Skip to main content

The Myth of Recovery
By David Glenn Cox

Cue: Smiling faces, young energetic men and women following their dreams as the voice over says, " During times like these, it seems, the world will never be the same. But there is a light beginning to shine again. The spark began where it always begins, at a restaurant downtown, in a shop on Main Street, a factory around the corner. Entrepreneurs like these are the most powerful force in the economy.

"They drive change and they’ll relentlessly push their business to innovate and connect. As we look to the future they’ll be there ahead of us, lights on, showing us the way forward. This is just the beginning of the reinvention of business, and while we’re sure that we don’t know all the answers, we do know one thing for certain, we want to help at American Express."

This is nothing but pure corporate propaganda. A bike shop, a restaurant, a cake shop and a landscaping business, who will buy these bicycles and cakes and meals? All State Insurance has chimed in, "We’ve been with you through seven recessions and we’ll be with you through this one." They're telling us that the worst is over; come on out and let the sun shine down upon you. There is only one problem with this rosy scenario, it’s just isn’t true.

"SACRAMENTO, Calif. -- Republican Gov. Arnold Schwarzenegger asked for $6.9 billion in federal funds in his state-budget proposal Friday and warned that state health and welfare programs would be threatened without the emergency help.

"Mr. Schwarzenegger's proposed $82.9 billion general-fund budget for the 2010-11 fiscal year would close a $19.9 billion gap over 18 months. In addition to the federal aid, he called for $8.5 billion in cuts and $4.5 billion in alternative funding to balance the budget."

Last year Mr. Schwarzenegger declared a fiscal emergency and pushed through $42 billion in budget cuts, layoffs, furloughs and tax increases. It was the most draconian budget ever passed in California history, and even before it could even be implemented, California was back in the hole to the tune $8 billion more.

Of course the conservatives screamed, "That’s what you get with a nanny state," forgetting that the general welfare of the populace is the only true purpose of a state in the first place. Yet, the key point is not that California was spending too much but that revenues have shrunk fantastically. California tax revenues year over year in 2009 dropped an incredible 44% from $12.995 billion (April 2008) down to $7.336 billion (April 2009).

"April numbers reflect actual tax returns that show lower incomes and more refunds than April 2008. But it also must indicate that wages/incomes are dropping at an accelerating pace." (California Personal Income Daily Revenue Tracker CA.GOV)

"There's no question this is extraordinary. The worst situation in 50 years," Susan Urahn, director of the Pew Center for the States, told ABC News. "Fiscal year 2010 will be just as bad as it was last year. We saw a $180 billion cumulative budget gap in 2009 and predict the same for 2010." So, a $787 billion stimulus package that was 40% tax cuts will be about as effective as snowballs against an Abrams tank. Plus the $360 billion shortfall doesn’t include cities, counties and municipalities.

In Silicon Valley entire office buildings stand vacant, more than 43 million square feet. That's over 15 Empire State Buildings worth of floor space, a lot of bicycles, cakes and landscaping. But we are all tied together and American Express is wrong when they say, "Entrepreneurs like these are the most powerful force in the economy." The workers are the most powerful force in this economy because if we can’t buy it they can’t sell it.

"In our personal ambitions we are individualists. But in our seeking for economic and political progress as a nation, we all go up or else all go down as one people. (Franklin Deleno Roosevelt)

Bloomberg- "There is a bubble bursting in much the same way as the residential market burst," said Jon Haveman, principal at Beacon Economics, a consulting firm in San Rafael, California. "None of those towers will fill up anytime soon."

Commercial property foreclosures will at least double in 2010 and job growth won’t return for two years after that, held back by U.S. consumers who are saving more and "getting back in line with sustainable spending habits," Haveman said.

Domino Effect

"Bloated inventory and tight lending standards will curtail office construction in pockets around California for the next several years," said Jack Kyser, founding economist of the Kyser Center for Economic Research at the Los Angeles Economic Development Corp.

"That means there won’t be jobs for construction workers and hence no tax revenue from sales of construction materials," Kyser said. "It is the ultimate domino effect."

This domino effect, however, falls both ways. No jobs for construction workers or for building material workers means no jobs for the truckers that haul and the salesmen that call. No work for the architect or the construction company exec, no foundation laid nor permits paid. Gee, I guess all those lazy, overpaid, fat American workers had a purpose after all. We paid the taxes that made the train go; on our backs society succeeds or fails. You could put all the investment bankers on Earth on the next rocket ship to Mars and we’d be no worse off, in fact we’d probably be better off without them.

