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Ear to the Ground

The Longest Recession Since WWII

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Posted on Sep 20, 2010
Flickr / Pablo Alvarado (CC-BY)

According to the National Bureau of Economic Research, the recession ended in June 2009 after 18 months—the longest downturn since World War II. That doesn’t mean we’re out of the woods. Reduced expectations for U.S. economic growth and fears that high unemployment could last longer than previously thought presage more pain to come.

BBC:

The OECD predicts the US economy will grow by 2.6% this year, having previously predicted expansion of 3.2%.

It also warned in its latest economic survey of the US that the downturn may trigger long-term damage to the economy, with higher long-term unemployment.

Meanwhile, the UK’s Centre for Economics and Business Research (CEBR) said that it expected the US economy to expand by 2.2% next year, after growing by 2.5% this year.

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rico, suave's avatar

By rico, suave, September 23, 2010 at 2:39 pm Link to this comment

Lafayette:

If by “superior” you mean superior in breadth of insurance coverage, you’re probably right.

But as I said in another thread, Cuba has universal health care coverage, too. Too bad they don’t have any medicine.

You conflate “care” and “coverage”. You’re right, only 84% of the US population is “covered” but everyone has access to “care” (which is why per capita costs are so high, unless of course you’re poor, in which case it’s free). If somebody anywhere in the world wants care RIGHT NOW, they come to the US, they don’t wait in line in Britain or Canada.

And as for your Public Services comment, you again use “fair, equitable, and universal” as the measure of success. Yes, giving everybody one cup of rice and a kilo of charcoal per day certainly is all of those things. But…

Don’t be satisfied with equity as sufficiency. Everybody in Cuba is materially and politically equal, and equally miserable by Western (of which they are a part) standards.

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Lafayette's avatar

By Lafayette, September 23, 2010 at 7:18 am Link to this comment

{rico: Governments have been shown to be far inferior to private initiative in managing social and economic institutions.}

Piffle. Look beyond the three mile limit. Towards Europe.

Most European governments, by two standards of measure (the World Health Organization and the OECD) have National Health Services that are superior to that of the US? And why?

Because what good is a health system that is not used by those who need it? Coverage in Europe is 100%, regardless of whether you are employed or not. Coverage in the US was only 84%. We shall see if the legislation passed will allow total coverage for all Americans. (Already, some Health Insurance companies have announced that they will NOT sell children-insurance alone - which is discriminatory.)

Per capita health care costs in America are $7200 (OECD number, 2007). In France, they are less than half that sum and in other European countries a third of that sum.

European Public Education up to a tertiary level of vocational or college or university is not only more adequate than that of the US (have a look at the PISA scores here) but is also universal. No one is refused admittance, though some specific schools (such as Med Schools) have entrance exams due to limited capacity. Moreover, a university-year in Europe costs about 10% of that at the least expensive state university. There is an admission fee but no tuition fees.

What muddles up the debate in the US are mindless remarks such as that cited above. The facts regarding Public Services, whether social or simply utilities (water, electricity) tend to show that where the government manages them (in Europe) they are fair and equitable and universal.

The constant hammering away at “Free Markets are best everywhere and at all times” is brazenly stupid. Yes, the market system does work better than centrally-planned communism, which was heinously undemocratic farce. But, when not properly regulated, then laissez-faire (supposedly) Free Markets lead to concentrations that are oligopolistic and rent-seeking. Meaning we all pay more for a basic good or service.

Don’t believe me? Just look at the map for Health Care insurance in America here. Is this the kind of fair and competitive market that it assures Americans the best service for the least cost?

Hell no!

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Lafayette's avatar

By Lafayette, September 23, 2010 at 4:59 am Link to this comment

WE’VE BEEN EFFED

{sam: And in an America of the people, by the people and for the people, to oppose the power of the people to unite and act through their government, well, that’s just un-American. }

Well put, but let us remember who voted for those scoundrels that supposedly represent “us Americans”.

