Skip to content

recession or depression? regression or obsession?

April 2, 2008

When I first asked my dad back in December 2007 if he’d seen my blog, he laughed unkindly, and said, isn’t that just a glorified diary? who reads those things, anyway?

Well, Dad, yeah, I guess : a glorified diary that has had almost 11000 hits in less than six months. And no, I don’t know who reads it. I’m just glad they do.

But in some ways, he’s right–it is a glorified diary at times in the sense that this blog is a place where I explore what interests me, engages me, concerns me–whether it be politics, poetry, or pantry!

And it’s also like a giant scrapbook, a scrapbook that is stored more compactly, and organized more completely than I think he can imagine.

It’s a place where my intellectual ramblings can land. And take root. And sometimes get read–and see the light of day on a computer far far from home.

So on that note, I found this article by Andrew Leonard on Salon.com and since I want to be able to put my finger on it when I want, and because what I think is being said is really really important, I am importing much of this article here. If you want to read it in it’s entirety, go to salon.com

And Dad, it’s too bad you never bother to read my blog because I really think you’d find this article of interest. And Jordan, (cuz I know you read my blog), I hope you read this article because this is partly why I don’t think it’s right for those execs to make so much money.

April 2, 2008 | A record number of Americans receiving food stamps. Gas prices at an all-time high, and staples such as milk, eggs and bread costing a prettier penny every week. The average number of Americans filing for unemployment benefits reached its highest level in two years last week, while just this week, construction spending fell for the fifth straight month and manufacturing activity shrank to its lowest level in five years. Real estate values are even plummeting in the Hamptons, and hedge funds started off 2008 with their worst quarter ever.

Most economists are no longer debating whether there will be a recession in 2008. Now, they’re arguing over when the recession started — was it last November, or December? — and how bad it’s likely to get. While they bicker, however, a far more terrifying economic specter from the distant past has sent a chill through the infosphere.

“We have not seen a nationwide decline in housing like this since the Great Depression,” said the CEO of Wells Fargo late last year. “It is now clear that the U.S. and global financial markets are experiencing their worst financial crisis since the Great Depression,” wrote economist Nouriel Roubini last week.


Want to see “The Great Depression: The Sequel”? Here’s a handy three-step do-it-yourself action plan.

1. Continue to ignore growing income inequality and govern the United States for the benefit of the rich at the expense of the many.
2. Continue to whittle away at the safety nets that exist to cushion Americans from economic ill winds.
3. Continue to weaken government oversight of Wall Street.

Last October, citing Internal Revenue Service data, the Wall Street Journal reported that the top 1 percent of Americans earned 21.2 percent of all income in 2005. That’s the highest measure of income inequality since, you guessed it, before the Great Depression. The numbers may be off that peak for 2008, given the carnage on Wall Street, and all those investment bankers trying to sell their weekend homes in the Hamptons into a sagging real estate market. But not by much.

However you slice it, it’s an appalling statistic. It may not carry the same visceral visual punch as a Hooverville, but it sends the same message: The richest Americans are gobbling up the lion’s share of the fruits of economic growth, while for everyone else, wages barely keep up with inflation, good jobs become increasingly scarce, and making ends meet gets tougher and tougher.

Right-wing economists tell us that allowing the rich to grab such a huge percentage of national wealth rewards the most “productive” sector of society and encourages them to create even more wealth, which eventually trickles down to all Americans. So who cares if the income inequality chasm has widened to historically unprecedented heights? Poor Americans now are rich compared to poor Americans in the 1920s. They’ve got their fancy TVs and access to an extraordinary array of cheaper-than-cheap products at the nearest Wal-Mart. Are they starving? No, the big social problem is rampant obesity! So let the good times roll, and make those tax cuts permanent.

There are some holes in that logic. The average American family carries upward of $8,000 in credit card debt. The personal savings rate has never been lower. Healthcare costs are inconceivable for anyone who doesn’t have insurance. And right now, home prices, which represent the largest chunk of net worth for most Americans, are dropping at a rate of 10 percent a year.

Never mind how these statistics make a mockery of the thesis that encouraging the top 1 percent of Americans to gorge themselves on 20 percent of the pie breeds prosperity for all. The truly discouraging aspect to all this is that if the current economic woes deepen into a severe recession, or if a systemic shock seriously rattles financial markets, Americans are less equipped to weather the storm than they have been since, well, the Great Depression.

That last point to underline is that the hands-off-Wall Street, deregulatory impulses unleashed by Ronald Reagan and expanded by all his White House successors have directly contributed to the precarious state of today’s average American. The housing crisis offers a terrific example. Yes, speculation by housing flippers played a role in fueling the boom, and so did fraud on the part of both lenders and borrowers. But Wall Street’s hunger for high-yielding complex financial instruments, that alphabet soup of CDOs and CMOs and countless other inscrutable derivatives, created the fundamental incentive that encouraged lenders to provide credit without restraint. The voracious demand for the junk encouraged the creation of more junk. And nobody asked any tough questions, all the way down the line. Worst of all, the hedge funds and investment banks that bought and sold these derivatives did not operate under the same levels of government scrutiny that traditional banks must face. Quite the opposite — the more complicated the financial innovation, the less likely it was to fall under any government oversight. And that was no accident — that was done on purpose. During both the Clinton and the George W. Bush administrations, Wall Street got exactly what it asked for — a light hand on the reins, but with the tacit assurance that if the shit really hit the fan, the government would bail it out, because, of course, the awful consequences of systemic collapse would be too devastating to risk.

