RSN Fundraising Banner
FB Share
Email This Page
add comment
Print

Reich writes: "American consumers account for almost 70 percent of economic activity, but they won't have enough purchasing power in 2016 to keep the economy going on more than two cylinders. Blame widening inequality."

Robert Reich. (photo: Perian Flaherty)
Robert Reich. (photo: Perian Flaherty)


The Economy in 2016: On the Edge of Recession

By Robert Reich, Robert Reich's Blog

06 January 16

 

conomic forecasters exist to make astrologers look good, but I’ll hazard a guess. I expect the U.S. economy to sputter in 2016. That’s because the economy faces a deep structural problem: not enough demand for all the goods and services it’s capable of producing.

American consumers account for almost 70 percent of economic activity, but they won’t have enough purchasing power in 2016 to keep the economy going on more than two cylinders. Blame widening inequality.

Consider: The median wage is 4 percent below what it was in 2000, adjusted for inflation. The median wage of young people, even those with college degrees, is also dropping, adjusted for inflation. That means a continued slowdown in the rate of family formation—more young people living at home and deferring marriage and children – and less demand for goods and services.

At the same time, the labor participation rate—the percentage of Americans of working age who have jobs—remains near a 40-year low.

The giant boomer generation won’t and can’t take up the slack. Boomers haven’t saved nearly enough for retirement, so they’re being forced to cut back expenditures.

Exports won’t make up for this deficiency in demand. To the contrary, Europe remains in or close to recession, China’s growth is slowing dramatically, Japan is still on its back, and most developing countries are in the doldrums.

Business investment won’t save the day, either. Without enough customers, businesses won’t step up investment. Add in uncertainties about the future—including who will become president, the makeup of the next Congress, the Middle East, and even the possibilities of domestic terrorism—and I wouldn’t be surprised if business investment declined in 2016.

I’d feel more optimistic if I thought government was ready to spring into action to stimulate demand, but the opposite is true. The Federal Reserve has started to raise interest rates—spooked by an inflationary ghost that shows no sign of appearing. And Congress, notwithstanding its end-of-year tax-cutting binge, is still in the thralls of austerity economics.

Chances are, therefore, the next president will inherit an economy teetering on the edge of recession.

e-max.it: your social media marketing partner
 

Comments   

A note of caution regarding our comment sections:

For months a stream of media reports have warned of coordinated propaganda efforts targeting political websites based in the U.S., particularly in the run-up to the 2016 presidential election.

We too were alarmed at the patterns we were, and still are, seeing. It is clear that the provocateurs are far more savvy, disciplined, and purposeful than anything we have ever experienced before.

It is also clear that we still have elements of the same activity in our article discussion forums at this time.

We have hosted and encouraged reader expression since the turn of the century. The comments of our readers are the most vibrant, best-used interactive feature at Reader Supported News. Accordingly, we are strongly resistant to interrupting those services.

It is, however, important to note that in all likelihood hardened operatives are attempting to shape the dialog our community seeks to engage in.

Adapt and overcome.

Marc Ash
Founder, Reader Supported News

 
+50 # revhen 2016-01-06 14:39
The scariest times of my adult life.
 
 
+50 # RGV.REG 2016-01-06 15:07
Since we, the 99.99% have less and less while the .01% are accumulating more and more, the most obvious solution is to stop the greed and spread the money to everyone. Then, we would all have money to spend... thereby stimulating business growth.
 
 
+12 # Caliban 2016-01-06 15:15
Sounds good in theory, but by exactly what methods do you propose this reallocation of resources be accomplished?
 
 
+29 # DD1946 2016-01-06 18:35
Proper taxing of the rich and corporations would work wonders. It did before.
 
 
+20 # Vegan_Girl 2016-01-07 07:00
The problem is that the 0.01% has captured Congress. (And the Supreme Court, and most institutions originally formed to protect the 99.99%) In effect, the oligarchy has destroyed our democracy.
 
 
-7 # Justice Lady 2016-01-08 05:55
True. Henry George had the remedy for that.
Do you have a reliable source of B12 & niacin? I know a vegan who got permanet nerve damge because she relied on tempe for her B 12. Only reliable natural sources for B 12 is animal foods. And niacin is only found in adequate amounts naturally in flesh foods.
 
 
-1 # Justice Lady 2016-01-09 21:19
THat's why palagraone of the original nutritional diseases caused by severe niacin lack was originally found in the poverty in the south where they were too poor to eat lean flesh foods.
I know someone who got lupis soon after becoming a vegan. That disease has been helped buy B-12.
That's why every native people, unless desperately exploited & impoverished, has some source of animal food & flesh food.
 
