Let's for the sake of this post just put the gains of the stock market where they belong , only of interest to the very rich who primarily benefiting from the run up of the market fueled by over 3 trillion dollars of newly printed greenbacks that went straight to the banks who promptly started pumping up Wall Street till it reached heights many believe are unsustainable.. at nearly double normal P/E's there is no doubt that a crash is coming and probably very soon. I don't make time predictions I instead try to guess the order of events over time.
So we shall consider things only of importance to the every day folks trying to maintain an upright position thruout this turbulent time. Let there be no doubt that I believe it was crooked banks and mortgage brokers who tailored this crisis to their own benefit. Some , of the economists I trust blame it on the government either too little regulation or too much regulation , I on the other hand think the banks are the one's with the most fault. They committed felony after felony using phony data to qualify folks who in normal times would not have been qualified for a loan. How many of the housing loans were of this nature is hard to say but if you look at the number of foreclosures you can get a feel that it was in the millions. That was a terrible thing they did but not the worst thing. The worst was building the derivative packages out of the junk mortgages packaging them with just enough decent loans to enable the rating companies to give them an A rating signifying were investment grade bonds knowing for well they were really junk. The rating they all knew was false. How they got so many money managers to buy this junk still amazes me considering how much danger they inflicted on their pension funds and city monies on this stuff. Throughout the world manager after manager bought this junk and bankrupted their countries forcing the citizens to eat the debt instead of the banks that caused the problem . How big was the problem , nobody can actually put a number on it but estimates have from 600 trillion to a quadrillion dollar problem . If that was not bad enough, housing prices shot up 15 to 20% per year giving many equity in their homes the banks convinced them was their money and liberally gave out second mortgages that also turned out toxic in the end. This is obviously the end of the train that was planned and carried out over 30+ years with unfortunately pretty successful.
How did we get into the mess we are in. To understand it you have to go clear back to 1980 and the election of Ronald Reagan, bringing with him the Free Market babble that him and Stockman and cronies sold the public. Singing the song that we were entering a new age of white collar jobs that would replace the blue collar jobs that built our middle classes.. Among his first act was to bust the Patco union of air traffic controllers that started the onslaught of union busting that drove union participation from the mid 30's to 7 %. Production jobs and the companies started fleeing the country looking for cheaper labor costs. As those jobs disappeared what replaced them in general were low wage (minimum wage most of them) jobs that dropped house hold income as much as $5000 a year present day. Some folks retrained and got positions in white collar jobs that soon started to disappear to foreign soil too, leaving our work force trying to make ends meet without a lot of success.
We arrive today at the beginning of another year and from the description above you know we are not in good times. We are told that GDP increased by 3+ points while all the major companies are reporting their November and December were not very good. Knowing that we consumers are 70% of demand and that half of the households are making 50K or less, a lot with only one wage earner are below 30K we will you immediate doubts about the Gov's GDP numbers. In actuality GDP has been positive only one time since 2001 as shown by Shadow Stats.
It is pointed out often that we are doing just fine, look at the stock market up a ton last year. Of course they are hoping that you figure that means your are doing well. How come we are not? Several factors are easily seen to be a major contributor to our lack of well being. The average family has lost $5000 of income in the last decade while inflation measured with the old formula is running close to 10% verified to be closer to reality than government numbers every time we go to the grocery store. A pictorial view of food inflation , seems about right to me.
The loss of 8 million manufacturing jobs and 60000 factories have left us throwing away several generations of our people. The latest college grads can't find work or if they do the job pays so poorly a large chunk of them have moved back with their parents. Sooner then these grads know they will be considered out of the work force too long to be of use to anybody.. What are they to do? then you have the 50 and over crowd you can't find work doing anything.. You find some at fast food joints or Walmarts but they are the lucky few of this age group able to find any work. The rest are just screwed. I know of some who have been looking for work for 4 years without a bite and some of these have 10 and 15 years in the business , their age kills any chance of them finding work.
Meantime back in the republican bunkers they are finding more ways to kill what little is left of the middle class. Take a city like Detroit where the latest news from the appointed City Manager is intending to remove health care from 20000+ retired city workers, and reduce payments to their pension fund by 75%. Seems fit to mention here that those benefits were gained under negotiated contracts that the city believes can be just thrown out the window. False stories are published every day saying how these greedy union workers have demanded too much and their pension funds are sorely underfunded ( which is just more Voodoo economics) If funds are short it is because the city and states have not been paying their share into the funds for a long time. These 30 year estimates are so wacky nobody should ever believe even one of them. Same kind of math that has been used to figure derivatives is being used to same these funds are underfunded. The attack on teacher's pushed by mainly republican governors has destroyed many schools and teachers while not making a thing better.
We now live in a country where every thing about our daily lives is noted by some device to be used for God knows what. Sure it may be mainly to sell us stuff but once the data is out there anything is possible. Way too many under the blanket programs are running out there listening in to, or video recording every moment of our lives. Soon thousands of drones will be flying our skies probing into our secret places, no more playing grabass with your love in the weeds.
We are saddled with a Supreme Court whose decisions over a decade or two have stripped us of our rights and giving corporations unlimited access to our politicians because after all they are people too? They stole an election giving us 8 lovely years of Bush/Cheney and a couple of wars we didn't need.
We are saddled with a congress who have done damn near nothing for for the last 6 years. A Congress manned by varying degrees of lunatics pursuing the agenda of their corporate masters caring not what we need and want. In most cases no amount of citizen action seems to be able to sway their minds. They plod on uncaring of what we say or think about them.. Without a way to break the corporate hold on our lawmakers the ruse will go on forever.
The parallels between 1914 and 2014 are many. Corporate strangle hold on government, monopolies abound, bubbles blowing around us, a restless world with trouble spots in lots of places. Budget problems similar to the Great Depression. Even though they call our current downturn a Great Recession, it more resembles the Big D. I believe the downturn is not over yet and the conservatives aided by a complacent democratic party and president will strangle us with more austerity driving us into the final leg of the 2nd Great Depression.
How do we get out of this mess.. The usual fix is a great war. WW2 is given credit for our recovery from the GD. A war might have fixed the first one, but times are different today. Nukes all over the place change the balance sheet as to the possibility of using war as a growth tool. We may still be the strongest in war capability and we could certainty nuke em, but getting nuked back would surely put and end to this mess, unfortunately the world end too. We have proven 3 times in recent history we cannot win a land war anywhere, Nam, Iraq and Afghanistan have been abject failures and they had punk armies. Our biggest possible enemies are much better equipped land army wise but all are left without a way to move large armies across seas. So scratch wars , they are just not survivable.
By now you should know the whole world is in the same mess, caused by the same few institutions and people. They are intending to make us pay for their misdeeds and so far have done so in much of the world. A few countries such as Iceland have shown us how not to do that. So far we haven't learned that lesson.
There is only one way I can think of to fix this mess and it could be done world wide. A mass effort to bring the world power to their knees is the only choice. To bring them down you have to put their wealth in danger. All the money in the world will not buy the services they need from us. A week of not buying anything , or going to work would bring them around pretty quick. Problem is how to pull this off. At present most don't seem inclined to do anything but take it. But as we have seen the more they take from us the more they want. They will reach a point where "WE THE PEOPLE" will stand and say enough. It will take a strong leader to take command in just one country and step forward and call for the masses to stand up and scream "I'M MAD AS HELL AND I WON'T TAKE IT ANY MORE. WITH YOUR HELP IT COULD HAPPEN