After Near Financial System Collapse The Senate GOP Risks A New Depression If More Trillions Aren't Made Available NOW

Not too many people, I warrant, would have been aware how close the financial markets came to perdition on March 16.  They'd not have been aware of a "liquidity panic" in the municipal bond and commercial paper (money market funds) arenas or that the Choe Volatility Index - known as Wall Street's 'fear gauge' - closed at its highest level on record: 82.69.  Nor would people - certainly not Janice or myself (with investments in money market funds) have been aware that on March 16 investors ceased to believe these funds were cash equivalents, i.e. liquid enough to function like checking accounts to help firms  manage payroll, pay office leases and move cash to finance daily operations.

We didn't know any of this until the WSJ lead story, 'The Day The Markets Seized Up;, appeared on the front page on May 21. To be sure, the information and graphs shook us to our core, as they ought to have any American invested to any degree in the financial system.   Basically, as the piece noted:

"Investors lost faith in Americas public infrastructure. As schools and universities shut down and airports and public transit services emptied out, the market began to question what had previously been considered gold-plated bets on the core institutions that make up community life in the country."

And so (ibid.):

"Terrified investors ditched municipal debt at fire sale prices, underwriters canceled billions of dollars worth of deals, and new borrowing stopped. There was less issuance in the week of March 16 than at any point since the 2008 financial crisis, or the 2001 terrorist attacks.... The liquidity panic quickly leaked into the stock market."

In other words, we came about this (   )  close to another credit freeze financial calamity. According to one money manager in an email to The Journal (ibid.):

"I don't think anyone has experienced anything more violent"

Perhaps the most important line in the whole piece appeared earlier on, in the continued discussion on page A10:

"A barrage of government programs has since pulled the system back from collapse."

Note, it pulled it back from collapse, but that doesn't mean the threat of collapse is expired. Not by a long shot.   The reason is that the tight -fisted GOP Senate is not prepared to pass anything more, whether in financial infusions to the states, or more infusions of cash into citizens' pockets. They expect people to either get by going back to work (hardly possible for three quarters of workers as noted in the Denver Post (May 24) - given most jobs are now service-related and workers not able to even pay rent or get adequate food.   We further have learned ('More Borrowers Fall Behind In Payments', May 21, p. B10):

"Millions of people are behind on their credit card and auto loan payments, the latest sign of pandemic financial  devastation.  Lenders in April had nearly 15 million credit cards in financial hardship programs."

And still,  despite this havoc, there is no more money coming in for people, no thanks to the GOP's austerity hawks.   This is risking yet another liquidity panic which will make the one on March 16 look like a walk in the park. Especially as people with no $$$ coming in are  "tapping credit cards and auto loan at record levels."  But...at some point that money has to be paid up or the credit-lending markets will themselves collapse, with ordinary citizens' bank accounts.

Other bad news emerged in the WSJ piece, 'Workers Face A Long Road Back To Normal', May 9-10, p. B14, noting how the climb back to normal will be "slow and painful".  Indeed, subsequent WSJ articles have pointedly noted how many millions of workers currently furloughed will not get hired back.  That means they cannot contribute to purchasing goods or services, i.e. to aggregate demand. Aggregate demand is composed of two parts: 1) demand generated by consumers for goods and services, and 2) the demand for investment goods. When the level of aggregate demand is high, both these components are generally equally high, and the levels of production and employment are high. On the other hand, when aggregate demand is low - or even one of the components (e.g. (1)) is very  low, then levels of production  plummet.


'Powell Urges Policy Makers To Spend More'  (WSJ, April 30, p. A2)  showed the Fed Chairman Jay Powell is terrified of another liquidity crisis erupting.  He likely suspects it will be triggered by a massive drop in aggregate demand, especially consumer spending which supports 70 percent of GDP.  But with no more cash infusion, how can ordinary (not rich) citizens contribute?  How can an economy based mostly on ordinary consumption thrive? Well, it can't! People can't just live on air!  That includes state employees, local government workers.  We know, for example ('State, Local Budget Woes Threaten Recovery', WSJ, p. A2 today):

"When those (state) workers are laid off they have to cut back on spending. That reduces the income of others in the economy, which amplifies the initial cut."

