Media and government have been careful to name this extended economic downturn a recession. There is a formula by which to define recession involving gross domestic product, wholesale/retail sales and other indicators over a specified period of time. It has almost nothing to do with the misery a recession causes real people.
Since the Great Depression of the 1930s, there have been 13 official recessions including the one in which we are currently ensnared. Ten of them lasted for less than a year and the other three ended after 13 and 16 months.
The National Bureau of Economic Research (NBER) is relied upon to identify recessions and this one, they say, began in December 2007, so we are now into our 22nd month of it with no end in sight.
The ten percent unemployment figure is a sham. Because those who have despaired of finding work and given up searching are not counted, nor are those who, for lack of work, have been forced into early Social Security at age 62, nor are independent contractors who have been laid off, the percentage of unemployed is closer to 20 percent. That is, closer to 30 million people than the official 15 million count. Add in the underemployed and who knows how high the figure might be.
Home foreclosures, happening at a record pace for the past two years, set a new record with 360,149 of them in July alone.
As of last Friday, there have been 99 bank failures in 2009. According to MarketWatch:
“This year is shaping up to be the first since 1992 to see the failure of at least 100 banks, and experts suggest we could be no more than 10% of the way through this cycle of bank collapses, which is sure to be the worst run of closures since the Great Depression.” [emphasis added]
The bank bailouts which were meant, we are told, to loosen up credit to get the wheels of commerce rolling again, is not working no matter what the pretty women in realtors' television commercials tell us about available mortgages. And tight lending is terrible for small businesses that rely on credit to meet payrolls, maintain inventory and grow their companies. (Read: hire workers)
Retail prices have dropped so much (although it's hard to believe with prescription drug costs, health insurance premiums and food prices heading north), there will be no cost-of-living increase in Social Security benefits for 2010. That has never happened before in the history of Social Security.
Consumer spending is 70 percent of the U.S. economy. With great fanfare, it was announced that consumer spending was up 2.7 percent in July but according to Gallup this week, it is down 24 percent in the 12 months since October 2008.
Even with all this, Federal Reserve chairman Ben Bernanke, quoted in the Wall Street Journal and everywhere else last month, says the recession is over.
I suppose it might look that way to someone who spends his days talking with Wall Street bankers, especially the ones at Goldman Sachs whose bonus piggy bank amounts to $770,000 per employee this year for a total of $16.7 billion, made possible by hundreds of billions of your and my tax dollars without which the bank would as dead as Lehman.
In a public relations ploy that is near-perfect in its Rousseau-like incomprehension of reality, Goldman chairman and CEO Lloyd C. Blankfein announced a $200 million donation to the charitable Goldman Foundation - a figure that amounts to 1.2 percent of the bonus total and which, on a good day, might fund a few soup kitchens for the winter.
And, according to the business press, Goldman and other trading banks are back to packaging and selling those empty derivatives that brought down the economy in the first place while howling at even the mildest proposed regulation from the Obama administration. This accounts for their astronomical profits this year and puts the country on track for another crash.
In a macabre twist on excessive greed, Wall Street is now working to package "death derivatives," more politely called life settlements, in which the life insurance policies of elders and sick people are bought, bundled into bonds, and sold in the same manner as the now-infamous mortgage derivatives. They collect on the policies when the insureds die.
In the past month, the number of economists' predictions of high unemployment as the new norm have been increasing. According to an AP story, many economists believe that will remain so for long into the future.
With all this, and I don't like saying it, if there has been any acknowledgment from President Obama or Congress that Americans are suffering – terribly – I've missed it. Obama recently said, “we need to grind out this recovery step by step.” The problem is, there has been no discernible step forward on any front and with it, no sense of urgency.
Bail out the banks. Extend unemployment insurance. Give elders a quick-fix $250. None of that creates jobs which is the only thing that will rebuild the economy.
On Tuesday, Bob Herbert at The New York Times made an important point in an Op-Ed piece headlined Safety Nets For the Rich:
“Two-thirds of all the income gains from the years 2002 to 2007 — two-thirds! — went to the top 1 percent of Americans.
“We cannot continue transferring the nation’s wealth to those at the apex of the economic pyramid — which is what we have been doing for the past three decades or so — while hoping that someday, maybe, the benefits of that transfer will trickle down in the form of steady employment and improved living standards for the many millions of families struggling to make it from day to day.
“That money is never going to trickle down. It’s a fairy tale. We’re crazy to continue believing it.”
He's right. That trickle down theory started with President Reagan and Mr. Herbert's figures show how well it's worked so far. Thirty years is enough experimentation with a failed policy.