The much ballyhooed November job numbers have been revised down to just four thousand new jobs, four thousand new jobs in an economy that requires fifty thousand new jobs each month just to break even. "Well, isn’t that better than losing four thousand jobs?" Sure, it's like being seventeen million dollars in debt and saying that things are looking up because I just found four dollars in my coat pocket!

The December number returned to the two-year trend, making November an aberration; the economy lost another eighty-five thousand jobs.

Bloomberg- The survey of households, used to calculate the unemployment rate, showed employment dropped by 589,000 workers last month. A decrease of 661,000 in the number of people saying they were in the labor force prevented the jobless rate from rising.

"A decrease of 661,000 in the number of people saying they were in the labor force prevented the jobless rate from rising?" Those 661,000 are discouraged workers! Once you exhaust your unemployment benefits you are no longer counted as unemployed. You are discouraged because there are no jobs and because you haven’t watched enough American Express commercials.

As for the cheerleaders at American Express, this little tidbit:

"Consumer Credit falls by a record $17.5 billion. More than $5 billion expectations--
The consumer credit fell by a record 17.5 billion in November. Revolving Credit (credit card) fell by -$13.7 billion and Non revolving (auto loans, mobile homes) fell by -$3.8 billion. The fall is a combination of lower spending and tighter credit standards." (Forex News)

No one, especially myself, enjoys being the harbinger of dark tidings, but I just can’t stand the lies. We must be honest with ourselves to solve this crisis; we can’t hide behind fictions and fallacies. There is a reason why the office buildings are empty in Silicon Valley and why New York commercial property rents are down 21%. This economy needs us and it won’t get better without us. We need jobs! We need a WPA and a CCC to infuse capital into the economy. The depression isn’t over, it just getting ready to begin.

"We of the Republic pledged ourselves to drive from the temple of our ancient faith those who had profaned it; to end by action, tireless and unafraid, the stagnation and despair of that day. We did those first things first.

"Our covenant with ourselves did not stop there. Instinctively we recognized a deeper need—the need to find through government the instrument of our united purpose to solve for the individual the ever-rising problems of a complex civilization. Repeated attempts at their solution without the aid of government had left us baffled and bewildered. For, without that aid, we had been unable to create those moral controls over the services of science which are necessary to make science a useful servant instead of a ruthless master of mankind. To do this we knew that we must find practical controls over blind economic forces and blindly selfish men." (Franklin Deleno Roosevelt)

This is the true reason why the name of Franklin Roosevelt sends cold shudders through Republican hearts. His answers are the crucifix that drives them back into their box and his solutions were the stake that was driven through their hearts to make them stay there. So, now they are loosed upon us again and those unwilling to take up the stake should be held up to a mirror to see who is who.

Originally posted to Daveparts on Mon Jan 11, 2010 at 08:52 AM PST.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

    •  But we have to (0+ / 0-)

      be careful, and make certain that the jobs being created or solely and always dependent on government spending, or if they are, they actually serve another interest rather than injecting capital into the economy.  

      If you don't, you end up with things like absurd situation we have with space & NASA - NASA is currently developing a plan to utilize rockets, that no one else is likely to utilize now, or in the future.  And the reason for that is because there will be job losses if those rockets go away, and those jobs are in certain Congressional districts with powerful people.  They have nothing to do with advancing us towards becoming a spacefaring society.  

      Paying people to bury money doesn't make sense - you need a self-sustaining mechanism for why you spend the money.

  •  They want to help get the money out of... (2+ / 0-)
    Recommended by:
    publicv, DRo

    ... your pocket and into theirs.

    "Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all" Andrew Carnegie

    by pantherq on Mon Jan 11, 2010 at 08:57:11 AM PST

  •  I am sorely afraid the worst is yet to come. (3+ / 0-)
    Recommended by:
    publicv, Kristina40, DRo

    There is still a gigantic backlog of foreclosures looming out there; unemployment checks are drying up; we are still losing jobs month-to-month.

    The terrible problems of state and local governments are only going to get worse in the near-term . . .

    "we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex" Dwight D. Eisenhower

    by bobdevo on Mon Jan 11, 2010 at 08:57:19 AM PST

  •  Rebulid our Public Schools (0+ / 0-)

    Start today.

