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Whenever Republicans talk about not enough jobs being created or the recovery being slow and blame it on overregulation or Obama’s policies, it angers me.

A single fact can explain why the recovery has been slow and it has nothing to do with regulation, taxes or "uncertainty", and it is nothing that Romney would be able to fix. Summed up in one word: debt.

This is part of a three-part series that addresses three central issues that Romney is running on:
1. There is a debate over the role of government in the economy
2. The recovery has been slow
3. Obama has added to the national debt

The first part is here.

There's a trade off between growth and debt that’s obvious but not often acknowledged.

When a person takes out a loan to buy a car, a car needs to be built today. That means jobs for people to build cars and parts, and to sell cars. That means growth today in GDP. That means sales tax and payroll tax revenue for the government today. But without the loan (debt) it might not have been possible. The person might have had to save up another year or more.

When a person (or business for that matter) buys a house or anything on credit—same principle.  New debt is created, and in exchange there’s economic growth today that might otherwise have taken later.

This kind of transaction is absolutely basic to our economy. It happens with almost every significant purchase that is made, across all sectors, all industries, all kinds of entities, large and small. It is like water in the human body—ubiqitous, an atomic building block of everything economic.

More debt = more growth.

But in this recovery we've seen exactly the opposite. More consumers are either defaulting or paying off older debts, and fewer are taking on new debts.

The household debt service ratio (DSR) is an estimate of the ratio of debt payments to disposable personal income. Debt payments consist of the estimated required payments on outstanding mortgage and consumer debt. (Source, Source)

In fact this change has been so dramatic that it’s overwhelmed the federal budget deficit. When you add together federal, state, and local debts with mortgage, credit card, student loan, car loan, business, and all other private debts across the economy, total debt across the economy is actually falling relative to GDP.


This single statistic explains why economic and job growth in this recovery has been slower than in past recoveries.

Fewer people borrowing, more people saving. That means less spending today, less demand today, less jobs today compared to other times.

Here I’ve made a chart comparing the change in the total debt to GDP ratios at the end of the past 10 recessions and the ratio 11 quarters later (because 11 quarters after the end of the last recession is the latest data available).

(Source, in combination with above)

Debt increased especially quickly after the end of the 2001 recession. With consumers and businesses debt-exhausted by 2008, not only was this the cause of the recession but it’s also the cause of the slow recovery. The economy is both working off debt and trying to recover from the recession at the same time, and the two goals are at cross-purposes. It's like an Olympian trying to train for Gold medal in gymnastics and the 100-meter dash at the same time. Of course they'll seem abnormally slow.

In other words, if the ratio of debt to GDP had changed at the average rate for postwawr recoveries, there would be more debt in the economy today equivalent to about 35% of GDP. This would be the equivalent to about $5 trillion of stimulus.

While the recovery has been slow under Obama, there’s a good reason, and a silver lining. Getting private sector debts under control is indispensible. Twice in my lifetime Republican Presidents have come into office on a supply-side deregulatory agenda, followed by a debt-fuelled expansion that looked like success at the time. This recovery is different. The private sector deleveraging will prevent what would be an even worse recession down the road, and it is a prerequisite for any real, lasting recovery.

In the next and final part of this, I will tackle what all of this means for the federal budget deficit.

Originally posted to randomfacts on Wed Aug 29, 2012 at 09:33 AM PDT.

Also republished by Community Spotlight.

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Comment Preferences

  •  Tip Jar (119+ / 0-)

    "It is, it seems, politically impossible to organize expenditure on the scale necessary to prove my case -- except in war conditions."--JM Keynes, 1940

    by randomfacts on Tue Aug 28, 2012 at 07:50:44 PM PDT

  •  That pent up demand is going to explode at some (38+ / 0-)

    point. Probably in the next few years. No wonder the Repukes are desperate to gain control of the Whitehouse. They know something has got to give and they want to be the ones who take credit for it when it does.

    Romney's religion is only an issue because he's a high priest in the Church of Mammon.

    by ontheleftcoast on Wed Aug 29, 2012 at 09:38:17 AM PDT

    •  But can pent-up demand (14+ / 0-)

      help the economy when consumers are out with pitchforks instead of credit cards?

      •  That would only happen if the economy completely (15+ / 0-)

        collapsed so in a way it would be good since it would create a new economy. But despite all the crap in this system I don't see it collapsing anytime soon. Remember, even at the height (depth, really) of the Great Depression we didn't have torches and pitchforks. It wasn't 1790's France. For some reason Americans just seem to muddle on thru the bad times and expect things will get better.

        Romney's religion is only an issue because he's a high priest in the Church of Mammon.

        by ontheleftcoast on Wed Aug 29, 2012 at 11:21:40 AM PDT

        [ Parent ]

        •  We had Huey Long in LA and Upton Sinclair in CA (16+ / 0-)

          There was pressure from non-centrists during the Depression, like the C.I.O. (the Congress of Industrial Organizations, like the United Auto Workers, United Steelworkers, etc) and the 1932 march on Washington by Cox's Army.

          But where are the leftists and the populists now when we need them? Not in the media and for sure not in office.

          •  Yeah, that's what has me worried (2+ / 0-)
            Recommended by:
            lgmcp, Woody

            During the Great Depression, the government implemented very progressive policies because they were terrified that if they didn't, the socialists and the trade-unionists would revolt.

            During this downturn, we have no voices on the left, and if the government is terrified of anyone, it's right-wing militias and hate groups. There's no credible voice left to push left-wing solutions (or, at least, no one that the media will allow to be heard). So expect more and more austerity, even if Obama and the Democrats win big.

            I expect huge cuts in Social Security, Medicare, and especially Medicaid (not to mention other programs for the poor and middle classes and the elderly) from Obama, in return for pretend tax increases. Sadly, that's still by far the lesser of two evils.

        •  I think it will collapse in (2+ / 0-)
          Recommended by:
          Shockwave, Santa Susanna Kid

          12 months and sooner if Iran is bombed.

          "And there are those who give and know not pain in giving, nor do they seek joy, nor give with mindfulness of virtue; They give as in yonder valley the myrtle breathes its fragrance into space" Khalil Gibran

          by bcdelta on Wed Aug 29, 2012 at 02:39:48 PM PDT

          [ Parent ]

          •  Why? (14+ / 0-)

            As much as I can understand the reason why bombing Iran would be bad policy, both for moral and practical reasons, I don't think it will plunge us back into the dark ages.

            Bombing Iran will not likely eliminate their nuclear weapons program. At best it will merely set them back a few years at the cost of strengthening the position of the hardliners in the Iranian government. That would be disastrous. Also, lots of people would die, which would also be bad.

            But there is no reason to believe that Iran can do any real harm to the US. They can maybe destroy a warship or two. Who knows, maybe they can do some real damage to one of our aircraft carriers. They could kill a bunch of people with missile attacks and perhaps some asymetric warfare.

            Of course they can wreak havoc on oil supply lines for awhile, but not indefinitely. Even during the worst months of the Iraq War, the oil for the most part kept flowing. It would be bad for the economy, to be sure. But not devastating. Iran's military is small. They have no real naval power. They do have some missiles, and they would use up that capability fairly quickly in a straight fight with the US Navy.

            Bottom line, if it comes to that, is that alot of people would die and there would be widespread destruction. Iran could possibly land a few blows, but they ultimately would be beaten badly in a matter of months if not weeks. The economic impact would be trivial compared to the structural debt issues the author addressed in this post, which was really good btw. I don't want to see this happen, because no matter how much success the Navy has against Iran's military the regime will likely survive and we'll be left with an Iran even more hostile to the US  which will get a bomb anyway in a matter of years. But it won't trigger some sort of zombie apocalypse. Life will go on for most of the world.

            You can do whatever you want to us, but we're not going to sit here and listen to you badmouth the United States of America.

            by Eric Stratton on Wed Aug 29, 2012 at 04:12:40 PM PDT

            [ Parent ]

            •  Eric (7+ / 0-)

              Well thought out response.  Thanks for taking the time.

