Opinion

Bernd Debusmann

Fading optimism in “new normal” America

By Bernd Debusmann
December 23, 2010

Bernd Debusmann is a Reuters columnist. The opinions expressed are his own

Optimism is so deeply embedded in the American national psyche that it withstood the Great Depression in the 1930s and a string of recessions since then. But in the era some economists call “the new normal” in America, optimism is fading.

So say public opinion polls that ask Americans how they see the future, theirs and their country’s. One recent survey, by the respected Pew Research Center, found that depression era Americans were more optimistic about economic recovery in the near future than people questioned in a Pew poll this October, when only 35 percent said they expected better economic conditions in a year’s time. In response to a similar question in 1936 and 1937, about half expected general business conditions to improve over the next six months.

The phrase “new normal” was coined by PIMCO, one of the world’s biggest investment funds, and is shorthand for an American future that includes lowered living standards, slow growth and high unemployment. Joblessness now stands at 9.8 percent, up from 9.6 percent in October. Add workers who have given up looking for jobs and people forced to work part time and the rate climbs to 17 percent, a powerful reason for declining optimism.

But it’s not the only one. A slew of studies, surveys and reports show that a growing number of Americans – some surveys say more than half – no longer believe that their country is a land of unlimited opportunity, where all it takes to rise to success is hard work and determination.

“The end of American optimism,” as a headline over an opinion piece in the Wall Street Journal proclaimed this summer, has not quite arrived. But Americans increasingly believe that the rich just get richer and the poor just get poorer. They have good reason to think so. The rich-poor gap in the United States is wider than in any other developed country.

That has rarely been a matter of concern for most Americans but the recession that began in December 2007 turned inequality into a topic of public debate, on occasion with peculiar twists.

In November, a widely-read New York Times columnist, Nicholas Kristof, compared the United States to Latin American banana republics. To see countries where the richest one percent take home more than a fifth of the national income, he said, it was no longer necessary to leave the U.S.

Two weeks later, he followed up with a column reporting that the comparison had drawn protests from readers who deemed it glib and unfair. Latin Americans thought it hurtful and invidious. After checking into the matter, he came to the conclusion that “I may have wronged the banana republics.”

Unlike in the U.S., he said, Latin America had become more equal in recent decades.

TRICKLE-DOWN THEORY

There is no reason to believe that American income inequality will shrink soon – the next Congress will be dominated by Republicans, many of whom firmly believe in “trickle-down economics,” the notion that giving tax and other financial breaks to the rich and the super-rich will result in increased profits for corporations which reinvest them, and then create new jobs. Money trickling down from the top. In theory.

This was the idea behind Republican insistence on an extension of tax cuts, introduced by George W. Bush, that included America’s wealthiest. Congress voted in favour of a two-year extension on December 17 after Republican leaders and President Barack Obama agreed on a compromise many in his own Democratic party saw as an abject surrender.

While considerable attention has been focused on the gap between rich and poor, wider than at any time since just before the Great Depression, there is perhaps an even weightier reason for Americans to lose their optimistic, can-do spirit — for many millions, the notion that they can climb up the economic ladder is more myth than reality.

Half of those starting at the bottom 20 percent never leave that level. “The…American economy tends to help those at the top stay there while making it difficult for those at the bottom to move up,” according to a study by Ron Haskins and Isabel Sawhill of the Brookings Institution, a Washington think tank.

That is true despite the rags-to-riches stories that underpin the American dream and have fired the imagination of countless immigrants. President Obama himself could be a poster child for upward mobility, a black man reaching the pinnacle of power after an unconventional childhood that included a spell of subsisting on his mother’s food stamps.

Obama’s Republican opponents portray him as a latter-day Karl Marx, intent on an economic model that distributes income from each according to his ability, to each according to his needs. That perception gained currency during Obama’s election campaign, when he used the phrase “spread the wealth around” in an exchange on his tax ideas with an Ohio voter named Joe Wurzelbacher.

Wurzelbacher became an instant hero to the American right as “Joe the Plumber.” He need not have worried. Obama never used the term again and wealth distribution looks likely to continue in one direction – upwards. In the “new normal,” there is reason for optimism for those at the top, not those in the shrinking middle or the bottom.

(You can contact the author at Debusmann@Reuters.com)

Comments
56 comments so far | RSS Comments RSS

Much of the fading optimism is because of Barack Obama. He insists on “change” for equality in outcomes, as opposed to an America with traditional values for equal opportunity. Joe “The Plumber” Wurzelbacher’s argument was summed up best by economist Milton Friedman, who said, ““Taxes are much less taxes on being wealthy than on becoming wealthy.”

Posted by ronaldgrey | Report as abusive
 

The point being missed here is the analysis of the current administrations attitude of taking from the rich and giving to the poor; basically the Robin Hood theory however Americans also understand this becomes the profiling of the rich and unfortunately, rich is what most Americans work towards. The underlying question becomes; is Obama administration is attacking what I am working to attain? To even confuse the matter worse, the Obama administration is attacking the rich in exactly the same manner the Nazi’s went after the Jews wealth in the 1930’s. Identify a group that you do not like and tax them; I believe the American people understand something is going wrong with the American government.

Posted by Alpha_Blogger | Report as abusive
 

“… depression era Americans were more optimistic about economic recovery in the near future than people questioned in a Pew poll this October…”

During the 1930s Depression, Americans correctly foresaw that the fundamentals remained good for strong economic activity in the near future. Henry Ford’s cars were on the roads in ever-increasing numbers, the U.S. possessed huge reserves of oil and many other natural resources, and the impoverished citizenry were eager to work, even for low wages. What better conditions could business ask for?

The situation today is, in many respects, just the opposite. U.S. domestic oil production is far below domestic consumption, while international petroleum prices continue to creep upward. Because U.S. labor costs are too high to be competitive in world markets, most manufacturing has moved off-shore. The U.S. spends vast amounts of money fighting hopeless overseas wars without any clear purpose.

Americans, by and large, know what they are talking about when they tells pollsters they predict worsening economic conditions here in the U.S. It is hard to imagine they will be proved seriously wrong.

Posted by Ralphooo | Report as abusive
 

I think things are just royaLLy messed up. to much taxing, way to much robin hooding, and everything cost too damn much. Now put that in your pipe and smoke it! All these stuff , ie: rich getting richer, and then they cut my food stamps, and my disabiLity check. How am I suppose to Live? I didn’t ask for aLL this crap I have “sickness, etc”, and well theres no one that can take care of me, and I do not want to goto a nursing home. My kids aren’t making it. I’m not making it, but the rich are making it over and over and over again, and the Government is helping them make it! What’s wrong with that picture? I’m aLL for a helping hand, and I do heLp when I can, but ya know I can bareLy waLk, I’ve broken my back twice now, I’ve been aLMost to death’s door this year, soon I won’t wont be able to walk and then what? Things gotta change and soon. $257.00 a month just dont go no where! Some times it gets reaL hard, and other times I just cry. I don’t know half the time what is going on everyone wants money, and I just don’t have any any more.

