Robert Reich: It's a Depression

[BurtWorm]

http://tpmcafe.talkingpointsmemo.com/talk/blogs/robert_reich/2009/04/its-a-depression.php


It's a Depression
April 3, 2009, 9:51AM

The March employment numbers, out this morning, are bleak: 8.5 percent of Americans officially unemployed, 663,000 more jobs lost. But if you include people who are out of work and have given up trying to find a job, the real unemployment rate is 9 percent. And if you include people working part time who'd rather be working full time, it's now up to 15.6 percent. One in every six workers in America is now either unemployed or underemployed.

Every lost job has a multiplier effect throughout the economy. For every person who no longer has a job and can't find another, or is trying to enter the job market and can't find one, there are at least three job holders who become more anxious that they may lose their job. Almost every American right now is within two degrees of separation of someone who is out of work. This broader anxiety expresses itself as less willingness to spend money on anything other than necessities. And this reluctance to spend further contracts the economy, leading to more job losses.

Capital markets may or may not unfreeze under the combined heat of the Treasury and the Fed, but what happens to Wall Street is becoming less and less relevant to Main Street. Anxious Americans will not borrow even if credit is available to them. And ever fewer Americans are good credit risks anyway.

All this means that the real economy will need a larger stimulus than the $787 billion already enacted. To be sure, only a small fraction of the $787 billion has been turned into new jobs so far. The money is still moving out the door. But today's bleak jobs report shows that the economy is so far below its productive capacity that much more money will be needed.

This is still not the Great Depression of the 1930s, but it is a Depression. And the only way out is government spending on a very large scale. We should stop worrying about Wall Street. Worry about American workers. Use money to build up Main Street, and the future capacities of our workforce.

...

[datasuspect]

1. why would any politician worry about the average everyday worker?

-the average everyday worker is not in communication with the ownership class

-the average everyday worker has no influence to peddle

-the average everyday worker cannot pony up the REAL funds necessary to run a political campaign

-the average everyday worker can make more money for the machine by being in prison or in the military than by working anyway. all they do is gobble up money that should be counted as profit to begin with.

[Deja Q]

32. Then what's the point of voting?

[datasuspect]

35. to give people the impression that they have some form of control over their destiny?

[lapfog_1]

2. Thanks for playing Robert...

but Robert Reich is one of the architects of the current "depression".

He was one of the cheer leaders of the Free Trade crap that has caused the US to become a "service economy" that makes nothing and now, does nothing.

I remember every time he would get on the TeeVee and promote Free Trade, someone would say "so what do we do with the people who were making a decent wage as a blue collar manufacturing worker and he would say "we retrain them, we have a component in this (bill/trade agreement/etc) to allow them to be retrained!" and NO ONE would ask the natural follow on question "WHAT THE HELL ARE THEY RETRAINING FOR? WHAT JOBS?" not to mention the further follow on... "What about the people who don't have the potential for higher education, or the desire?" Those questions were NEVER asked. And this asshat was allowed to get away with his "we'll retrain them for the new economy" statements. Bullshit. There never WAS a new economy, it was all smoke and mirrors. Free trade killed this country. Only undoing it will maybe save it. Maybe.

[AllieB]

3. I believe it was Robert Rubin, and not Robert Reich who was the freemarketeer

Reich has always been a Keynesian.

[BonnieJW]

5. You're right.

Robert Reich was never for free trade. He was always for the worker and unions.

[lapfog_1]

19. Try a few links...

http://www.ontheissues.org/Governor/Robert_Reich_Free_Trade.htm

http://rwcs.com/blog/?p=1622

http://www.brainyquote.com/quotes/quotes/r/robertreic381813.html

Read these and then tell me how he was "never for free trade".

I have a long (and very good memory).

[TBF]

24. Correct - Robert Reich was Labor Sec under Clinton - but he is an

economist and sometimes confused with Robert Rubin. The two hold very different views.

K&R for this OP - Robert Reich is correct.

[LSparkle]

6. Thank you! See my post below ... I was confused by that, too

Reich was LABOR secretary, for Pete's sake -- why on earth
would he have been pushing "free trade"????

[HughBeaumont]

38. Er . . . Elaine Chao was Bewsh II's labor secretary.

She's also a former Heritage fellow and is a massive laissez-fail Free Trade and job offshoring stooge. Kind of a strange stance to take for someone overlooking the . . . LABOR . . . of this country.