 
+24 # angelfish 2016-01-06 18:39
Quoting Caliban:
Sounds good in theory, but by exactly what methods do you propose this reallocation of resources be accomplished?

TAX REFORM! They SHOULD go back to the Tax rates of the Eisenhower Administration but I'm sure too many of them would scream and carry on like the Sissies they ARE. However, TAX their sorry a**es at 30 or 40%. They'll STILL scream but not as loud, and maybe, just MAYBE we might be able to turn it all around!
 
 
+1 # indian weaver 2016-01-07 07:19
What disgusting ignorance. The 1% owns the government. Get used to it. No significant tax increase on the 1% will ever again be possible. The Congress, and Administration I might add, are all sold out. We The People have absolutely no power and no impact on the government anymore, NONE.
 
 
+2 # fletch1165 2016-01-10 02:38
The corporate tax was 90% in the 1950's. They still made huge profits and the economy grew at an all time record.
 
 
+2 # Jim Young 2016-01-08 17:39
Quoting RGV.REG:
Since we, the 99.99% have less and less while the .01% are accumulating more and more, the most obvious solution is to stop the greed and spread the money to everyone. Then, we would all have money to spend... thereby stimulating business growth.


The 99% not have only less wealth but are much like the 99% of the French before the French Revolution when the selling of jobs (Venal Jobs) led to an extreme differential accumulation of wealth and power as those that "bought" the government jobs/levers of power were able to exempt themselves from taxes as they imposed whatever they wanted on those below them. The new twist seems to be that we not only allowed the government to be bought, but gave them Quantitative Easing equivalents of what used to be more like money that most of us think of, making them much more able to hold enough in the new (ridiculously low) reserve requirements (that we some how have agreed to pay them interest on since they can't otherwise invest that which we gave them/let them "create").

It seems they somehow now make money on what we gave them and can use it to incredibly, insanely irresponsibly, leverage into even more consumer debt they sucker people into accepting as we see things like the Mortgage Backed Securities bubble up in commercial property. How much of that will be useless over capacity leaving old school small investors more indebted than ever and pension funds gutted?
 
 
+2 # maindrains 2016-01-16 17:57
I read today that the EU has already put in controlson executive pay levels... they cannot exceed a certain percentage over their workers pay. Also jemeny Corbyn the leader of the Labor party in UK has proposed that companies be forbidden to issue dividends if their workers are paid below the "living wage" level. As the economy sinks further and it becomes more and more obvious that there will be no turnaround until ordinary people regain purchasing power more and more such proposals will be considered seriously.
 
 
+53 # tswhiskers 2016-01-06 15:21
Teetering? Those of us not in the top 10% are and have been in a recession for years. Thanks to cheap foreign labor, growing automation, loss of manufacturing, and the lack of disposable income for the majority of Americans what else could one call it? If you mean, Mr. Reich, that things could get worse than this I'd say that most Americans agree with you. As for the NEXT president inheriting a poor economy, Obama has been dealing with it since he first came into office. My only hope is that we'll get another Dem in the WH this year. A Rep. would REALLY wreck the economy for us. Is any of this news to anyone?
 
 
+2 # RLF 2016-01-07 06:57
We should be in the arms industry...I hear it is booming!
 
 
+4 # indian weaver 2016-01-07 07:21
"WE" are in the arms industry. "WE" are in the industry of Crimes Against Humanity and War Crimes. This industry is expensive and cannot be derailed. If America quit even a portion of the war industry, the government collapses. Like heroin, survival is dependent on addiction to war crimes and crimes against humanity, for Obama / dubya.
 
 
0 # Justice Lady 2016-01-07 13:22
In our sick & crazy economy & tax system this is true. But there is a solution.
 
 
+2 # fletch1165 2016-01-10 02:42
NO one sells more weapons than the United States and Israel. China once was the largest arms dealer. Its us now and our corporations that do are arch criminals feeding every war and conflict.
 
 
-2 # Justice Lady 2016-01-07 13:20
There is a "law of wages" which is tied directly into the margin of production & the only way to really raise that is to get to the root of the problem land speculation by fully taxing land & natural resource values. a Henry George outlines this in "Progress & Poverty" & his other great works. Tax anything man made & there will be lass of it. Tax land value & you have more of it availanle to those who would really use it. This effects the whole economy & scale of wages & is the only just & really workable solution.
 
