Housing prices are falling again and the pundits are talking double dip, indeed that’s what the graph looks like. Of course there never really was a recovery in the housing market. Government aid to first time buyers boosted sales for a time but the glut of foreclosed homes will take 9 years to work through and that’s without things getting any worse.
The underlying causes haven’t been fixed and unemployment remains high, this allows the corporations to continue driving down wages while Republicans push for severe public sector wage cuts. There is a whole school of thought on this pushed by conservative economists called “austerity driven growth.” It’s not a new concept but it does require a belief in magic even more than trickle down economics. You probably haven’t heard of it because it left the mainstream after Herbert Hoover drove wages down by 50% in 1929 so that by 1933 the Great Depression was in full swing.
Cutting back and saving money sounds good because they always describe it as if the country worked like a family budget. To make the comparison work you would send half the kids to live outside and go without food so that you’d have more money to give to your rich neighbor.
Conservatives keep chanting that we have a “spending problem” and need to cut back. Tax revenue compared to GDP is at a record low, what we have is a revenue problem. According to the Financial Times, if we had Clinton era tax revenues we would again run a surplus again. Who do you think buys all the Treasury bonds? No, it’s not China, they stopped buying them years ago, it’s rich people who clearly don’t need to money to “create jobs” because Treasuries pay almost nothing.
We had barely 3% growth in GDP last quarter and it was a “good” quarter, this quarter isn’t likely to be as good. The 2% payroll tax that was supposed to stimulate the economy is going straight into peoples’ gas tanks and from there straight into the pockets of Wall Street speculators.
China had 9.8% growth last year and for them that’s not very good. We had an 8% growth in the number of millionaires while the middle class shrank. The money to create millionaires has to come from somewhere and there isn’t any growth in the economy. The big fish continue to get bigger while the middle class guppies disappear. www.prairie2.com