Posted by RWB2205 | Report as abusive
 

Part of the tax cut deal was to extend unemployment assistance. People in other developed countries – Europe, Japan, Australia – with social security safety nets can only be amazed by the dominant American ideology which says that with “frontier spirit” millions can hunt down dinner for the family armed with just a knife or gun on the streets of urban America.
Do Americans ever wonder why the “socialist” governments of China, India, Brazil etc are investing huge amounts in public secondary and tertiary education.

Posted by Neurochuck | Report as abusive
 

Europe, Japan are broke. They are trillions in debt – and Australia has begun down that road as well. Why? So-called “Safety nets” destroy economic systems. I hate to tell you this, but the U.S. WAS the land of opportunity until the government began giving opportunity away.

Posted by beofaction | Report as abusive
 

Okay, time out. The crash of ’29 was seven years before the ’36-’37 poll, the banking crisis of 31′-’32 four years. 1936 was a period of relative recovery. The thirties were not a uniformly grim period.

Equivalent comparison with ’29 would make it 2015 starting from the Lehman crash. Historically I might take the bonus marchers or the election of ’32 as an equivalent barometer of the nation’s emotional state in 2010.

Posted by ARJTurgot2 | Report as abusive
 

the fading optimism has been caused by the great recession caused by bush, clinton and a bunch of other corrupt politicians, not to mention the clown economists that said it would be a good idea to have free trade with china.

Posted by jwws9999 | Report as abusive
 

Reading comments about economic reality of now and for the recent past of 4 decades, hope as a result of upward mobility has ebbed.For every tens of thousands of citizens who feel poorer for every one that is a success story into countless riches.Even the percentage of real rich have shrunk as compared with the millions more who have hit rock bottom financially;yet it seems deluded folks not able to grasp the realty and its consequences,as they vociferously defend like minions of the rich who they imagine will one day out of sheer benevolence will lift them up to their ranks over all other hard working souls who have given up on this fallacy.

Posted by cosmicinsight | Report as abusive
 

Nice piece today in WSJ about an OECD study (i.e. NOT a right-wing American group) that concludes that US tax rates are the most progressive, more so than Sweden, France, etc.
The author states that Repubs believe in trickle-down economics, and many of them do. But there is a larger question: should the gov’t be in the business of redistributing wealth? And will gov’t efforts in this area really have the intended effect? Again, the WSJ piece states (I paraphrase) that reported income is inversely related to tax rates. Full piece here: http://online.wsj.com/article/SB10001424 052748703581204576033861522959234.html?K EYWORDS=tax+sweden+oecd

Posted by mheld45 | Report as abusive
 

@mheld45: You neglect to say that the conclusion is from the author (not the OECD) who works for the CATO institute, not exactly an unbiased institution on the matter of taxes.

Here is what Warren Buffett, not a left-wing American billionaire, said about the matter in an interview with ABC in NOvember:

“The rich are always going to say that, you know, just give us more money and we’ll go out and spend more and then it will all trickle down to the rest of you. But that has not worked the last 10 years, and I hope the American public is catching on.”

Posted by Komment | Report as abusive
 

we’ve given the rich tax breaks ad nauseum, and what do we have to show for it, a shell of a former economy that may not ever come back

and yes, wea;th redistribution works. read up on us economic history instead of watching fox news, and you’ll see why

Posted by jwws9999 | Report as abusive
 

In Vietnam and China, the people are very optimistic. A lot of them come to the US and Europe on vacation because their money goes a long way. Things are cheaper here, even when it’s made over there. I just spent some time shopping with a group from Vietnam that had done a tour of the East and West coasts. They just grab the stuff off the shelves because their 2 week trips are just not long enough before they have to go back to their busy working lives. They get more and bigger bonuses than me.

Posted by bao | Report as abusive
 

i guess it’s easy to get rich in vietnam when you’re paying your workers 10 cents an hour

Posted by jwws9999 | Report as abusive
 

Either Bernd is not as old as the picture looks, or he lived in a family that wasn’t affected by the Great Depression, and/or ultimately he has fallen for the latest revisionist history. Because almost everyone was ‘depressed’ during the 1930′s. In fact, the unemployment rate went up in 1937, a full five years after most of the banks collapsed.
Thie ‘recession’ is just beginning…. We’ve got a long way to go. Hopefully it won’t take a world war to bring us out of it this time….

Posted by edgyinchina | Report as abusive
 

A major difference today is that there are so many people involved in government that do not have any connection to American values. Their only concern is themselves and their own kind. These government people make decisions that hurt the average American while helping only the elite. The outsourcing of manufacturing without any regard to the impact on those that have made their livelihoods in this sector is another prime example of the don’t care attitude in government and corporate America. Their is no cohesion or national identity in the USA which bonds all people together, rich and poor alike, for a common good like their was during the earlier times prior to the 1960′s. The average American is finally waking up to the idea that their futures have been sold out right from underneath them. Look no further than the corrupt Federal Reserve, which has manipulated and inflated the stock and real estate markets, only to leave the naive investors busted at the end. We are know living in every man for themselves nation. More like what Russia is than Latin America, where at least their is some common bonds between people.

Posted by jtal19 | Report as abusive
 

Manufacturing and mid-level jobs will begin trickling back to US workers on the day that US workers agree to work six to seven 14-hour days a week with no pensions, benefits, environmental, safety, human rights, or job security protections, for the munificent wage of $2.00 US per day. That’s the deal the businesses get in the world they own, and there’s no reason for them to back away from it.

Until then… not gonna happen. The US is a large market but it’s no longer a growing one… and the growing markets are where those $2/day jobs are.

The New World has two kinds of inhabitants: the Rich, and the Raped.

Posted by stormkite | Report as abusive
 

@edgyinchina. Not sure whose statistics you draw from. There were no official government figures on unemployment until 1940 but according to a widely-accepted estimate from economists, depression era unemployment peaked in 1933, at 24.9%, dropped to 17% in 1936, and dropped again in 1937, to 14%. Still a lot higher than today’s but the curve went down, not up.

Posted by BDebusmann | Report as abusive
 

What a bogus article. I’m sure there weren’t any surveys in the 1930s evaluating average American optimism about the economy.