 
+18 # Bruce Gruber 2016-01-06 15:38
Some traditional components of 'economic measure' are going to have to take a hit. ALL CHANGE IS PAIN, and the "ox" to be gored is interrelated. Delay of climatic destruction will require ENDING fossil fuel use. Added, and somewhat beneficial components, would be high speed global public transport and the end of resource competitive wars. Such a revolution would require a depression in the financial, military-indust rial and petrochemical complexes with growth in research, sustainable agriculture, renewable energy, and health sciences. Gains will not enough be enough to replace losses, but the excess accumulation at the upper reaches of our wealth pyramid may prove unnecessary in a changed world. Something's gotta give in ANY adjustment from our careless, exploitative, greedy misuse of our limited human and natural resources. Killing and stealing, whether legally justified or not, has proven far less than 'civilized'.
 
 
+1 # fletch1165 2016-01-10 02:46
As Isaac Asimov once wrote, we need a global carrot. Space is that carrot. The amount of wealth that can be gained from space should be enough to satisfy these goons. But they want cheap easy profits instead. We must end their cycle of violence and resource stealing somehow. its time the country wakes up from its malaise. Do we really have to wait for the tipping point, when the elites are finally targeted and murdered in French Revolution II. No, another way must hopefully be possible.
 
 
+8 # video4315 2016-01-06 16:18
There is no mention of banks and investment firms. The "too-big-to-fai l" status of most of the firms is even more so than in 2008. Much of our recent prosperity has been due to the falling prices of natural gas and oil, whose lower cost is masked by the damage to the environment to get it. The third rule of life is "There is no such thing as a free lunch."
 
 
0 # Jim Young 2016-01-09 21:07
Quoting video4315:
...Much of our recent prosperity has been due to the falling prices of natural gas and oil...


And it seems it will be like the last time there was so much overproduction (drill baby, drill this time) that they have again run out of places to store it. That happened in the summer of 2008 right after I remember paying $5.20 a gallon for Diesel. The Strategic Petroleum Reserve was as full as it could get, all the available tankers were in use with many anchored off shore since there was no place to unload their cargo and the Saudis, accused of cutting production to 70% to try to jack up prices had no place to put any more they could produce but not ship or store. Our college students and a lot of workers couldn't afford the gas to get to school or work if too far away earlier in the summer (exaggerating the lowering fuel usage that let the storage capacity fill to the brim. As they dropped the price to help get rid of the excess, and use refineries (actually more like chemical plants by then) for the other products they produced, the price dropped to a non maintainable low of $1.89 by the time Obama took office. Consider those energy and financial conditions with the current (too similar) conditions described at http://www.nakedcapitalism.com/2016/01/2016-oil-limits-and-the-end-of-the-debt-supercycle.html
 
 
0 # fletch1165 2016-01-10 02:51
China is not buying the fuel we produced and were going to sell them. Instead they closed a large number of factories since Americans cannot even afford to buy much at Walmart. This is the reason they voluntarily devalued their currency and we have no place to sell the product, and store the now reserve oil we overproduced in tanks in the Midwest. The prices at the pumps are lowest in a long time as a result. As a result oil investments are only returning 25% the yield of one year ago. This is why we are headed into recession. All stocks are fundamentally linked to the petroleum industry and will feel the reverberation since we are an oil based economy. Mismanagement by greedy self-serving elitist people is the only blame again.
 
 
-40 # MidwestTom 2016-01-06 16:39
Everybody talks about higher taxes on the high earners. That alone solves little, because those with 100's of millions get to keep what they have, and the higher taxes will discourage those with the potential to make high incomes.

What we need is a balance sheet tax. Say 5% of one s net worth. A much fairer system.
 
 
+10 # reiverpacific 2016-01-06 17:05
Quoting MidwestTom:
Everybody talks about higher taxes on the high earners. That alone solves little, because those with 100's of millions get to keep what they have, and the higher taxes will discourage those with the potential to make high incomes.

What we need is a balance sheet tax. Say 5% of one s net worth. A much fairer system.


Is that like a "Flat tax" or "Poll tax"? as Thatcher tried to impose on the UK -to her final demise.
I'm an economic first-grader so I'm just asking' for info'.
 
 
+6 # RLF 2016-01-07 06:59
It would be great if we had a Social Security 'flat tax'...since I pay a much higher percentage than Donald Trump or the Cock Bros!
 
 
+1 # rayb-baby 2016-01-10 16:28
SS is a flat tax, but with a WAY WAY too low of a cap. Bernie is proposing raising the cap to $250k, which I think is still way to low. Maybe he's being realistic offering something that may have a good chance of passing ....... once he's in the WH ....... hopefully.
 