By all discernible evidence, Ben Bernanke's optimistic proclamation that the recession is over applies only to the rich - Goldman Sachs and JP Morgan employees - and I think it is time to name the predicament the rest of us are in what it really is: a depression. Here's how Wikipedia defines it:
“[A] depression is characterized by its length, and by abnormal increases in unemployment, falls in the availability of credit, shrinking output and investment, numerous bankruptcies, reduced amounts of trade and commerce, as well as highly volatile relative currency value fluctuations, mostly devaluations. Price deflation, financial crisis and bank failures are also common elements of a depression.”
That's a close-enough match to the current state of affairs for me. If a few people who matter (not me) made regular use of that terrifying word – depression – it might shock the administration and the country into taking the bold steps necessary to get the economy moving again.
At The Elder Storytelling Place today, Suzanne: Sugar Molds and My Own Private Bamyian Budda
Since the Great Depression of the 1930s, there have been 13 official recessions including the one in which we are currently ensnared. Ten of them lasted for less than a year and the other three ended after 13 and 16 months.
The National Bureau of Economic Research (NBER) is relied upon to identify recessions and this one, they say, began in December 2007, so we are now into our 22nd month of it with no end in sight.
The ten percent unemployment figure is a sham. Because those who have despaired of finding work and given up searching are not counted, nor are those who, for lack of work, have been forced into early Social Security at age 62, nor are independent contractors who have been laid off, the percentage of unemployed is closer to 20 percent. That is, closer to 30 million people than the official 15 million count. Add in the underemployed and who knows how high the figure might be.
Home foreclosures, happening at a record pace for the past two years, set a new record with 360,149 of them in July alone.
As of last Friday, there have been 99 bank failures in 2009. According to MarketWatch:
The bank bailouts which were meant, we are told, to loosen up credit to get the wheels of commerce rolling again, is not working no matter what the pretty women in realtors' television commercials tell us about available mortgages. And tight lending is terrible for small businesses that rely on credit to meet payrolls, maintain inventory and grow their companies. (Read: hire workers)
Retail prices have dropped so much (although it's hard to believe with prescription drug costs, health insurance premiums and food prices heading north), there will be no cost-of-living increase in Social Security benefits for 2010. That has never happened before in the history of Social Security.
Consumer spending is 70 percent of the U.S. economy. With great fanfare, it was announced that consumer spending was up 2.7 percent in July but according to Gallup this week, it is down 24 percent in the 12 months since October 2008.
Even with all this, Federal Reserve chairman Ben Bernanke, quoted in the Wall Street Journal and everywhere else last month, says the recession is over.
I suppose it might look that way to someone who spends his days talking with Wall Street bankers, especially the ones at Goldman Sachs whose bonus piggy bank amounts to $770,000 per employee this year for a total of $16.7 billion, made possible by hundreds of billions of your and my tax dollars without which the bank would as dead as Lehman.
In a public relations ploy that is near-perfect in its Rousseau-like incomprehension of reality, Goldman chairman and CEO Lloyd C. Blankfein announced a $200 million donation to the charitable Goldman Foundation - a figure that amounts to 1.2 percent of the bonus total and which, on a good day, might fund a few soup kitchens for the winter.
And, according to the business press, Goldman and other trading banks are back to packaging and selling those empty derivatives that brought down the economy in the first place while howling at even the mildest proposed regulation from the Obama administration. This accounts for their astronomical profits this year and puts the country on track for another crash.
In a macabre twist on excessive greed, Wall Street is now working to package "death derivatives," more politely called life settlements, in which the life insurance policies of elders and sick people are bought, bundled into bonds, and sold in the same manner as the now-infamous mortgage derivatives. They collect on the policies when the insureds die.
In the past month, the number of economists' predictions of high unemployment as the new norm have been increasing. According to an AP story, many economists believe that will remain so for long into the future.
With all this, and I don't like saying it, if there has been any acknowledgment from President Obama or Congress that Americans are suffering – terribly – I've missed it. Obama recently said, “we need to grind out this recovery step by step.” The problem is, there has been no discernible step forward on any front and with it, no sense of urgency.
Bail out the banks. Extend unemployment insurance. Give elders a quick-fix $250. None of that creates jobs which is the only thing that will rebuild the economy.
On Tuesday, Bob Herbert at The New York Times made an important point in an Op-Ed piece headlined Safety Nets For the Rich:
He's right. That trickle down theory started with President Reagan and Mr. Herbert's figures show how well it's worked so far. Thirty years is enough experimentation with a failed policy.
By all discernible evidence, Ben Bernanke's optimistic proclamation that the recession is over applies only to the rich - Goldman Sachs and JP Morgan employees - and I think it is time to name the predicament the rest of us are in what it really is: a depression. Here's how Wikipedia defines it:
That's a close-enough match to the current state of affairs for me. If a few people who matter (not me) made regular use of that terrifying word – depression – it might shock the administration and the country into taking the bold steps necessary to get the economy moving again.
At The Elder Storytelling Place today, Suzanne: Sugar Molds and My Own Private Bamyian Budda