8/8/2012 6:22 PM ET|
The invisible depression is here
Call this a weak recovery if you like, but the truth is that it’s much worse. The extent of the problem is simply masked.
The Great Depression that Federal Reserve Chairman Ben Bernanke claims to have averted has been part of the background radiation of our economy since at least 2008.
And just like radiation, it's invisible.
We've called it the recovery, the jobless recovery, the slogging recovery, and more recently, the fading recovery. We've measured modest growth in our nation's gross domestic product to record that our so-called Great Recession ended in June 2009. And now we are saying that if this disappointing growth suddenly disappears, as currently feared, we will be in a new recession.
There is nothing more depressing than hearing about a new recession when you haven't fully recovered from the last one. I take heart in suspecting that in a still-distant future, historians will look back with clarity and call this whole rotten period a depression.
The precise definition of a depression, of course, remains as debatable as anything else in the field of economics. By some definitions, it is a long-term slump in economic activity, often characterized by unusually high unemployment, a banking crisis, a sovereign-debt crisis, surprising bankruptcies and other horrible symptoms we can find in the headlines almost every day.
It is easy to avoid seeing all of these events as constituting a depression if you somehow have kept your livelihood intact all this time. But it's important to remember that not everyone has to stand in a bread line during a depression.
Nearly one out of seven Americans receives food stamps, according to the U.S. Department of Agriculture. That's more than 44 million people. If they all stood in a line and someone photographed them using black-and-white film, they easily could be mistaken for people from the 1930s. Instead, they go to a grocery store and spend their credits like money. There isn't even a social stigma to make them stand out as any more glum or destitute than anybody else.
Last month, the Associated Press reported that America's poverty rate likely has hit levels not seen since the 1960s. Surveying several economists and academicians, the wire service predicted the official poverty rate will come in as high as 15.7% when the Census Bureau releases it in September. That would wipe out all the gains of President Lyndon Johnson's War on Poverty.
Poverty is another word for joblessness, and our economy hasn't been generating enough decent-paying jobs for many years. Globalization, technology, outsourcing, immigration and the schemes of financiers have taken their toll. No one is certain when jobs will come back, and many of the jobs that remain don't pay anywhere near what, say, your average failing CEO gets paid.
"Half the jobs in the nation pay less than $34,000 a year," noted Peter Edelman, author of "So Rich, So Poor: Why It's So Hard to End Poverty in America" in a recent New York Times opinion piece. "We've been drowning in a flood of low-wage jobs for the last 40 years."
If you don't want to call this epidemic of rising poverty an invisible depression, call it the golden age of unemployment. Today's laid-off workers can collect unemployment benefits for up to 99 weeks, staying off the public's radar as an economic distress signal. Over that time, they often lose confidence, their skills degrade, and they can slip into the ranks of America's chronically unemployed -- where they no longer will be counted in the nation's official unemployment rate, now at 8.2%.
What are the societal effects of millions of people sidelined for so many years on end? College graduates, looking to launch careers, end up working at Starbucks. Middle-aged professionals apply to temp agencies for gigs they once considered beneath them. The nearly retired simply retire early. Even if we could return to full employment tomorrow, the drag of all these idled lives could affect generations.
As the economy reels, the national debt approaches $16 trillion, and we hear fears of Congress jumping off a fiscal cliff by year's end. Many state and local governments are struggling with massive deficits, too. Three California cities have filed bankruptcies.
U.S. companies are warning of slower growth amid Europe's meltdown, yet the Dow Jones Industrial Average ($INDU) has crossed the 13,000 mark, and some observers are predicting new highs for the index soon.
The rising stock market is as counterintuitive as interest rates falling to new lows after the U.S. lost its triple-A debt rating last year. It isn't that investors aren't wary. It's just that every place else makes them more wary. This isn't the definition of a recovery.
The real estate market also seems to be doing a good job of masking the true condition of the economy. Overwhelmed banks are slow to foreclose on homes, sometimes letting borrowers live in their homes without payments for more than a year. The result is a shadow inventory of homes nobody can count accurately. On the commercial real estate side, banks and investment trusts are slow to take markdowns, too. The shiny, new stuff may still sell. But the old stuff sports "For Lease" signs.
The cure for our battered economy has been to allow our disasters to occur more slowly through taxpayer bailouts and extraordinary interventions from the Fed. So far, this strategy has worked. We have averted a sudden crash in favor of a depressingly slower one. At least if you don't look, you may not have to see it.
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at the bottom of the article it says we averted a sudden crash. REALLY !!?? where was this reporter in 2008?? I remember a pretty big crash. WHERE DOES MSN FIND THESE IDIOT REPORTERS ???
On another note, I just wish that the wackos who go around killing innocent people (like in recent news), would rather take aim at the Politicians (both Dems and Repubs), and the lobbyists in K street, DC. It will be win-win. We, the people, will applaud, and the wackos will get what they desire. Please pass this around. Hopefully, some wacko will try this out.