The political system in America has evolved to a point where corporations, recognizing that they have no constitution right to vote, have decided to procure that voice manipulating financially the electoral process in both Congress and for the presidency. And the Supremes seem to have agreed with them.

This decision (on the part of the Supremes) is unconscionable—particularly in an America that obtains its opinion-forming “information” from the Boob-Tube. Where opinion manipulation by vested-interests has proven to work well for both parties.

The problem is particularly acute in the Troglodyte Senate where a full 40 percent are millionaires. Does anyone in their right mind think that the Senate will permit reform of the taxation system—where Reckless Ronnie brought marginal tax rates down from 70 to about 27% at the end of his administration.

From Wikipedia, see the marginal tax rate historical graphic here. Note the reduction that began in 1980 and the end-point in 1990. Since, marginal rates have increased slightly to about 37% - half of what they were at the beginning of the 1980 decade. (But not after the Dems raised them to 40% and Georgy-porgy lowered them to “throw the dogs a bone”.)

We can rant all we want in forum, however, and it will do no good whatsoever. The American people remain largely blind to the tax rip-off that has been performed upon them. Particularly since most of the foregone tax revenue now reposes upon the Middle Class.

We are paying the bill and our children will continue to do so into the future. We, the middle-class, have been effed.

Y’all enjoyin’ it?

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Samson's avatar

By Samson, September 21, 2010 at 12:17 pm Link to this comment

The history of uncontrolled and unregulated markets, and of letting private firms manage the economy, is one of wild swings of boom and bust and of periodic massive economic collapses.

Most everyone sleeps through that part of American history at the end of the 19th century, but we’ve seen all of this many times before.

Which is why the two reform movements of the Roosevelts, first Teddy, then Franklin, tried to find ways to constrain and regulate these markets to try to prevent these sorts of economic collapses.

Which worked until the Democrats and the Republicans all got together and drank the koolaid of this free-market idiocy and removed those reforms.  Surprise, surprise, we’ve got the worst economic collapse since the great depression.

I can’t see how a system of management that periodically leads to the whole house of cards collapsing into a giant mess that leaves people starving and homeless and unemployed and out on the streets can be considered superior to anything.

We’ve let a bunch of crooks get rich by ripping us off while running the whole economy into the ditch.  Just like they always do when we are dumb enough to believe this free-market bs and let them run things.  And yet people still keep pumping this bs out about how free markets and private corporations are more efficient at running things than anyone else. 

But really, they just say that so they can rip us off.

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Samson's avatar

By Samson, September 21, 2010 at 12:07 pm Link to this comment

Medicare spends approx 9% on overhead and admin costs

Private insurance companies spend approx 28% on overhead and admin costs

Don’t believe the right-wing, pro-corporate, anti-freedom, anti-democratic, anti-American propaganda.

America is the nation that’s supposed to be a nation of the people, by the people, and for the people. Not of the corporation, by the corporation and for the corporation. But some will have you believe that any attempt by the people to gather together through their government and restrict the power of greedy, sociopathic corporations is wrong. 

And in an America of the people, by the people and for the people, to oppose the power of the people to unite and act through their government, well, that’s just un-American.

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Samson's avatar

By Samson, September 21, 2010 at 12:00 pm Link to this comment

Of course it is.

The Democrats are following Herbert Hoover’s economic policies.  Hoover tried exactly this between the crash of 1929 and FDR’s coming to office in 1933. 

We already knew that Herbert Hoover’s economic policies were not the answer. But that’s what Obama and Summers and the Democrats have tried.

And gee, surprise, surprise, surprise, it didn’t work any better this time with Obamhoover’s policies than it did the first time.

This is what you get when you let the bankers run the place.  It happened in the 1920’s and 30’s up until FDR.  And it happened again in the 90’s and 00’s up until .... well, until the people in this country stop voting for the candidates that have wall street money behind them.

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By Gmonst, September 21, 2010 at 9:51 am Link to this comment

Simple. Government domination of social and economic institutions and wealth redistribution.

