suck Up. Peddling the lies that if taxes are cut on the ultra rich, that will benefit the rest of us. The data clearly indicates otherwise.

Here's a link to the Nation's definitive article, Plutocracy Reborn, with great charts:

http://live.thenation.com/doc/20080630/extreme_inequality

[DissedByBush]

95. Can't have crazy people like the Google Guys

Pouring hundreds of millions of dollars into renewable energy startups.

No sireee! Take their money from them!

The postscript to the story is that one of those startups developed a cheap way to make solar cells in volume, only $1/watt.

They'll be manufactured and sold in Germany because the German government provides a much more friendly tax environment for the manufacture and sale of renewable energy products like solar.

Where's the problem here? The rich guys? Or the government?

[RaleighNCDUer]

19. And that is exactly the point.

The RICH can are only interested in making money, while the ECONOMY has to make things. The rich believe the stock market IS the economy, because they go to colleges where theorists crank out MBAs who are taught to look only at the quarterly bottom line.

The rich are looting the economy, and when this country goes belly up they will simply move their investments overseas because, when you get to nuts and bolts, the CEO of GE doesn't give a fuck about GE - the company, the labs, the factories - he only cares about the GE shares he owns.

EAT THE RICH!

[progressoid]

39. What good is inventing and supplying goods if none of us have cash to spend on those goods.

Right now, I have a house falling apart that I would love to spend money to fix. Same goes for my car. And my kid's teeth. And my teeth. And my computer. Hell, maybe even a vacation for the first time in a decade. The list goes on.

Even if GE made wonderful products that we want/need, what good would that do if the bulk of America can't afford to buy them?

[Carnage251]

44. Facepalm

[DeSwiss]

51. BS n/t

[EC]

54. No use inventing new products if there is no demand

ever hear the saying "Neccessity is the mother of invention"? The supply side is no longer needed without demand. The private sector could invest in new product, inventions and creating of such...but it don't mean diddly if no one buys...DEMAND...

[readmoreoften]

91. Are you kidding? How about all the PUBLIC sources of corporate research? AKA the universities.

That's a nice cheap return: a few million in grants to use the public resources of public universities and a bunch of underpaid grad students and you've got profits baby!

[Lint Head]

5. Nothing has changed. We must demand real change now.

The financial system in this country has been and will continue to be directly responsible for the degradation and death of thousands of human beings because greed is more important than human life.

[rhett o rick]

7. Demand????? From who???? nm

[rhett o rick]

6. We know that. What can we do? nm

[PDJane]

8. Tax and spend.........

on job creation, infrastructure, social services and green jobs.

[rhett o rick]

31. Of course that is what should be done. My question is, what can we do?

We dont have any control on Congress and everyday the death grip of CorpAmerica gets tighter around our necks. We need a leader and a strategy.

[Donnachaidh]

34. yeah, and we were told the *leader* we voted for would get it done.

Of course, that assertion got tossed out as soon as the lobbyists started filing into the oval office for JOBS.

[bhikkhu]

97. You could stop buying stuff from other countries

Think about it - all the manufacturing that this country was built on has dried up and gone overseas, and we are surprised to find ourselves with no jobs and no money. If we stopped buying cheap crap from Asia and everywhere else and started demanding US made products (basically, it has to be in that order) there would be an immediate flurry of activity ramping up production and hiring to fill the new demand. Presto - jobs and money and US manufacturing again, and all we have to do is change our spending habits.

Needless to say, it isn't going to happen, but that is how simple it is.

[Greyhound]

102. I think that those of us that do this (buy American whenever possible) are a significant minority

and do make a small difference,the problem is that there are too many essential items that America simply does not make anymore and has no capacity to start.

This is the root of how fucked we are, and we're not making any preparations.

[bhikkhu]

109. We have the capacity, but not the will

...so to some extent when I look at our situation I don't see evil corporatists hoarding all the good stuff, or rotten government mismanaging things; I see a whole country of people who are where they are because of the choices they've made, and because of a lack of will to make different choices.

There is no fundamental flaw in America that renders us incapable of making the things we need, we just choose to go the cheap and easy way and let other countries make things for us, as we sit here idle and getting poorer, year by year...