              If Iran is attacked they can't shut Hormuz for any length of time.  The issue is if they destroy port and land based oil infrastructure in the GCC.

              And I think they will.

              So it's easily 3-6 months to rebuild this and the spike in oil for 3-6 months on 20% of the world's old flow being disrupted will be large enough to put the global economy into very bad recession.

              Outside of this I think it will trigger a regional war, which will spread to non regional players making the conflict and global economy far worse.

              So I support the sanctions and do think they are working.

              On the economy - a lot of it is very fragile.  Wouldn't take much to send Europe over the edge and if this happens it spreads globally - US, China, etc.

              "And there are those who give and know not pain in giving, nor do they seek joy, nor give with mindfulness of virtue; They give as in yonder valley the myrtle breathes its fragrance into space" Khalil Gibran

              by bcdelta on Wed Aug 29, 2012 at 04:31:15 PM PDT

              [ Parent ]

              •  I think that's a possible worst case scenario. (5+ / 0-)

                But I don't know that it will necessarily happen. Certainly US planners have been working on this problem for years now, and they're not all bumbling fools, as much as it sometimes seems that way. I think you'd be surprised how quickly those pipelines get rebuilt. Just my opinion, it's not I like I get invited to JCS meetings.

                I think that if things got to that point, the instinct would be for the major players to actually set aside their differences and work together to avoid a total meltdown. As much as the US is at odds with the PRC, Russia and as much hatred as there is in SW Asia... when faced with the prospect of WWIII I believe people will recognize the need for cooperation in that moment of crisis.

                Basically I think our economy and military is adaptable and resilient, and I think that a crisis such as you describe would focus the minds of leaders in the industrialized world rather than lead to mass panic. I suppose I could be wrong, but I believe humanity has come a long way from the days when the assassination of a random Archduke could plunge the world into years of horrific bloodshed and destruction.

                Ultimately I just think it's a really bad idea, and I hope it doesn't happen. But if it does I'm not running for the hills. Life will go on for most of us.

                You can do whatever you want to us, but we're not going to sit here and listen to you badmouth the United States of America.

                by Eric Stratton on Wed Aug 29, 2012 at 05:00:56 PM PDT

                [ Parent ]

            •  ALLEGED nuclear weapons program... (11+ / 0-)

              Also, I wouldn't be so sanguine about "some asymetric warfare." What could be done by a wounded Iranian regime in that department could make al Qaeda look like  junior high school pranksters.

              Don't tell me what you believe, show me what you do and I will tell you what you believe.

              by Meteor Blades on Wed Aug 29, 2012 at 05:32:49 PM PDT

              [ Parent ]

              •  Come on, man. (1+ / 0-)
                Recommended by:
                Dr Swig Mcjigger

                Listen, I'm not gung ho to bomb
                -bomb-bomb, bomb-bomb-bomb Iran. And I agree with your point, Iran is not Iraq and they are not to be taken lightly. But this is just silly. Ahmedinejad would give his left nut for a bomb. They want it, for obvious reasons. It would give their regime security and give Hamas a free hand to seriously bloody up Israel, much more than what we have seen I fear.

                Saying otherwise would be like saying Romney isn't playing the race card right now, or that the GOP attacks on Obama are not entirely accurate. The only real question is how close they are to breakout capability and a successful test. I don't want it to happen any more than you do. But let's face reality, however inconvenient or cruel it may be. These are bad dudes with bad intentions.  

                Finally, while I acknowledge that Iran is capable of wreaking all sorts of havoc in the short term which would be awful and visit death and destruction and suffering on many souls... it's just ridiculous to suggest that Iran is going to beat the United States in a war. That's not happening. Further more, if they really take the gloves off and go all the way as you suggest they will, the international community won't put up with that. People would set aside whatever problem they have with us, they wouldn't care who started it, they would simply want the crisis resolved and that would mean Iran would be forced to relent.

                None of this would likely result in actual regime change or a democratic Iran or peace in the middle east. It's a bad idea. But it wouldn't be the end of the world either, that was my point and I'm pretty sure I'm right about this one.

                You can do whatever you want to us, but we're not going to sit here and listen to you badmouth the United States of America.

                by Eric Stratton on Wed Aug 29, 2012 at 08:17:49 PM PDT

                [ Parent ]

                •  How can Iran beat the US is war? (0+ / 0-)

                  It is not like they have they have the military resources and talent of places like Iraq and Afghanistan.

                •  Ahmadinejad has no authority in the matter... (11+ / 0-)

                  ...It's up to the Supreme Leader, Ali Khamenei.

                  You can claim that Iranian leaders want the Bomb, but they consistently say otherwise in public and there is no concrete evidence that they are, in fact, pursuing a nuclear weapon or have been doing so since 2003. I've been following IAEA inspections and as much English-language literature on the subject for the entire nine years since then. People disagree about the details; and some folks obviously suspect that the Iranians are concealing aspects of their nuclear program that may have to do with building nukes. But, again, there is no proof.

                  That doesn't mean they aren't pursuing such a weapon. It just means that any claims that they are doing so—until proof is forthcoming otherwise—necessitate the attachment of "ALLEGED."

                  Don't tell me what you believe, show me what you do and I will tell you what you believe.

                  by Meteor Blades on Wed Aug 29, 2012 at 10:14:00 PM PDT

                  [ Parent ]

              •  All 'civilian' nuclear power plants (0+ / 0-)

                are basically beards for plutonium production facilities whose purpose is weapons production.  They just don't make economic sense otherwise.  At least according to the US DOE and ConEd.

                •  But, then you have to have a processing... (5+ / 0-)

                  ...facility that can extract the plutonium from spent uranium fuel unless you are running heavy-water reactor (like the Israelis, North Koreans and Indians did), in which the separation process is (somewhat) easier.

                  The Iranians have no such facility that anybody is aware of.

                  Don't tell me what you believe, show me what you do and I will tell you what you believe.

                  by Meteor Blades on Wed Aug 29, 2012 at 10:08:08 PM PDT

                  [ Parent ]

                  •  Necessary but not sufficient (0+ / 0-)

                    Still having piles of plutonium on hand is really handy if you're into dirty bombs.  I never believed that Iran posed a threat of nuclear attack on anyone, or could do so within 5 years. I am convinced that the saber rattling from the neo-cons is just that, more WMD propaganda to cover wars of conquest.  I just like reminding everyone that the War Industry has exploited a truth which they generally pay huge sums to hide, namely, that civilian (uranium/plutonium cycle) nuclear power is still only economically reasonable as part of a weapons program.

            •  If the Straight of Hormuz is closed... (2+ / 0-)
              Recommended by:
              Van Buren, mightymouse

              ...IMO gas can go up to $8/gallon for a year.  Wouldn't that cause serious economic problems?

              It is not hard for the Iranians to close it and very difficult for the Navy to re-open it.  Sinking two or three tankers may be all that is needed.  

              Daily Kos an oasis of truth. Truth that leads to action.

              by Shockwave on Wed Aug 29, 2012 at 10:17:25 PM PDT

              [ Parent ]

    •  No money = no demand... (14+ / 0-)

      Wages have to go up first before demand does.

      "Big business is doing fine" - Mitt Romeny

      by RichM on Wed Aug 29, 2012 at 03:16:26 PM PDT

      [ Parent ]

    •  Only if (0+ / 0-)

      the banks cooperate.

      And they only want to do that if they get their pound of flesh.

      That's one of the big unspoken issues right now - how big a cut to they get, and with what counterbalances?

      I am not religious, and did NOT say I enjoyed sects.

      by trumpeter on Wed Aug 29, 2012 at 04:31:37 PM PDT

      [ Parent ]

    •  This needs to be broken down between pay-down (2+ / 0-)
      Recommended by:
      Odysseus, StrayCat

      versus debt-cancellation.  All of those municipalities and other government entities slashing if not outright cancelling pensions are knocking down debt.  So are the romney-botomatics that put companies through banckruptcy to access the pensions for dividend payouts to the vultures.