Governments have been shown to be far inferior to private initiative in managing social and economic institutions. And wealth redistribution schemes create no new wealth, they only “take from the rich and give to the poor until there are no rich no more”.

That’s interesting since all indicators I have seen have shown that the gap between the rich and the poor has been widening, but you suggest the opposite.  And go even further to suggest the current economic malaise is result of wealth redistribution policies.  Could you elaborate with some specifics?

Notably what wealth redistribution schemes caused this problem?

How and in what ways have governments been shown to be inferior to private initiative in managing social and economic solutions?

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Lafayette's avatar

By Lafayette, September 21, 2010 at 4:44 am Link to this comment

WHERE ARE THE SMOKING GUNS?

Economists declare “ex cathedra” (like a college of Cardinals) that a Recession exists when there are two successive quarters of economic downturn (meaning the GDP diminishes). The opposite is equally true, so the measurement stick is purely percentage-wise.

Which is nice-to-know but barely adequate to base any meaningful prediction of the condition of an economy. So, that leaves pundits elbow-room to finagle their own assessments of future outcomes.

Mine has to do with two factors that, I suggest, most people don’t think about. Meaning that they don’t get up in the morning and wonder if unbridled Health Care costs can wreak havoc with unit labor-costs thereby diminishing American competition. Or, is the American education system producing the right amounts of brain-workers compared to brawn-workers?

But some of us—looking for the smoking guns—do ask those questions because they are pertinent to guaranteeing this nation’s productivity and thus assuring our “pursuit of happiness” durably into the future.

Our exaggerated HC-costs (twice that of most of Europe, the most demographically similar of our competitors) mean that the cost must be recuperated by either of two means.
* Either it is paid for by the Treasury because legislation allow companies to offset some of the cost of HC-insurance coverage, and
* The rest they impute to the prices of goods and services, which consumers pay when consuming those goods and services.

In the first instance, therefore, the ponderous HC-costs are a drag on our budget deficit. Which means what? That money, which could have been spent better elsewhere, goes to health care (mostly in the form of paying for service costs which are sky-high—the GP physician mean earnings amount to 165.8 K$ whilst $173,900 per annum, whilst surgeons earn 219.7 k$ and and registered nurses about 66.5 K$. (Don’t believe me? Check out the numbers here.)

Yes, these are some of the most expensive HC service costs in the world, barring some oil-rich country.

In the second instance, the cost is passed onto consumers and thus they constitute an indirect tax.

As for education, who really cares except those informed parents who want the best schooling possible for their children? But what about the rest of the children? They are falling through the cracks of our national educational system—since inadequate academic guidance (meaning psychologists who monitor a child’s progress) are available. Because, of course, they are “too expensive”.

Ya pays for what ya gets. And we are getting unemployable dunces.

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rico, suave's avatar

By rico, suave, September 21, 2010 at 4:31 am Link to this comment

Gmonst:

Simple. Government domination of social and economic institutions and wealth redistribution.

Governments have been shown to be far inferior to private initiative in managing social and economic institutions. And wealth redistribution schemes create no new wealth, they only “take from the rich and give to the poor until there are no rich no more”.

Report this
Lafayette's avatar

By Lafayette, September 21, 2010 at 1:16 am Link to this comment

UNIVERSAL DUNCES

What I find most disturbing is this piece of information that appeared recently in the Economist here


This research shows clearly the “hollowing out” of middle-class jobs and their exit to warmer unit cost climates. The share of mid-level work-hours spent (meaning of our cherished Middle Class workers) diminished significantly over a period of 13 years - which is a highly troubling erosion.

What’s a nation to do?

Get in gear, methinks. That is, clear the rubbish out of secondary and tertiary education and gear our children to higher levels of both academic and vocational achievement. The New Age “Be all ya wannabe” is decidedly dead and gone. We must become very attentive to teaching quality/performance AND child academic guidance (to assure, first, a secondary-school diploma and, secondly, throughput to tertiary level education either vocational or university).

We must now assure that our Education System produces competent individuals for our national work force, not Universal Dunces who flounder about looking for the least work with the best pay (often found in Finance and Real Estate or, worse, at fast-food outlets).

