The False Recovery--More Delusion

[marmar]

from the WorkingLife blog:



The False Recovery--More Delusion
by Jonathan Tasini

Tuesday 30 of March, 2010


Bob Herbert makes a point that I've been making repeatedly for many, many months:

Those who think some kind of robust recovery is hiding around the corner, just waiting to spring a pleasant surprise on us, are deluded. Too many families and individuals are tapped out. They’re struggling from week to week and month to month just to meet the necessities of housing, food and energy costs. Those crazed, debt-driven buying sprees that held the economy aloft for so long are over.

Delusion is the right word to use. Many of the same "experts" who forecasted economic wonders in the past just don't live in the real world of average people.

Do not believe in the stock markets--the rise in stocks is another short-term bubble that will deflate again, I'm guessing by the end of the year.

States and cities are going to continue to cut deeply--and jobs will go first:

California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.

Savings rates are going down again, after a short blip upward. Why? Well, if millions of people are out of work for months and there is no credit left, why would anyone think that the savings rate would go up?

This is a long-term crisis. And the end is not near.


http://www.workinglife.org/blogs/view_post.php?content_id=14783

[laughingliberal]

1. "the rise in stocks is another short-term bubble that will deflate again, ..."

I don't see how it could be otherwise.

And, with CA sitting on the brink along with several other lesser states, it's just downright frightening.

[Nikki Stone1]

2. CA is in really bad shape

I hope we're not looking at a domino effect.

[laughingliberal]

3. I know. We are in NV, as well, but we're not big enough to take the whole country with us

and I think CA is.

[Nikki Stone1]

5. That's just mind boggling

I just heard that home prices in LA went up by a percent. That was allegedly good news.

[Warpy]

4. People are stuck paying off all the toys they "bought" with plastic

and the horrible part is that a lot of those toys are long broken, worn out, lost, discarded. They'll be paying for them for decades to come.

People who went on that buying spree are learning a very, very tough lesson: income might come and go, but those creditors never stop asking for their money no matter what the economy is doing.

That's the bottom line about why the economy is going to be so slow to improve. Not only will people have to save up and buy only what they can afford, they're not going to be able to save up to buy anything until that heavy debt burden is paid off.

[laughingliberal]

7. I do think some of it is due to people being out of work.

Who the hell would have thought there would be nurses in any part of the country having trouble finding jobs? I've lived through some crashes. I've never seen anything like this.

[Warpy]

13. I have, I got caught in that 1973-1975 crash

and persistent joblessness. They didn't ask us if we'd look for work, there was none to be had.

Wages were still fairly good back then, and people weren't going into debt to make up for depressed wages. Credit cards for the masses were still new enough that most of the masses didn't have them. Coming out of that recession would have been a breeze if inflation hadn't chewed up our wages or our wages had been raised enough to keep up with it. They weren't, and wages have been depressed for the last 35 years.

And that, kids, are why were are in this mess. We've been robbed of the fruits of our labor for 35 years and forced into debt to compensate for the difference. Either we took on huge debt and lived well, or we didn't and lived in relative penury.

[laughingliberal]

19. It's not been a good run, no

and I don't see it changing any time soon. No one is standing for workers that I can see.

[truedelphi]

27. Very good point. And for those paying off plastic in Calif.

Current State law tells the consumers that they do not have to pay for any credit card where the last payment on said card is more than four years ago.

And it can even be illegal for the credit card company to phone and harass about payments.

Of course if you haven't paid off a credit card company in four years - your credit is in the sub basement. But it is sweet to know that there is a time limit on the harassment.

[scarletwoman]

6. That's exactly right.

There are fundamental structural and systemic reasons why it's logically not possible to "recover". We cannot possibly recover until the movement of wealth from the many into the pockets of the few is halted and reversed. And this will never be reversed unless HUGE changes are made in the entire economic paradigm -- changes that are currently highly unlikely, to say the least.

On a side note, I truly wonder about the motivations of those who are unrec'ing this OP.

sw

[laughingliberal]

8. "I truly wonder about the motivations of those who are unrec'ing this OP".

Buzz kill.

[Jackpine Radical]

11. We need to build a new infrastructure in America.

High-speed rail to replace domestic air traffic, a green energy distribution system, etc. Ditch NAFTA & refuse to deal with any country that doesn't permit its workforce to unionize. We could do it, but we would need something akin to a socialist revolution.

We're like a salmon with corporate lampreys hanging all over us. We can't afford to support the parasites any more.

[Nikki Stone1]

15. +1

.

[scarletwoman]

17. The parasites will happily suck us dry -- THEY can afford to.

[lonestarnot]

18. So a never recover? or highly unlikely?

[laughingliberal]

20. I guess it depends on how we define recover

Perhaps after a few long, tough years we might be back where we were before it all fell apart in 08. I don't expect we're ever going to see an America where the workers are prospering and the middle class expanding again. At least not in my lifetime.

[scarletwoman]

21. Unless massive structural changes occur to reverse the continuing redistribution of wealth upward

to the already wealthy, then no. It won't be possible.

[lonestarnot]

22. No recovery.

Well I think there will be some natural redistribution as we see energy sources change, but ever so slowly. Someone needs to stop the bleeding upward.

[HiFructosePronSyrup]

23. There are many historical examples of recessions lasting forever.

For example, the Great Recession of 1846 to Present.

Or "Harding's Folly," the recession that lasted from 1906 to present, and probably caused Carter to get voted out of office.

[gleaner]

9. Thank you for your post ....

I was told this morning that there really was no inflation when prices here in LA have jumped so sharply I can barely buy food on a fixed income. I was also told that I didn't understand how COLAs were linked to indexing and that the indexing for COLAS must not be changed because it had closed the deficit.

Um, let's see. I worked as an employee of the IRS where they used indexing in tax law for all kinds of things and my COLAs there, as they do now that I have retired, depend on indexing based on the cost of living. But me? I'm such a child, I just don't get it.:sarcasm:

I mentioned the high cost of chicken as an example of how the cost of food is soaring, and I was met with disbelief and told that I should cut it up in little pieces so my ailing husband and I could eat the same thing for every meal for at least fourteen days. Apparently prosperity is just around the corner and I have failed to notice. Damn. I hate when that happens.:wtf:

[Fumesucker]

10. K&R

[Tierra_y_Libertad]

12. A consumer run economy without consumers doesn't make for a "recovery". K&R

[leftstreet]

14. K&R

[unblock]

16. i've not heard a single forecast of a "robust" recovery. they all say a SLOW and MILD recovery

and they've been saying that for a long time.

[Subdivisions]

24. If you think it's been bad so far, just hide and watch. Indeed, what we're in for

has never been experienced in the history of this nation. Most believe it can't happen here. They are about to get the surprise of their life.

[Political Heretic]

25. We have an impending commercial housing "reckoning" not yet felt as well....

[saracat]

26. Arizona is in about the worst shape of all and we are NOT getting better anytime soon.

There are NO jobs and while I love my home both Hubby and I are looking out of state for jobs. We have got to survive.

[maryf]

28. kick for reality

sorry I missed this 'til now...