      Both of the above actions reduce debt, but they do it through cancellation of money owed (some might call it theft).  That is not a good way to reduce debt, and does not represent pent-up demand, it represents servitude.

      and their contempt for the Latin schools was applauded by Theodoric himself, who gratified their prejudices, or his own, by declaring that the child who had trembled at a rod would never dare to look upon a sword.

      by ban48 on Thu Aug 30, 2012 at 05:00:41 AM PDT

      [ Parent ]

    •  I agree with you. (23+ / 0-)

      In terms of the question: What can we do to responsibly improve the recovery the answer is: "Get rid of the gop."

      What the information in this diary tells me is that we could easily invest in new spending in clean energy and a 21st century infrastructure, and create millions of new working and middle class jobs.
      Add to that investments in education ( hire more teachers) and research and development in areas that will remediate climate change...etc.

      Which brings us back to where we started: "Get out of the way, gop!"

      You can't make this stuff up.

      by David54 on Wed Aug 29, 2012 at 11:55:11 AM PDT

      [ Parent ]

      •  You agree with Nobel winner Stiglitz. (14+ / 0-)

        Joseph Stiglitz's recommendations are along the same lines as yours. See the Stiglitz article linked in my other comment on this diary.

        "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

        by HeyMikey on Wed Aug 29, 2012 at 01:20:44 PM PDT

        [ Parent ]

      •  The GOP limits on the stimulus and refusing (8+ / 0-)

        to pass any jobs bills is what Krugman, Stiglitz, and many other economists had cited (or predicted) for stalling the recovery. As a % of the GDP, even though the stimulus was too small, it helped stave off some problems. Add that too much of it was tax breaks to get the GOP to vote for it (which they didn't) it seems we got a darn good bang for those bucks.

        What really gets to me about the phony debt issue is how obvious it should be that infrastructure rebuilding involves BILLIONS going to: Private Contractors. It's quite fine if the PC is Halliburton, XE, or some other war based business. How long will the terrorists be seen as more dangerous than our crumbling infrastructure?

        There never has been a US Road and Bridge Building Company in the DOT. States don't have them either. There are a lot of unemployed who may not be able to qualify for many construction jobs. The number of workers will still cut the unemployment lines and boost expenditures across the economy for delayed needs (dental work, car maintenance, technology upgrades...).

        Some of the construction workers may leave jobs that other unemployed could fill, to go back to the work they know and would probably be paid better for.

        Then the tax base gets bigger!!!  The concept of revenue is a charade for the GOP. It's another area they play stupid (aka, lie) or use distraction (trickle, trickle) to keep the conversation going in circles.

        If you haven't linked to Part 1, I think the good governance model is a well conceived goal for the 99% to pursue. Developed on an international platform, it sets standards that can be quantified and monitored. Along with asking important questions - that the GOP will have to flat out lie to answer.

        "People, even more than things, have to be restored, renewed, revived, reclaimed and redeemed; never throw out anyone. " Audrey Hepburn "A Beautiful Woman"

        by Ginny in CO on Wed Aug 29, 2012 at 05:21:40 PM PDT

        [ Parent ]

        •  Problem= lookg for other than pure political reaso (1+ / 0-)
          Recommended by:

          n for Thug sabotague of the economy.  They did it b/c they knew many voters would blame the incumbent Pres and the media would not bother to try and explain anything (and Faux would active lie for them).

          Plain and simple.

          How could u watch Ryan's speech (and all the stuff that's come ouot re: they planned it all the day BO was inaugurated) and think anything else?

          The civilizationally tragic thing is that this path has been well paved by everyone who has killed a republic since Alcebiades ... and the Thugs are more than halfway there with the US.

          •  Um, no duh on the why. Referenced 1st paragraph (0+ / 0-)

            Basics don't get rehashed every comment. This has to do with hows, which is a bunch of lies, and how they are playing.

            Why would I watch or listen to Ryan's speech? Did he make any major revisions to his policy?  Did he leave out any lies? Do I need to get really peeved when it's time to wind down so I'm not awake at 3:45?

            No X 3. HOWEVER, multiple news media outlets had the same epiphany today and started calling the RNC Romney/Ryan charade what it is: a bunch of lies by liars.

            Even FOX News has an op ed - by their token lib- on Ryans' deception and other stupidity.

            I finally went out to look for flying pigs. Now I am going to go get some zzzz

            PS, your spell check is not working. Trust me.

            "People, even more than things, have to be restored, renewed, revived, reclaimed and redeemed; never throw out anyone. " Audrey Hepburn "A Beautiful Woman"

            by Ginny in CO on Thu Aug 30, 2012 at 03:08:03 AM PDT

            [ Parent ]

            •  Sorry, reference was too oblique given 'debt' emph (0+ / 0-)

              asis of rest of diary.  For me at least.  

              And the body of the diary seems inconsistent with that anyway: "Why slow recovery? Too much debt".

              The problem is not 'too much debt', its not enough, specifically federal debt.  We have historically low interest rates, they're practically paying us to borrow.  We should be borrowing $1 T+ to rebuild the infrastructure.  That would be a ROI many, many times over, especially given that interest rates will inevitably be much higher when we finally do get around to it. (Not too mention human cost from falling bridges, etc., but no one seems to care about that but us.)  Further, any sane accounting would carry that off budget as a capital account.  Like every bond issue for a new road, school, etc. in every city and state in the country.  Not the US tho.

            •  Oh, btw, ya, shoulda spellchckd. Blame Ryan :) (0+ / 0-)
      •  well hell, I said that a couple of years ago now, (1+ / 0-)
        Recommended by:

        along with a host of people here at DKos - we were trying to rally a cry for the President to do what FDR did during the Great Depression and use the power of the Oval Office and the Executive Order and put a couple million folks to work on infrastructure jobs.

        Roosevelt did it, Obama could have done it, too.

        He still could do it.

        "Taxes are what we pay for civilized society.''
        -- SCOTUS Justice O.W. Holmes Jr
        "I like paying taxes...with them, I buy Civilization"
        -- Angie in WA State

        by Angie in WA State on Thu Aug 30, 2012 at 12:06:43 AM PDT

        [ Parent ]

        •  sigh:: Please learn about the New Deal, every (2+ / 0-)
          Recommended by:
          David54, ConfusedSkyes

          one = legislation, passed by huge Dem majorities (far larger in relative terms than BO ever had).

          Whille BO could do a little at the margins on jobs purely by executive order, it is insignificant and mostly been done.

          The only thing he could have done different was nationalize andbreak up the banks in 2009, which would never have gotten thru the Congress b/c as Durbin said 'the banks own this place'.  Hell, look at the best they could do on Financial reform and how much the banks have squeeled and spent to defeat him for that.

          •  Let me introduce you to History, Executive Order (2+ / 0-)
            Recommended by:
            spacejam, OleHippieChick


              May 6, 1935 - President Franklin Delano Roosevelt Executive Order 7034 creates the Works Progress Administration (WPA).

               The WPA, the Public Works Administration (PWA) and other federal assistance programs put unemployed Americans to work in return for temporary financial assistance. Out of the 10 million jobless men in the United States in 1935, 3 million were helped by WPA jobs alone.

            So, yes, the US Congress would have to authorize a Spending Bill to fund such a program... but a Presidential Executive Order could create the program to put people to work directly for or under the auspices of the Federal Government.

            You might also consider toning down the attitude. Why assume that I am an uneducated person without any knowledge about the New Deal? Turns out it's you who might benefit from a bit of study on the subject.

            "Taxes are what we pay for civilized society.''
            -- SCOTUS Justice O.W. Holmes Jr
            "I like paying taxes...with them, I buy Civilization"
            -- Angie in WA State

            by Angie in WA State on Thu Aug 30, 2012 at 01:53:24 AM PDT

            [ Parent ]

            •  Ah, no. No $, no work. No Cong auth, no $. EO (4+ / 0-)

              just paper.  

              FDR could of course count on his huge D majorities - which you simply ignore, as well as my ptg same out - to fund it, especially after the country lay prostrate for 4 years under Hoover, so it made sense to star putting in place the administrative appaaratus to run it when it was authorized and funded before it actually was funded.  

