The U.S. Economy's Lost Decade: 2000-2009

[Lenny]

The Economy's Lost Decade

It has been a bad ten years for the economy. It may in fact have been the worst decade since the 1930s.

We have lost a historically large number of jobs. It could be years before we return to anything like full employment. If you doubt how bad it has been, consider this: the last decade was the only decade with no job growth since the 1930s.

The graph (http://voices.washingtonpost.com/ezra-klein/GR2010010101478.jpg) shows that while the number of jobs grew by at least 20% in every other decade since the 1930s, we added virtually no jobs in the 2000s. It's not just that the recent recession wiped out more than 8 million jobs. Although high asset prices made the economy seem healthier that it was, job growth was actually sluggish throughout the decade.

Our GDP grew less than 18% over these ten years, more slowly than in any other decade since the 1930s, and just half the rate of the previous three decades.

And when the asset price bubble burst—causing home values and stock prices to crash—it wiped out a huge part of our national net worth, making it the only decade for which data is available in which the average net worth of the American household actually declined.

http://bigthink.com/ideas/19618

http://img710.imageshack.us/img710/8342/gr2010010101478.jpg
link (http://voices.washingtonpost.com/ezra-klein/GR2010010101478.jpg)

[Blue Cheer]

Laissez Faire, Neo-Liberalism works its magic in the US of A.

[SwordoftheVistula]

Laissez Faire...

The economy is more regulated than ever before, which is a large part of the reason it's not growing. Also the assets bubble was created by the Federal Reserve keeping interest rates low

[Blue Cheer]

We've just gone through a 30 year period of de-regulation, starting with Reagan's union bustingand firing of the Air traffic controllers, Clintons NAFTA(hello), W's gutting of the oversight powers of the SEC(Elliot Spitzer started to investigate the SEC and look what happened to him), the overwhelming consensus is that there is way less regulation than any time since the!9th century.

[Lenny]

Problem:
A.) Population of the USA in year 2000: 280-million.
B.) Population of the USA in year 2010: 310-million.
C.) Net-growth in jobs 2000-2010: 0%.

Proposed Solution: We Need More Immigrants, Fast!! (http://www.theapricity.com/forum/showthread.php?t=13935) :rolleyes2:






Laissez Faire

Steve Sailer coined the slogan "Invade the world, Invite the world, In-hock (http://img517.imageshack.us/img517/8493/hockdefinition.jpg)to the world" to describe the USA's political-economic strategy over the past few decades. I don't know if you can call that laissez-faire or not, but whatever it was, it's been stupid.

[Blue Cheer]

Just look at the results; if we really had meaningful regulation(oversight) over the banking industry do you really think that those Wall Street pricks would have been able to use our economy as a casino? Banks would not have been allowed to create exotic products like Collateralized Debt Obligations and employ them while being insured by the FDIC; now thats de-regulation.

[SwordoftheVistula]

It's certainly not laissez-faire to bail out the banks, which is what caused the problem. The deregulation didn't have anything to do with the problem, it actually helped the economy for a time.

Look, do you want jobs or not? Jobs-good jobs, not shitty walmart type jobs-are created by wall street

[Lenny]

jobs-are created by wall street
It creates jobs, but probably not for us.

Pure capitalism demands the maximization of profit, which in an age of cheap transportation costs and instant global communications means relocating jobs overseas.

There are fewer and fewer jobs that are safe for any of us, as time marches on. Higher-end "tech" jobs can-be/are-being taken by cheap Indians; lower-end manufacturing jobs can-be/are-being taken by any number of "developing" countries where $5-an-hour makes one rich.


(This says nothing of the "pushing around paper and calling it wealth-creation" thing, which has been Wall Street's specialty in recent times).

[Lenny]

Just look at the results; if we really had meaningful regulation(oversight) over the banking industry do you really think that those Wall Street pricks would have been able to use our economy as a casino? Banks would not have been allowed to create exotic products like Collateralized Debt Obligations and employ them while being insured by the FDIC; now thats de-regulation.
What happened with "the financial industry" in general is often so complicated that most of us cannot understand it.

The simple version is that the denizens of Wall Street, while not at synogogue, were pushing around a bunch of paper and calling it wealth-creation, which is insane. Any system like that is bound to fail.