[Greyhound]

117. I was referring to the physical destruction of the means to produce these

essentials. You're using one of those things right now, this society can no longer function without computers, lots of them, and we literally do not have any way to make one any place in the western hemisphere. That means we would (and eventually will) have to build those facilities from the ground up.

In itself this is not good, but not crippling. It becomes another matter when you look at the length of the list of essential things we cannot make here. Everything from shoes to all manner of electronics, lumber to socks, and on and on...

We need, right now, somewhere between $2T and $7T just to repair and return to usefulness the inadequate infrastructure we have now. Where are those "Socialist" democrats that we constantly hear about on this issue (One that I might add is essential to our national security)?

This "lack of will" is nothing but an excuse for not doping their jobs, and as any employer will tell you, if you let any employee get away with not doing their job, it will spread through your business like smallpox.

[rhett o rick]

113. There are a lot of things we can do but we need to be organized. we need a leader and

strategy.

[KakistocracyHater]

107. tax the billionaires & spend on creating an even bigger Middle Class than

the 1950s.

I totally agree with you, I love turning their words to truth.

[rhett o rick]

114. Explain how we are going to get those in power to tax themselves? nm

[KakistocracyHater]

118. explain to me how FDR did it

*

[rhett o rick]

119. Ok I will play. You are suggesting we do it the same as FDR? Well, guess we need another FDR.

Now how do you suppose we do that? I think the ruling class is way more powerful today and I dont think we have a chance. If you do, please enlighten us.

[aquart]

9. Yes. The rich are insufficiently taxed.

[rhett o rick]

32. And they control those that determine their tax. Quandary. nm

[TBF]

10. That and the insanity of constant war. nt

[w8liftinglady]

11. i agree-part of that is sending jobs overseas

[Hannah Bell]

12. kr

[Starry Messenger]

14. k & r

[GSLevel9]

16. AND...

they're sitting on the cash. If they SPEND some of that cash, everyone benefits.

[lib2DaBone]

20. The Multi National Corporations Build no factories...

.. they do no research, they provide no jobs and they pay no taxes.

They make inferior cheap junk in China.. and they are allowed to import it back into the Unites States tariff free.

The politicians are only to happy to look the other way and take the Corporate payoffs, while our country goes down the drain.

Nothing is going to change because the Bankers are in control and they own all the lawmakers.

Illegal wars, Pallets of cash missing in Iraq, Blackwater mercenaries that make $100K a year while Senior Citizens freeze to death in their apartments here at home.

The whole stinking mess is going to collapse under the weight of the corruption.. it has to. It's the only way things will change.


Build American... Buy American is the answer. I wouldn't hold my breath waiting for it to happen.

[AdHocSolver]

21. We are in a recession because a majority of the everyday goods we buy are imported.

The money we spend goes, not to other Americans, but to foreign workers and corporations while the American corporations take their cut.

Those Americans who don't have jobs don't pay income taxes, which is a major reason why governments in this country haven't enough money to provide public services.

When most of the everyday goods that we buy are manufactured in other countries and the money we spend flows out of the country, we go into debt because we have no income. When we buy goods made by other Americans, money circulates within the U.S., and we don't increase our debt.

It is erroneous to think that we can increase exports enough to pay off the debt incurred from such huge quantities of imports. What could the U.S. possibly manufacture for export in large enough quantities to balance our imports that countries such as China couldn't manufacture more cheaply in their own country?

It is the corporate cartel agreements such as NAFTA, the WTO, the IMF, and the World Bank, together with a tax code and a corporate oriented Federal Reserve that has made it possible for the rich to siphon off the wealth of this country by exporting jobs.

The Republican suggestion that cutting spending will solve the U.S. economic problem is comparable to the guy without a job saying he will save himself financially by not making mortgage payments, stop making car payments, and eliminating food from his budget.

The only solution to the U.S. economic problems and to end the recession/depression is to bring the manufacturing of everyday goods back to the U.S. which will stem the outflow of money and provide income to Americans.

[Hannah Bell]

24. a lot of the money goes to US corporations & US "investors."