              Instead of BO actually preventing the Depression, but having to take a $100 B cut to his stim to get the 3 Thug votes to overcome the Thug filibuster in the Senate, and the Thugs then sabotaguing the recovery especally when they filibustered pretty much everything - something they could not do in '32-36 b/c of #s (as in far too few).

              In case it wasn't clear, I wish BO could have done what you said.  But other than mariginal stuff that he did do, there was little he could by EO (tho he could have done some stuff with TARP $ better).  If he had, the Thugs would have filibustered the funding and he would have looked even more powerless and impotent than the system has made any POTUS who actually tried to fix this mess.

              •  People are still talking about the "magic lefty (3+ / 0-)

                wand" that Obama could have waved poof and created a wonderful progressive paradise, leaving the hapless gop rubbing their eyes with mouths agape.

                Luckily, for the country, the President went the reality-based route and secured the economy, (in spite of gop efforts to throw us back into another recession) got us out of Iraq and started the process of getting out of Afghanistan, etc. and got all the other gains, such as the ACA. A very long list of accomplishments.
                In the meantime, the gop has obstructed the recovery and based their entire program on lies.
                Partly because of the lies (Jobs, jobs, jobs)  and the depressing effects of the "Obama should have waved his magic wand" crowd, we got our butts kicked in the 2010's.

                Now we have all the ammo we need to beat the gop back and get on with progress. We just have to overcome the enablers in big media who push gop lies onto the voters.

                You can't make this stuff up.

                by David54 on Thu Aug 30, 2012 at 05:05:39 AM PDT

                [ Parent ]

                •  BS on any effect your imaginary (3+ / 0-)

                  magic wand denigration had on 2010. People who wanted--and still want--Obama to do more than play moderator in Congress completely get that he can't do it on his own. We are talking politics here. By calling on Congress to do more than they did--more than they even could--Obama would have put pressure on them that would have been visible to the voting public. Instead, it appeared as if he was doing nothing. He was too passive. Even if no legislation got passed, he would have appeared to have been acting in our best interests, and that always resonates with people. And that would have had positive effects downballot as Dems in Congress would have also shown that they were trying, and that only the Republicans stood in the way of them actually helping people.
                  (Btw, you don't get to claim any accomplishments for Obama that went through Congress at the same time you absolve him of any blame for things that did not!)

                  "Lone catch of the moon, the roots of the sigh of an idea there will be the outcome may be why?"--from a spam diary entitled "The Vast World."

                  by bryduck on Thu Aug 30, 2012 at 08:50:54 AM PDT

                  [ Parent ]

    •  Not to mention... (2+ / 0-)
      Recommended by:
      asterkitty, rimstalker

      There simply are not enough factories to absorb the workers.  Tens of thousands of factories have been closed down.

      "Big business is doing fine" - Mitt Romeny

      by RichM on Wed Aug 29, 2012 at 03:17:37 PM PDT

      [ Parent ]

  •  Less borrowing because banks are lending less (23+ / 0-)

    You make it sound like people chose to not borrow. In many, many cases they had no choice. Banks still aren't lending nearly as much as before, either to individuals or even to business. Many people and businesses would love to borrow more but the banks aren't cooperating.

    Many businesses, especially seasonal businesses, have failed because they can't get credit, and as for individuals let's just say foreclosure and leave it at that.

    So if you are correct that less debt is a factor here, you can chalk up at least part of the slowdown to the banks choosing that path.

    So one can speculate here. Are most banksters Republicans? Do Republicans want Obama to fail? Would tighter lending slow the economic recovery? One wonders.

  •  Median Income Stagnation also contributes... (14+ / 0-) slow recovery.

    A new hire at UAW North makes as much as a new hire at NoUnion Toyota South.  And he makes 50% less than a UAW worker hired six years ago.  And UAW signed off on the package.

    Two weeks ago, the union representing Caterpillar workers recommended that they accept an awful contract, with a five year wage freeze.  (Why the union head hasn't resigned in disgrace is beyond me.)  And please note that Caterpillar isn't struggling.  It's thriving as it never has before.  Caterpillar basically argued, we're not going to pay you more because we don't have to.

    And where are the Dem pols?  Will any Dem pol take the UAW or the union representing the Caterpillar employees to task in prime time next week?  Will they call out the CEOs of GM or Caterpillar?

    Wage stagnation, much more than the unemployment rate, will impact the election this fall.  And it's the reason why the election is as close as it is.

    Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project.

    by PatriciaVa on Wed Aug 29, 2012 at 09:51:31 AM PDT

    •  Education re: unions must come from bottom up, pol (1+ / 0-)
      Recommended by:
      Calamity Jean

      s defending them actually hurts given our hyperpartisan times and utterly dysfunctional (or corrupt) media.

      Remember the 'Look for the Union label' campaign?  Did more to help unions than any politician bloviating.  But, given the success of the 40= year 'demonize unions' campaign and the Thugs poised to deliver the coup de grac as soon as they regain power... it may be far too late.

    •  Income stagnation fueled by (0+ / 0-)

      depressed private sector employment growth. Job creation has flatlined since the dotcom bubble burst.

      I'd add another data point: worker productivity. The U.S. loudly trumpets the fact that it has the most productive workers in the world, but what that essentially means is fewer workers doing more for less. Part of this "productivity boom" is a function of technology, which displaces human capital when deployed. Another part comes from treating global labor markets as a level playing field.

      So-called "supply side" theory conveniently overlooks the fact that 70 percent of GDP in the world's largest economy comes from consumption, and cutting the economic legs out from under the US middle class is a recipe for global economic collapse.

  •  Part of the problem.. (3+ / 0-)
    Recommended by:
    judyms9, Ginny in CO, OleHippieChick

    was TARP was not strict enough.  Part of the idea was to shore up banks' balance sheets, but to also encourage lending.

    Instead many of the banks just reinvested money borrowed from the Fed at next to nothing into securities rather than lending because the return was better.

    The same thing is going on in Europe with the ECB/Euro banks.  

    The trick is to improve consumer confidence as well so people that have jobs/money will by that new car.

    We did have nice recovery in 2011, but I'm afraid this is now faltering.

    "And there are those who give and know not pain in giving, nor do they seek joy, nor give with mindfulness of virtue; They give as in yonder valley the myrtle breathes its fragrance into space" Khalil Gibran

    by bcdelta on Wed Aug 29, 2012 at 10:02:24 AM PDT

  •  Bullseye. Paying off/writing off debt is good (4+ / 0-)

    in the long run, tough in the interim.

    My best guess was a reflection that did not look back, an image lost in every mirror.

    by Zacapoet on Wed Aug 29, 2012 at 10:51:26 AM PDT

  •  If you look around you'll see that the secondary (4+ / 0-)

    market is doing okay:  yard sales, consignment shops, pawn shops, bartering, auctions,Craig's List, etc.  Much of this activity is off the books and hard to factor into economic analysis.  Used cars are commanding much higher prices than ever before because they are in demand.  This recycling of items is a good thing for families trying to avoid debt but not necessariy for the economy.  On the darker side, the astrologers and other psychic types are doing pretty well too.

    Romney went to France instead of serving in our military, got rich chop-shopping US businesses and eliminating US jobs, off-shored his money in the Cayman Islands, and now tells us to "Believe in America."

    by judyms9 on Wed Aug 29, 2012 at 12:42:15 PM PDT

    •  Part of the reason for high used car prices... (8+ / 0-)

      is that production of new cars dropped off a cliff in 2008.  I think we went from 17 million new car sold in 2007 to 11 million in 2008.  Cash for Clunkers took another chunk out of circulation.  So supply took a big hit, demand has increased--with high unemployment, fewer people can afford new cars-- so you get higher prices.

      On a personal note, I reduced my non-mortgage debt by 50% in the last year, and hope to get it close to zero in another year.  Until then, not much spending going on.  I expect plenty of others are doing the same.  With the employment market as tight as it is, you're pretty crazy not to reduce you're debt load.  Nothing inspires consumer confidence like good paying jobs, but we sure don't hear much about that these days.

