No Economic Recovery

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Since 2009 there has been no meaningful economic recovery for most Americans.  People often wonder the percentages of the haves and have nots.  We hear about the 1% and even the 10%.  I would take an educated guess and tie it to the percentages that have been associated with right track/wrong track.  Since 2009 most surveys have shown 75% to 80% of Americans unsatisfied with the direction of the country.  While true may say this for non economic reasons common wisdom would say their beliefs are economically oriented (or "its the economy stupid.)

 

The big banks and Wall Street recovered gratis the Federal Reserve. Corporations have had near free money to buy back stock, buy out competitors, and pay higher executive pay.)  The investor class benefited from a pumped out stock market.  For the most part 75%-80% of Americans received no such benefit.  None of this flows down hill to the lower classes.

 

The reality is that the top 20% cannot make up for reduced demand for the bottom 80%.  Many included in that 20% are living life comfortably but not millionaire or billionaire style.  Millionaires and billionaires can only consumer so much.  This is where we stand now, falling demand.

 

The continuation of easy to get credit (think auto subprime) helped to defray some of the drop.  Now that is ending fast as consumers are again muddled in debt.  Look at what is happening with retail.  They will bold face deny it until the collapse.  Ben Bernanke claimed the system was strong three weeks before Lehman failed.  This time there will be another sacrificial lamb and then the blood bath will begin. Then it will be off to Congress for trillions again to make the crooks whole again.  A really nice gig for them indeed.

 

The end is again near.  Those that benefit from the perception of a strong economy can't stop denying it.  If you have paper wealth or are the political shrill this is not good news.  So you will claim it ain't so.

Comments

Dino Manalis Added Apr 15, 2017 - 5:20pm
Chronic economic stagnation continues, that's why business tax cuts should come first, health care is more complicated and has to be delivered in pieces.  The economy always comes first in various ways, directly and indirectly.  Repatriation of trillions from abroad is vital for investments; jobs; employee salaries; tax revenues; and growth.
John G Added Apr 15, 2017 - 5:26pm
why business tax cuts should come first
 
How do business tax cuts help a demand slump?
Businesses invest on the basis that there will be a healthy market for their products.
George N Romey Added Apr 15, 2017 - 5:43pm
Companies hire on demand.  Cash has not been a problem.  Companies have used excess cash to buy back stock, pay dividends, make acquisitions and pay higher executive pay.  That was the entire idea behind zero interest rates.  Companies would take the dirt cheap money and expand. They didn't happen.  And they won't with tax cuts.  Companies will just buy back more stock, acquire or merge even more with their competitors and pay their C officers even more.
Jeff Jackson Added Apr 15, 2017 - 8:55pm
Not to mention, George, the repatriation of the money that they're keeping offshore. Apple has hundreds of millions offshore. Trump has been talking about a tax break for repatriation, and it can't happen soon enough. If the corporations bring the money back, some of it will for sure get back into this economy, but there should be a qualifier that if the money isn't spent the right way, the tax break is out.
Not a whole lot of people know that when England's housing bubble burst and the British government "gave" the banks money, the banks were told that if the money wasn't loaned out, they would pay an enormous price price in fees. The money wasn't theirs, it belonged to the British citizens and they got it back in loans. Man, I wonder if our banking regulators heard that story...
John G Added Apr 16, 2017 - 1:24am
Not a whole lot of people know that when England's housing bubble burst and the British government "gave" the banks money, the banks were told that if the money wasn't loaned out, they would pay an enormous price price in fees.
 
That isn't true although the story was peddled at the time if I recall correctly as political cover.
Banks don't lend government money (reserves) outside the payments system. That is, to other banks and LFIs with central bank accounts.
Retail loans are created out of thin air by creating a deposit in the borrowers account by computer keystroke. The bank's reserve position is a different operation altogether.
 