 
+10 # RNLDaWy 2016-01-06 17:59
Higher taxes in % to the upper 1% does not dent them one bit .. Obama et al wanted to increase on those above 250 G's a year which put the burden on the working middle slightly upper middle class .. that is the current scam bought into and run by both parties (Clinton Rates would be much better he had under his tenure) .. the 'taxes cause all the problems including stifling the economy is in accurate. Companies can not offere healthcare anymore and those middle incomes should not be getting the burden ... it amazes me Tom that you and others still buy into that horseshit .. as it all began with Reagan .. and those economies including his are all busted .. we have an egreiously growing cost of liveing not considered as inflation which is what it is on all all .. along with stagnant wages and a privatization of everything including governmental services all shopped out via tax dollars .. all a fucking LIE!!!
 
 
+7 # ericlipps 2016-01-06 19:58
Quoting MidwestTom:
Everybody talks about higher taxes on the high earners. That alone solves little, because those with 100's of millions get to keep what they have, and the higher taxes will discourage those with the potential to make high incomes.

What we need is a balance sheet tax. Say 5% of one s net worth. A much fairer system.

And you seriously think the wealthy can't game the system to reduce their on-paper "net worth" to zero?
 
 
0 # Justice Lady 2016-01-07 13:30
When you tax land value, it can't be hidden as other forms of wealth can be.It;s value can be readily known & it was not made by any man. It's value belongs to all & should be taken in a tax for all.Its value grows as the community grows because of the efforts of the whole community.
 
 
-1 # Justice Lady 2016-01-07 13:26
what we need is to fully ax what the community & God creates land & natural values. What the individula creates without monopoly should belong to the individual & not be taxed. Taxing labor & non monopoly cpaital discourages production , taxing land values opens up land (for those who desperately need it) a vital cocmponent of all production.We need to understand basic economic principles & no one understood it as well as Henry George, the greatest of all economists.
 
 
+19 # Robbee 2016-01-06 17:03
asks - # Caliban 2016-01-06 15:15 "Sounds good in theory, but by exactly what methods do you propose this reallocation of resources be accomplished?"

elsewhere says bernie - "Long term, we need to go further and establish public funding of elections … The defining principle of American democracy is ... every citizen having an equal say ... And that’s the kind of American political system we have to fight for!"

elsewhere says reich - Look Who's Buying American Democracy, Robert Reich, Robert Reich's Blog 08 December 15 "... How long before we make it work for all of us instead of a handful at the top? We must not let them buy our democracy. We must get big money out of politics. Publicly finance political campaigns, disclose all sources of campaign funds, and reverse “Citizens United.”

“Here’s the truth: The economic and political systems of this country are stacked against ordinary Americans. The rich get richer and use their wealth to buy elections, and I believe that we cannot change this corrupt system by taking its money. If we’re serious about creating jobs, health care for all, climate change, and the needs of our children and the elderly, we must be serious about campaign finance reform …
 
 
+19 # Robbee 2016-01-06 17:04
(cont'd)

yesterday concludes bernie - “We must pass a constitutional amendment to overturn Citizens United … We need legislation that requires wealthy individuals and corporations who make large campaign contributions to disclose where their money is going. And more importantly, I believe we need to move towards the public funding of elections.”
 
 
+12 # MidwestTom 2016-01-06 17:18
We are faced with a double whammy when we look at income inequality.
First, under the story of trying to help the working man our government has created Trillions of new cash, which has been put in the banks and the bankers have invested in non-job-creatin g, but lucrative, speculation. This additional money has also driven up the value of assets, which are mainly held by the individuals with large balance sheets.

Second, Our government has allowed Wall Street to become a casino. The purpose of a stock market is to facilitate the division of ownership in a company, and a place where companies can raise needed cash. Neither of these purposes are served when hedge funds buy and hold stock for 3 seconds to gain pennies per share aided by large computer systems and algorithms designed to leap in and out of trades in seconds and making millions doing so. A simple correction that would return Wall Street to it's original capitalistic purpose would be to impose a one week holding period on any stock purchase.

We need major changes in our financial system, and Washington insiders will not provide them.

All candidates say that they want to 'correct the imbalance', don't react to those simple words; listen to HOW they actually intend to do it;and then ask if you think that they really can given the ingrained structure in DC.
 
