Read It… And Weep, Daily Kos, August 20, 2010, by Bob Swern, used with permission, quoted verbatim with additional important material from economic forecaster Gerald Celente:

Some of the better, IMHO, reality-based reads of the week (so far, still a day to go) on our economy:The Ongoing Destruction of Our Middle Class

A piece currently running in the International Online version of Germany’s Spiegel, by Thomas Schulz: “The Erosion of America’s Middle Class.” (See excerpt, below.)

“Austerian” Hysteria, Political Pandering and Social Security

Which Party Poses the Real Risk to Social Security’s Future? A Marshall Auerback guest post at Naked Capitalism, from Monday. (See below.)

Three posts from Calculated Risk from Thursday, August 19th (alone, just one day of god-awful economic story after story that screams to me: “If this is ‘the Recovery,’ god forbid if we ever officially enter into a double-dip.”):

Commercial Real Estate: Moody’s: Commercial Real Estate Price Index declines 4% in June.

Ongoing Economic Contraction: Philly Fed Index shows contraction in August, first time since July 2009.

Unemployment: Weekly initial unemployment claims at 500,000, highest since November 2009.

All in one day’s news cycle! Foreclosures

The NY Times lead editorial from Friday: Foreclosures Grind On.

Financial Reform

AFL-CIO: Stronger Financial Reform Would Have Saved Jobs, by Simon Johnson over at his Baseline Scenario blog.

The Status Quo/Business As Usual

When Wall Street Rules, We Get Wall Street Rules, from economist Dean Baker, currently near the top of the FP over at HuffPo.

Paul Krugman’s two columns in this week’s NY Times, from Monday and Friday–
Social Security: Attacking Social Security
Deficit Hawks: Appeasing the Bond Gods

“The Dismal Science”

Joe Stiglitz’ commentary via the Financial Times: Needed: a new economic paradigm.

This kind of quasi-Euro-”Austerian” commentary pretty much sums it all up in what was, IMHO, a “slow” news week for the economy…

The Erosion of America’s Middle Class
By Thomas Schulz
Spiegel (International Online Edition)

August 19th, 2010…For people in the lower income brackets, the recovery already seems to be falling apart. Experts fear that the US economy could remain weak for many years to come. And despite the many government assistance programs, the small amount of hope they engender has yet to be felt by the general public. On the contrary, for many people things are still headed dramatically downward.

According to a recent opinion poll, 70 percent of Americans believe that the recession is still in full swing. And this time it isn’t just the poor who are especially hard-hit, as they usually are during recessions.

This time the recession is also affecting well-educated people who had been earning a good living until now. These people, who see themselves as solidly middle-class, now feel more threatened than ever before in the country’s history. Four out of 10 Americans who consider themselves part of this class believe that they will be unable to maintain their social status.

Unemployment Persists

In a recent cover story titled “So long, middle class,” the New York Post presented its readers with “25 statistics that prove that the middle class is being systematically wiped out of existence in America.” Last week, the leading online columnist Arianna Huffington issued the almost apocalyptic warning that “America is in danger of becoming a Third World country.”

In fact, the United States, in the wake of a real estate, financial economic and now debt crisis, which it still hasn’t overcome, is threatened by a social Ice Age more severe than anything the country has seen since the Great Depression…

And, last but definitely not least, I have to say: WTF!? (Sometimes, we Democrats are our own worst enemy.)

(Even Krugman acknowledged this week, while slamming GOP’er Paul Ryan on Monday, that it’s not just Republicans encouraging the “austerian,” anti-entitlement meme.)

(Diarist’s Note: Diarist has received written authorization from Naked Capitalism Publisher Yves Smith to print her blog’s posts in their entirety.)

Auerback: Which Party Poses
The Real Risk to Social Security’s Future

Auerback: Which Party Poses the Real Risk to Social Security’s Future?
Naked Capitalism
Monday, August 16, 2010

By Marshall Auerback, a portfolio strategist and fund manager who writes at New Deal 2.0

Hint: it’s not Republicans.

Social Security remains one of the greatest achievements of the Democratic Party since its creation 75 years ago. Although Republicans have historically fulminated against the program (Ronald Reagan once likened it as something akin to “socialism”), they have actually made little headway in touching this sacred “third rail” in American politics. President Bush pushed for partial privatization of the program in 2005, but the proposal gained no policy traction (even within his own party) because Social Security continues to be hugely popular with American voters. It’s a universal program that benefits all Americans, not a government handout to a few privileged corporations.

Which is why it’s odd that Democrats seem almost embarrassed to continue to champion the legacy of FDR. The party frets about long-term deficits and the corresponding need to “save” Social Security from imminent bankruptcy and, in doing so, opens the gate to radical cuts in entitlements that will do nothing but further destroy incomes and perpetuate our current economic malaise. It is true that some Republicans have signed on to the idea of privatization, notably a proposal championed by Rep. Paul D. Ryan (Wis.), the senior Republican on the House Budget Committee. But only a handful of GOP lawmakers have actively embraced the measure and, in the aftermath of the worst shock to the financial system since the Great Depression, many Republican lawmakers would just as soon see the idea forgotten.

