...we're all going to die. The Washington Post says so:
The nation is losing jobs so quickly that the government, racing to deal with the crisis, is having trouble keeping up.
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The stunning pace of job losses raises the possibility that, perhaps as early as this summer, one in 10 Americans will be out of a job even though they are actively looking for work. It also means that the government faces even more pressure to take further action to stabilize the economy and the financial system.
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Analysts increasingly view the administration's actions so far as insufficient given the scope of the problem...
The stimulus package was designed to "save or create" 3.5 million jobs, according to the administration. But the nation has already lost 4.4 million jobs since the start of the recession. Many banks and other financial institutions, whose health is critical to the economy, are teetering, and the Treasury Department has yet to finalize the details of its plans to remove from their balance sheets the toxic assets dragging them down.
And just to really drive the point home, Martin Feldstein offers some grim statistics on the housing market:
The massive downturn in the US economy will last longer and be more damaging than previous recessions because it is driven by an unprecedented loss of household wealth. Although the fiscal stimulus package that US President Barack Obama recently signed will give a temporary boost to activity sometime this summer, the common forecast that a sustained recovery will begin in the second half of the year will almost certainly prove to be overly optimistic.
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[T]he fall in share prices and in home values has destroyed more than $12 trillion of household wealth in the US, an amount equal to more than 75 percent of GDP. Previous reactions to declines in household wealth indicate that such a fall will cut consumer spending by about US$500 billion every year until the wealth is restored. While a higher household saving rate will help to rebuild wealth, it would take more than a decade of relatively high saving rates to restore what was lost.
The decline in housing construction has added to the current shortfall in aggregate demand. The annual number of housing starts has fallen by 1.2 million units, cutting annual GDP by an additional US$250 billion. While this will eventually turn around as the inventory of unsold homes shrinks, the recovery will be slow.
So the US economy faces a US$750 billion shortfall of demand [ed note: this is a per year figure]. Moreover, the usual automatic stabilizers of unemployment benefits and reduced income tax collections will do nothing to offset this fall in demand, because it is not caused by lower earnings or increased unemployment.
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An optimistic estimate of the direct increase in annual demand from the stimulus package is about US$300 billion in each of the next two years.
So, basically, we're going to be spending less than half of what is needed to fill the hole in our GDP. Half, I suppose is better than nothing, but when shelling out $787 billion (not to mention the trillions of dollars that will be going into propping up the financial sector), I imagine the American citizens want to see something better than "better than nothing." We want to see a solution.
President Obama has said that now is not the time for small ideas. But it is not only the president who runs this country. It is the citizens. Obama's discretion in how aggressively he can combat this epic crisis is directly related to the support the public is willing to give to it.
Yet, fighting against the opinion of economists world wide -- including several Nobel Prize winners such as Paul Krugman and Joseph Stiglitz both of whom actually argue the governments actions are currently too small -- are the know-nothing talking heads on the major financial channels. After selling the American people for years on the infallibility of the market, and continuing to do so as recently as last fall even after it was already apparent that the economy was headed for absolute disaster, they now wish to be the voice of populism. When the populist movement became a room full of floor traders, I have no idea.
The gall it takes now for these same types blather about how we've become numb to the staggering figures we're hearing out of Congress and the White House is insulting, but for all their faux-populist rage, they are not anything like the American people. They make substantially more, their jobs are more secure, their savings dwarf those of the middle class, and the advice they're offering is so poor that it's akin to advising a caffeine addict to take up heroin instead.
The poster boy of these blithering morons at the moment is the infamous Rick Santelli. During his asinine rant on-air at CNBC two weeks ago, he proclaimed of Wall Street brokers, "This is America!" And like many of those whose fear mongering over price tags is perhaps limiting the government's ability to inject the kind of money that nearly all economists have deemed necessary regardless of political stripe, Mr. Santelli himself has little to worry about in this recession.
He is a resident of Wheaten, IL, a suburb of Chicago whose median income is substantially higher than that of the rest of America ($88,345 vs. $55,233), and whose median home value is three times as high as the rest of the Mid-West. In his mindless spiel, Santelli derided homeowners "with an extra bathroom who can't pay their bills." I suppose the gist was that if those silly homeowners hadn't wanted two bathrooms, they'd be okay now. For the record, this is the neighborhood Rick Santelli lives in:
I don't know about you, but where I come from, we call those mansions. An extra bathroom? Christ, this guy's garage alone is probably the size of a modest home. Who the fuck does he think he is speaking on behalf of the American people? Or, as he called them, "the losers."
It's time we moved away from this dialogue, and heeded the advice of actual economists. More stimulus may be a bitter pill to swallow, but doing what's right is not always easy. Contact your Congressmen, your local newspapers, and start talking the facts with your friends and loved ones. The logic is simple, when consumers can no longer spend, the government is obligated to fill that gap. And as I quoted above, the housing crisis -- which was the core of Santelli's rant -- will only continue to make this worse. I don't know what world Santelli and the rest of these so-called financial analysts live in, but mass foreclosures (more so than we have now) would be an absolute disaster for our economy. In fact, in his entire tirade, Santelli does not once address the possible problems with allowing millions of Americans to default on their mortgage.
But why should he care? It won't be his home that's taken away.
As always, more thoughts at The Left Anchor.