 
+2 # wrknight 2016-01-06 18:19
Quoting MidwestTom:
...Our government has allowed Wall Street to become a casino. The purpose of a stock market is to facilitate the division of ownership in a company, and a place where companies can raise needed cash. Neither of these purposes are served when hedge funds buy and hold stock for 3 seconds to gain pennies per share aided by large computer systems and algorithms designed to leap in and out of trades in seconds and making millions doing so. A simple correction that would return Wall Street to it's original capitalistic purpose would be to impose a one week holding period on any stock purchase.

How about a 5% sales tax on each transaction. That will slow the bastards down and help pay off the deficit.
 
 
+1 # RNLDaWy 2016-01-06 20:48
Heh. The DEFICIT. This is something you hear about Carly Fiorina she ran Hewlette Packard one of the worst computer companies standing .. that's what they talk about when they aren't in charge Fiscal Responsibility. Why did Bush W give all the surplus back? Why did Alan Greenspan say we don't want to pay off the debt too quickly? Because the debt is NOT that big a problem. It is Repub-lo-speek .. and sub to the other eco issues .. when economies are down and the world economy is down not just ours .. you stimulate and wait until the next boom .. otherwise you stagnate .. that's what's wrong with the susterity to Greece and blame created by the bankers of the EU .. their plan failed .. to shore up the weaker economies and absorb into the stronger .. however with failure ... now Greece is screwed .. same bad philosophy and analogy in my view ..
 
 
+2 # RNLDaWy 2016-01-06 20:55
And Tom my game is not to put forth my ideology necessarily. I just would like to see a representative democracy that represented it's regions counties .. cities .. and nationally .. the House should be cut up by population base .. that way we have a representative democracy per each segment with real elected officials ffrom the grass roots level on up .. representing people with local and regional issues that matter and effect them . and Not whether i agree with their platform or not .. it is that inalieable 'Right in a real Democracy to have that ....
 
 
0 # Justice Lady 2016-01-07 13:32
You're ignoring the real monstrousunseen villian, the land speculator encouraged by our tax laws. A great deal of the mssinations of the banks involve mortgaghes & the inflated price of land because it is greatly under taxed.
 
 
0 # RNLDaWy 2016-01-06 20:53
Refreshing input. I learned something from what you say here and it makes perfect sense about the ideology of how the stock market should work. It has gamed all our politico .. i still say .. Federal Money to grass roots candidates via taxpayer dollars .. at some point you get vetted by such and such rules ... you run on something in your region .. you get same amount of television ads the other Wall Street and Corporately backed candidates who can bury you now the way it is .. just do that you level the playing field and take the influence of money and fund raising out of the game .. just one idea .. but it can and would work ..
 
 
+9 # wrknight 2016-01-06 17:34
The oligarchs pay the politicians to make the rules and the politicians make the rules to make the oligarchs rich.

There's only one two ways to change that paradigm, but American voters are so gullible they will never figure out the easy way until it's too late.
 
 
+6 # joe_me 2016-01-06 17:58
Vote their sorry as_ out
 
 
+4 # wrknight 2016-01-06 18:46
A strong economy matters only to the 99%. The 1% who have it all and control government and the economy don't give a shit.
 
 
0 # RNLDaWy 2016-01-06 23:06
Don't think problem relies on voters are responsible. I dont' buy that and hear it a lot. That's like saying a kid is responsible for having bad parents. In that sense we can't do shit about it. Truth is you have to offer something to bring the voters to the table otherwise they dont' give a shit and rightfully so!!!
 
 
+4 # RNLDaWy 2016-01-06 17:55
People already have forgotten that the model that died in '08 was a Republican version of Reaganomics and much of the dereg put in place by Clinton to satisfy the Repub controlled House and Senate ... which they controlled until 2008 from 1995. Obama et al shored up the sinking ship .. now all is forgotten .. and if the Economy dips in '16 you can bet that the Dems are a sinking ship again .. considered 'dead in the water' ...
 
 
+10 # Robbee 2016-01-06 18:05
yakking while blocking what bernie says, goes - # MidwestTom 2016-01-06 17:18

"We are faced with a double whammy ...

"First ... our government has created Trillions of new cash, which has been put in the banks and the bankers have invested in non-job-creatin g, but lucrative, speculatio ...

"Second, Our government has allowed Wall Street to become a casino ...

"We need major changes in our financial system, and Washington insiders will not provide them.

"All candidates say (yadda, yadda)"

- bernie is alone, that i know, in proposing a tax on speculaion! tom, before you go around criticizing all candidates, please check out bernie's proposed tax on speculaion! thanks!
 
 
+7 # angelfish 2016-01-06 18:34
Unfortunately, too many Americans are CLUELESS about this kind of dire Economic eventuality because they're already over worked, under paid and forced to scramble just to make ends meet. Many think that Trump is their "Great White Hope" but he's a flash in the pan with NO intention of helping ANYONE if it doesn't increase his OWN Gazillions. Bernie is our Last, BEST hope to bail ourselves out of the quagmire caused by and magnified by, the ReTHUGlicans in our Congress who have done NOTHING for Americans since Reagan's Administration, compounding their ineptitude during the "shrub's" appointment and shaming themselves even further during President Obama's TWO TERMS. Finally getting the votes they need to repeal the A. C. A., Affordable Care Act, CALL IT WHAT IT IS! It it NOT something snatched out of the air, it's a RePublican Plan and I can't for the life of me understand why if they didn't like it as is, WHY wouldn't they WORK with the President to IMPROVE it? I think it's because they Hate this President MORE than they care about this country OR her people and I hope that our good God in Heaven DAMNS them ALL to Hell for it!
 
 
+4 # no2oil 2016-01-06 18:41
"American consumers account for almost 70 percent of economic activity", is part of the problem. Consumption is fine and well enough, so long as it's sustainable, but a healthy economy must be in synch with social and environmental priorities.

What is needed is not more consumption of non-essential items, rather a massive and emerging economic public and private sector opportunity to transition to a clean energy economy, and one that offers many new well paying jobs which do not require every worker to have a graduate degree. Examples: national infrastructure renewal, solar and other clean energy replacements of fossil fuels, a national power grid renewal, deployment of advance and available technologies to address climate change challenges, the list is nearly endless. But with a congress mostly controlled by old order investment interests, this needed transition will likely be incomplete and too slow to matter or benefit most Americans.
 
 
+4 # Robbee 2016-01-06 19:42
nonsense! - # MidwestTom 2016-01-06 16:39
"... higher taxes will discourage those with the potential to make high incomes."

- tom, you are a dupe of zombie lies! lies that return from death! zomblicans say it again and again, without end - so you believe it? are you brain-washed? do you believe wealth trickles down? what else?

* lower taxes lower the risk of doing nothing with wealth! - as they say, sitting wealth on the sidelines! - higher taxes force investors to gamble on entrepreneurs! *

sorry, tom, zombies have feasted on your brains!
 
 
-2 # RMF 2016-01-07 09:57
Great admirer of Reich, but there has never been a recession at same time the economy is adding 200,000 plus jobs per month. Indeed these two are analytically opposites. And when we look at China what do we find in Chinese stock market performance -- for all of 2015 the Chinese stock market gained about 7 percent -- yes, that's right, for the entire year it was up 7 percent. Admittedly it was a rocky ride with extreme volatility, and many market timers and other speculators lost tons of money. But calling a recession in the US is way premature at this point, and contrary to fundamental data. A recession is economic decline, or negative growth -- whereas the US economy has been growing at a decent rate, and job growth has been quite good. Another thing to remember -- don't believe what the business press reports -- they are just part of the Main Steam Media complex and don't do any research and in general are ignorant on the subject of which they pontificate, and in fact prefer sensationalism over sound reporting. What we are seeing now are a horde of "chicken-little s" and also scare tactics from those with vested interests -- the hot money seeking to encourage a sell-off so they can replace their portfolio at a reduced cost, and make a ton of money in the process.
 
 
+3 # wrknight 2016-01-07 10:16
Quoting RMF:
Great admirer of Reich, but there has never been a recession at same time the economy is adding 200,000 plus jobs per month. Indeed these two are analytically opposites.

Not true. You can add lots of jobs at the bottom of the wage scale and still have recession because those jobs you added don't contribute significantly to the GDP which is how we measure our economy.

(Serfdom does not raise GDP.)
 
 
0 # Justice Lady 2016-01-07 13:34
Depressions are always directly caused mainly by persiods of high land speculation . Read "Progress & Poverty" by Henry George.
 
 
+1 # RMF 2016-01-07 10:04
Contd.
And yes, we do need a transaction tax on Wall St, especially on speculative or short term trading, but most importantly this should extend to futures and derivatives trading -- I worked in that field as a regulator for 30 years, and the industry, through it's lobbyists, has always successfully resisted any kind of govt imposed fee or tax -- yes, you read that right, there is no public transaction fee or tax of any kind on futures/derivat ives trading, which, by definition, is speculative in nature, and in terms of being a casino dwarfs even the stock market -- the largest traded futures contracts are Eurodollars, the S&P 500 Index, and other financial instruments -- it's no longer about corn, soybeans or pork bellies. And also the anti-trust regulators have also unwisely allowed consolidation and merging of the securities and futures exchanges, which reduces competition among them.
 