Posted by TheSonoran | Report as abusive
 

Unfair is unfair. The rich paid to put Ronald Reagan in in the 1980′s. The rich didn’t like Carter because he was for the poor so they had their banker friends raise the interest rates to 22%, supposedly to fight inflation, but it actually took care of Carter. The reason they did this is because the rich were mad that their other big candidate that supported their issues, Richard Nixon, got kicked out of office for breaking into the Democratic headquarters so that they could sway the election when he was elected. This is a group of conspirators who have broken a series of laws to take over the U.S. government so that they could institute their own rules to protect their fortunes.
Why do all of the agencies that supposedly protect us throw people in jail in this country at a higher rate than anywhere? Worse yet, why is there such a high rate of crime? There is a directly corresponding line with the rate of crime and the amount of income owned by a smaller percent each year ever since the assassination of John F. Kennedy. This is where they started because he did not go along with their (rich) plan to take over America and make it a stink hole so that they could have more. People might not be cognizant about all of this but they can see the symptoms of this everyday. Isn’t it time that we fixed this problem once and for good!

Posted by builder7 | Report as abusive
 

Make outsourcing non tax deducible and bring jobs back to the US. Is that simple?

Posted by robb1 | Report as abusive
 

Oh ! the rich get richer and the poor get welfare in the meantime inbetween time the middle class get screwed!

Posted by robert1999 | Report as abusive
 

Bernd really hits the nail on the head, you know? This guy is my favorite Reuters blogger.

Posted by adamt78 | Report as abusive
 

It’s disappointing to see that so many Americans are buying into the Fox News rubbish about Obama trying to redistribute America’s wealth through taxes.

I agree that America’s poor should not get “your” money, but the fact remains that it costs more money to run our country than the government is taking in and that has been our situation for decades… thus our tremendous national debt.

It makes no sense to give the government more money right now, because it would only encourage them to continue spending like drunken sailors on shore leave. But if the government finally cuts enough spending to balance the budget as it did briefly during the Bill Clinton/ Newt Gingrich years, then we must get serious about our long-term debt… only AFTER the spending is brought under control.

That will require people with hard-earned money (including me) to pony up. If you took 100% of the assets of the poorest half of America, it would amount to only a pathetic fraction of what it currently costs to run the federal government for one year. That doesn’t even address our long-term debt.

How long do you want our country to remain deeply in debt?

Posted by breezinthru | Report as abusive
 

The article is right on point, I believe this failed “trickle down” economic theorgy has been going on in the US since Reagan. It’s nothing more than profiteering on the backs of the workers. It’s the fleecing of the country it inures to the benefit of insanely wealthy. For those who argue anything otherwise is “socialist”, balderdash, there has to be another option! People who work are just as entitled to earn a “flow” of money as investors and should not live on a “trickle”. Workers are seen as a commodity to be used to enhance the wealth of corporate investors. Even a dolt understands that using people is fundamentally wrong and I think those who don’t get it are morally misuided and motivated by greed.

Posted by m2u | Report as abusive
 

Let me to sum up. The current American polical and economic system permits a very small percentage of the population to become and stay very rich while forcing the absolute majority to become progressively poorer. This is the recipe for disaster. And I am absolutely certain than in 20 yars China will overcome US economically and militarily. Possibly then – and only then – out political class will change priorities, and this country will begin real progressive and LIBERAL reforms. Otherwise we are doomed.

Posted by Heretic1 | Report as abusive
 

I think that something is basically wrong in the United States. I think that to be a leader one has to be open and honest enough to be above board with your dealings. Contrary to what most writers think it is not the big corporation, bank, or government loan that provides the leadership needed in a country. It is the small businessmen who are leading the country. All the government secrecy, and the bailouts of large corporations will not rebuild America. When the government gets real and above board it will be a start.

Posted by fred5407 | Report as abusive
 

Problem is the writer Debusmann, as with Reuters as a whole, is deeply anti-American so all his writing must be viewed through such a prism. (I am even suspicious of Reuters’ doctored pictures.)

Debusmann plays fast and loose with early statistics of optimism in the 1930s. No formal surveys existed then.

He also ascribes the unhappiness to the gap between rich and poor, but fails to point out that left wing policies such as unionization in schools which produces mediocre results or the onslaught of dumb third worlders from across the border exacerbates the picture.

And then there is Obama: the old cornerstone of the US worldview is that people who are lazy or don’t work do not get ahead. Now Obama has turned that view upside down.

Being lazy and not working or joining the civil service now gets you wealth and benefits that many in the private sector can only dream about.

The long and short of it is Debusmann is misrepresenting the situation, most likely, for his own left wing political views.

I will put money on the table that Debusmann is a lefty who hates capitalism, the Israelis (while ignoring Iran) and support all the cuckoo left wing causes out there.

Posted by eleno | Report as abusive
 

Heretic1-

US Census data on household incomes actually shows families are becoming more prosperous over the long haul.

Sorry to burst your bubble with good news, but thems the facts….

Posted by jambrytay | Report as abusive
 

What pessimism? Take a look at MSNBC right now and you’ll see…….Zandi from Moodys, some former Treasury economist and one from Goldman say we’re in for a great 2011. Hey, the recession ended 18 months ago so get out there and get shopping! I’m listening to NPR right now as I write this and they’re telling me that this is the best Christmas season in years.

Yippee!!!

Except I’m also trained in economics and I just don’t believe it. I’m scared to death over this.

Posted by Missinginaction | Report as abusive
 

I welcome this alternative view of how things may unfold in this “PR recovery”.

However I feel the author (Debusmann) was implying that the inequality has migrated from the economic to the class/social, creating an entirely new dynamic for the US in the medium term.

The squeeze on the unskilled and bluecollar class will become more difficult as the US Dollar becomes less valuable against the currencies of China for example.

I don’t believe anyone has even bothered to model the export lead jobs growth, because its nonsense. The US cannot compete in the global economy because of systemic failure, at every level of responsibility.

Step 1 Deal with the Fed.

Step 1

Posted by tonydd | Report as abusive
 

17% Unemployment (including not looking and off the rolls) is only 8% less than the depths of the Great Depression.
The disparity of wealth is alarming.
America has sent it’s manufacturing base to China. We are victim to Chinese mercantilism (our natural resources for their manufacturred products).
Educators push ONLY college not the trades on us. Who will do the plumbing, electricity, auto repair, small machine reapiretc? We can’t offshore those, just bring in foreigners who have the skills. Oh I forgot, you can’t fix those machines we buy from Asia, just throw them away and buy new. China now owns most of our debt and is buying the debt of Portugal and Greece.
Sooner or later the American people will wake up and then as the saying goes, “Katy, bar the door.” It’s going to be very violent.

Posted by neahkahnie | Report as abusive
 

The Pew Research Center is “respected” only by leftists. They respect it for the damage that it inflicts upon Americans who don’t want the country to become socialist or “progressive”.

