Is "let them eat cake" a winning political strategy for 2010?
Tomorrow, the US Department of Labor will issue it's September 2009 Monthly Employment Situation Report. In all likelihood, it'll show the U.3 unemployment index--which is nowhere close to the real state of affairs on Main Street joblessness--at or around 9.8%, give or take. The corporate-owned MSM is still telling us it's "the worst unemployment rate since 1983." Don't believe it for second. More than one out of every six Americans is either unemployed or underemployed to the point where they would be better off getting ongoing unemployment compensation than working at a menial job. The reality is it's the "Weakest employment market since the Great Depression." Yes, when it comes to "Unemployment: The Harder You Look, The Uglier It Appears." And, today, "Bernanke Says Jobless Rate May Be Above 9% at End of Next Year."
Bernanke Says Jobless Rate May Be Above 9% at End of Next Year
By Scott Lanman
Oct. 1 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said U.S. economic growth next year probably won't be strong enough to "substantially" bring down the jobless rate, which may remain above 9 percent at the end of 2010.
"Most forecasters including the Fed are currently looking at growth in 2010, but not growth so rapid as to substantially lower the unemployment rate," Bernanke said in response to questions at a House Financial Services Committee hearing today in Washington. Growth of 3 percent means the rate would "still probably be above 9 percent by the end of 2010," Bernanke said.
Greater than 9% Bureau of Labor Statistics' U.3 Index unemployment (still) 15 months from now, means how many more millions falling off the federal and state unemployment compensation lists? It'll be many millions more in poverty, IMHO; with poverty increasing at a record rate, already. Make those poverty numbers just a little more realistic (i.e.: in NJ, "poverty" for a family of four is classified as less than $636 monthly income), and the reality is far, far worse.
From the AP: "US income gap widens as poor take hit in recession."
US income gap widens as poor take hit in recession
By HOPE YEN (Associated Press Writer)
From Associated Press
September 29, 2009 1:42 AM EST
WASHINGTON - The recession has hit middle-income and poor families hardest, widening the economic gap between the richest and poorest Americans as rippling job layoffs ravaged household budgets.
The wealthiest 10 percent of Americans - those making more than $138,000 each year - earned 11.4 times the roughly $12,000 made by those living near or below the poverty line in 2008, according to newly released census figures. That ratio was an increase from 11.2 in 2007 and the previous high of 11.22 in 2003.
Household income declined across all groups, but at sharper percentage levels for middle-income and poor Americans. Median income fell last year from $52,163 to $50,303, wiping out a decade's worth of gains to hit the lowest level since 1997.
Poverty jumped sharply to 13.2 percent, an 11-year high.
"No one should be surprised at the increased disparity," said Richard Freeman, an economist at Harvard University. "Unemployment hurts normal workers who do not have the golden parachutes the folks at the top have."
Analysts attributed the widening gap to the wave of layoffs in the economic downturn that have devastated household budgets. They said while the richest Americans may be seeing reductions in executive pay, those at the bottom of the income ladder are often unemployed and struggling to get by.
So, "Why Are We Lying to Ourselves About Our Catastrophic Economic Meltdown?"
Why Are We Lying to Ourselves About Our Catastrophic Economic Meltdown?
Posted by Arun Gupta, AlterNet at 2:00 PM on September 29, 2009.
Sorry, it's not over yet. This downturn will be severe and long-lasting, and profoundly re-shape our lives, culture, society and the world.
--SNIP--
While there is a wealth of information and some excellent reporters in the business press, the mainstream media has botched virtually every major economic story over the last decade. It helped inflate the Internet bubble. It worshiped at the shrine of the free market and Alan Greenspan. It ignored the evidence of the housing bubble. It was missing in action on the commodities bubble. It celebrated billionaires and speculators even as they manufactured financial weapons of mass destruction. It only sporadically reports on the myriad ways Wall Street games the financial system.
Even now, the corporate media downplay the scope of the disastrous U.S. economy. The current economic downturn, the longest since the Great Depression more than 70 years ago, has been dubbed by many the "Great Recession."
It's a useful way for journalists to acknowledge the pain of tens of millions of Americans who have lost homes, livelihoods, health care and more, while distinguishing the current misfortune from the Great Depression. But the term also makes the situation seem rosier than it is.
Despite the financial industry's self-induced catastrophe in 2008, most corporate media reporting still assumes "What's good for Wall Street is good for America."
Federal Reserve Chairman Ben Bernanke has already said this recession is "very likely over." The S&P 500 index, from its low point in March 2009, has rocketed upward by nearly 60 percent in barely six months. And Wall Street banks are reporting record profits, less than a year after taxpayers threw them a trillion-dollar lifeline.
You see, Ben's telling us the Recession's over! Everybody...celebrate! Oh, wait! Two days later he's also telling us unemployment may be this bad for...years.
So, exactly what are we being told? Isn't Bernanke really saying, when you look at the comments coming out of both sides of his mouth, "Let them eat cake?"
More from Gupta...
...for the average household, the reality is grim. The number of unemployed and underemployed is nearly 17 percent of the U.S. workforce, or around 25 million people. Residential mortgage foreclosure filings have exceeded 300,000 a month for six months in a row, starting in March 2009. Tent cities are sprouting across the country. Personal incomes continues to shrink, and it's projected that medical bankruptcies, people who file for personal bankruptcy because of medical bills, will reach 900,000 cases this year.