This, according to Gabriel Chodorow-Reich, an economist at Harvard University who estimates that "every dollar in cuts cost the overall economy $1.50 to $2.00."  Hence, the imperative of  a badly needed cash infusion to the states.

As I made clear in my May 4 post, we desperately need not just a $1, 200 one off payment to each American, but a universal basic income (UBI) of at least $2,000/ month for the next 6 months.  (As policy analyst Heather McGee noted on 'All In' last week). So despite the caterwauling and gaslighting from the Repukes, it is clear we need a massive infusion of at least $800 b to help the states, and possibly another $2 trillion more by the end of the fiscal year.  This despite the endless austerity whining of the likes of The Wall Street Journal (e.g. 'The Government Economy',  April 30, p. A14) who bellyache the states "contributed only 0.2% to  the CARES Act".  Well, duh! That's because THEY took the brunt of the lockdown hit ("economy put into the equivalent of a medical coma"), and also they have laws that require balanced budgets -  so must cut if spending exceeds a certain threshold. Also they have no latitude to print money like the Federal Reserve.  

But this is the gist of the Republican penny-pinching strategy which -  if it succeeds - will see the U.S. end up in a 2nd Great Depression, not just a bad recession.   In fact, while the austerity -minded Repubs have resisted calls for additional funding, citing added debt burdens,  Jay Powell pointed out (ibid.):

"This is not the time to act on these concerns. This is the time to use the great fiscal power of the United States to get through this with as little damage to the longer run productive capacity of the economy as possible."   

As I wrote in my May 4 post:

"It's incredible that a Scrooge like Mitch McConnell don't grasp this, and would rather put us into another Depression but there it is.  They would rather be chintzy now - especially with the states, local governments-  and pay ten to fifty times later to dig out from the carnage.   Which is why it's good we didn't have these losers in power after the credit meltdown in 2008."

Incredibly, the WSJ's op -ed writers-  like Phil Gramm and Michael Solon-  continue to peddle their rubbish that no more money is needed, e.g. ('More Stimulus Would Crush The Recovery',  WSJ, April 15, p. 17) .   

What is their solution?  It's  "rely on private capital and initiative and our free enterprise system".   In other words, let the loafers waiting for new handouts get off their butts and figure out - using "initiative" - ways to enhance their cash flow without depending on gov't handouts.  Else, "all this new government borrowing will consume the very oxygen a powerful recovery will need,"

Not to be outdone,  WSJ op-ed contributor John Cochrane offered up this gem ( 'How to Treat the Financial Symptoms of COVID-19') .just over a month ago:

"Loans are better than gifts. Rather than give each of us $1,000, allow us to borrow a fraction of last year's income from the Internal Revenue Service  and repay it when we file our taxes."

Fortunately, the Senate at the time had the sense it was born with and didn't pay attention to this nonsense.  It delivered the CARES Act with a $1,200 cash infusion for each person- no strings, no owing anyone-  or begging 'forgiveness' for loans to be repaid in huge lump sums.  Just as well given even with that infusion and the extra unemployment ($600/week) some "840,000 personal loans were in deferment or some other type of financial hardship program in April" - according to the May 21 WSJ piece on more borrowers falling behind.  So good to know cockeyed loans schemes like Cochrane's didn't add even more hardship borrowers.

The answer then is clearly not loans, or asking for "forgiveness" for such, nor raiding Social Security in a payroll tax cut, or any of the other dumb right wing solutions proffered - usually in the editorial pages of the Wall Street Journal.  But that's not to say all the offerings were drivel. Standing out for its sanity and reason was William Galston's May 19 piece 'Heed Powell's Call For Fiscal Stimulus', e.g.

https://www.wsj.com/articles/heed-powells-call-for-fiscal-stimulus-11589927206


Galston makes a compelling case for more 'no strings' cash infusions, echoing Jay Powell's call for more fiscal support  for citizens and small businesses alike given that:

"demand will remain depressed and unemployment elevated well into 2021.  Many households will struggle to pay for food, shelter and medical care. And many small businesses will shut their doors permanently."