      I don't know what's been trickling down, but it hasn't been pleasant---N. Pelosi

      by Russycle on Wed Aug 29, 2012 at 02:45:15 PM PDT

      [ Parent ]

  •  With all respect, I disagree. Sorta. (28+ / 0-)

    Debt is part of the problem, but it's not the main part.

    "The economy" isn't doing badly at all. "The economy" is doing great. Corporate profits have set records several quarters in a row. Corporate cash-on-hand is the highest it's been in 56 years. GDP growth has, for a couple years now, been back at its pre-recession rate.

    But obviously the economy is creating few jobs--barely ahead of population growth. Why?

    Nobel economics winner Joseph Stiglitz analogizes mass unemployment now to mass unemployment in the Great Depression. In the early 1900s, about 1 in 5 Americans worked on farms. But as farming got way more efficient, way fewer farm workers were needed to produce the same amount of food. This resulted in a lot of "surplus" workers, who remained unemployed until WWII put them to work building war supplies, or put them in uniform, and paid them with a lot of borrowed and printed money.

    After the war, the manufacturing-driven economy was self-sustaining for a long time. But over the last few decades, manufacturing has had its own efficiency revolution, due to automation and offshoring. We can now manufacture here or buy from abroad all the manufactured stuff we can consume, using way fewer Americans. Thus we have a lot of "surplus" people who, 20-50 years ago, would've worked in manufacturing.

    And not just in the USA:

    of the world’s five billion people over 15 years old, three billion said they worked or wanted to work, but there are only 1.2 billion full-time, formal jobs.
    The Atlantic and Pacific Oceans just don't keep the US economy separate from the rest of the world's anymore. Increasingly, American workers are part of the 3 billion. To get a job, an unemployed American essentially has to do something cheaper or better than all of the other 1.8 billion unemployed people in the world.

    And it gets worse. Before long we'll see or a competitor delivering retail goods in self-driving trucks, loaded with robot-packed orders. Why will customers fight the traffic and crowds and lines to shop at Walmart or Target or the mall when a robot will bring your purchases right to you at least as cheaply? Those robots will put a lot of current retail workers out of jobs. And we'll see drones operated by people in Bangladesh or somewhere like it, vacuuming carpets and emptying trash cans in offices and hotels here in the USA. What happened to agriculture and manufacturing is about to happen to services.

    Stiglitz's recommendation:

    there are many high-return investments we can make. Education is a crucial one—a highly educated population is a fundamental driver of economic growth. Support is needed for basic research. Government investment in earlier decades—for instance, to develop the Internet and biotechnology—helped fuel economic growth. Without investment in basic research, what will fuel the next spurt of innovation? Meanwhile, the states could certainly use federal help in closing budget shortfalls. Long-term economic growth at our current rates of resource consumption is impossible, so funding research, skilled technicians, and initiatives for cleaner and more efficient energy production will not only help us out of the recession but also build a robust economy for decades. Finally, our decaying infrastructure, from roads and railroads to levees and power plants, is a prime target for profitable investment.

    The second conclusion is this: If we expect to maintain any semblance of “normality,” we must fix the financial system.

    Returning to your original topic, debt: At the end of WWII, the national debt was higher as a % of GDP than it is now. But that did not prevent the 1950s and 1960s from being times of great growth in prosperity. Of course private debt is much higher now than it was then, and that ties into Stiglitz's second conclusion, fixing the financial system.

    Fixing debt is necessary but not nearly sufficient. It wouldn't solve the surplus-worker problem. And if we don't solve the surplus-worker problem, we're screwed.

    My question: why do we continue to assume everybody should work full-time? Perhaps we need mechanisms to spread the limited amount of work around among more people. Like:

    * Truly universal healthcare. Regardless of whether you work or how much, you should be covered.

    * Overtime kicks in at 32 hours a week, not 40. Gives employers incentive to hire more people instead of work current people more.

    * Paid parental leave for new moms and dads.

    * Mandatory paid vacation.


    "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

    by HeyMikey on Wed Aug 29, 2012 at 01:19:08 PM PDT

    •  You could've made a diary out of this :) (4+ / 0-)

      Paying off debt can be a dumb idea.  I think the repubs have shown they will take any surplus and give it to their cronies as tax-cuts.

      and their contempt for the Latin schools was applauded by Theodoric himself, who gratified their prejudices, or his own, by declaring that the child who had trembled at a rod would never dare to look upon a sword.

      by ban48 on Wed Aug 29, 2012 at 01:25:31 PM PDT

      [ Parent ]

      •  I kinda-sorta did, but... (7+ / 0-) that I look at it, I see the date was 8/31/11. So perhaps it's time for a first-anniversary revise-update-refocus-repost.

        The gist:

        Stimulus: EPA end run around Congress

        The economy needs more stimulus, pronto. There's no way in hell Congress will approve it. But the President doesn’t need Congress to use the EPA to clamp down on greenhouse emissions. That would get private utility companies and banks, both of which have a lot of cash on hand, to invest heavily in green energy jobs.

        "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

        by HeyMikey on Wed Aug 29, 2012 at 01:31:31 PM PDT

        [ Parent ]

        •  Here's an example: (10+ / 0-)

          Job-creating regulations strike Ottumwa

          A 3-year project to introduce new scrubber systems to an old coal-fired power plant will create up to 400 direct jobs and about that many indirect jobs. It boosts the economy, employment, and gets SO2 and Hg out of the air. The project is a response to stricter EPA regulations.

          •  Outstanding! Thanks. NT (3+ / 0-)
            Recommended by:
            cocinero, Larsstephens, Calamity Jean

            "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

            by HeyMikey on Wed Aug 29, 2012 at 03:29:50 PM PDT

            [ Parent ]

            •  Actually, it could be better (3+ / 0-)
              Recommended by:
              HeyMikey, Larsstephens, Calamity Jean

              if they were de-comissioning the coal-burning plant and replacing it with a big wind farm, an area-wide roof-top solar project, and a small natural gas turbine generator for peak loads if needed.

              •  U do not factor in courts, who will stop the regs (0+ / 0-)

                for years, as they have with GHG regs.

                •  Not so much. (1+ / 0-)
                  Recommended by:
                  High Court Faults EPA Inaction on Emissions

                  Washington Post

                  Tuesday, April 3, 2007

                  The Supreme Court rebuked the Bush administration yesterday for refusing to regulate greenhouse gas emissions, siding with environmentalists in the court's first examination of the phenomenon of global warming.

                  The court ruled 5 to 4 that the Environmental Protection Agency violated the Clean Air Act by improperly declining to regulate new-vehicle emissions standards to control the pollutants that scientists say contribute to global warming.


                  And look at the Obamacare decision--admittedly a close call, but Roberts of all people was the clinching vote.

                  When both Houses of Congress and the Prez agree on a certain general path for national policy--enough to enact it into legislation--the Supremes may shape the details, but they almost never change the fundamentals.

                  "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

                  by HeyMikey on Thu Aug 30, 2012 at 08:07:12 AM PDT

                  [ Parent ]

                  •  How long did lawsuit take to get there? 8 YEARS (0+ / 0-)

                    started in 1999, as article itself sez.

                    •  Not easy fighting Dept. of Justice, er, "Justice." (0+ / 0-)

                      I do a lot of federal litigation, suing the feds on behalf of denied claimants for Social Security disability and Medicare. Filed a US District Court brief earlier this week on behalf of a woman who filed her disability claim in 2002. I've been representing her since 2004. There is about a 25% chance we can get her disability benefits started sometime in early 2013. Or we could still have several years of litigation and administrative hearings ahead of us.

                      I wish I could say she's exceptional. About once a year, more or less, one of my clients dies before his disability benefits (which come with Medicare or Medicaid) approved.

                      And among Social Security lawyers, I'm considered an expert in federal appellate litigation.

                      "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

                      by HeyMikey on Thu Aug 30, 2012 at 12:35:57 PM PDT

                      [ Parent ]

                      •  My pt exactly. Cts will stay any regs for years, s (0+ / 0-)

                        o suggestion that BO can do anything about the economy by just 'making regulations' is specious.

