A Depression and Recovery in Internet Time 37 comments
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We are getting a daily diet of doom and gloom. Crashing markets, key economic sectors imploding, mounting foreclosures, continuing bank failures and trillions in retirement savings wiped out. Is this the end of the world (or at least capitalism) as we know it? Are we in a full-blown depression and destined to revisit the 25% unemployment and food lines of the Great Depression? Yes and no. Yes, we’ve had a Modern Depression every bit as powerful as that of the 1930s and no, this will not go on for 10+ years. Although the headlines will continue to question our survival, the outcome has already been decided. Most of the damage has been done. Indeed, the eye of the storm has passed and 2009 will be a much better year than everyone expects.
Internet Time. Make no mistake, the credit collapse created a Modern Depression but it wasn’t allowed to metastasize. The fix, the only one known for depressions, is unimaginable deficit spending. That spending will only go up and is already baked into the recipe. It will work because the world is behind it. It will make more sense if you step back and take a macroscopic view of today’s events, because they are being compressed into “internet time”. The deflationary carnage of this Modern Depression has been not been mitigated; rather it has been accelerated - all the damage at a fraction of the time. Similarly, the reflation will occur much faster than anyone would guess.
Deflation = Depression. Deflation (the destruction of assets and wealth) is the factor that separates a depression from a garden variety, back-to-back, lack of growth recession. Deflation spirals interminably without some significant interruption. Look around to see the rapid adjustment to your financial wellbeing. US wealth is down in direct proportion to dollar denominated assets; virtually every big ticket item that dollars buy is down 35-45%. We’re in about the third twist of the spiral and the contractions have forced a decade of bank consolidation into as many months. When you go shopping for a car or house you’ll see how much your dollars have grown. This is a depression, not a recession and the majority of the deflation has already occurred.
The Sped-Up Death Toll. All that remain are nine (and counting) large commercial banks; albeit some only by continuing governmental transfusions. Our Investment Banking is now a cottage industry and our once-celebrated financial engineering, that maintained so many marginal businesses (see Autos), is reverting back to good old lay-away. We are a changed nation. To shore up this collapse, while American Capitalism is reshuffled, the Treasury has promised to significantly increase our money supply. That should mean the dollar is ready for a swan dive while gold takes off, right? Wrong.
This Size Deficit = WWIII. Contrary to common wisdom (which is usually wrong) it wasn’t FDR’s programs that broke the deflationary spiral of the 30s; it was the do-or-die-deficit spending of WWII. The deficit spending we are embarking upon is tantamount to financing a world war. It is do-or-die, but for capitalism and the world understands; that’s why they’re buying dollars and Treasuries. If the government manufactured inflation (adding money makes the existing money worth less) was getting out of control, our dollar would be falling and commodities like gold and oil would be soaring. They aren’t.
The World Agrees on a New Gold Standard. Treasury Bills that yield 0.00% interest are essentially large denomination dollars; large bets on the surest bank on Earth. Even though financial theory states that a currency is weakened by dilution, and we are sure going to do some dillutin’, the world continues to buy dollars with abandon. Why? If the world is confident about us, despite our outrageous deficit, despite the printing presses humming into the night, despite our almost leading them into a full-blown depression, it can only mean something substantial has changed. That something is a world already flooded with paper money, looking for direction as a tsunami of more money is created. It revisits Bretton Woods and knocks gold completely out of the loop as a monetary instrument. In a world nearly out of control, where an overabundance of paper money has made gold irrelevant, the value of the US franchise has elevated the US dollar to the position once occupied by gold, as the new “gold standard”.