Most "chinese" electronics exports, for example, are wholly foreign-owned.

[JDPriestly]

22. Americans buy so many cheap, shabby products from China and

points south- and eastward because that is all that so many of us can afford. We can't afford the high quality American products.

As for what we purchase from Germany, it's mostly the very wealthy who buy those really top-quality products. They are the only ones who can afford, for example, the really good quality steel knives and kitchen utensils that the Germans manufacture.

[laughingliberal]

25. K & R nt

[jmowreader]

26. We are in a recession because the rich are printing their own money

You may want to look at what junk bonds, collateralized debt obligations and credit default swaps are.

Okay, quick layout of how this shit works:

1. Write a $400,000 No Down mortgage to a plumbing contractor.
2. Securitize the mortgages (a no-down mortgage is actually two--a second to pay origination fees on the first, which means you take out a second mortgage on a house you don't even own) and re-tranche the securities about eight times.
3. Sell credit default swaps on all the securities. CDS have a premium flow, right? Tranche that too. (It's called a synthetic CDO.)
4. When the plumbing contractor goes out of business, watch all those derivatives go under.

Guess what, kids: you can only turn a $400,000 mortgage into four million dollars worth of risk and then have the $4 million go into default a few hundred times before the economy HAS to collapse.

[glitch]

110. Everybody, but especially the apologists, please read this ^^^^ nt

[jeanpalmer]

27. At a minimum

the government should acknowledge the inequality and try to determine why it exists. Seems like that would be a natural thing to do. But there doesn't seem to be any curiosity at all about this obvious problem.

[Kermitt Gribble]

76. The Govt is complicit. n/t

[Orsino]

28. We could survive even that...

...were they not also dismantling the means of production.

[Hannah Bell]

29. the second follows from the first.

[Orsino]

33. They are eating all the seed corn. n/t

[pampango]

30. US' gini-measure of income inequality-(40.8) is close to Mexico (46.1) and China (46.9), while

European countries are typically in the mid-20's (Denmark-24.7, Germany-28.3) and Canada is at 32.6.

The multiple of the average income of the top 10% in the US to the bottom 10% (15.9) is the highest among all developed countries. European and Canadian numbers are all below 10 (6-9). Japan has the lowest (4.5) perhaps one of the reasons that their society seems so stable despite decades of economic problems. Surprising that India was at 8.6. Not so surprising that China was at 21.6.

http://en.wikipedia.org/wiki/List_of_countries_by_income_equality

[felix_numinous]

35. They call it a recession

I call it highway robbery. Guess it depends on your perspective B-)

"Recession" is such a nice word, so soft you could be lulled back to sleep with it. But that is the idea isn't it?

[nashville_brook]

42. it really is that simple. the money is *somewhere* and these numbers show us where.

if we were to be honest about the bubble economies...that they don't count as economic upturns...then we've been in recession since 70s.

[felix_numinous]

56. Don't get me started on the 'missing trillions'

anyone who falls for that needs a brain transplant. That's when the robbery shifted into warp speed.

Shoot I think we have to start printing alternative currency, the other stuff is literally monopoly money.

[lonestarnot]

36. Anyone who hasn't noticed a class war raging has been under a fucking rock.

[indepat]

40. There is only so much real wealth created: the mal-distribution of wealth concomitant with the

plethora of ways the system is gamed by Wall Street et al leads to wholly predictable results which have provided the RW with their twice-in-a-lifetime wet dream. :P

[onehandle]

41. France. 1789. Madame Guillotine.

Sorry, I was practicing free association... What was the OP?

[colsohlibgal]

43. +++ 1,000, yes!

Class warfare full on, and they have willing helpers in non wealthy right wingers, tea party people, many who don't have a pot to pee in but still do what they can to support the agenda of the ruling class, the gilded set - who are screwing them royally every day of lives.