And what is the GOP's and Trump administration's brilliant response? Well, it's to "adopt a wait and see stance".  But see citizens without money can't "wait and see" about their next meals or keeping a roof over their heads.  They need the money now, and as Galston points out "even delay isn't cost free"

As I wrote before, the hesitation in coughing up more money is largely due to the GOP's anti -statism posture. They simply don't believe the government should be "doling out" free money "at taxpayers' expense".  Never mind those suffering and waiting in bread lines ARE taxpayers, last time I checked.   But the conservos want limits. They want set dates after which they don't give any more money, not one cent. As one WSJ editorial ('The Fiscal Stimulus Panic', p. A16, March 18) howled:

"The checks no doubt will be popular....but they won't come cheap, running at a cost of hundreds of billions of dollars for the first round.  What happens if the pandemic lasts into the summer?  The clamor will be for another round and then another."
:
And then the "clamor" must be met, but which I tend to think of more in terms of need.   But for the WSJ editors and their stable of tightwad hacks, it's the clamor for more money that must be quashed.   The Reepos in the Senate then channel these austerity messages and act in kind.  Hence the latest twist ('Republicans Seek Alternatives To Jobless Benefits', WSJ, p. A4) where we learn the GOP savants want the increased unemployment benefits cut out ("it's making too many reluctant to return to work")  and instead replaced with a 'stipend' paying $150 less. This the brainchild of Sen. Rob Portman of Wisconsin.  

Meanwhile,  workers across the board are struggling to make ends meet, and pay their just debts.  Lenders, credit sources are also being squeezed given the CARES Act "allowed homeowners to suspend mortgage payments for up to a year, but provided no way to pay for this."  (WSJ, p. A1 today) Thus saddling lenders with the burden and setting the stage for a ginormous credit crunch.  To fix ideas - and perspectives (ibid.): "As of last week 4.5 million households had filed:" for such suspensions, "representing about $1.04 trillion of unpaid principal" - according to Black Night.  Meanwhile, "markets froze for s-called jumbo loans" which are too large for gov't baking.  (Jumbo loans would be theoretically allowed should homeowners need to pay back a year's worth of mortgage payments at once.)

Well, if there is another depression you know who to blame, given just the "unintended consequences" of what could happen in the mortgage-lending market. . Clue one: think of an elephant.

See Also:

Economic Policy | Jobs

The Greater Depression, 2020—

by P.M. Carpenter | May 22, 2020 - 7:07am | permalink

And:

Economic Policy

If the Federal Government Won’t Fund the States’ Emergency Needs, There is Another Solution

And:

Covid-19 | Economic Policy | Mitch McConnell | Republicans

Unrest Bubbling up among Republicans Who Have to Fight McConnell to Act Again on Covid-19

And:

Covid-19 | Government

If Covid-19 Teaches Us Anything, It's That Government Should Not and Cannot Be Run like a Business

The Lies And Propaganda About How Working Americans Have It So "Great" Have Never Been More Pronounced

The mind boggling stat from The Sunday Denver Post (p. 11A) that the U.S. is the only nation in the OECD that mandates no paid vacation days was hard to swallow.   Even more difficult,  when employers (91 percent) do offer such time off, only 70 % of workers take advantage.

Recall here that according to surplus value theory proposed by Karl Marx in his work, Kapital, if the labor value sold as a product or service is L, and V is the labor value embodied in the production of the item or service then the surplus value S is:

S = L - V

If an employee then earns $36,000 a year for generating a service or whatever other labor, and yields 6.2 days of his vacation time to the Boss Man, this translates to roughly $150 per working day assuming 20 such days per month. Then 6.2 days given up per year on average amounts to $930.

Then, by this reckoning V is the yearly paid labor or $36,000 and S is the unpaid labor or $930 per year. . The amount of labor expropriated per year is therefore equal to $930. Now, add in possible employee extra costs of $1,000 - say for health care or unpaid sick days - and you have $1,930 of labor exploited. 

Meanwhile, the rate of surplus value per year, or the rate of yearly exploitation is:

S/V = ($1,930)/ ($36,000) = 0.053

In other words, the company or Boss Man is extracting 5.3% more work per year out of his forlorn employee than that employee is being remunerated.  It was computations similar to these that led a statistics outfit called Hotwire to conclude American workers were leaving nearly $126 billion total "on the table" - and that was 7 years ago. 