If America Fails, It Takes the World With It. Mathematically, America is painfully bankrupt; however, our failure threatens global capitalism and stability. Consider how the world has changed since the Great Depression of the 1930s. Asia and Russia are now capitalizing rapidly because there is simply no viable alternative; Communism has failed. India as well was off the capitalist map but has now secured a prominent place. The Middle East is getting dragged into the present and largely embracing capitalism. In other words, American capitalism has won the world and no one is interested in reverting back to any other failed “ism”. The majority of the world has everything to lose and nothing to gain by staging a (justifiable) run on US assets, just because we must inflate our currency to stem the deflation. All currencies are in a deflationary race and we represent the highest and driest island of stability in an ocean of fiat.
In Summary: I have long ago seen this as a Modern Depression but have changed my opinion as to the government’s ability to stem the deflation. The events occurring today are very similar in size and scope to the past, however, they are moving much more quickly. We’ve experienced a Modern Depression and are now recreating the only known fix: over the top deficit spending. This knowledge was not greeted with the logical response of devaluation because all currencies are deflating and the system is on the brink. We aren’t slipping into a full-blown depression with uncontrolled deflation and we aren’t going in the opposite direction by triggering run-away inflation either. We are recovering even though the headlines won’t say it for months. The Depression and Recovery in Internet Time will rewrite economics forever. The world is agreeing that American capitalism has changed but must continue as the greatest show on Earth, for now.
Disclosure: I remain a seller of all currencies other than US Dollars and Japanese Yen and am an ever more aggressive buyer of US equities.
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This article has 37 comments:
The genuine recovery that we will see will be based on a rebalancing of global demand away from the over-indebted US consumer and the emergence of China and India as the new super-powers
Sure, but by the same reasoning there should never be a "tragedy of the commons."
"Indeed, the eye of the storm has passed and 2009 will be a much better year than everyone expects."
Anyone who has lived in Florida can tell you: it is after the eye passes and the 'back' side of the storm then hits that most of the serious damage is done. The author does not seem to realize just how apt his metaphor is, because he does not understand hurricanes any better than he understands economics, which is born out by making ludicrous assertions like 'over the top deficit spending' is the 'only known fix'. I suggest some reading on Austrian economics.
When the US invaded Iraq they messed up royally. Iraq and Iran have been trading oil in Euros for a long time. They expected to go into Iraq, mop up and move on to Iran. They never expected a Guerilla war in Iraq, which has demoralized the US when it found out there was no imminent threat or WMD.
On Jan 16 10:12 AM bluepoppy wrote:
> very interesting but.....China, asia and Europe are locked in an
> dance with the U.S and are well aware of the pitfalls of decoupling.
> so for now they will let the U.S lead....for now......but when things
> start to turn around as they will in whatever timeframe ( months,years)
> then watch out.....the dollar will drasticaly fall as will bonds
> and whats left of dow jones
On Jan 16 05:29 AM The hand wrote:
> This was a very interesting way of looking at what is going on. I
> do not buy your argument on the dollar being gold's replacement.
> all that has happened is the dollar resumed its position at the top
> of the fiat food chain (temporarily).
>
On Jan 16 09:52 AM socrateazz wrote:
> That in motion stays in motion until acted on by enough outside force.
> I expect you are right we are in a depression. the question I have
> is what stage. I tend to believe that we are not finished with the
> deflation. And the result of this deflation has not been finalized.
> Also, I believe any action will have approximately an equal and opposite
> reaction when applying equal or greater force. When enough money
> is applied to the momentum of deflation, much of that momentum will
> be applied to the opposite reaction of inflation. Thus a serious
> inflation period will emerge. If it is slowed soon enough then thngs
> will improve. I expect the government to believe their own belief
> that not enough action caused the current problem. I expect to see
> a number of 100% to 1000% swings in values of goods and monetary
> instruments before real fixes are implemented.
Capitalism is built on self-interest--that is the structural contradiction that has to change. To get out of this mess we are going to have focus our collective will as never before.
2. gold up 8 straight years
3. during the deflation of 2008, gold up 4%
4. the reports of gold's death have been greatly exaggerated
To paraphrase, the 'fix' is more of the same thing that caused the problem, but somehow that isn't going to make things worse. Yeah, right. Note to author: The 'depression' is what's fixing the over extended, print 'n spending, credit driven bubble we've been calling an economy for the past 20 years.