This country can't handle another term by Owebama...he is a pure socialist and it's destroying this country...he's raised the deficit more than any previous prez....Owebama care is going to totally destroy our healthcare system if it isn't repealed...Owebama runs campaign ads attacking Romney for outsourcing jobs when he himself has done absolutely nothing to bring jobs back to the states...his tax the rich and strangle businesses with ridiculous regulations stance is actually forcing people and businesses to move their money/businesses overseas....he also refuses to uphold immigration laws and stands in the way of states who want to protect themselves from law breaking and even dangerous illegals...all just because he wants the Hispanic vote...the man should be exicuted for treason!
These food stamp statistics arent all because of the recession. I have a brother who makes $30 an hour and he supports a girlfriend who recieves food stamps for their household. He makes more than we do and he still be bleeding mama dry also. I am so pissed off to hear he is recieving these and Im ready to report them, but will anything be done? Probably not.
Another guy my husband works with was bragging about the same scenario. Makes good money and the girlfriend brings in food stamps. The guys gave him such a hard time about what a loser he was that he made his girlfriend cancel the foodstamps (or so he says).
I am so sick of freeloaders making more than me taking more and more from my paycheck to support their lazy asses. If anything needs to be done in this country its fixing our welfare system and getting rid of illegals. That alone will save us a buttload.
I see alot of anti-Welfare comments. No doubt the government has enabled a welfare class to flourish. Any time you provide any population with sustenance, they will multiply. That being said there is a significant crossover level of income where it makes sense financially to remain on welfare rather than go to work. That should be addressed or people will not come off Welfare.
My pet peeve is people that reproduce while on Welfare. My wife is a OBGYN nurse and works in labor and delivery. Where we live, approximately 80% of the births are paid for by the government. It is insane! I know it is a controversial issue but if you can't afford to have the baby, you shouldn't be having it. I would put Welfare recipients on birth control as a condition of receiving assistance. I'm not talking about sterilization but birth control should be mandatory.
This has been an extremely bad recession...............the world has not seen the "great depression II" yet, but unfortunately it is coming. The problem is every politician says........."not on my watch" and does everything they can to falsely pump up the stock market in their attempts to stave off the real depression. But all they are doing is making things worse for everyone when it does finally hit.
If the Feds and Central banks all over the world had just left the markets alone back in '08, there would have been a "real" recovery instead of this phony pumped up stock market.
It is a DEPRESSION, the invisible part is that many Americans see NO jobs, NO medical, NO more house, NO money, NO food. The cries of our hungry children are NOT invisible.
So morejazz........it's ok to keep giving "corporate welfare" for big business like big oil, JP Morgan, while the rest of us are fed to the sharks. The corrupt Congress allows big oil to manipulate gas prices along with the speculators who were deregulated by Senator Phil Gramm.
The problems facing this country were there long before before Obama took office.
Put Romney in the oval office and you will see a major depression in this country, he will continue to serve his corporate buddies, less regulations for banks and Wall Street, more tax loop holes for the 1 percenters. It's time for the 1 percenters to start paying their fair share of taxes.
How is it that the government controlled media lets Bush, Cheney, and Rumsfeld off the hook for misplacing $2.3 trillion dollars from the defense coffures that was unaccounted for 2 days before 9/11? How is it possible? Then that story gets swept under the rug likes it no big deal.
The bottom line is we are being sold out by both parties who are puppets for special interest groups. We need to repeal the Citizens United Law which will bar corporations from buying elections and politicians.
The "D" word will not be used until the historians write the story.
The first time around things were just allowed to crash because we didn't know any better. This time around, we have alot of things in place to slow and or disguise the crashing process. The government feeds people through social programs so there are no soup lines and the FED can prop up the stock market so there are no bankers taking swan dives.
It may not be a crash but it will be a long uncomfortable descent.
It's important to remember, the damage has already been done. It was the housing bubble and the wholesale export of our manufacturing base. Any effort not directed at fixing the root causes is simply postponing the pain.
Borrow to buy a house, borrow to buy a car, borrow to buy the furniture, borrow to fix the house and when the economy tanks this is what you end up with.
And no, that's not judgmental, it's mathematical fact.
No matter the cause or how you look at it, there is an obvious rich-poor/have-have not gap in America. It's at its largest point since the Great Depression. Something has to be done.
And trickle down obviously doesn't work or we wouldn't have such a large gap. My two cents toward the solution begins with raising taxes on the wealthy. A little history. 1917 - 1924 the top interest rate fluctuated between 67% and 46%, with a high of 77%. In 1925 the rate was reduced from 46% to 25% and remained that way until 1931. Lo and behold, the Great Depression hits around 1929. Anyway, rates are then increased to where, in 1936 the top rate was 79%, reaching a peak of 94% in 1944 for those making more than $2.5 million. The top rate stayed in the 90th% until 1963 when it was reduced to 77% and remained in the 70th% until Reagan decreased it to 50% in 1982, 38% in 1987 and 28% in '88. Clinton increased it to nearly 40% and its stayed in the 30's since then.
What's the lesson? Obviously there are other factors but the current rich/poor gap really started in the early 80's. Trickle down only works if there is a high tax rate that discourages CEO's and business owners from hoarding the money.
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