We are not totally bereft. As Slate’s Daniel Gross cogently explained last week, the institutions created during the Great Depression, despite persistent Republican efforts to dismantle them, still provide a sturdy bulwark protecting Americans from abject, 1930s-style levels of misery and poverty. But those relics of the “nanny state” are under constant attack by starve-the-beast radicals whose explicit goal is to roll back the New Deal. And now we have Hank Paulson telling us that a new regulatory system needs to be even less onerous for Wall Street’s innovators to bear, while John McCain lectures Americans on how Wall Street deserves a bailout if financial meltdown looms, but individual Americans who screwed up deserve to stew in a soup of their own irresponsibility.

We shouldn’t have to require a depression, or even a severe recession, to send the discredited approach embraced by the current administration and the Republican aspirant to the throne into the dustbin of history where it belongs, there to malinger until today’s 18-year-olds celebrate their own 97th birthdays. The events of the past few months should be lesson enough. But we’ll have to wait until November to see just how many Americans are paying attention.

6 Comments leave one →
  1. April 2, 2008 9:18 am

    I am amazed that all or most of this mess in the US economy has been caused by the mis selling of sub prime loans to those that can’t afford them, oh and of course the investment banks that then spread the loans out into the financial system. What i find interesting is how will this affect the UK economy
    Rgds
    the frog

  2. sophiahonkey permalink
    April 2, 2008 2:30 pm

    as my friend kurt calls ’em. rich fuckers. god it’s so hard to keep my eye on the ball while it’s rolln’.

    i just think more people should quit their job do their art stop the war. simple as that. it’s mind opening…to look like a poor sunofabitch all the time even though you got a good education and a sunny disposition. it just reorientates ya. gives you more time to think of ways to redescribe the format.

    things cannot continue as they have.

  3. April 2, 2008 3:42 pm

    Frog, I’m not sur eif you went to Salon.com to read the ful text but it does discuss that relationship a bit. Did you see the post on the blog “holy cow! spitzer and bush”? that’s another post that’s mostly from after 10 downing street but the analysis is stunning…and obvious. i am sure too that this will have massive repercussions throughout the gloabl economy–was that supposed to be a live link to something on the impact on the UK economy? if so, can you post it again–or maybe it’s on your site. I’l go see what you’re up to!

    you know, sophia, you have an interesting point about just doing your art–because i do think business and such is an art, can be an art. but what is the purpose behind the practice? people want to provide for and protect their families, their genes, their interests. but too many have lost sight with and connection to the fact their their wealth is directly related to the wealth of others.

  4. April 2, 2008 3:43 pm

    and btw, congrats on keeping the sunny disposition along with the great education!

  5. April 3, 2008 10:19 am

    hi artpredator,

    Here s the link i tried to post about the US economy dragging the UK down. Hope it works this time, if not…

    http://thefroginvestor.wordpress.com/2008/03/31/is-the-uk-housing-bubble-about-to-burst/

    will take a look at the holy cow article now.

  6. April 3, 2008 5:33 pm

    great, frog investor! the link works now! thanks!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Sammy's Gourmet Blog

Feed your dog with love and a wise heart.

Memorable Moments

Adventures & "Bucket" Lists That Keep Life Interesting

Vinos y Pasiones

Aprendé sobre vinos, gastronomía y turismo. Mirá la Vida en modo positivo.

Best Tanzania Travel Guides

from Kilimanjaro to the Serengeti and beyond

LUCAS GILBERT

The Best Guide in Tanzania

Pull That Cork

Wine makes our life more fun.

The Writer's Den

A Community for Writers

Always Ravenous

Adventures in Food and Wine

Joy of Wine

"Wine cheereth God and man." -- Judges 9:13

Vineyard Son Alegre

Organic Wine And Olive Oil From Santanyí, Mallorca (Spain)

L.M. Archer

wordsmith | consumer, b2b + b2c

What's in that Bottle?

Better Living Through Better Wine!

ENOFYLZ

My humble wine blog

Jenny True

An excruciatingly personal food blog

foodwineclick

When food and wine click!

The Flavor of Grace

Helene Kremer's The Flavor of Grace

The Swirling Dervish

Wine Stories, Food Pairings, and Life Adventures

ENOFYLZ Wine Blog

Living La Vida Vino!

Dracaena Wines

Our Wines + Your Moments = Great Memories

L'OCCASION

a reason for wine

OkieWineGirl

A Wine Drinker Rambling about Wine

Drifting Through

Welcome to the inner workings of my mind

Sonya Huber

books, essays, etc.

THE GRAPE BELT

More People, More Wine

The Weekly Sift

making sense of the news one week at a time

poor mexican gone

Yesterday's stories shed light on the way forward

ROCKIN RED BLOG

A Song in Every Glass

Cindy Ross

Author | Speaker

trailtraveler

Get your copy of Mile 445 today at Amazon.com!

Laura Grace Weldon

Free Range Learning, Creative Living, Gentle Encouragement, Big Questions, Poetry, Occasional Drollery

From Insults To Respect

A Guide To Anger And Conflict Resolution

Wes Chyrchel

Consultant · Early Stage Advisor · Project Advisor

Burners.Me: Me, Burners and The Man

Snarky. Cheeky. Grumpy. Dopey. Never Bashful.

Elizabeth Smith

Writing | Marketing | Communications | Travel | Notary

L'esprit de Vin

A wine blog with food for thought...

The Wine Wankers

G’day, you’re at the best wine blog ever! We're all about wine; without the wankery.

Wine Verbiage

verbiage about wine & life

%d bloggers like this: