The Recession Explained

[Joanne98]

Run time: 03:18 https://www.youtube.com/watch?v=_dP6bWTpq8Q   Posted on YouTube: January 12, 2010 By YouTube Member: Views on YouTube: 0   Posted on DU: January 12, 2010 By DU Member: Joanne98 Views on DU: 891

 

Dylan Ratigan explains the recession.

[scentopine]

1. We are turning into third world oligarchy - we need a war against wall street -nt

[cufford]

2. Wrong!

(The video posted, not the previous comment)

This convenient propaganda of scapegoating Wall Street Bankers for their most recent decade of abuses, has little to do with our economic collapse. Sure, they always have, and always will, manipulate the system to make enormous, obscene profits. But that isn't what's brought our economy to its knees.

Ironically, this piece does touch on the real reason, but only superficially and then doesn't even pursue it. When it got to the brief moment where it said "consumers couldn't pay their bills" it was there. So why couldn't consumers pay their bills? This piece never asks the obvious question. Why can't consumers pay their bills? Well it ain't because of derivatives trading, that's for sure.

Rather it's because of the 30+ year assault on labor prices in this country - kicked into high gear with so-called "Free Trade" agreements, which opened the floodgates for American corporations to fire their well-paid, middle class work force. Wages have been in steady and drastic decline ever since.

Now here we are, nearly 20 years after the passage of NAFTA, a country devoid of manufacturing and industry, and having lost a critical mass of the best paying, working class jobs this country had. The very fuel of our economy. Those nice, mostly union jobs, created huge economic demand by their workers who went out and spent their great paychecks each week, consuming loads of goods and services. This demand created and fueled countless downstream jobs of further manufacturing and other services throughout communities and across the nation. Good paying jobs, creates more good paying jobs. The money flows through employee to business, to employees, to business, and so on and so forth.

But when you eliminate the lion's share of these good paying jobs for the masses, and instead shift our economy to a minimum wage workforce, then not only are those millions of great jobs lost, but all the downstream jobs they used to fuel now begin to disappear. Demand steadily decreases. More businesses close their doors and more people lose their jobs. And so on and so forth. Here we are folks.

We are in this economic disaster because of a 30+ year assault on wages in this country. Driving them down as far as possible so that these corporations could temporarily increase their bottom lines. But the chickens come home to roost. Those employees they fired when they outsourced these jobs to other countries, were essentially their own best customers. They slit their own economic throats.

The big automakers were at the head of the line lobbying for the passage of NAFTA. 20 years later there are so fewer customers left to buy their cars that they all go bankrupt. These corporations ultimately destroyed their own marketplace over the long term, in order to increase profits in the short term.

We are in the mess because the middle class, the great consumers of this nation which created the greatest marketplace on the planet, have been eliminated through decades of systematic economic treason by our corporate-owned government.

The reason we are in this mess is because there are not enough consumers consuming. Just as the video said, "they couldn't pay their bills". Why? Because a critical mass of the best paying, working class jobs for the masses have been systematically eliminated. A complete restructuring of our economy from an industrial, manufacturing, exporting nation that paid it's workers very well - which gave them all lots of money to spend and consume with - to a nation of minimum wage jobs for the masses. A country which doesn't hardly make a thing any more, exports very little, and now imports most of it's goods from abroad where labor prices are even cheaper for these immoral corporations.

Did the greedy Wall Street Bankers scam and manipulate the system to make huge profits any way they can and no matter who they hurt, of course. They always have and always will. They'll always be there trying to siphon off as much profits from the system as possible, no matter what the economy is.

But these practices are not "the reason" for our economic destruction. Rather it's the decades long war on wages in this country. The masses simlpy can't afford to consume like we used to. The well has dried up.

Even if we had 100% employment right now, it would mean little. Because the problem is "UNDERemployment" more than it is "UNemployment". Nothing will change in this country unless wages rise - if we doubled the minimum wage today our economy would take off like a rocket. But that's obviously not going to happen. To the contrary, they're continuing to turn the screws on the American worker by beginning to LOWER the minimum wage, which will only accelerate our plunge to the bottom.

It's wages folks. High wages creates high demand and fuels consumption. Low wages kills demand and starves consumption. That's the problem. And until enough people wake up to this reality, nothing will change.

And by the way, this is exactly what Thom Hartman has been preaching for ages. He's the only widely broadcast progressive voice on the air in this country that gets this, and he regularly touches on it.

Reinstate tariffs and force manufacturing back into this country, and while encouraging organized labor again. Rebuild unions and, most importantly, drive the cost of labor back up. Improve the standard of living for the masses instead of degrading it. It's the masses spending money that drives the economy. Not investment banking. The people, the masses, must make enough income to spend and consume beyond the basics. That used to the case in a big way. No longer.

As Thom has pointed out on his radio show, a moderate increase in labor costs is easily overcome by a modest increase in retail prices.

It's better to have a nation of people who can afford to buy slightly more expensive products, than a nation of people who can't even afford the cheap stuff.

I'm tired of this "evil Wall Street profiteers" meme that prevails in our media. That's just a scapegoat, not the real problem. Sure, we should try to minimize their abuses of the system, but it's not as important as paying our working class people a living wage. The powers that be never talk of raising wages, only more "jobs". And they talk about new "green jobs", but never bother to mention if those jobs will be "good paying", because they won't. More jobs means little for our country. More good paying jobs, on the other hand, does.

Again, if we had full employment at or near minimum wage, we'd still be in this mess, because you can't "consume" much on a living that doesn't even cover your monthly rent and utility bills.

It's the lack of good paying jobs for the masses that got us here, not what this video piece posits. And without that changing, our plunge to the bottom, to a third-world economy, ruled by Oligarchy, will only continue. All this talk about "recovery" is utter nonsense. It's mathematically illogical. There's nothing to rebound, this is not a cyclical "down-turn", but rather a decades long ride to the bottom. And there's apparently no stopping it at this point.

Our elected representatives are little more than legislative prostitutes, selling their influence and power to the highest bidders; the corporations and wealthy elite. Therefore wages will not increase, and we'll continue the plunge to the bottom over the years and decades to come.

[Jefferson23]

4. Great post, very well stated. n/t

[Aeon10101110]

3. gop protracting the recession

The world has managed some recovery after capitalism attempted to devour itself once more. But those who led us down the path of their inevitable destruction are now the loudest whiners. We are discovering that it was worse than imagined. Also we know that the socialistic measures instituted were once again the saviour of the capitalists (read - bailouts). But now, when hope appears in many facets of economic indicators, jobs aren't being created. Who's fault? Well, who hires people? You guessed it, the capitalists. But they are content to let the government pay unemployment compensation to people who would otherwise end up rioting. History is proven in blood.

Predictable even by their own equations, the most greedy among us plunged the entire world to the brink of a labyrinthine abyss of depression. And those who represent the capitalists the most, who are the Republican Party of the United States, refuse to participate in the recovery. Now these same people refuse to do any hiring! How often can history repeat itself without society learning? Apparently, ad nauseum. The Republicans should sicken any person with merely a consciousness, perhaps even simply a pulse. They have refused any measure of assistance for not only the economy but also to it's very backbone, the workers.

Of course we need people to take risks with their money to keep it circulating. But if they didn't and just hoarded it, what would it be worth? Who would want it? It is the duty capitalists owe to themselves to keep their money in circulation. But as everyone knows, labor is the source of all wealth. So, is it the duty of labor to bail out the capitalists when their excesses become brinkmanship? Pitiably, yes, and so do labor's children and even their children by way of taxes to pay off the Republican binge of spending and tax cuts for the wealthy. And of course the wars of the Republicans rage on, maximizing our debt, again ad nauseum. But they couldn't be bothered with 'details' like infrastructure - roads, bridges, information, et cetera.

Republicans are shamefully opposed to providing for such basic human needs as healthcare. But if the businesses they own would be better providers of such minimal services, the government would not need to step in to fill this very desperate need. Instead, their concern is merely to funnel wealth to fewer and fewer people. Theirs is the legacy of the Whig Party, essentially bankers' interests who also led the U.S. into a severe depression!

There is no credible doubt that unregulated financial machinations were responsible for the banking collapses and global recession of 2007-2009. The Republicans are thoroughly aware of this, they are the party of deregulation. When they had sizable U.S. political majorities in recent years, they in fact deregulated financial sectors to unparalleled levels; the distinction of "bank" was even blurred. While such irresponsibility allowed a temporary boom, it was short-lived. Now while Republicans sock away former profits, they complain about jobs. But primarily, they are the ones with wealth and companies, they must create the jobs. They appear to be creating unemployment artificially for political gain.