                        •  Facts matter. (0+ / 0-)

                          If you look at my diary (linked above) from a year ago, you'll see the Supreme Court has twice decided the current Clean Air Act already gives EPA authority to regulate CO2.

                          On this issue, I think it's the other side that will find the courts tough slogging.

                          "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

                          by HeyMikey on Thu Aug 30, 2012 at 07:23:52 PM PDT

                          [ Parent ]

                          •  They will still sue and it will still take years (0+ / 0-)

                            Just look at the Texas suit on 'downwind emissions'.  That's been settled law for 30+ years, far as general power to do it.  The devil, as they say, is in the details.

                            And sadly, now, often on the bench.

    •  It's the benes that make having fewer (1+ / 0-)
      Recommended by:

      workers working longer than more working fewer hours. Health care, pensions and paid days off do add up. It's why Walmart loves p/t labor.

      Even if I knew that tomorrow the world would go to pieces, I would still plant my apple tree. -Martin Luther

      by the fan man on Wed Aug 29, 2012 at 04:57:59 PM PDT

      [ Parent ]

      •  Mickey Kaus, "The End of Equality." (4+ / 0-)

        Kaus was sortof liberal-progressive, or at least iconoclastic, way back in the early '90s. He wrote an article in The New Republic, which he later developed into a book, "The End of Equality." His basic point was that financial inequality is bound to grow, but it wouldn't be so important if people of every income level could count on having good medical care, good schools, decent child care, safe neighborhoods, etc. He thought the government should focus on those things, financed with progressive taxation.

        Here's a link to the magazine article:

        Basically, I think Kaus was right.

        "The true strength of our nation comes not from the might of our arms or the scale of our wealth, but from the enduring power of our ideals." - Barack Obama

        by HeyMikey on Wed Aug 29, 2012 at 06:48:36 PM PDT

        [ Parent ]

    •  Diary, please. n/t (3+ / 0-)

      Don't tell me what you believe, show me what you do and I will tell you what you believe.

      by Meteor Blades on Wed Aug 29, 2012 at 05:35:16 PM PDT

      [ Parent ]

    •  I would suggest overtime (4+ / 0-)

      become automatic double time instead of time and a half. It has to often become cheaper to work overtime for time and a half than hire more people. Double time is almost always more costly.

      A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward. Franklin D. Roosevelt

      by notrouble on Wed Aug 29, 2012 at 09:33:06 PM PDT

      [ Parent ]

      •  While you're at it...fix 'exempt' employees (1+ / 0-)
        Recommended by:

        I’m thinking about all of the service sector jobs where “managers” are treated as exempt employees and made to work unpaid overtime but whose job descriptions are almost indistinguishable from the hourly employees.

        Similarly, I work among many exempt professionals where the unstated assumption is that we typically work 45-50 hours per week, and sometimes more depending on workload. If the staffing were structured to keep people as close to 40 hours per week as possible there would be about 15% more people at work.

        Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. - Groucho Marx

        by Joe Bob on Thu Aug 30, 2012 at 08:09:51 AM PDT

        [ Parent ]

        •  Yes! (0+ / 0-)

          My son falls into one of those groups. They pay him for actual hours, about 50 a week, but only at strait time.

          A conservative is a man with two perfectly good legs who, however, has never learned how to walk forward. Franklin D. Roosevelt

          by notrouble on Thu Aug 30, 2012 at 04:59:42 PM PDT

          [ Parent ]

    •  This. (0+ / 0-)

      50s sci-fi predicted a world where most people didn't work much, and no one did those menial jobs.  Of course, most of the sci-fi was much more socialist and egalitarian, and didn't assume that we'd just write off that part of the population that was displaced.

  •  could someone rescue this...??? (2+ / 0-)
    Recommended by:
    HeyMikey, Larsstephens

    and their contempt for the Latin schools was applauded by Theodoric himself, who gratified their prejudices, or his own, by declaring that the child who had trembled at a rod would never dare to look upon a sword.

    by ban48 on Wed Aug 29, 2012 at 01:21:36 PM PDT

  •  No - the one single fact (8+ / 0-)

    Why nothing is improving quicker than this?

    Mitch McConnell: I want to make sure Barack Obama is a one term president.

    It's that simple. They're all in a hissy-fit because they lost.

    Either you're wit' us or a Guinness -- Brilliant!

    by Unforgiven on Wed Aug 29, 2012 at 02:43:15 PM PDT

  •  I don't think the problem is debt... (3+ / 0-)
    Recommended by:
    zett, nicolemm, Brooke In Seattle

    I think the problem is an economic system that is fundamentally corrupt. We systemically reward the most sociopathically greedy thugs among us, and bill everyone else for the cost.

    The debt we have is a symptom of the corruption, not the cause of it.

    "We see things not as they are, but as we are." - John Milton

    by Jasonhouse on Wed Aug 29, 2012 at 02:50:15 PM PDT

  •  The problem isn't debt. (15+ / 0-)

    It's "demand".

    There is no demand because there is not enough disposable income where it is needed the most.

    Credit can generate demand, but it's illusory, because there comes a point where the credit runs out and demand falls.

    If pensions were increased, unemployment benefits increased and the minimum wage set at around the $15 level, the economy would soar.

    Couple that with realistic tax rates on the wealthy, and the deficit would disappear too.

    I hope that the quality of debate will improve,
    but I fear we will remain Democrats.

    by twigg on Wed Aug 29, 2012 at 02:54:09 PM PDT

    •  I agree with you completely. (6+ / 0-)

      Taking on addtional debt is only a short term solution.

      The ability to repay credit, and the ability to obtain more are governed by income. Debt financed personal spending and GDP growth for years, under the mistaken belief that times would get better.

      Times didn't get better, and consumer spending hit a brick wall.

      Now, those without jobs can't spend, and those with jobs are putting more income into paying down debt to avoid forclosure, etcetera, if the time comes when they lose theirs.

      I see very little sign of anything changing any time soon. Collapse, revolution or breadlines, your guess is as good as mine.

      Trickle-down theory; the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows. - J.K. Galbraith

      by Eric Twocents on Wed Aug 29, 2012 at 04:00:22 PM PDT

      [ Parent ]

  •  MMT covers this in detail (5+ / 0-)

    Your post is a valuable one and states what economists like Steven Keen have been saying for a long time. Every economy built upon personal debt ends up in the situation we face today. The key to understanding the affects of debt upon GDP is critical to explaining boom and bust cycles. If the debt is incurred to invest in infrastructure, manufacturing, farming or anything that actually creates a product that is tangible then that debt is an investment. When the debt is used to finance a lifestyle far beyond income, it is nothing more than a fake stimulus as you noted above. When the debt is used to finance asset speculation such as stock bubbles, housing bubbles and other bets on future rises in asset prices, it is like gasoline on a simmering fire. Due to the expansion of personal credit via credit card companies, mortgages and other forms of loose credit, we are now in a cycle that demands paying off debt rather than investing in the future. Interest payments are a form of extortion upon the economy, they are payments made which do nothing for the economy itself but allow lenders to reap massive profits at the expense of future growth. Keen advise a jubilee, I agree with him. If you don't know him yet, you should look him up. His site is called, check it out.

    Do facts matter anymore?

    by Sinan on Wed Aug 29, 2012 at 03:03:29 PM PDT

    •  Don't forget gambling (3+ / 0-)

      The US has been lightening the laws on Internet gambling to the point that even Facebook is trying to be prepared for the minute the Flood Gates of Exploitation open.

      Large scale gambling is nothing more than shifting wealth to those who would exploit the weaknesses of human beings. It does not produce anything or grow wealth: it just makes some rich people richer, and the money will get squirreled away in the Cayman islands.

      Le nirvane n'existe pas. - Etienne Lamotte

      by breakingranks on Wed Aug 29, 2012 at 08:40:48 PM PDT

      [ Parent ]

      •  But the amount of $ in that "gambling" (1+ / 0-)
        Recommended by:

        pales in comparison to that which goes by another name: investing in stocks and bonds on Wall Street. The effect is the same, but somehow, I think internet, Vegas, and AC gambling added together and multiplied by a million wouldn't come close to destroying the world's economy. Wall Street's? Damn near just did.