Doesn't really matter who they are. A Free Marketeer is a Free Marketeer.

She's also married to the turtle Pale Man look-alike that's currently stenching up TV screens every 4-5 days (Mitch McConnell).

Robert Reich has argued in the past for free trade and took the position of PRO-offshoring on news programs in the past. I remember his debate on a cable news show with a laid off US tech worker . . . one of Indian descent, ironically. He didn't do himself or Clinton's economic policies toward blue-collar workers any favors.

[lapfog_1]

14. No, he may be a Keynesian and he was Labor Secretary

but he has also been ALL OVER the TeeVee promoting the Clinton Free Trade policies. Always with the explanation that this was going to be good for the US to outsource those unskilled labor jobs while "trading up" to more highly skilled jobs here.

I'll find some youtubes (maybe) of him saying those EXACT words.

And, yeah, Robert Rubin was/is a Piece of Shit as well.

But I'm not confusing them.

[HughBeaumont]

39. I can vouch for this actually.

I remember his debate with Sonah Shah, a laid off US tech worker on CNN or NBC or one of those. Robert Reich, not Rubin, DID take the stance that offshoring is a positive for the US overall and that the laid-off blue collar workers would move into technology/new manufacturing positions. Trouble with that is, there are very few location-safe positions that pay a living wage anymore thanks to the Bean Counter cavalcade that run our businesses now.

Ms Shah kind of made Bob and his neo-lib free trade parroting look silly.

On edit . . . found the link: http://www.zazona.com/MediaClips.htm (halfway down the page from 2004 . . . dialup loads faster).

[LSparkle]

4. He was promoting "free trade" while he was LABOR secretary?

I don't remember him being a cheerleader for that, but if
so that's SO wrong. I've thought of Reich as a "good guy"
but if he wasn't smart enough to see that "free trade"
wouldn't benefit U.S. workers, then ... I may have to
reconsider my opinion of him.

[lapfog_1]

20. Yes, he certainly did.

Please google Robert Reich and Free Trade.

http://www.brainyquote.com/quotes/quotes/r/robertreic381813.html

[justaregularperson]

21. I remember it too. He was a big time free trader.

[HughBeaumont]

40. Jim McDermott and Jay Inslee were on the "Friends of India" committee with Hillary.

Both are free-trader champions and pro-job offshorers (as is Mrs Clinton); these are supposed to be two of the best Democrats we have.

Bob Reich argued the position of pro-job-offshoring on a cable news station. I remember watching it online several times.

http://www.zazona.com/MediaClips.htm (I think the dial-up loads faster . .. it's halfway down the page).

Democrats need to act like DEMOCRATS, not fly the flag for bad Republican economic policy. Whatever happened to THAT?

Seems to me there ARE no more good guys.

[mix]

13. fail

thanks for playing

[lapfog_1]

15. Really... your rebuttal lacks substance. - n/t

[mix]

16. you gotta point there

apologies

[Deja Q]

33. As does youe mea culpa. I was looking forward to reading something of substance;

I do read into both sides of any given topic.

Do you work for FOX news? They often have no substance. They sure do look mighty pretty, though.

[mix]

34. may i ask you something?

who is that person on your posts?

[HughBeaumont]

41. Er . . . no.

http://www.zazona.com/MediaClips.htm

Halfway down the page. Pretty telling stuff.

[Lydia Leftcoast]

29. In his defense:

1. He was one of the first to sound warnings about the roots of the current financial crisis. During the Reagan administration, he wrote an article in (I believe) The Atlantic, blasting what he called "paper entrepreneurism," i.e. making money not by providing products and services but by speculation, mergers and acquisitions, and dodgy financial products. In that article (I wish I'd saved it), he warned that this kind of economy was unsustainable.

2. "Free trade" was one of those ideas that sounds better than it really is. For a while, especially during the high tech bubble, it was easy to believe that former steelworkers could be retrained for high tech jobs, but then "free trade" moved even those jobs overseas.

[robdogbucky]

7. Not to put too fine a point on it, but

Someone has their Roberts mixed up:

In 1997, together with then-Federal Reserve chairman Alan Greenspan, Rubin strongly opposed the regulation of derivatives, when such regulation was proposed by then-head of the Commodity Futures Trading Commission (CFTC), Brooksley Born. Overexposure to credit derivatives of mortgage-backed securities was a key reason for the failure of US financial institutions Bear Stearns, Lehman Brothers, Merrill Lynch, American International Group, and Washington Mutual in 2008.