There is also little hope for a sustained recovery. Even if the recession technically ends in 2009, it's only because of the (flawed) stimulus plan passed by Washington earlier this year.
One way to measure the gross domestic product is to divide it up in four segments: consumer spending, which is negative year over year; business investment, which is still in a recession; trade, or the value of exports minus import, which has been running a massive gap for years; and government spending, which has increased dramatically at the federal level while dropping precipitously at the local and state level. These factors are represented by the formula GDP = C+I+G+(X-M).
In simple language, there is no sector that appears capable of pulling the economy out of its deep funk: manufacturing has virtually disappeared in this country; most service sector jobs pay dismally; the tech sector and "creative industries" can't employ tens of millions; those hopes of green jobs appear to vanished with Van Jones; and there are no more bubbles that can be pulled out of the Federal Reserves' bag of tricks, at least ones that trickle down to Main Street.
7,000,000 homes that should be in formal foreclosure haven't even hit the foreclosure lists, today, which will create--just in and of itself--almost a two-year supply of inventory, pushing housing prices much (IMHO) lower than they are now. Forget about the housing "sales increases." It's all about price. Sales increases mean little if price pressures, now in a false holding pattern, are unleashed once reality sets in within the marketplace. Another real story is that once the banks formally foreclose, they have to mark-to-market (downgrade) their own assets, accordingly. And, you can bet your bottom dollar that if it wasn't for the banks' own self-interests in this equation, your home would already be worth 10%, 20%, or 30% less than it is today.
What do you think that's going to do to already-massively-depressed consumer spending habits, when 48% of all homeowners (without accounting for ongoing adverse price pressures, still to come) are already projected to be underwater (owing more on their homes than they're worth) by the end of 2010, as well?
This brings us to the reality of the true state of the virtually insolvent U.S. banking industry. And, if you don't think that this "minor" insolvency issue is real, consider this: "Banks Have Us Flying Blind on Depth of Losses: Jonathan Weil." Still a doubter? Well, when our own government says the truth, itself, will cause a bank run, what else is there to believe? Current and projected numbers are light year's worse than any projected worst-case scenario established by those bogus stress tests earlier in the year.
It is not good.
So, how did we get here? Well, I've written extensively about this, but something new's just hit my radar, and I wanted to share it with you, in terms of it being, perhaps, THE most thorough, easy-to-understand explanation, historically, of how this all came about. It's right here, by Naomi Prins: "Wall Street Lies Blame Victims to Avoid Responsibility for Financial Meltdown."
Wall Street Lies Blame Victims to Avoid Responsibility for Financial Meltdown
By Nomi Prins, Wiley Press. Posted September 29, 2009.
To hear it from the big financial companies, the big crash started when poor people bought homes they couldn't afford. But that was at most 1% of the problem.
Editor's note: The following is an excerpt from Nomi Prins' new book, It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street.
The Second Great Bank Depression has spawned so many lies, it's hard to keep track of which is the biggest. Possibly the most irksome class of lies, usually spouted by Wall Street hacks and conservative pundits, is that we're all victims to a bunch of poor people who bought McMansions, or at least homes they had no business living in. If that was really what this crisis was all about, we could have solved it much more cheaply in a couple of days in late 2008, by simply providing borrowers with additional capital to reduce their loan principals. It would have cost about 3 percent of what the entire bailout wound up costing, with comparatively similar risk.
Just as great oaks from little acorns grow, so, too, can a Second Great Bank Depression from a tiny loan grow. But so you know, it wasn't the tiny loan's fault. It was everyone and everything that piled on top. That's how a small loan in Stockton, California, can be linked to a worldwide economic collapse all the way to Iceland, through a plethora of shady financial techniques and overzealous sales pitches.
Here are some numbers for you. There were approximately $1.4 trillion worth of subprime loans outstanding in the United States by the end of 2007. By May 2009, there were foreclosure filings against approximately 5.1 million properties. If it was only the subprime market's fault, 1.4 trillion would have covered the entire problem, right?
Yet the Federal Reserve, the Treasury, and the FDIC forked out more than $13 trillion to fix the "housing correction," as Hank Paulson steadfastly referred to the Second Great Bank Depression as late as November 20, 2008, while he was treasury secretary. With that money, the government could have bought up every residential mortgage in the country -- there were about $11.9 trillion worth at the end of December 2008 -- and still have had a trillion left over to buy homes for every single American who couldn't afford them, and pay their health care to boot.
But there was much more to it than that...
Interestingly, Ms. Prins spends a great deal of time in the article about her new book telling us--in very easily-understood terms I might add--about how the irresponsible leverage practices of Wall Street were a big part of the still-unfolding scenarios of the past decade that actually got us into this mess. And, a quick look at who's the king of the leverage hill on Wall Street, today, tells her readers that, by far and away, it's Goldman-Sachs that's the Master of that Universe now, moreso than ever.
And, how do we get out of this mess, responsibly? Well, I posted a lengthy diary about that, just the other day: "Is This The Death of a Visionary Progressive Movement?" I spent a good part of that diary covering a great piece by Les Leopold: "Where's the Progressive Agenda for the Great Recession?"
In the meantime, it's the first day of the new month, and the beginning of a whole new quarter. Let's eat some stale cake while we check the mail for all of the new month's bills, and wonder about the holiday season and the new year...and the lies ahead...