The Bait and Switch Recovery

There are sincere Democratic Villagers that are trying to tell the One and his advisors they've got it all wrong.

Robert Reich:

Oct. 2, 2009. Unemployment will almost certainly be in double-digits next year -- and may remain there for some time. And for every person who shows up as unemployed in the Bureau of Labor Statistics' household survey, you can bet there's another either too discouraged to look for work or working part-time who'd rather have a full-time job or else taking home less pay than before (I'm in the last category, now that the University of California has instituted pay cuts). And there's yet another person who's more fearful that he or she will be next to lose a job.

In other words, 10 percent unemployment really means 20 percent underemployment or anxious employment. All of which translates directly into late payments on mortgages, credit cards, auto and student loans, and loss of health insurance. It also means sleeplessness for tens of millions of Americans. And, of course, fewer purchases (more on this in a moment).

Unemployment of this magnitude and duration also translates into ugly politics, because fear and anxiety are fertile grounds for demagogues wielding the politics of resentment against immigrants, blacks, the poor, government leaders, business leaders, Jews and other easy targets. It's already started. Next year is a midterm election. Be prepared for worse.

So why is unemployment and underemployment so high, and why is it likely to remain high for some time? Because, as noted, people who are worried about their jobs or have no jobs, and who are also trying to get out from under a pile of debt, are not going to do a lot of shopping. And businesses that don't have customers aren't going to do a lot of new investing. And foreign nations also suffering high unemployment aren't going to buy a lot of our goods and services.

And without customers, companies won't hire. They'll cut payrolls instead.

Which brings us to the obvious question: Who's going to buy the stuff we make or the services we provide, and therefore bring jobs back? There's only one buyer left: the government.

Let me say this as clearly and forcefully as I can: The federal government should be spending even more than it already is on roads and bridges and schools and parks and everything else we need. It should make up for cutbacks at the state level, and then some. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.

Yes, I know. Our government is already deep in debt. But let me tell you something: When one out of six Americans is unemployed or underemployed, this is no time to worry about the debt.

When I was a small boy my father told me that I and my kids and my grandkids would be paying down the debt created by Franklin D. Roosevelt during the Depression and World War II. I didn't even know what a debt was, but it kept me up at night.

My father was right about a lot of things, but he was wrong about this. America paid down FDR's debt in the 1950s, when Americans went back to work, when the economy was growing again, and when our incomes grew, too. We paid taxes, and in a few years that FDR debt had shrunk to almost nothing...

This also happened during the Clinton years to the Reagan debt. Of course, Summers and the Clintonites immediately started blowing their own bubble which Bu$hie expanded tremendously. There were things about that recovery it seems the Company didn't like. Full employment meant that skilled workers could bargain for higher wages. Given the state of the economy then, though, there was no reason to deny them that.

It produced an independent-minded workforce that couldn't be controlled easily.

The current Recovery is based totally on the view of the banksters, who are using their best to inflate another speculaive bubble based on access to the U.S. Treasury. Job insecurity makes a population easier to control. Debt-ridden workers don't want to rock the boat.

Debt-ridden workers don't want to assume more debt, either, which in the final analysis makes a speculative market much harder to establish since the average worker can't throw two cents in the betting pool.

It would seem this latest market bounce would be designed to do just one thing. Pare down the richest 1% of Amerika that owns 90% of everything down to 0.5% or so.