Those who do take their paid vacation days too often remain willing hostages to their email or cell phones - effectively working even on vacation.  But this is small potatoes compared to the other indignities paid labor is having to withstand in the country - even when the economy is "doing great' according to Donnie Dotard.  Alas, too many American workers aren't aware of the bill of fake goods they've been handed because, well, most do not read the financial press.  (Which may be just as well given the gigabytes of pure propaganda and hog swill peddled therein, which we'll get to.)

But a bit of perspective first. Probably no truer a statement ever appeared than barely 21 years ago, in an issue of Psychology Today no less (July-August 1998, p. 10. Includes graph):

"Starting in the mid-1970s, the nation's quality of life parted company with its wealth, and the gap between social health, and GDP is now bigger than it's ever been."

A graph of 'quality life indices' vs. GDP (ibid.) shows the measured divergence. More recent data also suggests that we are currently a much sicker society than at that (PT publication)  time and beyond what anyone imagined. The marginalization of the workforce is surely one major barometer of that: the inability of so many millions to secure enough remuneration from one job to afford rent in most U.S. cities. The GINI coefficient is also trending worse (i.e. greater inequality), and there's more recent research disclosing how it portends social and economic upheaval..

Have things really changed for the better since the 2008 financial crisis? Well, the recession finally gave way to a tight labor market with many jobs, but alas too many of these jobs don't pay the freight.  By that I mean that one such job will not earn you enough to pay for rent in a decent place, say here in Colorado Springs.  That rent now approaching $1,100 a ,month,  whereas the average worker's wage here is just above $20/ hour.  Do the math and it does not favor the lower wage renter!  (Rent or mortgage should be no more than 30 % of total monthly expenses.)

According to a recent TIME article  ('Living on Tips'',  Sept. 2-9, p. 40)  food service (wait) jobs now number 12.2 million and continue to proliferate across the country even as manufacturing  jobs  (currently at 12. 8 million ) continue to suffer attrition.  Mainly owing to Trump's ongoing, relentless trade war with China, which will see further high end wage losses to the service-gig sector.

  Perhaps as many as twice that number of  12.2 m cited in the TIME article  are either stuck in Amazon- controlled warehouse jobs or gig jobs like Task Rabbit, Task Easy, Uber, Grub hub etc..   Worse, those workers who've lost manufacturing or coal mining jobs are often tossed headlong into the expanding gig  or service sector which pays 40-50% less than their original jobs - which also had benefits. We also learn (p. 42) that those who lose jobs in a recession usually move down the income scale and seldom move back up.  They are stuck in positions like "personal care aide ($24,020 median wage)",  "food prep worker ($21,250 median wage" and "wait staff ($21, 780 median wage)" - none of which is adequate to pay for rent in most areas of the nation now.

And yet we are informed by the likes of WSJ op-ed columnists Phil Gramm and John Early ('Americans Are Richer Than They Think', Aug. 22, p. 15A)  that if the pointy- headed gov't statisticians and economists just stopped "overstating inflation" all would be well given such "overstatement leads to understatement of America's well being".  In other words, hell, you'd then actually be richer than you've been led to believe!  And indeed this would be dramatically reinforced if "consumers always bought the same amount of goods and services."

Which make one wonder what planet (in what alternate cosmos)  these two nattering nabobs inhabit, because it sure isn't the US of A on this planet Earth.  I mean,  if I purchased pork chops one week and they were priced (at Safeway or King Soopers) at $.1.50 /lb. then came back the next week and found them at $2.75 a pound, there is no way I am purchasing the same amount. I may then elect to decrease my purchase from 3 lbs. of chops to 2 pounds.  The same, obviously applies to other goods  such as shoes, jackets, shirts or shorts, and services - including haircuts.  Speaking of the latter, those were once $10 per haircut for a senior here in the Springs and I usually went once per month. They are now $13 per cut, and so I go every two months.  My point:  only an independently wealthy person like Gramm would always buy the same volume of goods and services irrespective of costs.