So why don’t the Democrats leave well enough alone? Why bother even setting up “bipartisan commissions” to discuss the issue of Social Security? At the risk of sounding like one of those ungrateful members of the “Professional Left”, whom Robert Gibbs recently decried, I note that it was President Obama who most recently re-opened this issue by setting up a commission on reducing long term budget deficits and dealing with the long term issue of entitlements, including Social Security. In the Commission’s remit, nothing is off the table, including Social Security and Medicare. (Of course, given that one of the members is a director of Honeywell, it’s hard to envisage any suggestions of defense cuts). I also note that according to the Washington Post, “Democrats said Simpson and Bowles are uniquely equipped to blaze a path out of the fiscal wilderness — and to forge bipartisan consensus on a plan likely to require painful tax increases as well as program cuts.” No mention of Republicans getting on board. This is self-immolation, plain and simple. And Obama wonders why voters remain unhappy?

Now that the President has opened this Pandora’s Box, it is hard for him credibly to make the case, as he attempted to do in last Saturday’s weekly radio address, that “some Republican leaders in Congress want to privatize Social Security.” In fact, it is an idea enthusiastically embraced by a number of Wall Street Democrats who are funded with huge campaign contributions from Wall Street itself. (Candidate Obama received more money from Wall Street in 2008 than Hillary Clinton.) These contributors would be the Rubinites who for decades have played a huge role in allowing for greater financial leverage ratios, riskier banking practices, greater opacity, less oversight and regulation, consolidation of power in `too big to fail’ financial institutions that operated across the financial services spectrum (combining commercial banking, investment banking and insurance) and greater risk. Privatization of Social Security represents the last of the low hanging fruits for Wall Street. Who better to provide this to our captains of the financial services industry than their major political benefactors in the Democratic Party?

The issue of privatization is germane when one considers the members of the Commission approved by the President. There are questions of possible conflicts of interest. As James Galbraith has noted, the Commission has accepted support from Peter G. Peterson, a man who has been one of the leading campaigners to cut Social Security and Medicare. It is co-chaired by Erskine Bowles, a current Director at North Carolina Life Insurance Co (annuity products are a competitor to Social Security and would almost certainly be beneficiaries of the partial privatization). Mr. Bowles’ wife, Crandall Close Bowles, is on the Board of JP Morgan, and she is also on the “Business Council,” a 27 member group whose members include Dick Fuld, Jeff Immelt, Jamie Dimon and a plethora of other Wall Streeters.

At the very least, these kinds of ties raise questions in regard to proposals for dealing with Social Security. Many members of the Commission stand to become clear direct and indirect beneficiaries of the privatization that the President is now warning against. It’s disappointing that these ties have not been fully explored by the press, and it is extraordinary that the President would exhibit such political tone deafness in making these kinds of appointments. It tends to undercut the message of his last radio address.

I’ll leave aside the nonsensical arguments in regard to Social Security’s “solvency,” because Professor Stephanie Kelton has dealt with them conclusively here. The only point I would add is in regard to the alleged issue of deficit spending today burdening our grandchildren. In reality, we will be leaving our grandchildren with government bonds that are net financial assets and wealth for them. As Randy Wray and Yeva Nersisyan have recently argued, even if government decides to raise taxes in, say, 2050 to retire the bonds (for whatever reason), the extra taxes are matched by payments made directly to bondholders in 2050. We can question the wisdom of whether it is right to make this political argument in favor of bond holders over tax payers. But it is a decision to be made at that time (not before) by future generations as to whether they should raise taxes by an amount equal to those interest payments, or by a greater amount to equal retirement of debt.

In the meantime, President Obama’s approval ratings continue to plummet. His scaremongering has little credibility, given the disparity between his rhetoric and his actual policies. At the risk of further upsetting Robert Gibbs, we’ll try to explain why Obama isn’t finding stronger support from his base despite having passed, for instance, a health care bill, a fiscal stimulus bill and a financial regulation bill. For a start, follow the money: with the President and leading Democrats having taken the most campaign dollars from corporate interests those bills purport to challenge, and having gutted the most progressive elements in the bills themselves (see Matt Taibbi’s latest as a perfect illustration of the phenomenon), it is clear that those signature pieces of legislation do not fundamentally challenge the structure of power at a time when that’s what Americans most want. The only “change” most Americans might experience is a reduction in their Social Security benefits from a President currently presiding over one of the most regressive wealth transfers in history. They’ll be receiving nothing but pocket change if a serious attack on entitlements is legitimized by this commission. A scaremongering radio address doesn’t do a whole lot to change that or to alter the country’s current economic trajectory. To paraphrase one of his leading political opponents, Mr. Obama would do well to stop practicing the cynical “politics as usual” that his Presidency was supposed to “refudiate”.

#            #            #

However, from where I’m sitting, Dean Baker has the most apropos headline of the week: “When Wall Street Rules, We Get Wall Street Rules.”

So, will I be voting Democratic in November and then again in 2012? Ummm…yes, I will. But, if things keep moving forward as they are now, these will be some of the most underwhelming and unenthusiastic votes of my life.