Posted by MOC | Report as abusive
 

I would point out to beofaction Australia has one of the strongest economy’s in the world. Yes Australia’s national debt has increased over the past five years. Some has been wasted on stupid government programms. On the other hand you must look at how the majority has been spent and the US should take note at how we have done it. There is both good and bad national debt. If a country borrows money and that money builds and creates nothing other than a slight increase in consumer spending,then that is bad debt On the other hand if a country such as Australia has done borrows money then invests that money into huge infastructure projects needed to support our booming mining sector, then that investment returns a profit which helps pay the debt back, then that debt is very good debt The problem the US has is, they have a 14 trillion dollar national debt none of which or very little returns a profit to help pay it back. As a result it can never be paid back.
In my opinion the US needs to take a realistic look at itself. If I were say a promenant Chinease official I would look at the US and would see 300 million plus people all of which require housing, food, health care, and at least the basics of appliances plus much more to survive. I would know it does not matter what happens to the US demand for goods manufactured in China will always be stronge from 300 plus million people. It may not be the same volume, but I would have great faith in the billions in Asia who are just beginning to become huge consumers of manufactured product

Posted by Tat | Report as abusive
 

It is time for the human inhabitants of planet Earth to begin to learn to live within the means of our homeworld planet and mothership No growth economics and no more wasterd resources on wars of destruction. Redundancy in our systems for we have a chance for survival. That means the excessive wealth for the richest few cannot be affordee. Globalization requires local modularization. And a new economics that is not vulture multi-national corporate capitalism maximizing profits for the few as the prime directive! We have a system where the parts depend on the health of the whole system and the health of the whole system depends on the health if the parts and individuals. And the whole is greater than the sum of its parts.

Posted by wildthang | Report as abusive
 

Beofaction wrote

Europe, Japan are broke. They are trillions in debt – and Australia has begun down that road as well.

Well Europe might be broke, but Japan where did you get that idea from. Japan’s external debt is 2 trillion the US owes 13.5 trillion. As a percentage of GDP Japan’s is less than half the US debt. Australia’s debt is about the same as the US as a percentage of GDP but the economy is booming. Even your statement that Europe is broke is only partly true, some of Europe is broke other parts are rolling in the money.

The US is just as broke as the rest of the world.
The US system of dog eat dog has produced more millionaires than any other country in the world it also produced the highest infant death rate in the developed world.

Posted by Sinbad1 | Report as abusive
 

Perhaps, one root of the problem is movement among ‘Americans’ from the values held in the 30s to the more materialist-centered values of today. In the past self-realization, i.e., ‘success,’ was perhaps viewed not as narrowly as it is today. Perhaps, people pursued some individual goal rather than the same (materialist) goal as their neighbour.

Posted by Anerares | Report as abusive
 

The “new normal” is high job productivity (companies doing more (or same) with less employees). The manufacturing base is eroding through automation and offshoring (the global economy). Tax policy not that relevant, it is just that the governments (Fed, State, Local) must control their need of revenues and reach out to the public sector for some help on controling spending. Gov’ts must transfer work – more publizing government work. i.e. Homeland Security can be privatized.

Posted by uc8tcme | Report as abusive
 

Anerares, people have set a very high standard for material wealth these days. Compared to the fifties, houses are larger, cars are fancier, and people spend thousands of dollars annually on consumer electronics and entertainment products that didn’t even EXIST until 30-40 years ago.

These expectations were set during a debt-fueled economic boom running from Reagan through Bush II. We never could afford half of this stuff, we simply borrowed our way to a false prosperity. Now the bill is coming due and people are outraged that their standard of living is falling.

Ask your parents and grandparents how they lived growing up. Cut back your lifestyle to match and you’ll find that the “new normal” is a vast improvement over the “old normal”. We simply need to forget the decades of illusion that separated the two.

Posted by TFF | Report as abusive
 

Optimism is not fading due to the “elected officials”. The body of the American public is to blame for its own sour mentality. Passing blame onto a president for an overall economic trend is only showing ignorance about how Government is actually a business. It is a business designed to remove your money from you. Because most people would rather rely on entertainment and the news to give them ways to think and react, instead of resting on firm principles of value and morality, we are basically a sickened nation of individuals whom are in competition with one another. We might see ourselves as good people but when it comes down to the bottom of it we only want to feed our own mouths with our unnaturally developed sense of fetishized consumerism. We only care about what we want to buy and how we want to be looked upon by others, and how we can show each other what kind of image we want to be, whether we look like movie stars, atheletes, or some other fantasy character. If our individual focus was on the creation of a social body, that is people being a part of a larger whole in cooperation with each other, it would be a different story. Instead, we let the government treat us like one large body. A body that can be manipulated, treated like infants who have what they earned and worked for to readily hand over to them.

Posted by HaywardG | Report as abusive
 

The author fails to acknowledge the quintessential optimism the US has acted upon. The US has long advocated Free Trade as a fundamental for as much of the world as wanted to participate. That strategy requires short term (during the rise of the generation that is aging out of their productive phase) sacrifice on the part of the USA to achieve the long term (1.5-3 generations later) aspirations of a more economically interdependent world. We have long aspired to the view that economic interdependence would provide a forcing function toward stability and peaceful coexistence between nations. Our optimism continues, despite the comparatively momentary decline we chose to endure for the promise of more fully participating in the then larger and more vibrant economies around the world. I’d say we’ve got the first part moving along smartly … and, optimistically speaking, other nations will step-up to their role as more economically equal partners in the citizenship of nations.

Posted by Ketwhat | Report as abusive
 

Bernd Debusmann is once more on target.

Thank you for an excellent article.

Posted by Warburton | Report as abusive
 

Of course, we have got every right to be pessimistic.

In a follow up to the discussion about the US being the sick man of the globe:

1) Our government (basically most of the West’s) is (are) not run by the people, but by capital (arranged through lobbying and manipulating part of the media)
2) Capital, in principle, only folows the rule of capital (earn as much as possible out of as little as possible investment).
3) Our governement(s) have, since Reagonomics and Thatcherisme were introduced, done away with the constraints that communist opponents put on the freedom of capitalism, i.e. the need to maintain social stability in the West. (the “developped” –social- economies.)
4) The best opponents of communism actually were the social democratic countries of Western Europe (The Rhine land model, there is no intellectual denial possible of its benefits for the social economy.)
5) Present governments should take notice of the fact that the world’s factory of the moment carefully applies macro Marxist principles in the funtioning of an ,on microscale, capitalist system,
6) Nobody in politics seems to really see what is happening. They have lost touch with most of their voters, who see that because too big economic freedom of the top they have to put more and more effort in survival.
7) One should notice that the freedoms Reagonomics have given to the financial top and the beneftits of modern (cheap)communication and traffic, topped with the –industrial- openess of previously enclosed societies have led to our industrial decline.
8) The cost level in China, can, in their controlled environment never meet up with ours, therefore we should start from the point that it is not our wages that are too high, but their wages that are too low.
9) Their wages should rapidly be increased sothat our economies become more similar, very good for them (their people that is) and for us too.
10) The only problem of course is that our financial top would not like that, certainly for the short term it would get more difficult to make easy money.
Trickle down does not work because it is always more effective (profitable) to invests in emerging markets.

