Coming out of The Lost Decade, where we saw incomes rise by over 100% for the upper 20th percentile and wages collapse (or stagnation) for everyone else. We are now watching protesters accross the nation today. They are out in force because of the dramatic cuts in education and social services forced on the states by the real-estate crisis.
The constant downward pressure in this economy (and upward pressure in unemployment) is the collapse of state budgets. This diary is designed to provide quick reference to the state of where the states are now.
Just to be clear, here is the effect of current wage gains (not!) in the U.S. This, with rising costs of nearly all necessary goods (e.g. food, gas) and necessary services (e.g. heatlhcare) is the driving factor in this economic decline. And is leading to the complete destruction of the U.S. middle class.
President Says Federal Government Is the Only Remaining Option to Jolt Economy
The housing market collapse has impacted state revenues for 2 years now. The budget impasses have been put off by dramatic cuts but now second rounds of cuts are being implemented on the state and county level. Only the federal government and stimulus money can turn the tide of continued and devastating shutdowns to primary and social services on the state level. The effects of those coming cuts will be higher unemployment and continued downward pressure on the housing and commercial real estate markets. This is a process where the outcome of the event leads to more of the stuff that helped to create the event, forcing the entire system toward collapse. This is called an "economic negative feedback loop".
The graph shows projections but the actual revenue was much worse.
this graph below is a bit hard to read so it is blown up to a larger size. The grey areas are previous recessions, going back to the 1964's.
Notice how the most recent recession in 2000 had a similar decline? That was because the cause of the recession was similar in nature. The recession in 2000 was caused by a universal collapse in Durable Goods Spending. A process defined, quite literally by the availability of credit for personal consumption, since most consumers are taxed out, credit is where we get our long-term purchasing capability.
This graph shows the collapse of durable goods. both in 2000 and in 2007.
Notice the similarity?
The cycle of double-dip recessions within a period called the "lost decade" was always a strong possiblity. There was never really a recovery. In fact the double dip recession in a period of about 10 years is consistent with the Kondratieff Cycle wave graph that has been floating around for some time now.
And this is where we sit today.
You see, the people protesting cuts in schools. . .they are actually declaring the continued collapse of our domestic economy. Even though the Federal government is pushing hundreds of billions of dollars in stimulus through, it is only balancing the further cutbacks already ocurring in our state economies.
current projections hold 1 million state jobs are at risk.
The loss of these state jobs will further exacerbate the strained unemployment and welfare rolls in the states, as well as continue to be a drag on real estate values as these unemployed are continually struggling to make their mortgage payments in an environment where .1/4 of u.s. home mortgages are underwater.
------------------
In summary, The center does not hold. This is truly our finest hour, as Progressives and as Americans. It turns out that the push through for health care reform was actually only the cutting of milkteeth. Real progressive change will have to be implemented in the next 6 months to prevent a multi-decade economic furrow in the timeline of U.S. achievement.
Are you up for it?