        "Lone catch of the moon, the roots of the sigh of an idea there will be the outcome may be why?"--from a spam diary entitled "The Vast World."

        by bryduck on Thu Aug 30, 2012 at 09:01:58 AM PDT

        [ Parent ]

  •  The Way Forward (5+ / 0-)

    Last October, a plan was proposed for Moving From the Post-Bubble, Post-Bust Economy to Renewed Growth and Competitiveness.

    The report recommends three "pillars."

    First, as Pillar 1, a substantial five-to-seven year public investment program that repairs the nation’s crumbling public infrastructure
    The President proposed investing in infrastructure, but it went nowhere in Congress.
    Second, as Pillar 2, a debt restructuring program that is truly national in scope, addressing the (intimately related) banking and real estate sectors in particular
    The details for this pillar include principal reduction for underwater homes, among other things.
    Third, as Pillar 3, global reforms that can begin the process of restoring balance to the world economy and can facilitate the process of debt de-levering in Europe and the United States.
    This may be the most difficult of the three pillars.
    •  #2 should have been done (2+ / 0-)
      Recommended by:
      Calamity Jean, cocinero

      in Obama's first month in office.

      The banks got us into this mess.

      They convinced the American people that their houses were like piggy banks.. 110% re-fi's.. cash out..  pay off your credit cards..  Then, boom!

      And our government rewards them for it and sticks us with the payments..

      Had private debt restructuring been forced on the banks at the time of TARP I & II, this would all be behind us now.

  •  Well spoken (2+ / 0-)
    Recommended by:
    randomfacts, Larsstephens

    You are very well spoken on this. Your arguments are coherent and make sense to me. The only other blogger that makes such a clear case is Bonddad. And I believe Bonddad probably no longer posts here.

    No more gooper LITE!

    by krwada on Wed Aug 29, 2012 at 03:56:29 PM PDT

  •  What's missing (4+ / 0-)

    from the charts and statistics is a breakdown of where the missing debt is.

    How much of it is the blowback from the housing mess?  How much is due to the fact that in reaction to their complete breakdown of any regulatory standards, banks are now ultra-steadfast on lending standards, so that it is harder than ever to get qualified to buy or refinance a house?

    Now much of it is corporate?  How much is the fact that, rather than borrowing money to grow their businesses, corporations are looking at the lack of demand created by their long-term program of firing every worker they could get their hands on, and sitting on record amount of equity?

    How much is due to the tremendous inflation of debt from frankly illegal practices (not that anyone's been prosecuted, for Pete's sake) in the credit card and payday loan industries?  And the fact that there has been some, but not enough, pushback on this from the CPA?

    How much is doe the the fact that the unemployed and underemployed simply can't borrow money against assets they no longer have?

    Yes, people spending money on stuff they need or just want -- consumption -- drives the economy.  Supply-side Economics was just an excuse to ignore this basic fact so they could justify tax cuts for the rich, which actually hurt the overall economy more than they help it.  And debt is part of that.  But was need to think of money as an action, not a thing.  Numbers sitting in accounts aren't money, aren't dong a thing for the economy.  Spending makes money happen.

    That's why taxing the rich, and spending that money on infrastructure (which includes transportation, education, health care, and public health, public safety, and justice) helps the economy, and the policies of the Republicans have been proven to damage the economy.

    In Washington, whenever anyone does something wrong, everyone else gets punished.

    by Noziglia on Wed Aug 29, 2012 at 04:12:11 PM PDT

  •  Isn't it rather foolish to take on debt if you are (4+ / 0-)

    not sure you are going to have a job next month or next year?

    "I cannot live without books" -- Thomas Jefferson, 1815

    by Susan Grigsby on Wed Aug 29, 2012 at 04:14:08 PM PDT

    •  It's foolish for a person to take on debt, (2+ / 0-)
      Recommended by:
      JeffW, Susan from 29
      Isn't it rather foolish to take on debt if you are not sure you are going to have a job next month or next year?  
      but the United States government is going to "have a job" for many years to come.  

      Renewable energy brings national global security.     

      by Calamity Jean on Thu Aug 30, 2012 at 08:24:56 AM PDT

      [ Parent ]

  •  It's much simpler than that: (4+ / 0-)

    China.  China.  China.

    When a country's economy is transformed the way ours has been over the past 15 years, you need a steep recession to shake off the no longer needed personnel that linger on well past the time that offshoring to China has made them redundant.

    Our economy was packed up in steamer trunks and shipped to China, and the level of employment we now have is not really the new "normal" is just a transitional phase while even more jobs get outsourced.  

    That's why job growth has been so tepid over the course of the last 3 recessions...The economy is shedding jobs permanently.  They won't be replaced.  Period.

    Because we have no national policy that corresponds to any semblance of an industrial plan, other than shipping jobs to the most low cost labor source on the globe, regardless of the policies of that particular country, or the irreparable harm it does to this country.

    On that item, both Republicans and Democrats are in complete agreement.

    Oregon:'s cold. But it's a damp cold.

    by Keith930 on Wed Aug 29, 2012 at 04:14:09 PM PDT

  •  Yes ... and No (2+ / 0-)
    Recommended by:
    randomfacts, Larsstephens

    Yes it is about debt ...but

    1. More debt = more growth is true, but only for today. Tomorrow you have to start paying interest and then also repaying the debt ... so tomorrow, or next year, you will buy less (unless you go and borrow even more). Ultimately more debt means less growth in the future. In fact we already see that for each $ of debt we now get less of an increase in GDP than in the past (when we had less debt). Basically the debt burden has gotten so heavy that even more new debt will not help.

    2. A 350% debt to GDP ratio is still ultra high. At this level it is very difficult to get more growth.

    3. Debt service has fallen because interest rates have come down. If they start to rise it will get worse quite quickly.

    4. We will not get strong growth for many years yet. An awful lot more deleveraging has to happen first. Trying to slow this down or stop it happening will just ensure an even longer period of poor growth (ask Japan 20 years on).

    The solution is TIME. You don't work off 30 years of debt fueled growth in a weekend (or even 5 years). For many years people have said the growth by debt mode was unsustainable. It took a while to break, but those folks were right.

    Those who make peaceful revolution impossible will make violent revolution inevitable. - JFK

    by taonow on Wed Aug 29, 2012 at 04:20:31 PM PDT

  •  No one is borrowing because they don't have jobs. (1+ / 0-)
    Recommended by:
    Calamity Jean

    Hence, no income to pay back the loan.  Why no jobs?  Too many people relative to the jobs that need doing.  This will only worsen with increased technology and further population increases.  Solution.  Major war/plague.  With half the population there'd be work for everyone left.  Terrible but true.

  •  Debt sucks up demand (6+ / 0-)

    Yes, credit can help, but it has to be paid back at some point, meaning we forsake future purchases for purchases today.

    I fell out of the economy in October 2008. It was a year and a half of unemployment and since then a little over two and one-half years of employment. It was the ARRA stimulus, of all things. ARRA never created a job, MY ASS. At its worst, summer 2010, I had maxed three cards, had zero savings and zero assets. Since being employed I've started my own austerity program. I have saved a small emergency fund and will have zero credit card debt for the first time in over 15 years. Doing that took more than a third of my take home pay every month for 30 months. EVERY. FREAKING. MONTH. Imagine what you could do with a third of your take home pay.

    For four years I did no shopping, no new clothes, no electronics, no flights, no vacations, no meals out, nothing. Did I want to get those things? You bet. Instead,  I did dollar cinema, used the library, took lunch to work, drank cheap beer, and became good friends with netflix. Thankfully, i'm in good health.

    I know that I am responsible for incurring my own debts, I do blame Bush for the crash and the loss of 18 months of productive adult labor.

    So, yes, I agree 100% with this post. I'm turning a corner soon and feel that others are too. Paying down debt is a good thing, but man there's a lot of pent up demand out there, myself included.

    I was maxed out, but never Again.