It would take decennia for the income levels to come alongside, especially when e.g. China seems to be so keen on controlling the internal spending (low inflation) and…. does not wish to review the position of the currency and…. hampers imports, has easy access to all our technical developments/innovations and…. does not seem to be bothered by intellectual ownership and is principally undemocratic. Of course it is not just competition from there but currently, above all, our industry that moves out there, which means that in fact we are more and more competing against ourselves.

They know what Marx means with:

“In a free and open Market economy people (work) and money (capital) fight an unequal battle. When the economy grows, the demand for labor will also grow, employees should then be able to put down higher demands.

These market workings are however interfered by, what Marx calls, the army reserve of unemployed. People that work and people that are unemployed keep each other in a strangle hold, the extra work of the employed on the one side increases the unemployed labor serves, while at the opposite side the employed are forced by competition of the unempoyed to subjugate to the demands of “capital”

In fact we used to buy stuff there …that is OK, but now we export our jobs there and by doing so impose an ever incrasing pressure in ways of possibilities for employment and standard of living on our “working class”…that is not acceptable and definitely not sustainable.

Tarriff walls on imports and imported services…the only answer…..I think….

Posted by Beobachter | Report as abusive
 

I note from the comments above that exactly the same things are happening in the US as the UK and the West in general.

In the UK we worry about outsourcing jobs and 90% of new jobs going to guest workers. The US has 17% unemployment and so do we. You don’t count those who have given up looking for work and we don’t count the 2.5m on incapacity benefit.

Two of the comments above referred to Karl Marx. Whilst it is refreshing to note that some of you can quote Marx it is not refreshing that he is quoted. We stand on the shoulders of giants and we have come 150 years since Marx and he in tern stood on the shoulders of Adam Smith and JS Mill.

We can only solve our problems if we first understand them.

We get into debt if our outgoings exceed our income. The West had been tumbling onto debt for a decade. Low interest rates disguised the problem, debt was an affordable option for the individual, corporations and the state.

The credit crunch was not an event but a consequece of high debt. You only feel the realisation of over-indebtedness when your lender gives you a wake up call and you realise that you are in so much debt that you have to make massive lifestyle adjustments.

What we all need in the West is professional debt management but that cannot come from democratically elected management. It can only come from a third party such as the IMF.

Posted by objectiveknow | Report as abusive
 

@objectiveknow

Of course, nobody is perfect and certainly not his (Marcx) more or less immediate followers,…but, they are learning….they are going more the social democratic way (except for democracy..that is where we lose out…, we are still democratic…more or less…)

Basically I do not agree with most of Marx’ s solutions, but I find his pinpointing analyses of social economic relations with capital very strong.

After all he already lived in an industrialized (small) world, most of the European countries already possessed a reasonably sized railway network, which reduced journey times for people and goods considerably.

In Adam Smith’s (UK) days London – Manchester (parts of one country with the same currency and similar working conditions) abt. 250 miles was a two day trip, China (different currency, different working conditions can be reached within a full day from anywhere in the world.

Communication is now in real time, in Smith’s days also a 2 day’s trip! I Know how this works I am a professional in Inter national (Inter continental) business. (not the financial side)

Funnily enough Reagan and Thatcher and their economists based their policies on the (rather simplistic) ideas of Smith, whereas they should have paid more attention to the full works of Keynes.

Of course tye crisis is a debt crisis, but we got trapped in that because of selling policies of credit suppliers, who sold to people who could not afford it.

The loosened financial restrictions, first under Reagan / Thatcher …then still understandable…and later under Bush, in his time already a big mistake. (Paulson?)

The IMF pushes developed countries to keep their inflation low, a good excuse not to do anything to let the market go it’s “natural” way…

Problem:
1) Mortgage sold on basis of expected increase in real estate’s value.
2) Mortgage takers lost their jobs “en masse”
3) Mortgage were not able to pay mortgage.
4) Keys were handed in to bank.
5) Too many keys were handed in to banks.
6) Property value dropped.
7) Because of lost jobs too little tax came in and too much social benefit is paid out.
8) Reason not enough paid work
9) All comparitive work can be done for 1/10 to 1/20 of our income and the cost level in our grown up (200 years of development ) economies does not allow us to go back …..

Posted by Beobachter | Report as abusive
 

It is no secret that the US economy has been functioning as a real estate ponzi scheme for the last 30 years, which is also the biggest driver for the growing income inequity during that time. Homeowners who felt rich from paper equity revelled in their phony “wealth” while investors, bankers, and intermediaries made easy money and took a slice of every transaction. Who needs industry or a manufactuing base when money can be so easily “made”. The social ramifications over the years have been ignored and in fact, those who had difficulties keeping a roof over their head while working two jobs at slave wages are just blamed for being irresponsible, or thrown into the prison industrial complex, the fastest growing industry in the US. Funny how the US has managed to create the same conditions that their forefathers left the UK over 200 years ago in order to escape from.

Posted by Greenspan2 | Report as abusive
 

Optimism in the USA is sociopath-psychopathic optimism, used by business, politicians, pretend christian preachers[biblical harlots]to manipulate mindlessness Americans to believe the USG propaganda.