Evans Liberal Politics would like to thank Bob Swern for permission to republish his work on an ongoing basis. Bob is our favorite progressive economics writer (along with
Robert Reich). More than even Paul Krugman, Mr. Swern fleshes out his articles with lots of details and links, and so provides real grist for liberals and progressives to learn from. You are invited to email Bob Swern here.

Economic Forecaster: ‘Greatest Depression’ Coming

See Economic forecaster: ‘Greatest Depression’ coming, The Raw Story, August 20, 2010, by Daniel Tencer, excerpt quoted verbatim:

Collapse of middle class means there’s no fuel for recovery, Gerald Celente argues.

The US economic recovery in recent quarters is little more than a “cover-up” and the world is headed for a “Greatest Depression,” complete with social unrest and class warfare, says a renowned economic forecaster.

Gerald Celente, head of the Trends Research Institute, told Yahoo!News’ Tech Ticker that there’s no risk of a “double-dip recession” because the first “dip” never ended.

“We’re saying there’s no double dip, it never ended,” Celente said. “We’re looking at the Greatest Depression. There’s no way out of this without [rebuilding] productive capacity. You can’t print [money to get] out of it.”

Celente, who has been credited with predicting the 1987 stock market crash, the collapse of the Soviet Union and the subprime mortgage crisis of recent years, said the US and other developed countries can expect to see the sort of social unrest the world witnessed in Greece this year once government attempts to shore up the economy fail and lawmakers turn to “austerity measures” to plug gaping budget holes.

“You’re going to see it all over the world,” Celente said. “What they call austerity programs … What are they doing? They’re bailing out the banks and they’re making the people pay for it. And the people don’t like that.”

Celente pointed to a near-riot that took place last week in Atlanta when 30,000 people showed up to be put on a housing waiting list, saying that the event is a harbinger of what’s to come.

He also argued that the way unemployment is measured today masks a much larger joblessness crisis because “once you’re off the unemployment rolls, you’re no longer unemployed.”

Celente said the current unemployment rate, if it were measured as it was measured during the Great Depression, would be around 17.5 percent. And he expects that number to rise to around 22 percent in the coming years.

“One of the good businesses to get in to may be guillotines,” Celente quipped. “Because there’s a real off-with-their-heads fever going on. People are really fed up.”

Hire a Dedicated Worker
for Your Business in Northeast Ohio

SENDING IT OUT TO THE UNIVERSE: I NEED A JOB, by Evans Liberal Politics owner Paul Evans: Here in Wooster, Ohio, the three of us in this house have been trying to get jobs for six months now. And while the unemployment rate for those making $200,000 a year or more stands at a very tolerable 3.2 percent, for those making $20,000 a year or less, unemployment stands an an official 31 percent. That’s the official unemployment rate.

I’m looking for any reasonable work. I have a B.A. with an undergraduate G.P.A. of 3.44 from Miami of Ohio, a good school, and an “all-but-thesis” in fields that I am no longer interested in (geology), but this constituted for me an excellent, liberal education. I type 55 words per minute, can program web pages in three languages and can work with five, and will happily design a website for you, and have edited 12 books. I can help you with your book or other project in terms of style, word processing and editing. I can do a very credible job fixing or optimizing your computer, including problems with spyware, and I’ll do it for less. And I’ll do any sort of reasonable work and I am a fast learner and a hard worker who “gets it”. I have no symptoms of mental illness whatsoever and am in healthy condition. My resume can be downloaded here. If you have work for me, please email me or call 330-262-0571. Real work for a hard worker.

HEY UNIVERSE!!!

I’m very grateful to the Universe for my life. I think that only in America could I have had the happy, even fulfilling, life that I have led. But for me, so far, the American Dream has not materialized. Now that my mental illness is not a factor and I am functionally well, simply because I have the word “disabled” on my resume is no reason not to consider me. I’ve been afraid that so far in my job search, employers have perhaps not been taking me seriously just because of that little, poisonous word “disabled” on the resume, with a lack of much of a recent, successful work history. But a person sometimes has to have a long time-out in their work history, and sometimes, if the Universe wills it, if God is listening, a person can make a big time comeback. I’m willing to work in Wooster, Canton, Massilon, Mansfield, Orrville, Smithville, Akron, Wadsworth, Medina, or anywhere in Northeast Ohio and I’d certainly strongly consider relocating in the long run. You want hard work and loyalty? Consider hiring me, and you’ll never regret it. Please email me or phone 330-262-0571. Thanks for considering me.

I did want to say, despite the “dark” comedy by George Carlin below, I still believe in the American Dream. I still believe in the decency of people and the intelligence of the HR people making employment decisions. So I’m putting it out to the Universe: give me a chance and I’ll be your best, most dedicated employee. Now let’s listen to a little black humor on an American Dream that for many in our society, has gone badly wrong.

Serious Comedy on the American Dream

Warning: Obscenity. For Mature Audiences Only.

George Carlin: The American Dream

OR: Why the American Education System Will Stay "Broken"

"The American Dream": (This is a repeat due to popular demand.) George Carlin performs a brilliant and scathing monologue on our serfdom which may be his very best short effort. — 3:15. Scary stuff.

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