The reason the markets are diving (Ezra Klein)

[TheNewMe]

Posted at 01:58 PM ET, 08/04/2011
The reason the markets are diving
By Ezra Klein

Quote:...
But the Dow Jones isn’t diving because spending has risen, deficits have grown or stimulus policy has changed. It’s diving because of forces Washington can’t control, and in many cases, doesn’t understand very well. How many members of Congress do you think could give a coherent account of what has happened to oil or steel prices over the last three years? Or what’s happening in the Eurozone? Or to the yuan?
...
The right question is simple enough to pose: Where will the recovery come from? The problem is that no one has an answer. And as one hopeful hypothesis after another is dashed, the markets are beginning to panic.

It won’t come from the United States. Our recovery has slowed, and updates to the Commerce Department’s growth figures have shown that the hole we’re in is significantly deeper than we realized. Thursday’s news only underscored that conclusion, as the early signs suggest that Friday’s job numbers report will be disappointing.

It won’t come from Europe or Japan. The debt crises in Greece, Spain, Portugal and Italy have quieted any conversation about recovery and raised the question of whether the Eurozone can survive. And Japan is still trying to rebuild after the horrific earthquake and tsunami that ripped across its coastline back in March.
...

[jaxx]

Ezra gives a rather hopeless scenario there. Time to print the money and spend it on infrastructure and get people to work. I know that will cause inflation, but we're dying on the vine.

[TheNewMe]

(08-04-2011 03:38 PM)jaxx Wrote:  Ezra gives a rather hopeless scenario there. Time to print the money and spend it on infrastructure and get people to work. I know that will cause inflation, but we're dying on the vine.

Yeah, he seems a bit depressing. Though I like his point of view that this is a global thing, and it's not just the U.S. The U.S. is not good at thinking "We are all in this together."

[Drunken Irishman]

Yeah. That might be the most depressing story I've read in a long, long time. He's basically saying, "we're fucked and there ain't a damn thing we can do about it..."

[RoyGBiv]

(08-04-2011 03:44 PM)Drunken Irishman Wrote:  Yeah. That might be the most depressing story I've read in a long, long time. He's basically saying, "we're fucked and there ain't a damn thing we can do about it..."

Oh, we *could* do something about it, but then there are Republicans and conservative Democrats to account for.

Our current economic problems have been amplified beyond all rational sense by abject stupidity in governance and in the population that relishes these inadequacies.

[nofurylike]

(08-04-2011 05:52 PM)RoyGBiv Wrote:  

(08-04-2011 03:44 PM)Drunken Irishman Wrote:  Yeah. That might be the most depressing story I've read in a long, long time. He's basically saying, "we're fucked and there ain't a damn thing we can do about it..."

Oh, we *could* do something about it, but then there are Republicans and conservative Democrats to account for.

Our current economic problems have been amplified beyond all rational sense by abject stupidity in governance and in the population that relishes these inadequacies.

hear hear!!

thank you for adding that, Roy.

[Velleity]

(08-04-2011 05:52 PM)RoyGBiv Wrote:  

(08-04-2011 03:44 PM)Drunken Irishman Wrote:  Yeah. That might be the most depressing story I've read in a long, long time. He's basically saying, "we're fucked and there ain't a damn thing we can do about it..."

Oh, we *could* do something about it, but then there are Republicans and conservative Democrats to account for.

Our current economic problems have been amplified beyond all rational sense by abject stupidity in governance and in the population that relishes these inadequacies.

Abject stupidity is absolutely correct. We could solve the real crisis here, which is jobs. GDP = Consumer Spending + Investment + Government Spending + Exports - Imports. That is not theory; that is how GDP is actually calculated. Therefore if you are in a condition that we are in today, you know consumers are not going to spend and lead the economy out and if consumers are not going to spend then businesses are not going to invest, leading the economy out.

So what do you do? If you're a "conservative" you cut government spending? Really? This is going to create jobs? This is going to make consumers consume more and businesses invest?

On second thought abject stupidity is probably too generous.

[RoyGBiv]

(08-05-2011 05:00 AM)Velleity Wrote:  On second thought abject stupidity is probably too generous.

On reflection, I don't know if stupidity is actually the right word. They are doing amazingly well for the people who own them.

But they are insane.

I read an article yesterday that I intended to post here but never got around to it. Now it is buried somewhere in the maze of Bloomberg, and I can't find it again. (It would not surprise me if it were ordered pulled.) It was basically about retail sales, breaking it down into sectors, showing that the numbers are even worse than we realize. The reason is that retail sales at upscale establishments (Sax Fifth Avenue, people who sell yachts, etc.) is up something like 15% for the last quarter. Retail sales at the stores the other 99% of the population shops at was either flat or down dramatically. So, we report anemic growth overall when what we've actually got is incredible growth in the wealth industry and losses everywhere else.

So, yeah, Republican policies are doing great for one sector of society, the one that pays them to do what they do.

[Velleity]

The markets are going down because we had a lost decade, thanks to idiotic and irresponsible "conservative" policies. Capitalist economies do not necessarily foster a strong middle class. Just look at Mexico with it's more millionaires per capita than anywhere else in the world and it's average daily wage of $5 a day for everyone else. That is the natural capitalist way? Why? Because the people at the top, who know how to create barriers to entry (the ones conservatives have told us can't possibly exist), will make it that way.

Have you ever played poker with someone who has more money than they know what to do with? If you have then you have some idea what I mean.

Our grandfathers and greatgrandfathers knew something. They knew that to create a strong middle class, after WWII, they would need highly progressive taxation, strong unions, and good government regulation. And what have "conservatives" done? They have systematically dismantled that and they have achieved the highest concentration of wealth since the Gilded Age, right before the Republican Great Depression I.

Gee, what a coincidence. Isn't it?

[nofurylike]

(08-04-2011 05:09 PM)Velleity Wrote:  The markets are going down because we had a lost decade, thanks to idiotic and irresponsible "conservative" policies. Capitalist economies do not necessarily foster a strong middle class. Just look at Mexico with it's more millionaires per capita than anywhere else in the world and it's average daily wage of $5 a day for everyone else. That is the natural capitalist way? Why? Because the people at the top, who know how to create barriers to entry (the ones conservatives have told us can't possibly exist), will make it that way.

Have you ever played poker with someone who has more money than they know what to do with? If you have then you have some idea what I mean.

Our grandfathers and greatgrandfathers knew something. They knew that to create a strong middle class, after WWII, they would need highly progressive taxation, strong unions, and good government regulation. And what have "conservatives" done? They have systematically dismantled that and they have achieved the highest concentration of wealth since the Gilded Age, right before the Republican Great Depression I.

Gee, what a coincidence. Isn't it?

thank you for that clarifying post, Velleity.

[azmouse]

I'm getting drunk tonight.

[jaxx]

(08-04-2011 06:33 PM)azmouse Wrote:  I'm getting drunk tonight.

That's the best idea I've seen all day!

[nofurylike]

sheesh.
ah, well ....

thank you for posting that, TheNewMe.