"That spending will only go up and is already baked into the recipe. It will work because the world is behind it."
I'm sure Santa is behind it too. What could possibly go wrong? After all, it worked sooo well when we did the same thing in 2001 to counter the dot com bust only to find it led to even bigger problems today.
"If the government manufactured inflation (adding money makes the existing money worth less) was getting out of control, our dollar would be falling and commodities like gold and oil would be soaring. They aren’t. "
Yet.
"America is painfully bankrupt; however, our failure threatens global capitalism and stability. ... The majority of the world has everything to lose and nothing to gain by staging a (justifiable) run on US assets"
So now economic prosperity is assured because we're in an all - or - nothing game of financial chicken with the rest of the world and they're certain to blink first? Doesn't seem like a very sound economic theory to me. What if the Chinese DO decide it's not worth dealing with a financial deadbeat like the USTreasury and its ever devaluing dollar? What if they start selling dollars and TBonds hand over fist? Oops! Dollar based interest rates would skyrocket and cripple our economy.
Mr. Roskoph appears to have been drinking two handed from the FED's bowl of kool-aid. His reasoning is overly dependent on "never gonna happen" assumptions that are questionable at best. He appears to understand just enough to be incredibly dangerous as an economic forecaster.
What about current fiscal policy can force lenders to lend, and borrowers both WANT and are ABLE to borrow?
Governments cannot possibly spend their way out of a debt-induced depression, it will only make things ultimately worse.
If the dollar is the new gold standard, watch out. But it's not. Gold is the new gold standard.
The rest of the world won't fall if the U.S. does. The failure of the U.S. won't have a good effect, but other countries will get past it all right. The Chinese actually have a long-term view in regard to economics and resources. I only pray we learn to have the same outlook while restoring a free system--which we have bypassed for far too long.
Yes we are flooding the world with dollars and the world is sopping them up.
The dollar is a temporary safe haven while the turmoil is underway. Hedge funds and others that have to unwind derivatives must do so in US dollars, hence they need dollars once now.
Once this financial turmoil abates, why would people want to continue to hold US dollars?
Also consider, China has bought up a huge amount of US dollars. Right now China is caught in the economic downturn just like the US. China, however, has money in the bank to spend on stimulus. Why would China not redeem its US Treasuries in order to fund domestic consumption and infrastructure work to offset the dropoff in their exports caused by the recession in the developed countries?
I think the reason financial gurus are so consistently wrong is that they need to exercise their hifalutin education by making things far more complicated than they are.
The more dollars there are, the less they are worth.
This is about as close as you can get in the world of economics to a fundamental law of physics like gravity.
When, as in in 2005, the top 1% had a far bigger raise in income than the TOTAL income of the lowest 20%, something is seriously out of whack.
When for over 25 years nearly all the growth in wealth has gone to the top 20%, something is seriously out of wack.
89% went to the top 20% between 1983 and 2004. 33% to the top 1% and about 60% to the top 5%
(Reaganomics prevailed even under Clinton)
When corporate executives made 25 times worker pay in 1978, and now make 250-400 times as much, while the average worker makes 12% less in buying power than in 1978, something is seriously out of whack.
When the top 10% of families owns over 71% of wealth, and the bottom 40% of the population owns way less than 1%, something is out of whack.
When the bottom 60% of households possess only 4% of the nation's wealth, something is out of whack.
When real hourly wages between 2001 and 2004 rose only 1.6%
while the price of homes went up 17.9%, something is out of whack.
When in 2004 the top 10% owned 81% of non-home wealth, something is out of whack.
When the top 20% had 84.7% of net worth
and the same 20% owned 92.5% of non-home wealth, something is out of whack.
In 2004, the top 1% owned 44.8% of stocks and mutual funds, the top 10% owned 85.4% of stocks and funds.
