Soaring Unemployment and Double-dip Recession?

[Crewleader]

Nov 26, 2009 - 05:47 PM

By: Mike_Whitney

Barack Obama's chief economic advisor, Lawrence Summers, is determined to sabotage a second round of stimulus. And, he's getting plenty of help, too. Congressional Democrats are dragging their feet because they're worried about the political backlash and midterm elections, the GOP deficit hawks are looking for a way they can derail the Obama agenda and reestablish their bone fides as fiscal conservatives, and the bailout-traumatized American people are simply opposed to anything that generates more red ink. Even Obama has joined the fray and started badmouthing stimulus stressing the importance of living within our means and trimming the deficits. So it looks like a done-deal; no more stimulus. There's only one problem, without another blast of stimulus the economy is headed for the skids.

Summers knows this because he is an extremely bright and competent economist. With Summers, the issue is loyalty, not intelligence. To prove this point, consider Summers comments in a Washington Post editorial (September of 2008) where he explains what needs to be done to put the economy back on track:

"Indeed, in the current circumstances the case for fiscal stimulus -- policy actions that increase short-term deficits -- is stronger than ever before in my professional lifetime. Unemployment is almost certain to increase -- probably to the highest levels in a generation. Monetary policy has little scope to stimulate the economy given how low interest rates already are and the problems in the financial system. Global experience with economic downturns caused by financial distress suggests that while they are of uncertain depth, they are almost always of long duration.

The economic point here can be made straightforwardly: The more people who are unemployed, the more desirable it is that government takes steps to put them back to work by investing in infrastructure or energy or simply by providing tax cuts that allow families to avoid cutting back on their spending. ("A Bailout Is Just a Start", Lawrence Summers, Washington Post)

http://www.marketoracle.co.uk/Article15369.html

[Warpy]

1. Double dip is survivable with few changes

which is why I sincerely doubt it will happen that way. I think rather we're in for an L-shaped dip with the second one until Congress is persuaded to do what they should have done already: make the tax more progressive and nearly confiscatory on billionaires, use the revenue to both start paying down foreign debt and rebuilding industry and infrastructure, and start cutting the Pentagon budget 10% per year until it's in line with the military budgets of other large industrial countries. Extricating us from the Republican wars is also part of cutting that budget: Iraq first and Afghanistan when NATO is finally ready to give up.

Until and unless these things are done, this economy will continue to worsen.

May we learn to take care of each other in the meantime. No one else will.

[Crewleader]

2. May we learn to take care of each other in the meantime. No one else will.

You said it my friend. :hug:

[phasma ex machina]

7. +1 May we learn to take care of each other nt

[AdHocSolver]

3. Economic changes needed checklist.

Listed in no particular order:

End the Iraq and Afghanistan occupations. (Every colonial power in history collapsed because it went broke.)

Reduce the bloated military budget much of which merely provides "pork".

Rewrite the tax code so that wealthy individuals AND corporations can't EVADE taxes by using offshore "dummy" corporations. Eliminate tax loopholes that allow corporations to evade taxes such as the schemes used by oil companies to make billions in profits and pay hardly any taxes.

Rewrite trade agreements such as NAFTA, MFN status for China and other slave-wage countries, the WTO, the IMF, the World Bank, and all the corporate cartel agreements that make it profitable to offshore jobs.

Apply tariffs and import quotas on imports from slave-wage countries so that American workers can compete with workers paid fifty cents an hour or less. In other words, take the huge profits out of offshoring jobs. Capitalism does not guarantee huge profits to corporations. No economy can survive when there is massive unemployment, and the U.S. economy needs to make these changes if it is to survive.

No stimulus package will do any good if it is almost all spent on imported goods. It will support job creation in China and India, but not in the U.S. unless incentives and restrictions are built in to ensure that the money is spent to create jobs in the U.S.

Working Americans pay taxes. Working Americans who buy goods and services from other Americans build the U.S. economy.

Any society that is strictly a "consumer" society is living on credit and will eventually (and inevitably) collapse.

Take the Federal Reserve away from the control of the bankers. The Fed's arbitrarily keeping interest rates low was a chief enabler of the swindles and Ponzi schemes in the stock market and real estate bubbles and busts.

Reimplement the Glass Steagall Act and other New Deal legislation to regulate the banks and other financial corporations.

What needs to be done is straightforward. It doesn't take a degree in economics (which I have) to understand what I have written here.

Whether it will get done without a total economic collapse first occurring (or even if an economic collapse does occur) is another question.

[Warpy]

6. Thanks for the expanded checklist

My degree is not in economics, I just read the books for kicks.

However, unless we reenact the near confiscatory taxes of the late 1930s on extreme wealth and begin to address the enormous concentration of wealth in this country, any scheme is doomed to fail. It's also the only way to free up the moneys needed to rebuild industry and infrastructure.

Plutocracy will kill us just as surely as bankruptcy from military adventure. Our infrastructure is falling apart because they've looted that, too.

[AdHocSolver]

8. I left out an important economic policy change that is needed: Bust the trusts.

This country needs to implement vigorous antitrust actions to break up the monopolies. If it is too big to fail, it is too big to be allowed to exist.

Several smaller companies in any industry promote competition and create more jobs.

Corporations merge and acquire other companies solely to eliminate competition and eliminate jobs. Mergers and acquisitions are a "back door" method of collusion between companies to fix prices and prevent competition. Laws must be implemented that heavily regulate such effective monopolies and make them pay a stiff price for such actions.

[mother earth]

10. Well said, Warpy.

[fasttense]

4. Well, Dubai's failing debt and the Japanese yen seem to be predicting another

corporation crash. I wonder what Wall Street will look like on Monday and what will the Fed have to do to right it?

[northernlights]

5. never mind....

[wuvuj]

9. See a pattern here?

* those who helped create the economic collapse...get to fix it by doing more of the same?

* those who helped start the wars...get to fix them by doing more of the same?

* those who helped to create the health crisis...get to fix it by doing more of the same?

* so those who helped to establish the realities of peak energy and global warming will get to "fix" it by doing more of the same?

More of the same = SOS? ...in both it's meanings....same old shit......and it's an emergency....

.....................

http://www.informationclearinghouse.info/article24068.htm

But there won't be another round of stimulus because Summers and his sniveling companion Geithner won't allow it. They have other plans. Oh yeah, Wall Street and the banking Goliaths will still get as much monetary stimulus as they need (under the phony moniker of "quantitative easing", liquidity swaps, or excess reserves) But as for the working slob---nada, zippo, zilch.

Summers assignment is to bring the broader economy to its knees; to crush big labor by keeping unemployment high, to force state and local and governments to privatize more public assets and services, and to generate as much human misery as possible. In short, Summers is laying the groundwork for structural adjustment within the US, a policy which reflects his ongoing commitment to multinational corporations and neoliberalism. It's the shock doctrine redux. These people are monsters.