The Truth About the American Economy

Robert Reich

Chancellor's Professor of Public Policy, University of California at Berkeley; Author, 'Aftershock'

05/31/11 

The U.S. economy continues to stagnate. It's growing at the rate of 1.8 percent, which is barely growing at all. Consumer spending is down. Home prices are down. Jobs and wages are going nowhere.
It's vital that we understand the truth about the American economy.
How did we go from the Great Depression to 30 years of Great Prosperity? And from there, to 30 years of stagnant incomes and widening inequality, culminating in the Great Recession? And from the Great Recession into such an anemic recovery?
The Great Prosperity
During three decades from 1947 to 1977, the nation implemented what might be called a basic bargain with American workers. Employers paid them enough to buy what they produced. Mass production and mass consumption proved perfect complements. Almost everyone who wanted a job could find one with good wages, or at least wages that were trending upward.
During these three decades everyone's wages grew -- not just those at or near the top.
Government enforced the basic bargain in several ways. It used Keynesian policy to achieve nearly full employment. It gave ordinary workers more bargaining power. It provided social insurance. And it expanded public investment. Consequently, the portion of total income that went to the middle class grew while the portion going to the top declined. But this was no zero-sum game. As the economy grew almost everyone came out ahead, including those at the top.

Read more:
http://www.huffingtonpost.com/robert-reich/the-truth-about-the-ameri_b_869033.html

"Toma la Plaza": Frustration with Unemployment, Budget Cuts Fuels Grassroots Protests in Spain

"Toma la Plaza": Frustration with Unemployment, Budget Cuts Fuels Grassroots Protests in Spain

Attention Shifts To Rip Van Eric Holder, Who Contrary To Conventional Wisdom, Is Not Frozen In Carbonite

  Tyler Durden


Finally, with about a two year delay, popular opinion has finally caught up with the fact that America has an Attorney General, and that Attorney General is not getting paid $186,600 a year merely to conduct medical research on the dangers of carbonite freezing. In its headline article "Prosecutors Faulted for Not Catching Credit-Crunch ‘Bandits’" Bloomberg has done what every other media was supposed to do years ago, namely ask the well-rested Eric Holder what the hell is the reason that not a single criminal investigation being launched against an entire generation of criminal and corrupt bankers (granted, not all of them....just the multi-millionaires). "In November 2009, Attorney General Eric Holder vowed before television cameras to prosecute those responsible for the market collapse a year earlier, saying the U.S. would be “relentless” in pursuing corporate criminals. In the 18 months since, no senior Wall Street executive has been criminally charged, and some lawmakers are questioning whether the U.S. Justice Department has been aggressive enough after declining to bring cases against officials at American International Group Inc. (AIG) and Countrywide Financial Corp." It is stunning that this is only the first time someone in the mainstream media has had the temerity to actually wonder why nobody had previously thawed Holder from his resting place deep in the nether regions of Jaba's barge where his carbonite statue is publicly presented for all to enjoy.
Some observations on why America can just do away with its ranks of public prosecutorial muppets:

Prosecutions of three categories of crime that could be linked to the causes of the crisis -- corporate, securities and bank fraud -- declined last fiscal year by 39 percent from 2003, the period after the accounting scandals at Enron Corp. and WorldCom Inc., Justice Department records show.

“You need a massive prosecutorial effort,” said Solomon Wisenberg, a white-collar defense attorney at Barnes & Thornburg LLP in Washington and a former federal prosecutor. “I don’t see evidence that it’s happening. If we were talking baseball, it would be at the AAA level.”

The Justice Department and Federal Bureau of Investigation dispute that, saying they are continuing to investigate potential wrongdoing connected to the emergency, and some probes didn’t find criminal behavior. They say they stepped up mortgage-fraud prosecutions, which more than doubled in fiscal 2010 from 2009, the first full year for which there is data.

And some more:

To prosecute fraud, the government generally must show executives knowingly made false statements or omitted the truth about a company’s financial health. Bankers have argued that they broke no laws and can’t be blamed for an industry-wide breakdown in risk controls.

Well, for those who have read Levin's paperweight, so aptly summarized by Matt Taibbi, this is not the case, so if only Holder would be so kind to stop accepting indulgences from his Wall Street amigos, he may be better served (and serve the public) to actually do his damn job. For once in his life.
Luckily, the anger is building:


Read More:
http://www.zerohedge.com/article/attention-shifts-rip-van-eric-holder-who-contrary-conventional-wisdom-not-frozen-carbonite?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+surviv

Models of Community: Alternatives to Corporate America

charles hugh smith 

There are community-based alternatives to Corporate America.



As I have often observed, the majority of America's household income flows to a handful of corporate cartels protected by the Central State. Most of the mortgage payments flow to the "too big to fail" banks. Most of the telecom payments flow to the few companies in the telecom cartel. Most of the energy money flow to the energy cartel. Most of the food budget go to the Big Ag cartel and the retail cartel. Most of the money spent on "entertainment" flows to the corporate media cartel, and so on.