Anyone who ignores this in assessing the state of the economy is just plain dishonest, or uninformed.
But hey, we wouldn't want to redistribute wealth right?
"The Pew report also found that many countries-including Norway, Finland, Canada, Sweden, Germany and France have more economic mobility than the United States does."
Yes, all those countries with mixed economies and mostly more social programs than we have. So much for social programs killing off incentive to move up economically.
And somehow the Republicans manage, each election year, to fool millions of working people into believing it's the welfare people who have taken all their money. It helps to throw the word "socialism" around a few times to scare them into voting against their own self interest.
Excellent rebuttal to the article.
Furthermore, in the game of chicken that you point out the author of the article believes is the foundation for the global economic future:
Contrary to the author's claim, I think the holders of US dollars know full well that there is a huge risk of massive devaluation of the dollar.
And holders of US dollars know that the only way to keep the dollar afloat is if EVERYONE continues to treat the dollar as a gold standard.
But, the reality is, they all have a vested interest in doing the exact opposite. If the dollar is destined to collapse, as I believe it is, those who dump their dollars first will come out the best.
So I would not be surprised if the collapse of the dollar, instead of being a gradual devaluation of 10-15% per year over the next 5-7 years, may happen almost instantaneously. In other words, a global run on the bank to pull out of US dollars.
I agree this is heading for a depression but what we are seeing right now is deleveraging run rampant. Whether we actually have a systemic deflation or merely a drop in commodity prices to a new base level is not yet apparent. The economic forces we are dealing with are titanic and do not move on internet time - only the trades and information flow do. Look back on how what started as a mortgage lender crisis seemed to proceed like a slow train wreck right up until it hit the real economy.
This will take a long time to play out.
"His conclusion was that fiscal and monetary was entirely impotent- velocity delines regardless. That is exactly what we have seen so far, and I expect will continue. Companies and people struggle to re-pay debt, with harder to earn dollars, savings rise, consumption plummets.
What about current fiscal policy can force lenders to lend, and borrowers both WANT and are ABLE to borrow?
Governments cannot possibly spend their way out of a debt-induced depression, it will only make things ultimately worse."
What you say makes a lot of sense to me. In fact, even though I believe the dollar is going to devalue bigtime over the coming years, I'm not at all sure that will lead to generalized inflation. If unemployment is high, I can't see wages rising much even if the dollar is being devalued by the government. If wages don't rise, things like real estate won't go up in price, since the only way people could more easily afford to buy homes is if their wages go up.
However, one big question is: If the government (for the purists- the Fed, the government's unaccountable Frankenstinian monetary wing) drastically expands the money supply, then were is all that extra money going to go?
Well, I guess the most positive aspect is that some will wind up as wages of those funded by the stimulus programs, the people building bridges, etc. Hopefully that will mitigate the rising unemployment rate somewhat.
But what about the rest of the new flood of dollars? What happens to them?
My guess is we will see a mixed bag of deflation remaining in some sectors and inflation occurring in others. I believe for example real estate will remain depressed in price, while commodities will go back up.
Not that anybody in authority would ever admit it, but I'm afraid a strong case can be made that America has already failed in the sense that its financial system and fiscal structure are no longer viable and large chunks of its manufacturing sector are uncompetitive. From my perch in another failing country, I draw two conclusions from what is happening:
1. The United States still has a great future ahead of it, providing she recognises the dangers - political as well as economic - of imperial overreach. Her people are optimistic, innovative, and energetic. She also has the most favourable demographic future of any developed economy.
2. However, as I've said ad nauseam in recent SA comments, the economic model is broken and has to be fixed. SA readers do not need another laundry-list of the things that need fixing - they are many and they run deep. They are cultural as well as institutional. This will take time - probably a long time. The difficulty is that the US is oriented to quick action and quick fixes. Notwithstanding that the author makes some perfectly valid points about the speed of the internet age, I doubt that the sort of reforms to the economy, financial system, consumer mentality, or the social and physical infrastructure that a growing number of Americans seem to think necessary can be accomplished quickly. The market pundits will say otherwise, but these are not the sort of challenges that can be overcome on a 'worst two quarters are behind us'/'shoots of recovery by H209' sort of timescale. Maybe we are today living through the worst of it in raw GDP terms, and maybe we will see signs of recovery later in the year (I personally doubt both but I don't pretend to know either way); however, recovery is not going to be a question of doing a hand-brake turn and a quick 180 - it is going to be a long, wrenching experience. That America can succeed is beyond doubt. Whether her elite will let her or will continue fighting to preserve the past is the open question for me.
All this increased volatility in all different markets, whether they are stocks, bonds, currencies or commodities is pointing to a coming collapse in the fiat money experiment the World has embarked upon. The efforts of Central bankers to competitively devalue their currency in order to keep exports competitive will eventually spiral out of control. A new global monetary system will evolve and most like gold will be employed in some manner to achieve this.
To me your Key words are: "incredibly dangerous".
Have you read the Man's profile? How do your credentials stack up against against his?
Personally, I believe he has a strong understanding of economics. Just because you do not agree with his stance, does not allow you put down his intelligence.
"Mr. Roskoph appears to have been drinking two handed from the FED's bowl of Kool aid."
Was this comment really necessary to enhance your own views?
I really thought better of you.
On the same hand, because the author's credentails are really not so anything, I don't see him as being incredibly dangerous, except to the few who listen. But that's always a danger to those who don't read widely and think for themselves.
Common Sense VS degrees in whatever..IMO.
I recently applauded the comments of one Smarty_Pants.
His comments here were not up to the Standard I had given him. I did not comment on this Article at all.
BTW, MR. R. posted another Article called "Wake Up America, You're Sinking" on Aug. 8, 2008.
I wish I had paid more attention to that one.
I have no problem at all with attempting to clarify what has been written VS what I believe/know to be true.
Why anyone would want to cast aspersions just because one doesn't agree with someone else's view. Making a point doesn't require taking the "low road".
IMHO
This commentary goes against 99% of the commentary I read: a long and endless depression/recovery, but the author has the advantage that 1) He may be right and 2) If he is, his prediction will stand out from the crowd.
I'll add one very simple thought. The author wrote: "The fix, the only one known for depressions, is unimaginable deficit spending."
I believe he used the world "fix" meaning "remedy". He may or may not be correct. (I think he may be right.) But I am worried that the word could have another meaning, as in "fix" for an addict. If money is thrown in the wrong way, can't it reinforce the bad behavior that caused the illness?
The author and several commenters expressed the opinion that massive spending is baked in the cake and can not be avoided. I agree it is going to happen. The best we can do now is try to figure out how to diminish feeding the addicts and increase giving remedies to the ill.
What kind of fix will prevail?
There are a few legitimate candidates, but one must be careful there.
I agree (or suggest) that all that stimulus money will be going somewhere and should be good for at least one good exhaustion rebound rally, but I feel sorry for anyone who decides to buy and hold and overstays the market.
The trillions of pledged and soon to be pledged bailout dollars coupled with the one to two trillion (maybe more ultimately) spent on the two ongoing wars is not my idea of a healthy or sustainable situation, and I will act accordingly. Pretty soon we're going to be talking about real money.
We are in a great deal more trouble than most seems to realize, and the concept that anyone has the one idea, or set of ideas to get us out of this mess is an amusing one in a macabre sort of way.
We're going to oscillate between deflation and inflation with at least humbling if not downright terrifying swings for some time to come.
That is why someone as experienced and astute as Paul Volker has very little to say on the subject because he knows the problems are bigger than we are , and doesn't want to engender any false hope , as some others are all so willing to do.
I think the only thing to do is try to get in phase with the to and fro, and not get destroyed by the amplitude of the swings, or zigging when we should be zagging.
