An Unmentioned Cause Behind America’s Economic Woes

America’s economy is in a bad way. The economic recovery has turned out to be disturbingly weak, and joblessness rates are still actually rising. Investment is down, Americans are depressed and angry, and there are even worries about a double-dip recession.

There has not been much analysis of the causes behind today’s economic stagnation. Most experts talk about how weak recoveries generally follow financial crises. Politically, Republicans blame Democrats, and Democrats are generally too busy trying to fix the problem than to think about what caused it.

Yet there is indeed something that did badly damage the recovery – an event very few nowadays link to America’s economic woes. This event was much like the 2008 financial crisis (indeed, it actually was another financial crisis). It dominated newspaper headlines, threatened to severely weaken several economically mighty countries, and in the end required international intervention to the tune of one trillion dollars.

On the surface, the European sovereign debt crisis – and more specifically, the bankruptcy of Greece – might have little to do with the United States. Greece, after all, is quite far away from America. Yet, as 2008 showed, the fall-out from a financial crisis goes wide and far; if Europe was hurt by America’s financial crisis, it stands to reason that America was hurt by Europe’s financial crisis.

Moreover, both crises had much in common. Panic hit the market and risk spread wildly, from the original contagion to even the safest strongholds. In the United States, banks went bankrupt; in Europe, countries went bankrupt. For both crises, the “fix” cost hundreds of billions of dollars.

There is another, more ominous analogy. The Great Depression, it is commonly held, started with the collapse of the American stock market. What really made it “Great,” however, was a series of bank failures that followed. These started in Austria. If the 2008 financial crisis was Black Tuesday, then the Greek crisis holds a disturbing parallel with the chain of bank failures that started in Europe.

Fortunately, the European Union was able to put a halt to the Greek crisis – unlike what happened during the Great Depression. Due to the lessons learned from that era, unemployment is less than half what it was during the Great Depression’s peak (which is, unfortunately, still quite high).

Nevertheless, the fact that the European debt crisis was halted probably did not it from inflicting the harm it had already done. Much as the 2008 financial crisis raised unemployment to jump to 10%, fall-out from the European financial crisis seems to be keeping it at that number. It is interesting that almost nobody, whether in politics or economics, seems to be publicizing this fact.

--Inoljt, http://mypolitikal.com/

 

 

Just How Unequal is the U.S.? We Have No Idea

The last three and a half decades have seen a disturbing increase in inequality in the U.S.  The wealthiest Americans have made significant income and wealth gains, while the rest of us have treaded water at best.  And yet, as our national dream of economic security and mobility dies, we don’t even care enough to offer a eulogy.  As Willy Loman’s wife reminded us, “Attention must be paid.”

There's more...

Weekly Audit: Can Elizabeth Warren Save the Economy?

by Zach Carter, Media Consortium blogger

President Barack Obama’s decision to appoint Elizabeth Warren to set up the new Consumer Financial Protection Bureau (CFPB) couldn’t have come at a more critical time.

Over 44 million Americans were living in poverty last year. That’s the highest number on record. The Great Recession is taking a terrible toll on everyone outside the executive class, but policymakers have been reluctant to pursue an economic agenda that improves the lives of ordinary Americans.

The uniqueness of Warren’s new post raises plenty of questions, but it puts a fierce defender of the middle class in office at a time when the middle class most needs help.

So what exactly will Elizabeth Warren do?

As Annie Lowrey emphasizes for The Washington Independent, it’s not entirely clear what Warren’s new job will be or how long she will have it.

Consumer advocates have pushed hard to get Obama to name Warren the first director of the new CFPB. Obama, citing Senate confirmation hurdles, has instead charged Warren with setting up the agency as an adviser to both the Treasury Department and Obama himself. The post allows Warren to get to work setting up the agency, but not the power to start drafting regulations. It’s good to see her get a post on the Obama team, but we do not yet know how influential she will be.

Tim Fernholz sums up the pros and cons of Warren’s appointment in a piece for The American Prospect. There are very real drawbacks to the move. Confirming Warren for a permanent post as director of the CFPB will be harder next year—Democrats are likely to lose Senate seats in November.