The claptrap of the two WSJ writers was also corrected in a followup letter ('The BLS Strives To Track Inflation Accurately',  Aug. 30, p. 12A) written by one William W. Beach Ph.D., Commissioner of the U.S. Bureau of Labor Statistics.  In the reply he writes:

"In constructing the (price) indexes, the Bureau of Labor Statistics follows the guidance of the International Labour Organization's  consumer price index manual, an internationally recognized authority on price index theory and practice. In fact, the U.S.  CPI not only meets the best practices recommended in the manual, it exceeds many of them.  Thus we take issue with the authors' notion that the BLS produces ;bad measures of inflation'"

But, of course, that is Gramm's and Early's intention. To muddy the water on inflation indexes to try to snooker American workers that they really have it much better than they believe. Hell, don't go buy those high-priced pork chops or chicken thighs! Don't believe your lying eyes or pocket book! Just believe our codswallop!  You'll be richer for it!

Another letter writer (Jim Smedra) actually pulls up the two propagandists directly, writing:

"Messrs. Gramm and Early state that inflation readings (about 2 %) are overstated. I disagree. The Journal has published several articles describing how Americans are struggling with higher costs for homes, rent, health care, college and vehicles.".

A third WSJ letter writer clobbers the pair from a different direction, that rising debt is the real culprit, not overstated inflation, i.e.

"The measure of inflation today isn't rising prices but rising debt - the opposite side of the ledger. Debt is nothing more than collapse of purchasing power, or 'what your money buys'."

Which, of course, is why so many young Americans can't afford rent or even a first mortgage in Denver, or Colorado Springs.  Their purchasing power simply isn't enough to buy in.  Plus, most are already saddled with enormous student loan debt. So they either have to rent  chintzy rooms at $550 a month, or share an apartment with 3 or 4 others. Those are the choices granted.

But let's remind ourselves Messrs. Gramm and Early tried a similar stunt back in May when they churned out 'The Myth Of Wage Stagnation', (WSJ, May 18-19, p. A15) trying to argue that if we just added employer benefits to the wages actually earned everyone would be seen to be paid much better.   But that increment, or any other tack-ons the pair propose, is still not going to get those Denver workers a new home or apt.   As we learned (Denver Post, May 15, p 2A):

"A middle of the road home in metro Denver now costs more than five times the median household income, a record. "

Again, a lack of purchasing power, which then leads the buyer to have to take out more debt than he or she can afford - if they can afford a down payment at all.  But looking all through the median household worker economy this is what we see: exploding debt because the wage standards have collapsed to the point they can't support current purchases, whether of homes, special services, or even medical care.  The Fed's recent stat showing that nearly half of most middle income earners can't even afford a $400 emergency expense was one of the biggest shockers in the past 4 months.  Then there was JP Morgan's prediction that U.S. households will pay an extra $1,000 this year thanks to Trump's trade war.  Yet Gramm and Early don't mention any of this.   They also would be taken more seriously if they'd referenced the WSJ piece of August 1: 'U.S. Workers' Wage Growth Levels Off' (p. A2) which noted that even the pitiful little increment increase in compensation gains of American workers had "leveled off"

Wage stagnation a myth? Propaganda!  Americans are really richer than they think? Even more propaganda designed as a kind of  'opiate' for the masses to imbibe.

Another reality needle puncturing the fantasy balloons of Gramm and Early appeared August 30, on page A3, e.g.

Historic Asset Boom Passes by Half of Families - WSJ

https://www.wsj.com/articles/historic-asset-boom-passes-by-half-of-families-11567157400

Wherein we learn the decades long economic boom has effectively passed by nearly half of American families who "still have 32 percent less wealth than they had in 2003 adjusted for inflation".  Americans ricer? Only the top 1 percent who saw the value of their assets soar with the over heated, cheap money infused Stock market.

Lastly, bear in mind when the glowing jobs numbers and low unemployment stats are trotted out, they don't tell the full story. That is,  "The BLS official unemployment rate only counts as unemployed those who are available to work and actively searching over the past 4 weeks" to find a job.  Not counted are the 2.3 million -plus between the ages of 25 to 54 who have basically dropped out since 2000.

What becomes of these, what has become of hem? Most likely they live mainly in debt - as one of the WSJ letter writers pointed out - but this isn't being wealthy or rich.   Then there is the underemployment rate for those who are working. Especially forlorn are those with a B.A. or B.Sc. degree and working in an Amazon   Those who may have aspired to get a decent job with benefits that makes use of their degree- but to no avail.

Well these workers definitely need to read the book The Winner Take All Society -to explain  why the U.S. has a narrow 'pyramid' of jobs with quality conditions.   At the very narrow peak or top (Google engineers, software testers, etc.) are the few winners in terms of salary and benefits.  