The robust and often expert dialog produced on this site should assist in this regard, if we but pay attention, and I continue to look forward to it.
The FED and its printing or $trillions does not serve the interests of the American people, but rather those of his pals, the ruling class of this courntry, aka the capitalist elites.
I can go on and on but I will instead direct the curious to the following articles:
"THE WALL STREET PONZI SCHEME CALLED FRACTIONAL RESERVE BANKING"
www.webofdebt.com/arti...
"HOW TO RESOLVE THE CREDIT CRISIS"
www.webofdebt.com/arti...
"What Hank and Ben Are Up to"
www.webofdebt.com/arti...
finally
" CRONY SOCIALISM OR FINANCIAL SOVEREIGNTY"
www.webofdebt.com/arti...
Of all the above links, the most important is the first one, "FRACTIONAL RESERVE BANKING".
Interesting times call for interesting knowledge folks.
This Article ends with the Disclosure that He is an "ever more agressive Buyer of US equities".
There aren't any Articles inbetween, he never posted anything regarding a pause in his thinking. He does not explain in this Article why he has done a 180.
From this aspect, I have to treat the Article as an attempt to increase business.
Grace Cheng has posted an "Exclusive Interview with Jim Rogers" which directly opposes the above view.
Of these 2 Articles, My Vote goes to Jim Rogers.
A word of warning though, Jim Rogers believes the liquidation process is far from over.
I have tried to echo this stance but have found many tend to ignore what he says about the "now" and focus instead on his "future" vision as if it was happening now.
One thing I agree with in the article is that those holding great piles of dollars, as Saddam used to, will not rush to dump them all in one place at one time.
China, for example, can use judicious amounts here and there to buy raw materials to make things for off-shore or on-shore consumption. Many places with raw materials still accept dollars.
Buying some things to reverse-engineer might make some sense. Buying some expertise to staff universities might be a deal.
Some places that own a lot of dollars don't grow their own foods or manufacture much, and they import a great deal of labor and expertise. The Saudis fall into this category.
Some places that own a lot of dollars are interested in growing more food and developing next-generation energy sources. Some of the United Arab Emirates are busy with these activities, for which dollars can be used.
In the meantime, many U.S. people hold opinions of their congresspeople similar to the opinions of Mark Twain and Will Rogers. These wry individuals are growing their own rainbow chard, dinosaur kale, and other upscale and fashionable vegetables and fruits in the spaces where grass used to grow. Then there are the chickens. I live in a city where the annual Tour de Coops sells out.
The U.S. Congress is not stopping the rains that flood the interstates and stop the trucks. Some of us still want to eat.
Who knows what is going to happen to prices when the feds are throwing money around with such wild abandon, and none of it seems to show up anywhere that anyone can detect.
Couldn't they put tags on some of it and track it with global-positioning detection equipment?
States that take a stand against the worst of federal behaviors will do better.
States with cultures that promote class mobility will also do better. I mean this in the sense of individual states in the United States, but it is also true of nation states.
I wish I had a nickel for every surgery on an American performed in Thailand. The value of going home to practice is rising for physicians trained in this country. It may actually be easier to get an E-Bay-like rating on an offshore surgeon than on an on-shore one. There is still value in accepting dollars in many of the places who have sent students here.
Many new ideas debut here, but the carry-through may be easier to do elsewhere. Maybe our legislatures will get this some day. In the meantime, I will tend my urban fruits and vegetables and buy my clothes at the thrift shop.
I will not bet against China or against some of the best U.S. companies either. I own STP and SPWRA.
Now regarding the Gold itself, each bubble has it's heroes.
We don't must go back to the nemes that sold us an Internet Bubble or any previous assets bubble, this guys are long gone, bankrupt, fired and you can meet them in KFC selling other commodities like chicken.