Arthur Levitt Jr., a former chairman of the Securities and Exchange Commission, has said in explaining Rubin's strong opposition to the regulations proposed by Born that Greenspan and Rubin were "joined at the hip on this." "They were certainly very fiercely opposed to this and persuaded me that this would cause chaos." <9> However, in Mr. Rubin’s autobiography, he notes that he believed derivatives could pose significant problems and that many people who used derivatives didn’t fully understand the risks they were taking. <10>

According to the New York Times, "In November 1999, senior regulators—including Mr. Greenspan and Mr. Rubin—recommended that Congress permanently strip the CFTC of regulatory authority over derivatives."<9> This advice was accepted and derivatives were kept clear of regulation by the CFTC.

http://en.wikipedia.org/wiki/Robert_Rubin


In 1996, between Clinton's re-election and second inauguration, Reich decided to leave the department to spend more time with his sons, then in their teen years. He published his experiences working for the Clinton administration in Locked in the Cabinet. After publication of the book, Reich received criticism for embellishing events with invented dialogue. The paperback release of the memoir revised or omitted the inventions.<8>

Reich became a professor at Brandeis University, teaching courses for undergraduates as well as in the Heller School for Social Policy and Management. In 2003, he was elected the Professor of the Year by the undergraduate student body.

In 2002, he ran for Governor of Massachusetts. He also published an associated campaign book, I'll Be Short. Reich was the first Democratic candidate for a major political office to support same-sex marriage. He also pledged support for abortion rights, and strongly condemned capital punishment. His campaign staff was largely made up of his Brandeis students. Although his campaign had little funding, he surprised many and came in second in the Democratic primary with 25% of the vote.

In 2003, he was awarded the prestigious Václav Havel Foundation VIZE 97 Prize, by the former Czech president, for his writings in economics and politics.<9>

In 2004, he published Reason, a handbook on how liberals can forcefully argue for their position in a country increasingly dominated by what he calls "radcons", or radical conservatives.

http://en.wikipedia.org/wiki/Robert_Reich


BIG DIFFERENCE IN THESE TWO ROBERTS


robdogbucky

[lapfog_1]

17. I am perfectly aware of the difference between the Roberts.

And THIS ONE promoted free trade while he was in the Clinton cabinet.

It may NOT have been his personal view (but I believe it was), but he did promote it.

The two Roberts look entirely different. Reich has had a beard for a long time.

[justaregularperson]

22. I was paying attention as well. Reich was a big believer.

He is somewhat re-inventing himself these days.

[hedgehog]

25. One person's reinvention is another person's kicking himself for being

wrong and changing course. Whatever he said in the past, Reich is dead on today. The final paragraph is an elegant summation of what we need to do. Obama's programs don't need to be put off because we're in a Depression, they're the way out of this Depression!

[chimpymustgo]

36. Here's his "elegant summation of what we need to do." It's good.

-snip-

Energy independence and a non-carbon economy should be the equivalent of a war mobilization. Hire Americans to weatherize and insulate homes across the land. Don't encourage General Motors or any other auto company to shrink. Use the auto makers' spare capacity to make busses, new wind turbines, and electric cars (why let the Chinese best us on this?). Enlarge public transit systems.

Meanwhile, extend our educational infrastructure. So many young people are out of work that they should be using this time to improve their skills and capacities. Expand community colleges. Enlarge Pell Grants. Extend job-training opportunities to the unemployed, so they can learn new skills while they're collecting unemployment benefits.

Finally, accelerate universal health care.

-snip-

[madrchsod]

8. it certainly is...

all the money that has been dumped into the wall street/banks has created nothing. a trillion dollars directly invested in public works jobs , unemployment insurance and retraining, and all the public service sector employees the economy would recover faster than obama`s bank bail out.

[truedelphi]

9. K & R for reading later. n/t

[Hawkowl]

10. So true

Reich has been right on the money since I started following him in 1990. I was really hoping he would get a cabinet slot. He would have made an awesome commerce secretary.

[TheCowsCameHome]

11. Why isn't he in a high government position?

Surely he's qualified for a cabinet post.