 
+2 # RMF 2016-01-07 10:12
And finally:
Bernie Sanders has the best economic proposals of any of the candidates seeking nomination. And that is why I fully support Bernie Sanders. Some degree of speculation is normal, and perhaps within bounds of rationality to be expected, but it has become excessive in the extreme, to the point of increasing volatility to a dangerous degree, and destabilizing market equilibrium and performance.
 
 
0 # Robbee 2016-01-07 11:44
thanks for sharing your insight!, i agree that - # RMF 2016-01-07 10:12 "... Bernie Sanders has the best economic proposals of any of the candidates seeking nomination..."

i share your concern that = # RMF 2016-01-07 10:04 "... we do need a transaction tax on Wall St, especially on speculative or short term trading, but most importantly this should extend to futures and derivatives trading ..."

only i would extend the tax to all market and bank transactions, including currency, here, or by corporations ever based in america, abroad - to stop the shell game - say 1/2000th - or one penny for every $20.00 - so as not to influence stock prices - i know this is radical here in america; but so is any transaction tax - based on several trillions in transactions daily, i suspect such a transaction tax would raise enough bucks to buy public college ed for all students, plus start to pay down existing college debt - RMF, as a former regulator, what do you think?

finally i wonder if reich is a # RMF 2016-01-07 09:57"... "chicken-little "

- in a slowing world economy, absence of savings, stagnant wages, cannot american consumers still save us from inability to afford to consume expected loss of export income? save us from recession? - foreign nations seem to buy our arms at record levels - the new big dig will hike our farm exports - nobody but paul wants small government, tho for zombies big gov't is big military; so gov't spending is rock-solid stable - just asking!
 
 
0 # RMF 2016-01-07 12:43
As some have pointed out the purpose of the stock exchanges is to facilitate raising capital for real business investment. It is thought, with some merit, that a reasonable level of speculation is not only needed but even healthy as a self-regulating measure to balance buying and selling activity on the futures and securities exchanges. However, short term trading, market timing, and other speculative trading has become excessively high in recent years, as regulators have pandered to the trading desks on Wall St and in foreign financial centers. Once again large block trades (those are trades more than 10,000 shares in size) are growing rapidly on the NYSE, which is a danger signal that speculation is once again getting out of hand -- prior to the Great Recession of 2007-2008 large block trades reached a level of 50 percent of total NYSE trading.
While I support a securities, futures, and derivatives transaction tax as a means to finance public investment in the safety net, in infrastructure, and other public works it is not sufficient to dampen excessive speculation. Instead, to implement a speculative stabilizer, it would be a better palliative measure to tax speculation and short term trading at ordinary income tax rates. This would reduce volatility, and restore the main purpose of stock and derivatives markets as an investment medium, not a free-for-all gambling casino.
 
 
-1 # RMF 2016-01-07 12:52
It is incorrect to think that the economy can experience good job growth and be in recession at the same time. GDP is measured as total spending. When jobs are added the additional income is spent, increasing GDP (measured as C+I+G.) During the Great Depression unemployment reached 25 percent, and more recently during the Great Recession I believe it reached something like 10 percent. The swing variable, which explains most of strong GDP growth is the I (Investment) variable, which ironically is the smallest of the three components of GDP. But it seems implausible that job growth could be strong at same time that I is tanking. Reich may be saying he expects such a sharp drop in I, that the feedback loop will cause a reversal in job growth numbers. A valid theory, but one I think highly ubnli8kely in present US and global circumstances.
 
 
+4 # Buddha 2016-01-07 13:08
And how convenient, all right before the 2016 election where the GOP can claim it is all "because of Obama and Socialism". And rubes will once again eat it up, and vote for more of the same Trickle-Down we've been under for almost 40 years now...
 
 
0 # Justice Lady 2016-01-07 13:37
More of the same all right, Republicans , Democrats, neither have any real solutions because Henry George has been ignored & surpressed by the powers that be in both partys & the colleges etc. Go to www.Henrygeorge.org or www.arwerp.org or www.henrygeorgeacademy.org.
 