This challenge is the most important to our nation in a century, I suggest, since it goes to heart of economic productivity and therefore national output. But, why since a century?

Because the last great transformation of our workforce in the 19th century was the transition from the Agricultural to the Industrial Age, when untrained workers migrated hugely from the farm (or immigrated from Europe) to large cities where manufacturing facilities had been built. 

Training the workers needed in order to function adeptly in a product-line environment became a significant challenge. Which brought about in our nation various means to do so, most notable of which was America’s effort at building Public Libraries in the early part of the 20th century. Or, most importantly, the expansion of our secondary-school system with obligatory schooling.

BRAIN-WORK OVER BRAWN-WORK

We must embark, as our nation transitions from the Industrial Age to the Information Age, upon another significantly large transformation of our work-force too much of which is stuck in lower or mid-level Brainless Work—if we are to generate the productivity improvements this nation requires to assure decent/durable jobs that will nurture future American families.

And this will take decades to achieve.

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By Gmonst, September 21, 2010 at 12:18 am Link to this comment

Soon we will all be united in our poverty. The progressive dream is coming to fruition.

Please explain the progressive dream and how its coming to fruition.

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By samosamo, September 20, 2010 at 6:44 pm Link to this comment

****************

 

Here’s a link that even includes a cute chart of
past recessions, oh, copy and paste in address
bar:

http://www.usatoday.com/money/economy/2010
-09-20-recession-over_N.htm?
plckFindCommentKey=CommentKey:c4f37497-
edd5-40f7-a28b-06b7854e8bcc

And how convenient to know just 6 or 7 weeks
before the november elections that the recession
has been over for almost a year. Hot damn I’m
happy and will give a femtosecond of thought
about voting for o.

But what it is, is smoke and mirrors economics,
more of milton turdlick friedman’s ‘disaster
economics’ where the system is ostensibly back in
working order but the people are not. No quaterly
growth, just another one of those fake ‘leading
indicators’ of how well the economy is doing, just
as the dow jones industrial is a leading indicator
of the economy. Once again the msm provides
meaningless information for those who really
need a ‘really’ improving economy.

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rico, suave's avatar

By rico, suave, September 20, 2010 at 3:39 pm Link to this comment

Soon we will all be united in our poverty. The progressive dream is coming to fruition.

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By FRTothus, September 20, 2010 at 12:42 pm Link to this comment

This isn’t over by a long shot.

The empire is quickly approaching the end-game.  The stagnation has only just begun.  Over the next few years, we are going to see obligations on the interest on the national debt to its creditors outstrip that half of the federal discretionary budget that goes to the Pentagon.  This is the way empires collapse.  It happened to the Hapsburgs in Spain, the Bourbons in France, the Czars in Russia, and then the Soviet Union itself.  It happened to Great Britain, and it is happening to us. It is not a question of if, but when.  Signs indicate it could be as early as within the next 5 to 10 years, but no more than about 40.  The point at which obligations to debt interest service cross over the amount currently spent on the Pentagon is right around the corner, and then…


The collapse of empire, if history is any guide, does not occur slowly, but comes down all at once, once it’s begun.  Empires are complex systems, always on the verge of disaster, and it takes only one little thing to set the chain-reaction in motion.  As the interest on borrowed money mounts, and the US finds it increasingly impossible to borrow enough to make the interest payments, then it is game over. The lenders will refuse to lend, and the US will be bankrupt, unable to pay its bills. Overseas bases and resources will have to be sold off to pay the creditors, the currency devalued. The US will finally retreat exhausted from Mesopotamia, the historical graveyard of empires, and find itself with few friends.

China, the next great power, is slowly reducing its exposure to US Treasury bonds, buying up hard currencies and resources, a telling harbinger of what is to come.

I suspect life here will carry on much as before, but the retreat from the world stage, the abandonment of all of those overseas bases and the ending of the US role as the Mafia Don will not be an easy pill for the NeoCon crowd, or the Pentagon.

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