  •  People can buy with cash - that's a different (1+ / 0-)
    Recommended by:

    form of debt, but the banksters hate it when they do.

    That, in its essence, is fascism--ownership of government by an individual, by a group, or by any other controlling private power. -- Franklin D. Roosevelt --

    by enhydra lutris on Wed Aug 29, 2012 at 05:18:28 PM PDT

  •  whole system needs to change (1+ / 0-)
    Recommended by:

    we can't keep growing

    -7.75, -6.05 And these wars; they can't be won Does anyone know or care how they begun?-Matt Bellamy

    by nicolemm on Wed Aug 29, 2012 at 06:11:41 PM PDT

  •  Why Debt? (1+ / 0-)
    Recommended by:

    There's an enormous amount of debt because we have been trying to live a lifestyle we can no longer afford. The U.S. shipped it's wealth-producing jobs overseas for four decades. This has impoverished the country, but to keep up the lifestyle we've all become accustomed to we keep piling on the debt.

    That was what the housing bubble was all about: maintaining spending by borrowing against assets.

    The only way back from this is to change the trade situation. We cannot afford to send almost a trillion dollars out of the country each year. The books don't balance, and that's why we have debt.

    We need an international minimum wage and uniform tariffs, so that wealth-producing jobs drift back to the U.S. That's the only way to get back to a healthy balance.

    •  Isn't that a sign of the apocalypse for the GOP? (0+ / 0-)

      Isn't the slick-talking Prince of Darkness supposed to seize control of the UN and inflict horrors like a standard minimum wage on the faithful? And their library card patron IDs shall end in 666.

      We are still playing political footsie with International  environmental standards. I can't imagine how we'd actually manage to get humanitarian standards through.

      (Ps. And the US is 75% to blame for the environmental crap).

      Le nirvane n'existe pas. - Etienne Lamotte

      by breakingranks on Wed Aug 29, 2012 at 08:36:52 PM PDT

      [ Parent ]

  •  A couple of questions about your assumptions... (2+ / 0-)
    Recommended by:
    Brooke In Seattle, run around

    1.) Why is there little/no mention of the reality that massive amounts of consumer revolving credit were either: a.) charged-off, and/or, b.) substantially cut from 2008 and onward, which would account for the lion's share of diminishing consumer debt...a very significant part of it, in fact? (In other words, it wasn't voluntary, but imposed by Wall Street, in fact.) Somewhere in the neighborhood of up to half (depending upon the credit provider) of all consumer revolving credit accounts were either: charged-off, wound down, or credit available for utilization was significantly cut (i.e.: the open credit limits were reset lower).

    2.) Also, I'm assuming you're aware that the concept that "the public's saving more" is a also a bit inaccurate, correct? A certain portion of the public's saving more. Roughly half of the U.S. lives from paycheck to paycheck (i.e.: savings are, and continue to be, nonexistent). Of course, the upper quintile, give or take, of the nation may be saving more, but that's just the status quo. (I always find it amusing nowadays when I hear that "the rate of savings has increased.") Furthermore, income inequality is--for all intents and purposes--virtually as bad as it's been since they first applied decent metrics to measure those statistics, back in the nineteen-teens. Lastly, The top 10% of our society (again, give or take), owns over 90% of all marketable securities in this country. So, like consumer "savings," when I hear these terms, I think it's important to put them in context. Neither the stock market, nor savings rates are really that pertinent these days to the vast majority of the population; although nobody other than the MSM, parrotting Wall Street, is to blame for this misconception.

    Last of all, a comment: With most "Main Street" savings accounts paying about somewhere between 1/100th to 1/10th of a a.p.r. interest on the first $100,000 saved, the reality is that consumers are losing money, even with low inflation, just by parking it in the bank.

    "I always thought if you worked hard enough and tried hard enough, things would work out. I was wrong." --Katharine Graham

    by bobswern on Wed Aug 29, 2012 at 09:53:58 PM PDT

  •  Oh what's wrong with you? (0+ / 0-)

    Don't you get it?

    Debt: poor and middle class thingy
    Lunch: investor thingy

    Investment bankers don't worry about debt, that's the responsibility of the suckers who pay their management fees.

    Get serious, Dude!

    What about my Daughter's future?

    by koNko on Thu Aug 30, 2012 at 01:23:41 AM PDT

  •  Smaller government payrolls (1+ / 0-)
    Recommended by:

    That's a huge part of the slow recovery you don't address here.  The Commerce Department reported that since Obama took office 636,000 public sector jobs have been lost.  An economist at Raymond James positied recently that we might have 50% better GDP growth (3% instead of 2%) if the jobs had just stayed flat.

    We get what we want - or what we fail to refuse. - Muhammad Yunus

    by nightsweat on Thu Aug 30, 2012 at 07:15:52 AM PDT

  •  good points (0+ / 0-)

    Well done and researched. I just thought I might bring up one point of discussion for you to consider and maybe do some future research on (you could not have know about this before btw).

    I do agree with your point about debt, but because of the information I have recently exposed...

    "A single fact can explain why the recovery has been slow and it has nothing to do with regulation, taxes or "uncertainty", and it is nothing that Romney would be able to fix. Summed up in one word:debt

    This is not a slag on the wonderful Mr. Obama and the many other good things he and his administration have done and tried to do, but I can specifically show people some facts they are not aware of right here with regards to our "recovery efforts":

    Mr. President there is a serious problem with the EUC08 program

    The Department of Labor Employment & Training Administration has been caught in a cover-up scandal involving my whistle blower efforts to alert our government to this massive and historic recovery waste, harm, denial and fraud. Billions of dollars have been wasted over four years due to a mistake the feds made and published in the EUC08 guidelines (that all states blindly follow).

    For some reason. When people think "recovery". The emergency Unemployment Compensation Program (EUC08) does not come to mind. It should. That money goes right "through" the unemployed and into our struggling economy. EUC08 was added under Division B Title II section 2001 of the ARRA in 2009. EUC08 is major part of our stimulus.

    This program has paid out $97,433,246,688 (on all tiers paid so far since 2008). If you read the American Recovery and Re-Investment Act, section 5 explains the emergency designation for ALL funds in this Act. You can also look back to the "principles and purposes of the act" in section 3:

    (1) To preserve and create jobs and promote economic
    (2) To assist those most impacted by the recession.
    Yep. EUC08 is very much part of that. So why don't people care if a serious implementation error has been discovered, proved by a standing appeal decision, and further held up after the feds threatened to overturn the case, but could not (did not even try to take it to court)?

    Oh yea btw...the state and feds violated many rights, laws and regulations while ignoring oversight along the way...

    Candidates for office keep talking: stimulus, economy, recovery, unemployment, on and on. Between them and the mob squad reception so far here and elsewhere, I can sum up how a great many Americans feel about our current election attack and defend process:
    We want a real discussion of the real problems. Not this...

    The recovery has been slow. You are right. I have uncovered and exposed one of the errors that has helped to contribute to this along with the debt you point out so well.. But, there still is a silver lining....

    This can be fixed an repaired. We can clean house over at the corrupt and incompetent Department of Labor, get rid of the bloated Recover Board (RATB), and restore billions of dollars back into the Economy, in lump sums to claimants that have been denied millions of dollars (29,748,954 EUC08 Claims since 2008).

    Sometimes you have to get dirty when you clean up a huge mess. Just wipe yourself off afterwards and look forward to the results of what repairing this problem would bring.

    If we don't fix this:
    The specific EUC08 ARRA error in the DOL guidelines...

    The we face this:
    Welcome to our 21st century Watergate...

  •  Well, thank you!! This is something that (0+ / 0-)

    I've heard before and then forgot about. It needs to be said repeatedly, banged into people's heads, including my own. ;~}

    Most people would never ever consider this factor. But would understand it from a personal point of view. Everyone stopped charging so much on cards when the realization hit home that they could lose a job and everything was going south due to the bankers' casino mortgage debacle.

    "extreme concentration of income is incompatible with real democracy.... the truth is that the whole nature of our society is at stake." Paul Krugman

    by Gorette on Thu Aug 30, 2012 at 10:28:19 AM PDT

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