Thus the observed asymmetry in the U.S. job market(Ch. 6, 'Too Many Contestants?', p. 102):

"Market incentives typically lure too many contestants into winner take all markets, and too few into other careers. One reason involves a well documented human frailty: the tendency to overestimate our chances of prevailing over our competitors."

Adding:

"The decision to compete in a winner take all market is akin to buying a lottery ticket. If you win you win many times more than if you were in a less risky career. If you lose, you earn much less."

The takeaway in terms of newly minted Ph.D.s  for example,  is don't obsess over getting into a university teaching job for status - because that is a winner take all market - too many competing. So you are as likely as not to lose the lotto and end u an adjunct on food stamps, e.g.

http://chronicle.com/article/From-Graduate-School-to/131795/


Better by fare to snatch a good paying job at a private or STEM high school, where the students' caliber often compares favorably with 1st, 2nd year university students. 

As for one way workers can correct the imbalance between capital and labor, well take all your paid vacation days! Don't leave any on the table which amounts to a de facto pay cut for you.  Also don't take cell phones or activate emails on holidays.  To do so merely keeps playing into the exploiters' paws.

See also:

https://www.dailykos.com/stories/2019/9/2/1883053/-Something-interesting-happened-at-a-Labor-Day-Parade-in-Trumpland?detail=emaildkre

And:

Corporate America | Worker's Rights

The 5 Biggest Corporate Lies about Unions

No, Not Every American Is Crowing About The Great Bull Market

The endless paeans to the grandiose Bull,  market that is,  abound in the financial press,  see e.g.

https://www.wsj.com/articles/what-can-stop-this-bull-market-1534881350

But also usurp huge spaces in the regular press (Denver Post, p. 1A yesterday)  - and enough to make anyone with sense bring up his or her breakfast. Yes, the DOW (as well as NASDAQ and S&P 500) have reached new heights as well as duration, but do none of its worshippers in the media grasp how it's been jiggered to perform better?  See e.g. http://brane-space.blogspot.com/2018/07/trumps-asset-bubble-economy-based-on.html

And yes, some reports have also rubbed it in about those in the "ordinary middle class" who have been left out while the "rich get richer".   But no one who pens such balderdash goes on to explain why.  For example, that many in the ordinary middle class- squeezed by parental care and youngsters' college costs - are in no position to partake, given they have little or no disposable income, i.e. like the rich.  Hence, the lesson many learned from the 2008- 009 financial crisis and stock crash is don't buy into the Wall Street casino if you can't afford to lose.

That was brought home even more poignantly on the local evening news two nights ago when the economic crunch affecting many in our (EL Paso) county was discussed by a financial expert. The issue was sky high rents which have been rising into the stratosphere even as home prices have also soared (we're getting the excess demand from the overly pressured Denver market) and the accompanying wage stagnation.

According to the finance specialist appearing on KOAA-TV, the average renter in our county is in a retail service job and earning barely $10.22 an hour when that wage needs to be at least $20.65 an hour to make most rents and not pay more than 35 percent of income for them.   This bad news also comports with the enormous pressures on household mortgage debt  and auto loans - which have now pushed U.S. consumer debt to $13.3 trillion   (WSJ, 'Household Borrowing Hits High',  Aug. 15, p. A3)

We find (ibid.):

"Debts rose by $82 billion in the second quarter driven by rising mortgage, credit card and auto loan balances, according to the Federal Reserve Bank of New York's quarterly report on household debt and credit."

Adding, ominously:

"Total debt is now higher than before the financial crisis when widespread defaults, especially on mortgages, contributed to the longest and deepest recession since the Great Depression. After paying down debt through 2013, in aggregate, consumers gradually began to borrow again and household debt is now nearly 20 percent higher than five years ago."


And nattering finance scolds and nabobs wonder why more middle class blokes are not in the stock market?  Especially when "aggregate household debt grew for the 16th quarter."

Another worrisome aspect:  "The total stock of outstanding mortgages climbed to $9 trillion, the highest level since 2009."

