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Thursday, June 2, 2011

Breaking down Robert Reich's Op Ed

Robert Reich, former Labor Secretary under President Clinton wrote an op-ed column yesterday entitled 'Back towards a US double-dip' in which he lays out how weak the economy really is.

Rather than restate his points, I will briefly comment on a couple points he makes which seemed to strike my interest.

First, some general statistics as Reich states..

"Average hourly earnings of production and non-supervisory employees – who make up 80 per cent of non-government workers – dropped to $8.76 in April. Adjusted for inflation, that’s lower than they were in the depths of the recession."

" (Housing prices) are now 33 per cent below their 2006 peak. That is a bigger drop than recorded in the Great Depression. Homes are the largest single asset of the American middle class, so as housing prices drop many Americans feel poorer."

Then Reich says the following..  "The recovery has stalled"

Certainly an intelligent and learned man such as Mr. Reich should know there never was any recovery in the first place so the economy is not really stalling.  Its just declining at a more precipitous rate.

Reich also talks about how the American consumer which constitutes 70% of the total economy can not seem to jump-start it, and adds this very curious comment..

"Banks, with equal justification, are reluctant to lend to them."

There is NO justification for banks to not lend..  None.  Part of the reason they collectively received hundreds of billions in interest-free taxpayer dollars was to take it and re-invest in the community via lending.  Instead they pocketed the money to cover their toxic assets on their burnt mortgages.  Unless a perspective lendee is completely penniless and homeless, there's no excuse for banks to not lend, and Reich saying banks are justified to be reluctant is simply Ignorant.

Then Reich talks about how party politics play a role in addressing the economy in any meaningful way.   First he describes the Republicans as basically "quietly hoping the economy stays rotten up until election day."  Then Reich adds this interesting nugget concerning the Democrats,

"They (the Democrats) would rather not dwell on the slowdown because they do not want to spook the bond market or add to the prevailing gloom (Jimmy Carter’s ill-fated comment about the nation’s “malaise” during the stagflation of the late 1970s has served as a permanent admonition for presidents to stay upbeat)."

This is fascinating- it explains why this Administration keeps Hard-Selling this "recovery" nonsense, and why a very corporate and predominately liberal media keep using the term in every single article no matter how bad the news they're reporting.  It is scared to death of even remotely acknowledging how bad things are.   Might lose some votes... Yikes..

** Interestingly, the new cutesy media buzzword to describe this morbid economy is "slowdown" as if to imply America has previously been in an amazing rapid 'recovery'  but Now its slowing.  Remember all the gobbletygook terminology the Administration and media used in the past... "jobless recovery"?  V-shaped recovery?  U-shaped recovery?  

Here are some more accurate buzzword terms:
"Lightning Bolt" recovery-- see how it keeps jagging downward

A "Dog chasing Tail" recovery -- An' round n round she goes

A "Daydreaming" recovery -- Mm, everything IS better now

"Flying piggie" recovery --  Self explanatory

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