Blue Cheer, where I'd disagree with your blaming of the free-market is :
Any system is only as good as the integrity of the individuals "manning the oars". Some other system that would replace "American-style laissez-faire-ism" might be even worse. A centralized system could be plagued by problems just as well. Or maybe not. It depends on the integrity/honor of the people behind it. How motivated are they to do things right?

How do you regulate morality? It is impossible, some would say. But there is a way: People who think of themselves as intrinsically bound in a kinship network ('nation') to their neighbors will not lie, cheat, and steal their way to the bank at the expense of their neighbors.

What I'm trying to say is that the answer is not to be found in economics, but in "blood-and-honor-ism". Reviving feelings of kinship as high social values. No one but the lowest sociopath would cheat their own mother or even cousins.
So, as long as the twinned concepts of blood and honor animate the people's Weltanschauung, it matters little what economic system is in place.

[SwordoftheVistula]

It creates jobs, but probably not for us.

There are fewer and fewer jobs that are safe for any of us, as time marches on. Higher-end "tech" jobs can-be/are-being taken by cheap Indians; lower-end manufacturing jobs can-be/are-being taken by any number of "developing" countries where $5-an-hour makes one rich.

Depends on who 'us' is. I did low end manufacturing jobs for a few years, and it sucked. So, I went and got an education, and now since the stock market collapse there are no more good jobs for college graduates-areas like law, finance, business, etc.

[Cato]

Fall of Rome - Reasons for the Fall of Rome Include the Economy and Hoarding

http://ancienthistory.about.com/cs/romefallarticles/a/fallofrome_3.htm

[Blue Cheer]

It's certainly not laissez-faire to bail out the banks, which is what caused the problem. The deregulation didn't have anything to do with the problem, it actually helped the economy for a time.

Look, do you want jobs or not? Jobs-good jobs, not shitty walmart type jobs-are created by wall street
Of course its not Laissez Faire to bail out the banks, but this country if not the entire world, would have plunged into an economic abyss if the banks had not been bailed out, (even W knew that), but it is Laissez Faire to allow, in the first place, banks which are insured by the FDIC, to use that insured money to, underwrite risky things like Mortgage Backed Securities, especially when those mortgages as we all know were subprime crap. As far as good jobs being created on Wall Street goes, when capitalism is watched over by more or less disinterested parties then capitalism can create wealth, if its left to its own devices pure greed takes over and capitalism becomes a wealth extractor for an elite group of billionaires.

[SwordoftheVistula]

this country if not the entire world, would have plunged into an economic abyss if the banks had not been bailed out

That's just the scare story they told as an excuse to hand over hundreds of billions of dollars to their buddies in the banking industry. The economy would actually be headed for improvement now if they hadn't bailed out the banks.

http://www.realclearmarkets.com/articles/2010/04/13/bernanke_confuses_what_saved_the_economy_98416.htm l

Back in 1988, real estate mogul Donald Trump wrote the bestselling book, The Art of the Deal. One of the highest profile success stories of the ‘80s, Trump's book was written to explain to those not-yet-rich how to become fabulously wealthy like, well, Trump.

Fast forward three years, and Trump released The Art of Survival, which chronicled his recovery from a negative net worth that the Wall Street Journal reported at the time as being in the $300 million range. Trump failed in the late ‘80s, and if the Journal's account was true, failed stupendously, only to recover again. And since the victors invariably get to tell the tale of their success, Trump has continued to release other books over the years talking about how the ambitious in our midst can become like him.

Trump's professional rebirth, while offensive to some who decry his self-aggrandizing ways, at the very least serves as a reminder that failure is in no way permanent. And with the U.S. "economy" nothing more than a collection of self-interested individuals, just as individual decline is hardly everlasting, neither is "country" economic decline perpetual.

That is, unless Federal Reserve Board Chairman Ben Bernanke is the economic storyteller. At a dinner last week, the Fed Chair who doth protest too much yet again forwarded the notion that he and other bureaucrats "saved the world", to paraphrase some of his enablers. Bernanke himself asserted that "Although the economic consequences of the financial crisis have been painfully severe, the world was spared an even worse cataclysm that could have rivaled or surpassed the Great Depression."

Bernanke's argument is that absent the various federal bailouts of banks which the Fed played a major role in, long-term economic decline would have been our reward. Logic tells us he gets things 100% backwards.