It’s not impossible, but if confirmation was Obama’s chief worry, he’s only made it harder on himself by kicking the nomination down the road. This is true for whoever Obama picks—the bank lobby is going to scream about anybody other than a bank lobbyist, and Republicans are filibustering almost everybody Obama nominates to any post, including critical economic policy positions at the Federal Reserve.

Getting to work

But the new role also gets Warren on the economic policy team right away, and allows the agency to begin staffing up under her stewardship, even if it can’t draft regulations until a permanent director has been confirmed. There will finally be a strong voice on Obama’s economic team prioritizing household financial security above all else. That’s very good news.

Whatever the formal powers of Warren’s new post, we can be sure she’ll have a significant impact on policy making. Her current role as chair of the oversight panel for the Wall Street bailout was given almost no power at all by Congress, yet Warren has transformed it into the only real source of economic accountability in Washington, D.C. That’s no easy task, and we can expect similar courage and creativity from her as a member of Obama’s economic team.

What will the CFPB look like?

Warren herself seems to be pleased with the appointment. In a piece for AlterNet, Warren says that she “enthusiastically agreed” to take on the new position, and explains the vision for the CFPB:

“The new consumer bureau is based on a pretty simple idea: People ought to be able to read their credit card and mortgage contracts and know the deal. They shouldn’t learn about an unfair rule or practice only when it bites them — way too late for them to do anything about it. The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market.”

Sea change

That sounds common-sense, but it’s exactly opposite to the past three decades of deregulation. Reversing the damage caused by that anti-regulatory fervor has been extremely difficult. The Obama administration needs Warren’s voice now more than ever. In the early days of his presidency, Obama pushed through a stimulus plan that has prevented the middle class from falling completely off the map. But those efforts are expiring, and they haven’t been enough to prevent millions of families from sinking into poverty.

Alarming poverty rate

In a harrowing piece for The Nation, Kai Wright notes that more people are now impoverished than at any time since the government began tracking poverty data. The poverty rate rose to 14.3 percent, with 44 million Americans—roughly one in seven—living in poverty. More than one-third of black and Latino children are growing up impoverished.

So it’s no surprise that income inequality is also at its most severe in decades. As Kevin Drum notes for Mother Jones—for the past thirty years, more and more American wealth has been concentrated among  the richest citizens. The richest 1 percent of U.S. earners are raking in 10 percent more of the national income today than they were at the start of the Reagan administration, while the poorest 95 percent have seen their share of the national income decline.

Numbers like these aren’t a fluke—they’re a direct result of policies that put the interests of Wall Street and other powerful corporate players ahead of the well-being of households. Nor were these policies adopted in a vacuum– Wall Street lobbied hard for the right to pillage our pocketbooks, and when it couldn’t rewrite the rules, it simply broke them while bank-friendly regulators looked the other way. Elizabeth Warren can’t fix all of this on her own, and she’ll surely face opposition from some members of Obama’s inner circle. But families couldn’t ask for a better advocate, and her appointment couldn’t come at a better time.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

Weekly Audit: Can Elizabeth Warren Save the Economy?

by Zach Carter, Media Consortium blogger

President Barack Obama’s decision to appoint Elizabeth Warren to set up the new Consumer Financial Protection Bureau (CFPB) couldn’t have come at a more critical time.

Over 44 million Americans were living in poverty last year. That’s the highest number on record. The Great Recession is taking a terrible toll on everyone outside the executive class, but policymakers have been reluctant to pursue an economic agenda that improves the lives of ordinary Americans.

The uniqueness of Warren’s new post raises plenty of questions, but it puts a fierce defender of the middle class in office at a time when the middle class most needs help.

So what exactly will Elizabeth Warren do?

As Annie Lowrey emphasizes for The Washington Independent, it’s not entirely clear what Warren’s new job will be or how long she will have it.