Posted by bogi666 | Report as abusive
 

Excellent article. Now if somebody will just publish the solution to this problem and some existing or new political party and leadership implement it, the U. S. and west just might survive in some form that preserves what has been of value and is worth saving. I don’t see anyone offering a real solution. The author of this article, among others, practically says there is none and that “the good times [are] really over for good” for most Americans.
Both parties and their Presidential candidates and so-called “leadership,” including their allegedly brilliant and well-informed economic advisors, have been lying to us about their claimed love and concern for the “common man” and the middle class, and about what they know and don’t know about this, since at least 1974, when Chase [Bank] Econometrics produced, and the general media published a summary of, a report for their clients pointing out that, contrary to what we were being told publicly, “There actually [would] be a very small middle class in this [upcoming young] generation.” I know that the parties and several key politicians know about that because I sent them copies, pointed out the implications, and asked what they proposed to do about it, and the few who responded at all sent only the usual meaningless form letter.
You likewise didn’t need to read beyond the New York Times, Washington Post, or then conservative Dallas Morning News to realize that we could not possibly send the hundreds of billions of dollars more we were sending to the new OPEC at such sharply higher cartel prices, ultimately one of the greatest transfers of income and wealth in the history of the world, for oil which we burned, without ultimately experiencing a reduction in the American standard of living on a magnitude, which some sources suggested would have to be at least thirty percent (30%) that would throw our economy, including housing and home mortgages, into a drastic dive.
The unpleasant fact is that, just as Chase Econometrics predicted, instead of rising as the college recruiters told us and too many business plans assumed, the market value of labor, including highly intelligent, college-educated labor, even including many of those whose talents happened to lie in higher math and other supposedly high-demand fields, collapsed, with the result that the average nominal and real incomes of most college graduates, among others, either stagnated or fell between about 1970 or 1974 and now. While the starting salaries of the very, very top new graduates at elite law schools, paid by firms representing clients who could pay any price because they could pretty well set their own prices, skyrocketed to equal and surpass the salaries of federal judges, the average incomes of lawyers fell noticeably while average citizens and small businesses could no longer afford what we had to charge just to cover increased rents and other costs. A friend who was a senior name partner at a top law firm in Dallas told me that there is no market for the ability to do legal work well, only for clients. I know people with advanced degrees and most of their Ph.D. in math, physics, and counseling who have ended up teaching English in China, or working as roofers or truck drivers, because there is no market.
You cannot have an economy and society worth preserving, or which any power on earth could preserve, in which, as the song from the First Great Depression put it, “there’s nothing surer, the rich get richer and the poor get poorer,” much less in which much of the vital middle class gets liquidated, indefinitely, every bit as effectively, and more efficiently, though less bloodily, as in Soviet Russia, Mao’s China, or Pol Pot’s Cambodia, and, contrary to the pipe dreams of the Keynesians, Socialists, and Marxists on the left, or “trickle-down” theories on the right, you can’t solve our structural unemployment and under-employment problem, among others, by rearranging and reassigning deck chairs on the Titanic. The Keynsian changes in debt to income and debt to wealth ratios that were tried in the FDR Administration in the First Great Depression, and thereafter under both parties, simply are not sustainable, nor did Keynes and his brightest disciples ever say they would or might be sustainable, when starting from the place we did this time. I’ve actually read Keynes, and, unlike too many of his political camp followers, he was smart enough to know, and intellectually honest enough to say, that there were limits to his theory, and that pushing it far enough would have certain results that I would consider most undesirable. I’ve also read Adam Smith, Milton Friedman, etc., and, similarly, too many who cite them obviously haven’t. When I majored in economics, Samuelson’s leading textbook said not to worry about the national debt because “we owe it to ourselves.” I remember looking around the room and trying to guess who among my fellow students, owned much of it. Today, huge chunks of it are held not by “ourselves,” domestically, as then, but by the Chinese, the Arabs, and others who do not share our key values or wish us well except in that way that creditors hope their debtors continue to be able to pay. Samuelson’s leading economics textbook also pointed out that the increased incomes we had been told we could expect to enjoy by going to college, and into debt to do that, were actually unlikely in real terms for more than a few of us.
We were going through a notable recession, high unemployment, and other economic stresses then and, long before globalization, it was obvious that the real markets for labor, including college-educated folks, and for other things, did not behave anything like a true free market. There was also definite rationing and restrictions upon access into most of the better-paying jobs to preserve their high wages. The Steelworkers’ and other unions “won” long, bitter strikes, whereupon the prices of cars and other things were immediately raised more than the price, much less the increased price, of the steel in them, leaving everyone who didn’t have and exercise the monopoly power to set their own prices, and some who did, worse off. I went into law and our so-called ethical rules, including binding minimum-fee schedules, were so clearly designed, intended, and calculated to raise our incomes above what any true market rate would provide, and to favor those already established and keep the poor man poor and the rich man rich, that the Supreme Court eventually held that and other parts of the profession’s price-fixing schemes violated federal antitrust laws.
I’ve represented a lot of real estate and construction based small businesses over many years. That got me very deeply into bankruptcy law. I’ve done both consumer and business collections, and served briefly as general counsel, and reviewed the current and defaulted loan portfolio, of a downtown Dallas bank. I’ve watched several real estate and related bubbles that anyone with any brains, economic education, including economic history, and ability to observe knew were bubbles and had to end in crashes, as they did. Our credit system went crazy, violating every rule of sound banking, consumer credit, and mortgage lending, too. I’ve represented many people, from $20,000.00 a year blue collar workers and $9,000.00 a year retirees to $100,000.00 defense contractor executives, who had been allowed to get two and a half years’, instead of the generally accepted prudent limit of 20% of one year’s, income just in credit card debt on which they could never pay the 18-33% compound interest. When you start having mass layoffs of people making from $100,000.00 a year down to minimum wage, skilled and licensed airframe and power mechanics coming to work to learn that their pay has been cut from $23 per hour to minimum wage and their health and other benefits cancelled, they fall into dire poverty and desperation, and the economy goes into the toilet. There are huge amounts of non-dischargeable child support, set in dollar amounts, when these people were making good money, the defaulted amounts on which, that can never be discharged or adjusted, quickly mushroom to impossible amounts that make them look like scofflaws before they can afford to hire legal counsel to bring just their future payments into line with the statutory formula percentage of their real current disposable income. One court-appointed client of mine, who had lost a six-figure income due to congestive heart failure and was living in a $5,000.00 shack of which he only owned half, missed scheduled heart surgery and died in jail before I could get that straightened out because the federal law mandating state law on the subject makes no provision for real life. Another’s wife left him and he ended up living in a tent in someone else’s pasture, and there is no way to reactivate his driver’s or airframe and power mechanic’s licenses, both of which the law cancels if you fall behind on child support, student loan debt, etc. There is no way, in or out of bankruptcy court, to down-shift from a middle, upper or lower middle class standard of living, even lived prudently, to unemployment and poverty, much less disability and poverty, without losing everything and falling all the way to destitution. When you lose the car or house you had, getting another decent cheaper one at a fair price and interest rate is practically impossible, and, citing nothing in the Bankruptcy Code or other law, the Supreme Court has decided, at the behest of the powerful and unified creditors who overwhelm anyone speaking for debtors, that to keep such essential property, you must pay not just what the creditor could actually net by foreclosing but its value to you.
One of the effects of the shift between labor, including college-educated professional labor, and capital, that has resulted from the structural shifts in our economy, is that a large percentage of the population must now devote significantly larger parts of their incomes to housing, usually rent, and a notable percentage are now paying rents in excess not only of 40% but of 50% of their disposable incomes. Much of this is being paid on older rental housing stock that had been profitable when only a third of average income was devoted to rent. Many of such rents, like some other costs, can simply be raised at will because the owners of such properties stick together rather than actually competing on price, etc. . Then figure higher energy-based gas, electric, and other utilities, gasoline, grocery and other prices. The official cost of living figures simply omit such “volatile” necessities of life.
There is a huge amount of debt out there that the debtors can never pay, and the creditors and collectors can never collect, but which is carried on various original creditors and assignees’ balance sheets as though it represented real assets. There is also a lot of debt still on the books as assets which are owed only by individuals who died broke owning practically nothing, and by corporations and other entities which have gone under and have no real existence much less assets of any value. Some of it, including huge piles of unsecured credit card, medical, and other debt, on which the statute of limitations for suit has already run, and that gets bought and sold in bulk for pennies on the dollar. Some of the big banking and financial houses have billions of dollars loaned to or otherwise invested in such schemes, and in “payday” “car title,” and other predatory lending to the poor and unsophisticated at interest rates that can start at 492% and mushroom upward from there, that never should be collected even if some of it can be.
It is all very well for some of the supposedly learned to talk about the U. S. shifting from a natural resource and manufacturing base to a service-based IT economy, but that glosses over real problems. In the first place, way too many of the highly trained and skilled IT workers, like waves of aerospace workers before them, who fairly and rationally bought houses and otherwise created their economic worlds based upon those jobs and incomes, are out of high-value, high-paying jobs, many of which got shipped to India, etc., and many of which simply disappeared, and either working at far lower paying temporary jobs, often far away, or unemployed, with no real prospects of returning to the middle class or even steady, gainful employment. Whether unemployment compensation is extended a few months ultimately means little if you are fifty years old and, antidiscrimination laws or not, nobody will hire you.
As for half the adults in America reading well enough to know what Information Technology is, much less working in any of these high-tech jobs people keep saying will replace the old blue-collar jobs, notwithstanding that they don’t exist, never will exist, and most of the few that will never will pay a living wage or salary, anybody who believes this change is anything like earlier ones is kidding himself, willfully ignorant. Half the graduates of American public schools can’t alphabetize, balance a checkbook, or read well enough, and half are dropouts. We have wasted an awful lot of money, including much of what we run through the federal government, that is actually or allegedly and purportedly spent on education, while real English and math proficiency in American public schools has fallen below that of places where English is not the native or first language, including some where widespread literacy is new, and where they spend a lot less and get better results. Dallas hired a succession of high-dollar education people from, or recommended by, the U. S. Department of Education, most of whom turned out to be thieves, and lousy ones who got caught at that.
Social Security, Medicare, and Medicaid are already broke and drowning the economy, before the AACA, which requires both premium payments for people who can’t earn enough to cover them and eat, and health care workers who don’t exist, can’t be trained from the existing population, and who won’t get paid enough to make it worth getting up and going to work. Raising Social Security, Medicare, etc. taxes high enough to make these systems functional and solvent would add 25% more of the work force that actually has a job to the list of welfare recipients, and reduce the number of jobs created. At current reduced wage rates, the so-called inter-generational compact cannot be paid for even by including all wages, salaries, capital gains, and other taxable transactions to the base, which would depress the economy and reduce the number of people hired at any figures.
Too many of those who we have trusted to manage the American economy over the past generation have proven themselves either liars, fools, or both, while making themselves wealthy. They all say they didn’t see the current Great Recession coming. If they didn’t, they should have and got their jobs by fraudulent misrepresentation, because I, anyone close to the real estate or building business, etc., or any grocery checker, did. If they did, they were criminally negligent and complicit with the misconduct of the malefactors of great wealth without which this situation, with its “liar loans” and “synthetic collateralized debt obligations,” could never have arisen.
As for our two political parties and their respective nominees for President and other so-called “leadership” over the thirty years this has been building up, they are all either economic ignoramuses or, more probably, liars who have been lying to us all along. Name me one Presidential nominee since “9/11/[01],” if not the first World Trade Center bombing in 1993, who didn’t prove himself an ignoramus, a fool, and a liar by telling us that he, and only he, could and would capture Osama Bin Laden. They all told us things and made promises in the 2008 election, among others, that have proven false, and that the evidence clearly proves they knew or should have known were false and said with utter recklessness of the truth or falsity thereof if not with the deliberate intent, as probable, to lie and deceive. Treasury Secretary Geithner started back-pedaling from Obama’s promises and projections on taxes and employment early on. Now, after their first gambit didn’t work, they’re talking about putting the country and its people billions and trillions deeper into debt to foreigners in the hope that this repetition of what didn’t work last time somehow stimulates job creation.
Flip side, who do the Republicans think they’re kidding telling us that people who make $200,000.00 up are going to invest whatever they save by extending tax cuts, which they didn’t invest in any such thing during the years these cuts have already been in effect, in small businesses? The very rich don’t invest in true small businesses, and somebody should figure out who does and help them do this, because that is where most of the new jobs are created.
I’ll let you in on one secret of advanced economics that works under Republican and Democratic Presidents and Congresses alike. It doesn’t take Benoit Mandelbrot to figure out the math: When the incomes of your clients or customers, in real, constant-dollar, much less absolute, terms, collapse, unless you are in the illegal addictive substance business, it plays hell with your ability to stay in business, add more employees, or raise the compensation of the ones you have, and avoid painful layoffs, even if you can still afford to keep open.