Indeed, the failure of financial institutions beginning in 2008 was more than anything a sign that the economy was on the mend. To make basic what is already basic, when businesses can no longer fund their daily operations - meaning investors have lost interest - the market signal is that they've failed their customers, and should be allowed to meet their natural fate.

In that certain sense, bankruptcy, while painful, is an economic good for customers, and nothing more than a change of ownership. Bankruptcy means that poor managers are relieved of their duties so that better managers can deploy the debased assets more profitably. And if the poor managers are forced to sell their assets at fire-sale levels, the potential for profits to be achieved by the new managers is greatly enhanced.

Business failure, be it among car companies, software firms or banks, means that the economy is being cleansed of non-economic activity. Failure, in short, means that capitalism is working for the rough justice wrought by profit and loss weeding out the unsuccessful so that either the successful or ambitious can attempt to make work what the previous managers could not.

To believe Bernanke, the U.S. economy avoided Armageddon for bankrupt firms being propped up on the backs of taxpayers, but simple logic tells us the Fed's actions extended, rather than deterred economic hardship. In bailing out the banks our federal minders not only perpetuated non-economic, depressive activity, but they also planted the seeds of future crises for the economy not being allowed to naturally rid itself of that which didn't work in the first place.

Bernanke's support of taxpayer bailouts as the economy's savior is the equivalent of the drunk waking up hung over, fingering the hangover as his problem, then resuming the drinking in order to blunt the pain caused by the previous night's activities. In truth, the hangover is the signal to the drunk to be more circumspect when it comes to drinking. The hangover is the drunk's cure.

Much the same, the failures among banks, far from the economy-killing problem, were the cure for signaling to prudent and imprudent banks alike what not to do in the future. Capitalism is as much about failure as it is about success, and the much-needed collapses among financial institutions would have once again served as a sign of economic rebirth if allowed thanks to the banking system being purged of poor financial practices.

Looked at in light of the "economic depression" that Trump experienced in the late ‘80s, far from a sign of long-term economic decline on his part, his ability to fail ultimately taught him how to succeed. Considering the violent collapses in the banking world of not long ago, as opposed to them threatening long-term economic frailty, the awful way in which they nearly went under happily revealed for all to see just how poorly they were being run, and more to the point the grave economic damage they were bringing to the economy for existing at all. The banking practices that delivered them to bankruptcy were the recession, their actual bankruptcy the economy's revival.

And since failed businesses don't disappear as much they change hands, had the free markets been allowed to work their magic whereby the banks fell into bankruptcy quickly, rather than elongating the recession, their quick declines would have shortened it for new, more sensible management speedily entering the picture. Failure is not death, instead it constitutes revival as assets fall into the hands of those more skillful.

All of this might be obvious to our Fed Chairman were he to cease looking at the U.S. economy through what is a very foggy macroeconomic lens. If so, he would soon become aware that economies are merely a collection of individuals, and that success and failure among individuals is by no means perpetual.

In truth, we can neither succeed nor fail too much. But wherever we presently are on the proverbial Bell Curve of individual economic health, as Trump's example makes clear, simple odds suggest that during our careers we'll experience a fair bit of both, failure by no means forever if we're allowed to learn from our mistakes.

Going forward, Bernanke and his enablers will continue to excuse his and other governmental actions as necessary to avoid economic calamity. Many will accept these explanations without comment or protest.

But for those of us who correctly break human action down to the individual level, the bailouts which Bernanke defends will become increasingly suspect. Just as the allowance of mistakes authors and speeds up success on the individual level, so does it by definition achieve the same on the company or "country economy" level.

In that sense, the only "crisis" of 2008 concerned the unwillingness of our political masters to allow the bankruptcies necessary to cleanse the economy of non-economic practices. Hopefully we've learned from this mistake.

[Blue Cheer]

Thats alot to chew on, I'll have to get back to you on that; but i'll say this, Donald Trump as just one guy, does not serve as a viable metaphore for the entire country ( although in his mind he probably signifies God's gift to humanity) also the Stock Market took a nose-dive after the collapse of Bear-Stearns, which to even anti-government conservatives like W, and his cabinet, heralded depression scale failure requiring a bail-out, not a market on the mend. Plus Wall Street hit 14,000 during the 00's where are the jobs?

