Robert Reich *The Next Crash. 10th Anniv. of the Great Recession, Sept. 15
"The Next Crash, Trump and his Republican enablers are now reversing regulations put in place to stop Wall Street's excessively risky lending," by Robert Reich, Sept. 2, 2018, Common Dreams.
-- "The richest 1 percent of Americans now takes home about 20 percent of total income, and owns over 40 percent of the nations wealth. These are close to the peaks of 1928 and 2007."--
September 15 will mark the tenth anniversary of the collapse of Lehman Brothers and near meltdown of Wall Street, followed by the Great Recession. Since hitting bottom in 2009, the economy has grown steadily, the stock market has soared, and corporate profits have ballooned.
But most Americans are still living in the shadow of the Great Recession. More have jobs, to be sure. But they havent seen any rise in their wages, adjusted for inflation.
Many are worse off due to the escalating costs of housing, healthcare, and education. And the value of whatever assets they own is less than in 2007.
Last year, about 40 percent of American families struggled to meet at least one basic need food, health care, housing or utilities, according to an Urban Institute survey.
All of which suggests were careening toward the same sort of crash we had in 2008, and possibly as bad as 1929...
The richest 1 percent of Americans now takes home about 20 percent of total income, and owns over 40 percent of the nations wealth. These are close to the peaks of 1928 and 2007.
The U.S. economy crashes when it becomes too top heavy because the economy depends on consumer spending to keep it going, yet the rich dont spend nearly as much of their income as the middle class and the poor.
For a time, the middle class and poor can keep the economy going nonetheless by borrowing.
But, as in 1929 and 2008, debt bubbles eventually burst. Were getting dangerously close. By the first quarter of this year, household debt was at an all-time high of $13.2 trillion.
Almost 80 percent of Americans are now living paycheck to paycheck.
In a recent Federal Reserve survey, 40 percent of Americans said they wouldnt be able to pay their bills if faced with a $400 emergency.
Theyve managed their debts because interest rates have remained low. But the days of low rates are coming to an end.
The underlying problem isnt that Americans have been living beyond their means. Its that their means havent been keeping up with the growing economy. Most gains have gone to the top.
It was similar in the years leading up to the crash of 2008.
Between 1983 and 2007, household debt soared while most economic gains went to the top. Had the majority of households taken home a larger share, they wouldnt have needed to go so deeply into debt...
After the 1929 crash, the government invented new ways to boost wages Social Security, unemployment insurance, overtime pay, a minimum wage, the requirement that employers bargain with labor unions, and, finally, a full-employment program called World War II.
After the 2008 crash, the government bailed out the banks and pumped enough money into the economy to contain the slide. But apart from the Affordable Care Act, nothing was done to address the underlying problem of stagnant wages.
Trump and his Republican enablers are now reversing regulations put in place to stop Wall Streets excessively risky lending.
But Trumps real contributions to the next crash are his sabotage of the Affordable Care Act, rollback of overtime pay, burdens on labor organizing, tax reductions for corporations and the wealthy but not for most workers, cuts in programs for the poor, and proposed cuts in Medicare and Medicaid all of which put more stress on the paychecks of most Americans.
Ten years after Lehman Brothers collapsed, its important to understand that the real root of the Great Recession wasnt a banking crisis. It was the growing imbalance between consumer spending and total output brought on by stagnant wages and widening inequality.
That imbalance is back. Watch your wallets.
Read More, https://www.commondreams.org/views/2018/09/02/next-crash
*New Urban Institute Survey, "Despite Strong Economy, Many Americans Struggling to Get By," AP, Aug. 28, 2018.
https://apnews.com/1d31cf4b56e449769ab4cb456237ea1f/Despite-strong-economy,-many-Americans-struggling-to-get-by
"The underlying problem isnt that Americans have been living beyond their means. Its that their means havent been keeping up with the growing economy. Most gains have gone to the top," Reich writes.
Turbineguy
(37,291 posts)Those who have no money in the markets? Those who are working and saving for their retirement? Those who are retired and have equity assets in the markets? The rich?
There are are some people around here who seem to rub their hands in glee over the prospect of the market crashing. But it hurts a lot more people than it benefits. And that includes the poor and those who have no money at risk in stocks.
Republicans always roll back regulations to benefit gamblers (with other peoples' money) and financial predators.
appalachiablue
(41,103 posts)So many opportunities to buy up businesses, property for peanuts when a big crash happens.
NickB79
(19,224 posts)They keep sufficient funds in safe havens (legal or otherwise) to insulate themselves from crashes. Then they swoop in and gobble up assets at pennies on the dollar. That's where the real money is made: buying cheap. And right now, there aren't any cheap assets to buy up anymore.
Make no mistake, the smart billionaires are salivating for a crash.
elleng
(130,732 posts)'reversing regulations put in place to stop Wall Street's excessively risky lending,"'
Here we go again.
Igel
(35,274 posts)For those who can remember.
nmgaucho
(527 posts)BigmanPigman
(51,567 posts)The question is "when" will it happen and not "if" it happens.
NickB79
(19,224 posts)Apparently I'm a goddamn Rockefeller in Trump's America.
Uncle Joe
(58,282 posts)Thanks for the thread appalachiablue