Just last year most investors from 1,000$ to 10,000,000,000$ hedge fund were riding the biggest investment opportunity of all times - the commodities.Today we all know about the losses and bankruptcies of this guru's but Gold offers the last hangover for last of the Mohicans who pumped Gold lately, as price didn't crash yet so they use it as the last chance.
I wouldn't follow the lonely boat in the storm category 5 in the current global crash that last had it's similarities in 1929.
Sell Gold.
Mark Medayski
As to whether the market is in recovery, that remains to be seen. Data would suggest otherwise.
Asia and Russia are now capitalizing rapidly because there is simply no viable alternative; Communism has failed.
"
The "communism" that failed in the USSR was but a monstrous caricature created by the monster Stalin after Lenin's death. Get your facts straight sir. Regarding Stalin, he would have been a monster in a capitalist system just as well as in a socialist system.
frflyer made some good comments but I will go further but saying that, from the perspective of the working class, capitalism is no longer delivering the goods. It hasn't been delivering the goods for the last 30 yrs or so as evidenced by the average wage of th American working man seeing no increase after inflation. The lack of increasing income was disguised by massive debt accumulation in order just to stay afloat. Of course, the ruling class used debt (leverage) for record profits during that time so, it seems to be, the capitalism has failed the working man.
frflyer said:
Your comments about the 30s depression and WW2 being the only thing that ended it smack of revisionist history in my opinion. No doubt the massive ramp up for the war played a major role in ending the depression, but I hope you aren't part of the crew who wants to rewrite the history of FDRs presidency. FDR turned more economically conservative in his approach to the depression in the late thirties and the recovery slowed as a result. Those who now claim the New Deal was a complete failure are not thinking clearly or are ideologically blinded. There was no such thing as a working middle class until the new deal. The middle class as we know it is a direct result of FDRs policies. Never before were workers so prosperous as they were after WW2. Those who want to rewrite this chapter in history would not be happy living in the robber barron era that came before it, when workers had no rights, no retirement, no vacations, no unemployment, no GI bill so they could go to college or buy a home, no ability to negotiate for better pay, no worker safety, long long hours. The programs like the CCC and the WPA gave people hope, and a sense of worth and provided sustainance and housing while they improved the infrastructure of the country. The depression followed an extreme concentration of wealth in a few hands, just like the situation today.
When, as in in 2005, the top 1% had a far bigger raise in income than the TOTAL income of the lowest 20%, something is seriously out of whack.
When for over 25 years nearly all the growth in wealth has gone to the top 20%, something is seriously out of wack.
89% went to the top 20% between 1983 and 2004. 33% to the top 1% and about 60% to the top 5%
(Reaganomics prevailed even under Clinton)
When corporate executives made 25 times worker pay in 1978, and now make 250-400 times as much, while the average worker makes 12% less in buying power than in 1978, something is seriously out of whack.
When the top 10% of families owns over 71% of wealth, and the bottom 40% of the population owns way less than 1%, something is out of whack.
When the bottom 60% of households possess only 4% of the nation's wealth, something is out of whack.
When real hourly wages between 2001 and 2004 rose only 1.6%
while the price of homes went up 17.9%, something is out of whack.
When in 2004 the top 10% owned 81% of non-home wealth, something is out of whack.
When the top 20% had 84.7% of net worth
and the same 20% owned 92.5% of non-home wealth, something is out of whack.
In 2004, the top 1% owned 44.8% of stocks and mutual funds, the top 10% owned 85.4% of stocks and funds.
Anyone who ignores this in assessing the state of the economy is just plain dishonest, or uninformed.
But hey, we wouldn't want to redistribute wealth right?
"The Pew report also found that many countries-including Norway, Finland, Canada, Sweden, Germany and France have more economic mobility than the United States does."
Yes, all those countries with mixed economies and mostly more social programs than we have. So much for social programs killing off incentive to move up economically.
And somehow the Republicans manage, each election year, to fool millions of working people into believing it's the welfare people who have taken all their money. It helps to throw the word "socialism" around a few times to scare them into voting against their own self interest.