Posted by Transaction7 | Report as abusive
 

Average people have finally now learned for sure that rich people control America through and through, from business to gov’t, no difference. That is what scares them to death, as no one is guarding the hen house(taxpayer/retirement money) and it is wide open not only to foxes but also to uncontrolled, and much more ravenous, bears and lions.

When Main Street has to guard what little it has, compared to rich people, from rich people with no protection at all and indeed, similar predation from their own gov’t, what is there to be honestly optimistic about? Many smarter ones see today’s America as a winding down of this country and society, closer every day to foreclosure by the Chinese. Better start taking some Chinese lessons!

Posted by bobbobwhite | Report as abusive
 

Perception vs reality. The perception is that Obama and the Democrats want to steal from the rich and give to the poor. The administration has ties to wall street that influenced them to bail out the banks when they should have held them accountable. They want so socialize medicine and every other social need.

All these presumptions are true to an extent, but these generalizations are not sufficient. The reality is that we have enjoyed a tax cut for the past 11 years and they were just extended. Whether Obama wants to redistribute the wealth is another story, but so far he has not taken any action that would produce such results.

The potential collapse of major banks produced a ton of uncertainty surrounding the safety of our debt and even our deposits. All private entities should be held accountable for their actions, but the government buying equity in long standing corporations that have been around for over 50 years in order to preserve business as we know it might have been the best solution. Banks are now trying to meet new regulations and it is unlikely that the government would go through the same process next time around. Also we did recoup a large chunk of the bail out money through equity sales.