[Blue Cheer]

Alright I just think this guy might just have an axe to grind, I don't know who he is but I don't agree with what he's asserting; and thats all he's doing Asserting, speculating.

1. the problem is that alot if not most of the assets those banks were using, the Fed was on the hook for and there would have been a lagal responsibility on the feds part to reimburse all those funds if the banks went belly-up, and there in lies the problem; if the banks went down like Dominos they very likely would have wiped out everybodie's savings, thats you and me, which if you took that gamble would have been more costly than bailing out the banks.

2. Why did your grandparents hide their money in their mattresses? Because the banks failed during the depression and wiped out their assets. And that is what the bail-outs were trying to prevent.

[Cato]

The Fall of Rome 2.0.

[RoyBatty]

The US economy is tanking because it's being directed to tank by the master scammers from Wall Street and their associates from Europe's banking dynasties. The economic system is insane, it appears to hinge on:

- projecting military power and using gunboat diplomacy to enforce the "economic cooperation" from other countries in a corrupt financial system which

- relies on creating wealth out of thin air through the printing press which

- in turn again leads to an eschewed global financial system where the countries at the top of the economic / trading tier can manipulate the system to their own advantage while the rest of the world have to play by the rules and pay in real money and wealth.


Outsourcing jobs and manufacturing for "maximising profits" = gutting one's own technical capabilities and economy to benefit the few scheissters at the top and to screw over the many of the rest.

The recent "bailouts" are an even sicker more extreme example of (for lack of a better term) "shock capitalism" whereby the system is deliberately driven into bankruptcy in order to create conditions whereby enormous amounts of wealth can be stolen from the State in order to refloat this system and in the process give those who caused the disaster in the first place the capabilities to now take control over and buy out remaining assets with public money!!

In other words, a few greedy crooks who control this "capitalist" system (and it's not really capitalist because it is designed to lose money and rely on public debt bailouts and inflows of foreign capital, especially oil $$ from the Middle East) are now able to hijack most of the economy.

The concentration of wealth in the hands of the few coupled with declines in work opportunities and social conditions for the many is a recipe for disaster should this pyramid system eventually unravel.

[SwordoftheVistula]

Most investments are not FDIC insured, only bank accounts, which make up a small portion of the assets.

At any rate, it would have been better and cheaper to just pay back the individual depositors rather than the mega banks and insurance companies, and let the mega banks and insurance companies go down and get replaced by something better.

Anyways I don't have any 'savings' nor does anyone else my age I know so the sooner the whole thing blows up the better

[Blue Cheer]

Don't forget commercial banks those assets are protected by the FDIC too. It is a complex issue but thanks for the argument~ cheers:D

[Bloodeagle]

What happened with "the financial industry" in general is often so complicated that most of us cannot understand it.

The simple version is that the denizens of Wall Street, while not at synogogue, were pushing around a bunch of paper and calling it wealth-creation, which is insane. Any system like that is bound to fail.


Blue Cheer, where I'd disagree with your blaming of the free-market is :
Any system is only as good as the integrity of the individuals "manning the oars". Some other system that would replace "American-style laissez-faire-ism" might be even worse. A centralized system could be plagued by problems just as well. Or maybe not. It depends on the integrity/honor of the people behind it. How motivated are they to do things right?

How do you regulate morality? It is impossible, some would say. But there is a way: People who think of themselves as intrinsically bound in a kinship network ('nation') to their neighbors will not lie, cheat, and steal their way to the bank at the expense of their neighbors.

What I'm trying to say is that the answer is not to be found in economics, but in "blood-and-honor-ism". Reviving feelings of kinship as high social values. No one but the lowest sociopath would cheat their own mother or even cousins.
So, as long as the twinned concepts of blood and honor animate the people's Weltanschauung, it matters little what economic system is in place.

Our current system of civilization is to far removed from nature.
There is no real kinship between our vast hoards!
Like rats, the people of our world devour one-another seeking empty life destroying monetary wealth.

I believe we are in the eleventh hour of this great travesty.
History will soon teach of the failures of capitalism.

[SwordoftheVistula]

Well society has advanced a lot, if you just were to 'turn back the clock' the standard of living would fall significantly, and also the planet would not be to support such a large population