 
+3 # Vardoz 2016-01-07 14:09
If Hillary becomes president and supports the TPP and citizens United and She has already taken big donations from Wall St which is on thin ice or if a Republican, gets in I think there will be a Great Depression - way past a recession. With both the job killing, out sourcing corporate take over of the TPP which Hillary has always supported until she saw that Bernie Sanders was
getting more support for his position against all job killing trade agreements, citizens united and un-livable wages in the richest nation in
the history of the world + corporations
not paying taxes & getting gigantic subsidies, the 99% will be left on an
economic ash heap. Corporations will lose too. Bernie is the only one who can't be bought, is already 70 million dollars + strong - more than Obama during the same election cycle and has no PACS or corporate donors- the 99% gets it- the game is rigged against us and ENOUGH IS ENOUGH! We do not want to be impoverished to enrich the top. VOTE FOR BERNIE SANDERS LIKE YOUR LIFE DEPENDED ON IT CASUE IT DOES. We also need to work on changing the house and senate- its just as crucial.
 
 
-1 # Robbee 2016-01-07 21:21
says - # RMF 2016-01-07 12:43 "As some have pointed out ..."

beg your pardon! did you just say that capital gains are not taxed? how can that be?
 
 
0 # Robbee 2016-01-07 21:48
says - # RMF 2016-01-07 12:52 "... Reich may be saying he expects such a sharp drop in I, that the feedback loop will cause a reversal in job growth numbers ..."

- we may get a clue whether we may be headed to recession tonight, when chinese markets open without the usual protocol to automatically shut down in the event of decline over 7% - NPR says our markets are reducing risk - which i take it to mean we are massively selling off chinese stocks! dump everything! - chinese gov't may do some massive capital intervention?

- a chinese curse - may you live in interesting times!
 
 
0 # Robbee 2016-01-07 22:07
says - # Buddha 2016-01-07 13:08 "And how convenient, all right before the 2016 election where the GOP can claim it is all "because of Obama and Socialism" ..."

- reich pointed out the slow-down that yellin's fed may cause by raising interest rate despite lack of full employment or inflation - yellen noted that prices rose 2% but with gasoline falling i can't quite see how that can be - if our ecomomy slows i hope she leaves it at 1/4%
 
 
0 # Robbee 2016-01-07 22:27
says - # Vardoz 2016-01-07 14:09 "If Hillary becomes president and supports the TPP ..." (which her union buddies will not allow!)

- there is little any dem prez can do until bernie and we overthrows our plutocrat rulers - congress' primary concern is reelection, they secure reelection by begging billionaires for campaign funds, listening to them and doing their bidding - bernie proposes a constitutional amendment that public funds, only, all federal, state and local elections - no private funds allowed! no ads by anyone other than the candidate! - bernie's con-am overthrows our 1% masters!

as a wise man once said - Robert Reich, Robert Reich's Blog 04 January 16 "Bernie Sander’s presidential campaign is part of this mobilization ... no single president or any other politician can accomplish what’s needed because a system caught in the spiral of wealth and power cannot be reformed from within. It can be changed only by a mass movement of citizens pushing from the outside.

“So regardless of who wins the presidency in November and which party dominates the next Congress, it is up to the rest of us to continue to organize and mobilize. Real reform will require many years of hard work from millions of us.”
 
 
+2 # Robbee 2016-01-07 22:37
reich, pt. 2

moreover says - Look Who's Buying American Democracy, Robert Reich, Robert Reich's Blog 08 December 15 "... How long before we make it work for all of us instead of a handful at the top? We must not let them buy our democracy. We must get big money out of politics. Publicly finance political campaigns, disclose all sources of campaign funds, and reverse “Citizens United.”

not that there's anything wrong with bernie becoming prez, it's what i prefer and phone bank for - but bernie's dream and mine is restoring democracy! - vardoz, lets keep our eyes on the prize!

as bernie puts it - “Long term, we need to go further and establish public funding of elections … American democracy is not about corporations and billionaires being able to buy candidates and elections. It is not about Wall Street and big oil or the Koch brothers and Sheldon Adelson spending billions of dollars to elect candidates who will make the rich richer and everyone else poorer. According to media reports the Koch brothers alone, one family, will spend more money in this election cycle than either the Democratic or Republican parties. This is not democracy. This is oligarchy. The defining principle of American democracy is ... every citizen having an equal say ... And that’s the kind of American political system we have to fight for!”

listen to bernie! - go bernie!
 

THE NEW STREAMLINED RSN LOGIN PROCESS: Register once, then login and you are ready to comment. All you need is a Username and a Password of your choosing and you are free to comment whenever you like! Welcome to the Reader Supported News community.

RSNRSN