[INdemo]

45. The stolen election of 2000 and 2004 was no accident. It was I believe ,a planned

strategy. The Wall street class wanted a puppet so they could easily abandon any regulations that served as a barrier of reaching their goals of "stealing" from main street consumers.It was going so well for them they decided to steal another election in 2004..Had John Kerry taken his rightful place in the White House in 2004 we would have uncovered this economic crisis even then..Yes I am saying that I believe this had gone on for years and the banks and Wall Street were able to cover it up. When the Democrats took over they dumped all this on them.And yes months before the election it became obvious that Obama would win and the Democrats would pick up even more seats in Congress.
After all this mess Democrats should be in great shape for years...Not so.... they have turned around and are giving it back to the Repukes without a fight all because the corporate power group has found new friends with most Democrats in Congress.

[KansDem]

53. Let me ask you this...

I saw Michael Moore's "Capitalism: a Love Story" and couple of weekends ago and there was a segment on the bank/Wall Street bailout. It looked like the House stopped the bailout initially, but then Congress went "behind closed doors" with representatives from the troubled industries--even some "federal" officials as well. Then, when they emerged, Congress voted for the bailouts.

It was late and I might have missed something, but it looked like some deal was struck with Dem leaders in Congress and the Big Money Boys got their way, even if the American people called and told their Reps "NO!"

Did I get that right?

[blindpig]

46. Capitalism is a series of crisis

It is an inherent and unavoidable disorder of Capitalism, eventually fatal to Capitalism itself but pretty damn bad for people and the environment in the meantime.

[DirkGently]

47. Yep. America is becoming a wealth funnel. Hope they choke

on it.

Good post.

[DeSwiss]

49. K&R

It ain't robbery, it's a business cycle

Capitalism is about one thing: aggregating the surplus productive value of the public for private interests. As we have said, it is about creating state sanctioned "investments" for the workers who produce the real wealth. Things like home "ownership" and mortgages, or stock investments and funds to absorb their retirement savings. That crushing 30-year mortgage with two refis is an investment. So is that 401K melting like a snow cone at the beach.

As the people's wealth accumulates, it is steadily siphoned off by government and elite private forces. From time to time, it is openly plundered for their benefit by way of various bubbles, depressions or recessions and other forms of theft passed off as unavoidable acts of nature/god. These periodic raids and draw downs of the people's wealth are attributed to "business cycles." Past periodic raids and thefts are heralded as being proof of the rationale. "See folks, it comes and goes, so it's a cycle!" Economic raids and busts become "market adjustments."

Public blackmail and plundering through bailouts become "necessary rescue packages." Giveaways to corporations under the guise of public works and creating employment become "stimulus." The chief responsibility of economists is to name things in accordance with government and corporate interests. The function of the public is to acquire debt and maintain "consumer confidence." When the public staggers to its feet again and manages to carry more debt, buy more poker chips on credit to play again, it's called a recovery. They are back in the game.

~ http://www.joebageant.com/joe/2010/07/waltzing.html">Joe Bageant, "Waltzing at the Doomsday Ball"

[sui generis]

50. we're in a recession because the poor refuse to earn.

god I hate these fucking threads.

No, we're in a recession because we have an environment that gives unfair advantage to a class of earners. The earners themselves are not the problem, it's the ecology they flourish in that is.

[BEZERKO]

52. I was just thinking about the graduated

income tax or the progressive income tax, and Dan Quayle's 92 convention speech where he said "Why should the best people be punished?"

Anybody know where I can find the text of that speech?

[EC]

55. I love how they frame taxes as punishment when it's the rich

paying them, but just desserts for the rest of us to pay...

[Unruly]

57. Nonsense . . .

The subprime mortgage crisis caused the recession. Fannie & Freddie provided a lucrative secondary market for subprime mortgages. They bundled those mortgages into mortgage backed securities, and when housing prices stopped rising everything collapsed. And the rest, as they say is history.

[YOY]

59. Keep telling yourself that was the only cause.

Just keep doing it...

Never mind the defense budget...national debt...the continual lack of a single payer health care system...lack of increase in wages for the working man and woman...

Keep telling yourself it was all and only the subprime market...

[Unruly]

63. You're trapped in an echo chamber . . .

. . . let's hear how the cause & effect worked with those things . . . and how they all came together at once two years ago . . . and how the recession resulted from them. Sounds pretty, but that's about all.