[terisan]

12. Not acceptable to Wall Street. nt

[omega minimo]

18. That damn Reich! He's always on about the truth and stuff!!

[roamer65]

23. Reich and Roubini are right.

Roubini says this will be a "near depression". Reich says the same by saying its not the GD but a depression nonetheless.

[TWiley]

26. Sorry Burt, but the post is wrong.

Dow ends above 8,000 in best 4-week run since 1933
REUTERS — 12 MINUTES AGO
By Edward Krudy

NEW YORK (Reuters) - Stocks rose on Friday, with the Dow marking its best four-week winning streak since 1933, lifted by robust results from Research in Motion and comments by Fed Chairman Ben Bernanke, who said the central bank will do everything it can to stabilize banks.

Growing conviction that the worst is over for the economy helped Wall Street shrug off dour jobs data showing the highest unemployment rate since 1983.

The Nasdaq outperformed other indexes, helped by a 21 percent jump in the U.S.-listed stock of Research in Motion after the BlackBerry maker, a Canadian company, posted surprisingly strong results on brisk retail demand and gave a rosy outlook after Thursday's closing bell.

"The move into technology reflects investors rotating funds into groups likely to benefit from an economic recovery, even though a turnaround in corporate profits in that sector might still be a few quarters away," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

The Dow Jones industrial average climbed 39.51 points, or 0.50 percent, to 8,017.59. The Standard & Poor's 500 Index rose 8.12 points, or 0.97 percent, to 842.50. The Nasdaq Composite Index gained 19.24 points, or 1.20 percent, to 1,621.87. For the week, the Dow rose 3.1 percent, while the S&P 500 advanced 3.3 percent and the Nasdaq jumped 5 percent.

S&P UP NEARLY 25 PERCENT VS. MARCH LOW

At Friday's close, the S&P 500 was up 24.5 percent from a 12-year low set on March 9, helped mainly by growing optimism that the economic slowdown is starting to moderate. The Dow closed above 8,000 for the first time since February 9 after four straight days of gains. Research in Motion, a technology bellwether, surged 20.8 percent to $59.29 on the Nasdaq, while IBM ranked as the Dow's biggest gainer, up 1.4 percent at $102.22 on the New York Stock Exchange. The semiconductor index rose 2.9 percent. Financial stocks rose after Bernanke, the Federal Reserve chairman, said the Fed will use "all of its tools" to stabilize markets.

Citigroup advanced 4 percent to $2.85, while Bank of America added 5 percent to $7.60.

An S&P index of financial companies' stocks shot up 4.2 percent. Some analysts said investors may be covering short bets on financial stocks by buying back the shares.

Wall Street received more confirmation about deterioration in the labor market, when data showed the U.S. unemployment rate hit 8.5 percent, the highest level since 1983, as employers cut 663,000 jobs in March.

The numbers, though, were in line with economists' forecasts.

Another report from the Institute for Supply Management showed the U.S. services sector shrank for the sixth straight month in March as recession-weary consumers tightened their belts.

An index of pharmaceutical stocks fell 1.8 percent, but was still up more than 9 percent from last month's lows. Among the heaviest weights on the blue-chip Dow average were Johnson & Johnson down 2 percent at $26.46.

Trading was moderate on the New York Stock Exchange, with about 1.48 billion shares changing hands, slightly below last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.13 billion shares traded, below last year's daily average of 2.28 billion.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 2 to 1, while on the Nasdaq, about eight stocks rose for every five that fell.

Story Here: https://news.fidelity.com/news/news.jhtml?articleid=200...


The capital markets are forward-looking so recovery always begins there. Once a new bull market begins, bad news is ignored because investors are looking further down the road. This has ALWAYS been the case and will continue to be.

What this means is that econimic recovery has probably started (leads unemployment) an broader recovery will likely begin towards the end of summer or early fall.

Like it or not, Mr. Obama's plan is starting to work .....

The chicken-little stuff is yesterdays news.

[omega minimo]

27. .

[ardvark]

28. Reich has been a big H-1b visa pusher

he is of course right in this article, all I'm saying is that he's one of the people who brought us here

[jemma]

30. If only we had FDR in the White House instead of a corporate puppet

But we don't.

[MarjorieG]

37. Conditions and Congressional resistance not the same. O Team trying to diffuse worse effects.

[Karmadillo]

31. The Democratic wing of the Democratic Party has far better ideas than the Postpartisan wing.

nt