    "One man alone can be pretty dumb sometimes, but for real bona fide stupidity nothing beats teamwork." - Mark Twain

    by greendem on Mon Jan 11, 2010 at 08:58:35 AM PST

  •  TAX THE FUCKERS! (2+ / 0-)
    Recommended by:
    Bobs Telecaster, DRo

    Tax the shit out of corporations and the wealthiest individuals. (And actually, now that the SCOTUS appears to have affirmed corporate "personhood," Corporations should be taxed at the same rate as persons...) Tax the shit out of that top 5%, and you'll see a huge decrease in the size of all "bubbles."

    Levy a HUGE tax on CDS/CDOs--if not make them illegal outright; a small trading tax on ALL equities. Also, jack short-term capital gains even higher than it has historically been, maybe 70%. Create a massive dis-incentive for skimming the wealth out of the economy. Give investors at better rate for long term cap gains, you give them reason to invest for the long term.

    Also, close all loopholes for offshoring income, and put Glass-Stegall back in place.

    Get all that crazy money floating around back into the hands of federal and state governments, and back into our pockets.

    "'club America salutes you' says the girl on the door/we accept all major lies, we love any kind of war"--The Cure, "Club America"

    by Wheever on Mon Jan 11, 2010 at 09:05:58 AM PST

    •  And then... (1+ / 0-)
      Recommended by:
      Wheever

      You see, if capital is mobile - if it can move away without restrictions, you have a bit of a problem: Capital will simply shift costs to other production factors by capital flight.

      On the other hand, a Tobin tax should be introduced.

      Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae 1, 3

      by Dauphin on Mon Jan 11, 2010 at 09:13:39 AM PST

      [ Parent ]

    •  England placed a 50% tax on all (2+ / 0-)
      Recommended by:
      Calamity Jean, Wheever

      CEO bonuses.  Why can't we.  It seems like a no brainer.

      Expose the lies. Fight for the truth. Push progressive politics. Save our planet. Health care is a right, not a privilege.

      by lighttheway on Mon Jan 11, 2010 at 09:56:33 AM PST

      [ Parent ]

  •  There will be NO and I mean... (4+ / 0-)
    Recommended by:
    Calamity Jean, publicv, Kristina40, DRo

    ...and I mean NO job growth until the fundamental economic problem that no one is discussing is addressed. It is the inequality of the distribution of wealth and its impact on our consumption driven economy. There will be NO recovery so long as the wealth of our nation is concentrated in the hands of the super rich who won‘t (or can‘t) spend enough to keep the economy going. It is not even their fault. A decreasing marginal propensity to consume as people grow richer is a basic tenet of economic theory. Only ten percent of our population now possess over 80% of our wealth which means that 90% of us do not have the economic resources to maintain our consumer based economy. This lack of consumer demand guarantees that GM and Chrysler will eventually slide into full Chapter 7 liquidation, and the housing market will never recover. Unemployment will rise well into the teens and stay there. Following California’s lead, state after state government will go bankrupt as well. The answer is to recycle some of the stagnant pool of wealth (it currently is not going into productive investment) back into the economy through a highly progressive tax on those with annual incomes over $250,000 to be spent on free universal health care, and education for qualified students through college. This action would stimulate consumer spending, jump start the economy and surprisingly not even hurt the super rich who would benefit from the reulting economic growth. The Obama administration will not confront the super rich to make it happen, and if the Republicans are returned to power the problem will only get worse. The result will be (and is) a return to a near permanent 1930’s type of depression and one in which government at all levels will not have the resources to help its citizens.

    _____________________________________________________________________________________________________

    If you read anything today read Juan Cole‘s  recent  analysis of the super rich.

      INEQUALITY OF WEALTH
    Photobucket
    To see the data go to UCSC.

    Where we are headed if we don‘t change course and begin to fairly tax the super rich.

    Photobucket

    Photographer: Tuca Vieira, Paraisópolis Favela in Sāo Paulo, Brazil 2005

  •  Meh. (1+ / 0-)
    Recommended by:
    DRo

    Recovery or no, it's been patently obvious that the real estate boom won't come back. Unfortunately, construction happens to be a sector which employes a lot of people, especially unskilled workers.

    As with any recession, the question isn't what to produce but where to employ people. And no one has an answer.

    Iuris praecepta sunt haec: Honeste vivere, alterum non laedere, suum cuique tribuere. - Ulpian, Digestae 1, 3

    by Dauphin on Mon Jan 11, 2010 at 09:12:04 AM PST

  •  Nice diary. (2+ / 0-)
    Recommended by:
    Calamity Jean, Kristina40

    I really liked your phrase

    the general welfare of the populace is the only true purpose of a state in the first place

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site