[YOY]

64. Hardly. This has been going on for far longer than that.

Stagnant wages. Since Saint Ronnie only the top tier has grown significantly. Everyone else hasn't even kept up to inflation. My pop made 50K in 1980. I make only 30K more than that...with standard inflation I SHOULD be making over 140K. Everyone should be making almost 3x as much as they did 30 years ago. Yet we are not...and the cost of living has increased to standard inflation.

MIC. Since WWII in one form or another.

If you think the subprime market caused those and others, then the concept of time eludes you.

And as for echo chamber...you think I don't get out of DU? Off of the internet? You don't think that I read?

[Unruly]

65. Still haven't heard . . .

. . . your logic of cause & effect, if there is any.

[YOY]

67. I just did. And please...don't even pretend to be clever.

This has been brewing since the start of the cold war and added up to the point of financial meltdown. The slow and final eroding of the American economy and the American household's income to the point where it rests squarly on two or three industries. This ideology started in the cold war and was announced as mainstream in the 80s, then sharpened to a fine edge in the 90s and fell on it's own impractical blade in the last 10 years..

Wage stagnation from the 80s, the cold war defense budget continuing from the 1950s to the present even after the end of the cold war, the 80s to the present acceptance of Milton Friedman's econonomic model as a positive method to produce jobs...

Shit, I didn't even bring in NAFTA and the start of offshoring of American jobs as well as the complete shift in our GNP in the early 90s and 80s relatively..

Anyone who thinks the economy is in the state it is only because of the subprime market, truly is a deluding themselves. It was just the final straw to suck out all it could while it could.

There is a place for that kind of thinking. Supposedly, this isn't it.

[Unruly]

68. Name-calling . . .

. . . is no substitute for thinking and reasoning, here or anywhere else.

I'd still like to hear how you think we got into this mess. Making a list of problems with the economy, doesn't establish how they caused the recession we're in.

[YOY]

69. I just did about 3 times.

Not my fault you can't read or remember past the last 10 years. You'd understand the negative sentiment if you were talking to someone who couldn't remember past the last 2 years.

The shitstorm now is from 30 years of crap mostly from one party and all generally right wing bs.

[Unruly]

70. I see . . .

. . . you have nothing of substantive value to offer on the subject.

Have a nice day. :)

[YOY]

71. And you have? I only heard the subprime market as the single cause to the recession!

Have a special day yourself!

[proud2BlibKansan]

77. Pepperoni with extra cheese?

[YOY]

79. With a side of "it was all Fannie and Freddie" no doubt!

n/t

[liberation]

84. Little known fact:

The whole economic collapse was due to a black welfare queen missing a mortgage payment because she decided to detail her new cadillac...

[YOY]

93. DAMN YOU SHANTIFA!!! DAMN YOU TO HELL!!!

[liberation]

100. I hope she is happy...

I hope her life of luxury in the Ghetto is worth the pain and distress that has been visited upon our heroic financial CEOs after they collapsed the economy for our own good. We will never know the hell that must have been having to make due this this estival season with a puny 20 room vacation mansion rather than the preferred private island estate!

What is this country coming to? When the victims are not only ingrate for the character-building hardship bestowed upon them by our benevolent financial elites, but refuse to take the blame for actions and decisions they had absolutely no part in, the gall!

[YOY]

101. she made Chuck Heston cry in the grave...his rifle in his cold dead hands may rust.

The gall indeed!

[proud2BlibKansan]

99. SShhhhhhh

:rofl:

[Selatius]

73. It is the proximate cause, but there were deep structural problems in the economy at large.

Stagnating wages tend to lead to a decrease in demand for products and services, especially when inflation essentially gives everyone a pay cut year after year. Sub-prime lending exacerbated the problem, but it doesn't entirely explain the deep structural flaws in the economy. The savings rate went negative for a time before the crash of '08. Anybody looking at the numbers would tell you there was going to be a snapping point somewhere. 2008 was it. The sub-prime lending fiasco simply was the final straw.

[YOY]

74. I already explained that to him/her.

He/she doesn't really care.

It's totally and only the subprime market to him/her.