Finally, there is the perception that we live in a completely capitalistic society when we do not and never have. There is a need for federal and state governments to supply services such as education, military, social security….etc. I have heard people argue that even these departments should be privatized, but obviously not much thought was given to this. Any service that is a necessity and entry to competition is scarce needs to be regulated. Look at the shape of our health care system currently. We cannot stop the increasing costs that are imposed upon our care providers. The aging population and the need for medical supplies and services are creating high demand driving costs higher than inflation and wages to the point where insurance providers need to cut corners in coverage to provide coverage. Whether we need to move towards a more socialized approach in health care is for the experts decide, but we cannot sit here and claim that capitalistic behavior is always the best solution when in other industries we have defaulted to gov’t control. Successful capitalism relies on the assumption that individuals will act rationally and honestly, we have not proven we can do neither. When I was 13 I wanted more freedom and responsibility, but I was forced to earn it first. Until we “grow up” as a nation the government will continue to try to get involved. Can you really blame them?

Posted by Scapattack | Report as abusive
 

I am one of those “rich” people who make just more than $200,000.00 per year. For the past 20 years I’ve invested as much of that money as I could. I live well, but I do not consider myself rich. I employ 15 to twenty people. Not only do I pay a high tax rate, but most of the tax deductions are phased out as income approaches 200,000, even the Roth Ira’s, school loans for my kids and others. I started working when I was 14 years old, have worked very hard all my life to get where I am today. I am grateful for the blessings that God has given me, and I’m gratefull to my country as well, but I realize that I will never be allowed to be truly rich – there is a point, and I am there, that you must pay so many penalties for being “rich” that you can’t advance to the next level of income. I am not whining, just giving my side of the story. When you consider that a ballplayer or talk show host can make millions of dollars a year – those are the really rich – and they have ways to get out of the taxes. I am for a flat or a sales tax!

Posted by zotdoc | Report as abusive
 

I won’t be commenting on the substance of the article but I certainly agree that the new Normal is depressing.

I see little hope for America and little hope for my future. I am employed, married, college educated with a masters degree. It has nothing to do with my status in life or my income.

I am concerned for my future because of the following:

- DC is filled with bickering self serving (and rich) career politicians. They ALL lie, all cheat and look after themselves. Their words and their actions most often do not agree.
- Our government is bloated and inefficient. We have a tax code that requires hundreds of thousands of CPAs and attorneys to interpret for us
- We have an enormously inefficient military that can’t even find bin laden
- We encourage children, in the name of progress, to find themselves and encourage and protect homosexuality as if its normal. How normal and prosperous would a society of gays be? Hint, there won’t be a second generation…you call that normal, call that progress?
- Our tax punishes those who work hard and rewards people for having children (even if they can’t afford them – refundable child care credits)
- Our politicans have us hating each other through class warfare and divisive speach
- Terrorists derived from one single religion are trying to kill those who disagree with them. They willingly murder civilians to prove their strentgh.
- We, the USA and nations of the world have chosen to ignore nations like N. Korea and Iran who repeatedly speak of hate and murder.
- We pretend that a world without nukes will ever exist. In what world will a nation not strive to better itself by picking up a stick when all others hold straw?
- We pretend that entire nations are not run by the mafia (Russia) and strike deals with them to limit our defenses against our own enemies
- We ignore the rule of law regarding immigration and allow criminals into our country via a blind eye. And we make those who enter legally to wait and wait and wait.
- We cry foul against latino nations who supply drugs to our country while doing nothing to limit the demand within our borders (harsher sentences for drug crimes of AMERICAN citizens)

and my favorite: We pretend that government was not the cause of the housing crisis. The CRA, passed by Carter, expanded and empowered under Clinton, cheered on by Bush, encouraged and required under penalties the lending of money to those who did not deserve homes sometimes establishing racial quotas (sound free market to you). We did this for decades and yet ‘banksters’ are to blame. Its the evil banks who wrote mortgages with little or no proof of income. Did those who agreed to mortgages not realize the debt they were taking on? Did the banks come knocking on their door? How does someone who falsified their income or assets suddenly become a victim? And Fannie and Freddie were guaranteing millions & billions of dollars worth of mortgage backed securities thus feeding the demand for banks all over the world. Housing became a right. Market forces did not create the housing bubble. The market tells you not to lend money to family with $30k in income. Government tells you to do it because he deserves a home and they will insure against default. Were banks to blame? Sure, partly. But the party started in DC. Don’t let anyone tell you otherwise. Easy rates and piss poor regualtion were also contributors.

If you hope in your contry you hope in the wrong place.

Posted by BHOlied | Report as abusive
 

BHOlied I understand everything you said. I’m Australian, and offer the following for consideration. Is it possible because America has declined its people for the first time in over 100 years are beginning to feel insecure not having the financial strength America once had to protect them? If that is right then it does America no good for its people to walk around wringing their hands over a situation your governments created. I come from a generation of Australians that was told by my parents and grand parents to never forget America saved us in the battle of the Coral Sea during world war two. Americans saved us not the US, were have those Americans gone?

Posted by Tat | Report as abusive
 

The future for most US residents is grim indeed and there has been a lot of commentary on it. Unfortunately there’s too much hyperbole and wishful thinking. So here is a short list of things to do to start making things better:

1. Stop shopping at Wal*Mart. Buy quality stuff, not crap that is so cheap you have to replace it in two months time.

2. Vote for politicians who will downsize the military. You are paying to police the world. Can you afford that?

3. Vote for politicians who will impose tariffs on goods from countries that don’t have our same environmental AND social constraints. Free trade is fine as long as it is fair trade. This will even the playing field and bring back good jobs that pay better than Wal*Mart.

4. Stop whining about taxes. The US pays the lowest taxes of the developed world. Where would we be without roads or schools? We’d be in the third world. Where do you think our prosperity comes from? It comes from our society and our society needs roads and schools. Taxes are necessary. Cheap stuff from China is not. And all the mean spirited talk doesn’t help either.

Posted by LEEDAP | Report as abusive
 

Tat is 100 percent correct. Americans don’t want the government to do anything, but when they don’t do anything they complain. It is called getting off your butts and working no matter what taxes you have to pay, no matter what cheap imports there are, and no matter how expensive things are. That is what America did in the past and it got us through economic decline and depressions before. Now, Americans are soft and despite saying they don’t want the government to do anything, they actually want the government to do everything. Tax breaks are a government action after all. I only have a gloomy outlook for the US if people continue this crying and government dependency.

Posted by hujintaosson | Report as abusive
 

Hello, All. I’ve had to dig deep lately, but I maintain that the Goodness in most human beings, will triumph. However, first and foremost, we must get real control of the Borders; eliminate illegal immigration (NO Amnesty of any kind), lower legal immigration levels(currently 5 times higher than traditional). Also, start training those already here for jobs Americans, are, supposedly, unqualified for since NO ONE NATION can be a LIFEBOAT for the entire planet. Prosperous countries should assist poor ones in developing their own economic & social resources. But, the US needs to provide for its own citizens first. Peace & Love, Bread & Justice.

Posted by sixtiesactivist | Report as abusive
 

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