Consumer advocates have pushed hard to get Obama to name Warren the first director of the new CFPB. Obama, citing Senate confirmation hurdles, has instead charged Warren with setting up the agency as an adviser to both the Treasury Department and Obama himself. The post allows Warren to get to work setting up the agency, but not the power to start drafting regulations. It’s good to see her get a post on the Obama team, but we do not yet know how influential she will be.

Tim Fernholz sums up the pros and cons of Warren’s appointment in a piece for The American Prospect. There are very real drawbacks to the move. Confirming Warren for a permanent post as director of the CFPB will be harder next year—Democrats are likely to lose Senate seats in November.

It’s not impossible, but if confirmation was Obama’s chief worry, he’s only made it harder on himself by kicking the nomination down the road. This is true for whoever Obama picks—the bank lobby is going to scream about anybody other than a bank lobbyist, and Republicans are filibustering almost everybody Obama nominates to any post, including critical economic policy positions at the Federal Reserve.

Getting to work

But the new role also gets Warren on the economic policy team right away, and allows the agency to begin staffing up under her stewardship, even if it can’t draft regulations until a permanent director has been confirmed. There will finally be a strong voice on Obama’s economic team prioritizing household financial security above all else. That’s very good news.

Whatever the formal powers of Warren’s new post, we can be sure she’ll have a significant impact on policy making. Her current role as chair of the oversight panel for the Wall Street bailout was given almost no power at all by Congress, yet Warren has transformed it into the only real source of economic accountability in Washington, D.C. That’s no easy task, and we can expect similar courage and creativity from her as a member of Obama’s economic team.

What will the CFPB look like?

Warren herself seems to be pleased with the appointment. In a piece for AlterNet, Warren says that she “enthusiastically agreed” to take on the new position, and explains the vision for the CFPB:

“The new consumer bureau is based on a pretty simple idea: People ought to be able to read their credit card and mortgage contracts and know the deal. They shouldn’t learn about an unfair rule or practice only when it bites them — way too late for them to do anything about it. The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market.”

Sea change

That sounds common-sense, but it’s exactly opposite to the past three decades of deregulation. Reversing the damage caused by that anti-regulatory fervor has been extremely difficult. The Obama administration needs Warren’s voice now more than ever. In the early days of his presidency, Obama pushed through a stimulus plan that has prevented the middle class from falling completely off the map. But those efforts are expiring, and they haven’t been enough to prevent millions of families from sinking into poverty.

Alarming poverty rate

In a harrowing piece for The Nation, Kai Wright notes that more people are now impoverished than at any time since the government began tracking poverty data. The poverty rate rose to 14.3 percent, with 44 million Americans—roughly one in seven—living in poverty. More than one-third of black and Latino children are growing up impoverished.

So it’s no surprise that income inequality is also at its most severe in decades. As Kevin Drum notes for Mother Jones—for the past thirty years, more and more American wealth has been concentrated among  the richest citizens. The richest 1 percent of U.S. earners are raking in 10 percent more of the national income today than they were at the start of the Reagan administration, while the poorest 95 percent have seen their share of the national income decline.

Numbers like these aren’t a fluke—they’re a direct result of policies that put the interests of Wall Street and other powerful corporate players ahead of the well-being of households. Nor were these policies adopted in a vacuum– Wall Street lobbied hard for the right to pillage our pocketbooks, and when it couldn’t rewrite the rules, it simply broke them while bank-friendly regulators looked the other way. Elizabeth Warren can’t fix all of this on her own, and she’ll surely face opposition from some members of Obama’s inner circle. But families couldn’t ask for a better advocate, and her appointment couldn’t come at a better time.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

Weekly Audit: Can Elizabeth Warren Save the Economy?

by Zach Carter, Media Consortium blogger

President Barack Obama’s decision to appoint Elizabeth Warren to set up the new Consumer Financial Protection Bureau (CFPB) couldn’t have come at a more critical time.

Over 44 million Americans were living in poverty last year. That’s the highest number on record. The Great Recession is taking a terrible toll on everyone outside the executive class, but policymakers have been reluctant to pursue an economic agenda that improves the lives of ordinary Americans.