[whathehell]

90. Sure...It was all Fannie & Freddie...a very typical RW Talking point. n/t

[Unruly]

80. I don't think so . . .

. . . real wages and real incomes had been growing steadily since the early 1990s. Demand decreased because of the enormous decrease in wealth resulting from the decline in housing prices. The decrease in demand for housing resulted from financial institutions stopping the subprime lending. The housing bubble was created by the stimulation of housing demand by subprime lending.

With the potential collapse of the financial markets due to the collapse of the market in mortgage backed securities, there was virtually no liquidity in the financial sector, exacerbating the decline in demand due to bursting of the housing bubble.

The recession and the accompanying decline in real wages and income stemmed from these factors, not the other way around.

[liberation]

83. I'd like to title your post "Ode to Logical Dissonance"

Go on...

LOL

[Unruly]

94. Talk about . . .

. . . shedding light on a problem, that's very enlightening.

[liberation]

98. Fair enough, let's title it "Ode to Logical Dissonance in Key of Argumentum ad Verbosium"

I stand corrected...

LOL.

[Unruly]

108. Thanks for clearing that up . . .

I would quote myself, but that would be rude.

[grahamhgreen]

87. "real wages and real incomes had been growing steadily since the early 1990s" not true

[Unruly]

96. Look at . . .

. . . your own chart, wages & incomes were rising from 95 to 2000. This caused the recession, how?

[liberation]

103. Uh? What?

How is getting back to the same level than 20 years ago constitute an "increase" exactly?

Basic math skills dictate that chart displays a stagnant wage situation, runaway intellectual dishonesty would try to make a case for wage increase. It is clear in which camp you set your tent then...

[Unruly]

104. How so?

[Honeycombe8]

105. So you're saying the OP's statement that the wealthy have gone back to their 1928 % of wealth...

is not an increase from the inbetween years?

If the general public's wealth increased from year A to year X, but went down in year M....and you say that's not an increase, since it's going back to a prior level, then....

If the richest 1%'s level of wealth increases stays the same from year A to year X, but goes down in year M....then that is not an increase, either.

Which is it?

[girl gone mad]

111. Demand for derivatives is what created the housing bubble in the first place.

Wall Street was making a mint repackaging mortgage debt. They couldn't generate CDS fast enough.

The pressure to lend to unqualified subprime borrowers, alt-a borrowers, anyone with a pulse (and some without) came straight from the top.

Rich investors who have gotten most of the economic pie over the last 3 decades, thanks to Reaganomics and Rubinomics, always want more, more, more, and the new bubble in housing debt was the easy way to get quick returns without having to actually risk capital since the fix was in at the Fed and in the corridors of power.

[grahamhgreen]

86. You're proving our point!

the entire subprime crisis was part of the stovepipe set up by big finance to stovepipe the wealth to the top tiers of the ultra rich.

[mstinamotorcity]

58. For so many years

all the country has heard was about the private sector.That they control the jobs. Oh really I beg to differ. The private corporate sector are interested in profits. The supply and demand thing would work if the companies we bought goods and services from retain U.S. workers. The problem was as they shipped out jobs to other countries and allowed the balance of trade to be inadequate going against U.S. interest. Once those things were done, the manufacturing sector was headed for shrinkage. This was a growing problem in the seventies and eighties. Now that corporations have sent all of the jobs away from U.S. by having overseas workers work for in some cases a dollar a day,they bring their products back to the U.S. and sell them at a lower price while still making a huge profit.They took their profits and put them in risky investments after the regulations on banking and investment banking went lapse.Which really started with the savings and loan scandals. Next thing you know there wasn't anyone to purchase their products because the very people who bought a lot of those goods and services that the U.S. uses are the everyday workers or farmers.Now they are stunned that as people recover that they don't want to invest or bank with crooks. I wish every one would become pro-active and find alternative ways to have control over their own money that they have left. As for those who do not have work yet I wish them a job yesterday.But wishes are for the genie in the bottle.So I will try and help them by voting on the best interest for humanity.Writing e-mails to my congressmen and staying in their asses until something happens.What is truly amazing is the Crooks are literally telling us now that if you don't let us keep f--king over your money and stealing we will not hire you.