Most of the global media is owned by 5 or 6 corporations. Most of the radio stations in the U.S. are owned by two corporations. This tremendous concentration of ownership of the nation's assets gives these cartels immense political power, and so the Central State acts as "partner" to Corporate America, protecting the cartels from competition by insuring that regulations are used to stamp out or limit competitors. Corporate losses are shifted to the backs of the taxpayers, all in the name of the "common good." Profits are private but losses are public--a peculiar definition of "common good."


Corporate profits are now the bellwether, and the raison d'etre, of the entire U.S. economy. The central State and the Federal Reserve have a single domestic goal: boost the U.S. stock market, which they have made the proxy for the economy's "health." If corporate profits and the stock market are rising, then all is well. Or so we are constantly told by Fed and Treasury hacks, toadies and lackeys.


If The Pledge of Allegiance reflected reality, it should now read: I pledge allegiance to the profits of the Corporate States of America, and to the stock market for which it stands, one nation under the Federal Reserve, with taxation and serfdom for all.


 Read More:

http://charleshughsmith.blogspot.com/2011/05/models-of-community-alternatives-to.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+google%2FRzFQ+%28oftwominds%29

The Great Switch by the Super Rich

Robert Reich

Tuesday, May 17, 2011
 

Forty years ago, wealthy Americans financed the U.S. government mainly through their tax payments. Today wealthy Americans finance the government mainly by lending it money. While foreigners own most of our national debt, over 40 percent is owned by Americans – mostly the very wealthy.

This great switch by the super rich – from paying the government taxes to lending the government money — has gone almost unnoticed. But it’s critical for understanding the budget predicament we’re now in. And for getting out of it.

 

Over that four decades, tax rates on the very rich have plummeted. Between the end of World War II and 1980, the top tax bracket remained over 70 percent — and even after deductions and credits was well over 50 percent. Now it’s 36 percent. As recently as the late 1980s, the capital gains rate was 35 percent. Now it’s 15 percent.

Not only are rates lower now, but loopholes are bigger. 18,000 households earning more than a half-million dollars last year paid no income taxes at all. In recent years, according to the IRS, the richest 400 Americans have paid only 18 percent of their total incomes in federal income taxes. Billionaire hedge-fund and private-equity managers are allowed to treat much of their incomes as capital gains (again, at 15 percent).

Meanwhile, more and more of the nation’s income and wealth have gone to the top. In the late 1970s, the top 1 percent took home 9 percent of total national income. Now the top 1 percent’s take is more than 20 percent. Over the same period, the top one-tenth of one percent has tripled its share.

Read More:

http://robertreich.org/post/5583016733

One Lawman With the Guts to Go After Wall Street

AP / Frank Franklin II

By Robert Scheer

The fix was in to let the Wall Street scoundrels off the hook for the enormous damage they caused in creating the Great Recession. All of the leading politicians and officials, federal and state, Republican and Democrat, were on board to complete the job of saving the banks while ignoring their victims ... until last week when the attorney general of New York refused to go along. 

Eric Schneiderman will probably fail, as did his predecessors in that job; the honest sheriff doesn’t last long in a town that houses the Wall Street casino.

Read More:

http://www.truthdig.com/report/item/one_lawman_with_the_guts_to_go_after_wall_street_20110518

Keep Your Eyes on Greece - by LGMC

The first round of the plutocratic class war to create a new world order is being played out in Greece right now. The large international financial corporations and their handmaiden, the IMF, are pursuing the change of Greece from a first world nation to a neo-feudal vassal state. The IMF has convinced the government to take the IMF money to bail out the banks, protect the wealthy bond holders and institute severe austerity measures that effect the middle class and the poor. The result of this policy will be a stagnation of the economy, a continuation of the recession at best or a complete economic meltdown. The government will have no money to cycle through the economy for infrastructure improvements or social safety net maintenance. The middle class will not have access to capital to create new business and since most monies will be syphoned off to pay for IMF loans there will be less local main street business activity. The result of these policies has always led to a decrease in the middle class and a rise in the working poor. This policy has always worked well in the third world to keep poor countries poor, in debt, and subservient to multinational corporations that have financial interests in those countries.

This is the future of Greece.

Next on the hit list after Greece is Turkey and Ireland. All three of these countries have something in common, they all were praised by the international financial community for following the US economic model of unregulated financial speculation to drive their economies. See a pattern emerging? As in most things economic today we in the US are on the slower track and usually get hip to the trend a little later than the Europeans. The day is coming when Americans will be asked to make the same sacrifice that the Greeks are making today. It will come wrapped in a flag carrying a bible shouting constitutional freedom.

The the Greek middle class have woken up to the future the financial oligarchs have planned for them and. The Greek middle-class are starting to engage in financial disobedience campaigns such as the "I won't pay" campaign designed to speak to the Greek ruling class in terms they understand: money and defiant power.

Keep your eyes on Greece.

The real question is will Americans see the future that awaits them or will they blindly accept what Wall Street banksters and their international financial henchmen say they should?  I would suggest they wake up and resist this rush to a neo-feudal future that wall-street has planned.


Posted by:
LGMC
5-17-11