The uniqueness of Warren’s new post raises plenty of questions, but it puts a fierce defender of the middle class in office at a time when the middle class most needs help.

So what exactly will Elizabeth Warren do?

As Annie Lowrey emphasizes for The Washington Independent, it’s not entirely clear what Warren’s new job will be or how long she will have it.

Consumer advocates have pushed hard to get Obama to name Warren the first director of the new CFPB. Obama, citing Senate confirmation hurdles, has instead charged Warren with setting up the agency as an adviser to both the Treasury Department and Obama himself. The post allows Warren to get to work setting up the agency, but not the power to start drafting regulations. It’s good to see her get a post on the Obama team, but we do not yet know how influential she will be.

Tim Fernholz sums up the pros and cons of Warren’s appointment in a piece for The American Prospect. There are very real drawbacks to the move. Confirming Warren for a permanent post as director of the CFPB will be harder next year—Democrats are likely to lose Senate seats in November.

It’s not impossible, but if confirmation was Obama’s chief worry, he’s only made it harder on himself by kicking the nomination down the road. This is true for whoever Obama picks—the bank lobby is going to scream about anybody other than a bank lobbyist, and Republicans are filibustering almost everybody Obama nominates to any post, including critical economic policy positions at the Federal Reserve.

Getting to work

But the new role also gets Warren on the economic policy team right away, and allows the agency to begin staffing up under her stewardship, even if it can’t draft regulations until a permanent director has been confirmed. There will finally be a strong voice on Obama’s economic team prioritizing household financial security above all else. That’s very good news.

Whatever the formal powers of Warren’s new post, we can be sure she’ll have a significant impact on policy making. Her current role as chair of the oversight panel for the Wall Street bailout was given almost no power at all by Congress, yet Warren has transformed it into the only real source of economic accountability in Washington, D.C. That’s no easy task, and we can expect similar courage and creativity from her as a member of Obama’s economic team.

What will the CFPB look like?

Warren herself seems to be pleased with the appointment. In a piece for AlterNet, Warren says that she “enthusiastically agreed” to take on the new position, and explains the vision for the CFPB:

“The new consumer bureau is based on a pretty simple idea: People ought to be able to read their credit card and mortgage contracts and know the deal. They shouldn’t learn about an unfair rule or practice only when it bites them — way too late for them to do anything about it. The new law creates a chance to put a tough cop on the beat and provide real accountability and oversight of the consumer credit market.”

Sea change

That sounds common-sense, but it’s exactly opposite to the past three decades of deregulation. Reversing the damage caused by that anti-regulatory fervor has been extremely difficult. The Obama administration needs Warren’s voice now more than ever. In the early days of his presidency, Obama pushed through a stimulus plan that has prevented the middle class from falling completely off the map. But those efforts are expiring, and they haven’t been enough to prevent millions of families from sinking into poverty.

Alarming poverty rate

In a harrowing piece for The Nation, Kai Wright notes that more people are now impoverished than at any time since the government began tracking poverty data. The poverty rate rose to 14.3 percent, with 44 million Americans—roughly one in seven—living in poverty. More than one-third of black and Latino children are growing up impoverished.

So it’s no surprise that income inequality is also at its most severe in decades. As Kevin Drum notes for Mother Jones—for the past thirty years, more and more American wealth has been concentrated among  the richest citizens. The richest 1 percent of U.S. earners are raking in 10 percent more of the national income today than they were at the start of the Reagan administration, while the poorest 95 percent have seen their share of the national income decline.

Numbers like these aren’t a fluke—they’re a direct result of policies that put the interests of Wall Street and other powerful corporate players ahead of the well-being of households. Nor were these policies adopted in a vacuum– Wall Street lobbied hard for the right to pillage our pocketbooks, and when it couldn’t rewrite the rules, it simply broke them while bank-friendly regulators looked the other way. Elizabeth Warren can’t fix all of this on her own, and she’ll surely face opposition from some members of Obama’s inner circle. But families couldn’t ask for a better advocate, and her appointment couldn’t come at a better time.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

 

 

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