[bobburgster]

60. Great post!

I can't believe they can justify keeping the tax cuts for the rich.

[paparush]

61. An educated, financially independent middle class is a THREAT to the financial elites.

That's why they are waging war on us.

An educated, financially independent middle class helped affect great change in this country. We demanded and got incredible things:
-An end to the Vietnam war
-Civil Rights
-Women's Rights
-Worker's Rights
-Govt Regulation of Business and the Environment

Just to name a few.

And all of this threatens the Financial Elites and they are determined to return the middle class to a serf class. They want us dumb, poor, and too frightened to rock the boat. And they are getting exactly what they want from a complicit "government".

I'll see you in the bread lines.

[ieoeja]

72. That's why they are trying to get rid of public education.

If the schools were failing, why are we still the world's leading innovator? But innovation threatens the status quo. Just enough education to follow orders is what they want.

[Selatius]

75. The situation with Workers' Rights was never really won. We lost with Taft-Hartley.

And that was when President Truman was still in office. We may have legislated equal rights for all, but we never legislated equality between labor and management. There is still a power imbalance there, a vast one at that. People protested Viet Nam and marched for equality, but they never succeeded in reversing the crippling damage to workers by the passage of the Taft-Hartley Act.

[RagAss]

78. The Estate Tax comes back in 2011....so they better all die this year.

[glinda]

81. Rich are hoarding to buy places to survive the climate change....

[hay rick]

89. K&R

[Honeycombe8]

106. The rich are not our enemies. "The rich" did not cause the recession.

SOME wealthy people in SOME areas of business caused the recession, coupled, IMO, with policies by mainly the Republican Party (aided in some instances by the Democratic Party, I'm sorry to say).

Rich people:
Alec Baldwin
President Obama
Philanthropist Bill Gates (who thinks the tax rate for the wealthiest should be increased)
Philathropist/investor Warren Buffet (who thinks the tax rate for the wealthiest should be increased)
Sean Penn
Keith Olbermann
Tweety
Every Democratic Senator
Every Democratic Representative in the House
Howard Dean
John Kerry
Bill Clinton
Hillary Clinton
Ted Danson
Every member of U2
etc., etc.

It's not a great thing to lump groups of people together for the purpose of spreading hateful feelings, when only SOME of a group caused the problem. The groups that caused the problems, or at least some of them, were insurance company executives, Wall Street investment firms of various types, and mortgage lending institutions, including banks. The wheel that started them turning was the deregulation mainly by the Republican Party. And a party it was....for them.

But also, some middle class people are to blame for the loss of their home. There were those who must have known that they couldn't afford that expensive a house, were it not for the "creative" financing. There were those who were extended to the max, but had no savings to weather a decline in income. And that includes some very wealthy people...they are sometimes the worst at extending themselves financially in order to put on a front.

Then there are the scores of consumers who charged to the max to buy things they didn't need, then couldn't pay when one of the spouses lost his/her job. They take some responsibility for their financial woes.

There's plenty of blame to go around. It was not every rich person in the country. It was not your average, hard working, frugal person with little debt and rainy day savings in the bank. It wasn't the working poor who can't afford a credit card and lives paycheck to paycheck.

[rhett o rick]

116. "There is plenty of blame to go around". Bull shit. You list a handful of

members of the ruling class and use them as examples of people that didnt cause the recession. Congress has a big hand in causing the recession and that included many Democrats.

So I agree that all members of the ruling class arent "bad", so.... what's your point. The ruling class, as a class are fucking killing us. The only "blame" that should be leveled on the working class is that we got lax and allowed the ruling class tooo much power. They are ruling and they caused the recession.

[DailyGrind51]

115. Unless the Fed cranks up those printing presses, there really is only so much to go around!

And, if the rich hoard it all, without paying American workers a decent wage or making loans to American businesses or for home purchases, we will continue to live in recession!

[Steely_Dan]

120. And What About...

Wasn't it in the mid-70's that a CEO (business owner) made approximately 5 times as much income as did their employees and now they make something like 300 times as much? Just a thought.

"Greed is good."
-Wall Street