Cliff M. Added Apr 16, 2017 - 1:21pm
Repatriated profits and lower corporate taxes will all go to the Wall street casino just like they have the last 8 years . We need these things to get the market to 25K. Demand still remains anemic while areas that were strong may well be past the best best part of their cycle. A rudderless economy where the top can continue to skim the profits will continue.
George N Romey Added Apr 16, 2017 - 1:26pm
Cliff my belief is that we need more Henry Fords that are willing to take a chance to create demand.  To do that successfully would mean a hit to profits in the short run.  That is often what happened when companies would fully innovate and invent.  But then they get beat up by Wall Street, the stock price tanks and shareholders get pissed-75% of which are large institutional investors part of the Wall Street crime family.  Its all one big circle.  Wall Street is the head of the snake.
Mircea Negres Added Apr 16, 2017 - 1:39pm
George, you once wrote "There is no free market. There is a system in which Wall Street privatizes profit and socializes the losses, and will never be required to pay for their sins". I thought you were right then, and I think you are right now. Yup, up the creek in a leaky mortgaged canoe with a broken paddle and bailing bucket without a bottom- I can just see how that's gonna turn out...
George N Romey Added Apr 16, 2017 - 1:46pm
Mircea its not going to be pretty.  There are some very successful people on YouTube that are forecasting a very bad end to all of this destruction of the middle class, and sooner rather than later. Some of these same people were predicting 2008 and there are tapes of them being made fun of on shows like CNBC and Bloomberg.  Those most teetered to this corrupt and destructive system will be the loudest denying its crash ending.
Mircea Negres Added Apr 16, 2017 - 1:58pm
George, amen brother, amen. I spoke about this talk I had with a banker once, when I warned him the real estate bubble his employer was financing (together with the other Big Four banks) was going to burst and they should get out then and there. He denied it was a bubble or that there was any danger with such fury and utter conviction that he reminded me of one of those religious fanatics. And then the South African property speculation bubble burst... Yes, the staunchest deniers are the most tethered to this madly unsustainable scheme.
George N Romey Added Apr 16, 2017 - 2:01pm
Mircea when you live in the bubble your financial success is connected to the bubble.  Its why people in the bubble deny the existence of the bubble so vehemently.  To admit to the bubble would be to say you are so totally screwed. 
Jeff Jackson Added Apr 16, 2017 - 2:08pm
Well John G, I guess the BBC news was fibbing when they announced:
"Banks that took the rescue packages had restrictions on executive pay and dividends to existing shareholders, as well as a mandate to offer reasonable credit to homeowners and small businesses.- BBC News. 2008-10-08. rel="nofollow">Archived from the original on 10 October 2008.
Jeffry Gilbert Added Apr 16, 2017 - 2:20pm
Because BBC (Buggering British Children) are so reliable? Sure. Dolt.
Jeff Jackson Added Apr 16, 2017 - 3:12pm
Why yes, internationally recognized news organization, BBC risks its reputation for few banks, Makes sense. If you're a conspiracy theorist, that is. Confirmed by the New York Times December of 2008: "Some analysts said the idea that recapitalizing banks would repair the lending market was flawed from the beginning because it was contradictory. On the one hand, the policy was meant to make banks reduce risk. On the other, it pressured them to lend more, which meant taking more risks."
Jeffry Gilbert Added Apr 16, 2017 - 3:20pm
See Jeff, you are the poster boy for DUHmerican. Dogshit stupid, ignorant, illiterate, uninformed and damned proud of it. Everyone with critical thinking skills knows that BBC and NYT are not reputable. They are fake news. They are both at the beck and call of the banksters. Your need to believe in a failed system would be breathtaking were it not so pathetic. 
Jeffry Gilbert Added Apr 16, 2017 - 3:22pm
Thailand Pushes Back Against BBC Propaganda
 
Reputable my sticky rice. 
John G Added Apr 16, 2017 - 4:11pm
Jeff, your statement was "the British government "gave" the banks money, the banks were told that if the money wasn't loaned out,"
 
The money that governments give or loan to banks never, ever goes to retail loans. That isn't how the system works.
And no, the chumps at the BBC don't understand. Nor does your everyday neoclassical economist.
George N Romey Added Apr 17, 2017 - 9:45am
Iceland did just that and jailed its crooked bankers and today is fully recovered.  The difference is that Iceland had a government willing to stand up to the banking cartels.  When the "D"s and "R"s in charge this will never happen in the US.
wsucram15 Added Apr 17, 2017 - 1:31pm
George..as usual you are correct, the Republicans and Democrats cant do anything now..they are just as involved in the damage as the bankers, former Presidents and yes, even the revered Supreme Court.
Only the people can fix this, at the state level, maybe.  Im not as convinced about that anymore. I think its gone too far now.
The country cannot exist without the middle class, that is where about half of the national revenue comes from, the rest is payroll and business or borrowed.
It is getting increasingly more difficult to survive even on a middle income wage...the countries that did make an economic turnaround took control of the problems. 
We are encouraging the problems..so I dont see any way out of this.
wsucram15 Added Apr 17, 2017 - 1:46pm
Richard..Im not sure if this is what you are talking about, but the car business is booming...in a big way. I see it being done through high leasing payments though. Its sneaky and not seen too often, but its done.  Also really high interest loans on cars, I mean high interest.   Im not even sure its legal...but they do it.
 I see car lots where people who are hurting have to go to buy cars that should not even be on the road, sell for 2-3 times book value because they finance on weekly payments. 
Leases are another thing, big money in those.
George N Romey Added Apr 17, 2017 - 1:47pm
Jeanne I agree 100% the system cannot be sustained and has a very short life.  Sadly it will take the route of collapse rather than internal change for anything positive to eventually come about.
 
The thing is that the US had never cured The Depression, WW2 did that.  Its hard to imagine what would have happened long term otherwise.  To this day its astounding that the US went over a decade without massive social unrest.  However, in the 1930s more people had land to sustain themselves, there was very low levels of debt in both private and public sector, the family unit was strong and most Americans had faith in FDR.  Today all four of those circumstances are radically different. 
 
People want to somehow say that today is nothing like the 1930s and yes in some ways.  However, many things are the same but look different-long lines at food pantries instead of soup kitchens.
 
The next collapse which will be sooner rather than later will resemble more the 1930s.  The Federal Reserve likely won't have the financial "umph" to bail out Wall Street and will likely turn to the IMF for relief in the form of "Special Drawling Rights" or in reality world money for countries and their central banks.  Of course the ECB, Bank of China and Bank of Japan will be right there along with the Fed with their hands out.  No one knows how long this would play out and exactly how.  And of course it couldn't save the general economy just large multinational financial firms.
 
Consequently, we could see a world economy unimagined.  Death rates would soar from disease, social strife, substance abuse and suicide.  The family unit would fall apart.  People would lose paper wealth over night.
 
People living in the bubble of course will deny all of this to the hilt-just like they did in 1928-1929 and 2007-2008.  Since their fortunes and quality of life are tied to everything the bubble represents naturally they are horrified of the bubble bursting.  No different today in 2017. 
John G Added Apr 21, 2017 - 3:37am
  The Federal Reserve likely won't have the financial "umph" to bail out Wall Street
 
LOLz. The US government has unlimited financial power over its own currency zone.