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Why Are We Lying to Ourselves About Our Catastrophic Economic Meltdown?
Arun Gupta, alternet
Over the last year, the world has received a crash course in real-world capitalism as the follies of Wall Street nearly torpedoed the global economy, which had to be rescued by a trillion-dollar government handout.
Economics, the study of systems of production, distribution and consumption of goods and services, touches virtually facet of our lives from work, recreation and home life to entertainment, culture and social relations.
While there is a wealth of information and some excellent reporters in the business press, the mainstream media has botched virtually every major economic story over the last decade. It helped inflate the Internet bubble. It worshiped at the shrine of the free market and Alan Greenspan. It ignored the evidence of the housing bubble. It was missing in action on the commodities bubble. It celebrated billionaires and speculators even as they manufactured financial weapons of mass destruction. It only sporadically reports on the myriad ways Wall Street games the financial system.
Even now, the corporate media downplay the scope of the disastrous U.S. economy. The current economic downturn, the longest since the Great Depression more than 70 years ago, has been dubbed by many the “Great Recession.”…
(29 Sept 2009)
Have we learned nothing from the economic catastrophe of 12 months ago?
Leader, The New Statesman
If, as the saying goes, “everything changed” after the terrorist attacks of 11 September 2001, it could be argued that “nothing changed” after the equally world-historic events of 15 September 2008.
The collapse that day of Lehman Brothers triggered what one Bank of England official called “the largest financial crisis of its kind in human history” and brought the world to the brink of economic depression. In the immediate aftermath, world leaders – inspired by Gordon Brown – came together in order to rescue the banks and shore up the global economy with a multitrillion-pound fiscal stimulus. The Prime Minister’s leadership prompted the Nobel Prize-winning economist Paul Krugman to ask: “Has Gordon Brown . . . saved the world financial system?”
A year on, however, those same politicians are still bickering over how to reform the financial system. And as this magazine’s new economics columnist, the former member of the Bank of England’s Monetary Policy Committee Professor David Blanchflower, points out (from page 16), “the risk of a long-lasting economic depression is not over” and the much-heralded recovery “remains fragile”. There is a real danger of a “double-dip” recession. Blanchflower, it should be remembered, was the only member of the MPC to argue, during 2007 and early 2008, that unless interest rates were cut, the economy would go into a deep, downward spiral. In doing so, he set his face against what he now calls the “tyranny of the consensus”…
(10 Sept 2009)
More state businesses using Shared-Work Program
Janet I. Tu, The Seattle Times
In February, Sterling Ramberg faced the prospect of laying off a fifth of the employees at The Gear Works, a manufacturing company in South Park founded by his father.
Then he found a way around it. Through a vendor he heard about a government program that would allow his employees to work part-time yet still collect partial unemployment benefits.
The federal-state Shared-Work Program, now available in 17 states, is another way to distribute unemployment benefits. In Washington, it’s operated by the Employment Security Department.
Though it’s been in place since 1983, it hasn’t been widely known. But this year, in the depths of the recession, more than 2,100 businesses in the state have signed up — a whopping increase from 145 employers just a year ago…
(1 Oct 2009)
Just the naked eye
Ilargi, The automatic earth
I’m starting to wonder how many people there are left who actually believe all the talk about the economic recovery we’re supposed to have entered. You know, the one proclaimed by governments, central bankers, institutions such as the IMF and the entire flock of parrots and parakeets that call themselves media and are all set 24/7 to repeat their every word, chirping, tweeting and twittering as they go along. And I’m afraid there still are far too many such believers left. They have a great shot at losing a lot of money in the next few months.
I also wonder how many people have gotten real nervous by now. Who’ve asked themselves what I asked a while back: what are the odds that the stock markets will keep on rising? And on what grounds would they do so? Surely many must have realized by now that perhaps that talk about a recovery is just that, talk. The strength of their belief may depend, to a large degree, on the job market. After all, it should be obvious that “jobless recovery” is a term used exclusively by people who do have jobs, and often cushy ones…
(3 Oct 2009)
US credit shrinks at Great Depression rate prompting fears of double-dip recession
Ambrose Evans-Pritchard, Telegraph
Professor Tim Congdon from International Monetary Research said US bank loans have fallen at an annual pace of almost 14pc in the three months to August (from $7,147bn to $6,886bn).
“There has been nothing like this in the USA since the 1930s,” he said. “The rapid destruction of money balances is madness.”
The M3 “broad” money supply, watched as an early warning signal for the economy a year or so later, has been falling at a 5pc annual rate.
Similar concerns have been raised by David Rosenberg, chief strategist at Gluskin Sheff, who said that over the four weeks up to August 24, bank credit shrank at an “epic” 9pc annual pace, the M2 money supply shrank at 12.2pc and M1 shrank at 6.5pc.
(14 Sept 2009)
How the Fed Can Avoid the Next Bubble
Ian Bremmer and Nouriel Rabini, Wall Street Journal
Ben Bernanke and the Federal Reserve face a number of very difficult challenges in the years ahead. They include:
• Resisting pressure to monetize deficits, which would eventually cause high inflation.
• Implementing an exit strategy from the massive monetary easing of the past year.
• Maintaining the Fed’s independence, which has been compromised by the direct and indirect bailout of financial institutions and congressional attempts to micromanage the central bank.
• Properly calculating asset prices and the risk of asset bubbles according to the Taylor rule, an important guideline central banks use to set interest rates.
• Supervising and regulating the financial system more effectively, particularly in the role of “systemic risk” regulator…
(5 Oct 2009)