What gives? Well it's clear that people - too many in the middle class and lower- are treading water and going under with wage stagnation, so are trying to keep their standard of living by taking on more debt.  Epitomizing this pathetic situation is the news that one actually finds too many employees offered: The Promotion That Comes Without the Pay Raise,  e.g.
https://www.wsj.com/articles/the-promotion-that-comes-without-the-pay-raise-1534944636

What appears to be counter intuitive now that so many Millennials -  who've never experienced a bear market -  are in the stock market now and absolutely blase about the possibility. (41 percent of households age 35 and younger own stocks now compared to 23 percent in 1989)   In the words of one young Turk quoted in a piece in yesterday's Denver Post:

"It's going to sound terrible but I'm actually looking forward to the next downturn."

Well, you might regret it if the stocks (or mutual funds) you own turn out to be duds, leaving you waiting two decades (after 40- 50 percent losses) to reach the breakeven point.

Given all the above it's logical to point out that even the labor participation rate remains low because of the pathetic wage increases. Sadly, it makes more sense for many people just to grab disability or other benefits where and when they can than to plod away in a job that won't pay even a basic rent. So why not instead opt for Medicaid and a Section 8 housing voucher?   As WSJ columnist William Galston has pointed out ('Wage Stagnation Is Everyone's Problem', Aug. 15, p. A15), the "labor share has in fact declined".(The 'labor share' is defined as the share of national income going to working and middle class Americans).

Galston in his column considers several reasons, including the decline of union membership, but mainly points his finger at globalizaton, observing:

"In a 2013 paper for the San Francisco Federal Reserve Bank economists found as much as 85 percent of the declining labor share may be attributable to increased import competition as U.S. producers responded by shifting production to countires with cheaper labor."

And oh by the way, that shift included tech specialists, and call agents as well whose jobs were shifted to Indians in Bangalore or Delhi.

Another less cited source of the declining labor share arises from automation.  As I pointed out, citing a WSJ piece, in November of last year:

Two thirds of large global companies  expect to automate some or all of their finance department tasks over the next two or three years, according to new research by Hackett Group Inc. Hacket's report is based on benchmark and performance studies at hundreds of  large global companies.

Adding:

The new technologies are designed to cut costs, liberate workers from time consuming repetitive tasks and - in many cases - reduce finance and treasury department employee numbers."

In other words, corporations have found human employees to be more like drains on their profits than useful contributors.  Benefits alone clip the profit margins especially for providing any health care, or even sick days. Given these monetary limitations - and the fact humans get sick and machines don't  - who wouldn't  dedicated capitalists manning the corps want to ditch all the bio-based flesh and blood workers for machines and software.?

Jim Hightower provided even more insights that I also cited:

"With corporations socking away massive profits and the labor market still tight why are worker's wages stuck at miserly levels? One big reason is that corporate boards and CEOs have their heads stuck in a dreamy future. Nearly every economic sector is spending vast sums of money on workers p just not on human workers.

While few Americans are aware of it, bosses are investing in hordes of sophisticated autonomous robots powered by a cognitive technology called artificial intelligence. Instead of paying a decent wage to you, corporations are buying millions of these cheap, human-esque thinking machines in order to take a shocking number of jobs away - well, from you!"

Of course, in the midst of all this one will always find cocklemamey fantasies churned out by the delusionary elements of the media such as FOX News or some of its WSJ op-ed counterparts. One example: Phil Gramm's 'The Myth Of American Inequality" (Aug,. 10, p. A15), writing such bollocks as:

"The bottom 90 percent of German earners pay a share of their nation's taxes on income 77 percent larger than that paid by the bottom 90 percent of Americans".

Failing to note the Germans paying those high taxes get an enormous return including for top notch medical care (no worries over bankruptcy and pre-existing conditions), child care, generous unemployment benefits and generous pensions - oh, not the 401(k) kind Americans are forced to pay for on their own!)  Gramm's dreck was also scuttled in a subsequent WSJ letter from Martine Durand ('Many Data Sets Show High U.S. Inequality', Aug. 24). Ms.  Durand, the chief statistician and Director of  the Statistics and Data Directorate of the OECD wrote:

"The  claims by Messrs. Gramm and Early that the OECD  measures overestimate U.S. inequality are unwarranted.  The OECD relies on existing international standards and on source most suitable for international comparison."

Then today, more cheerleading devoid of reality touchstones, e.g. 'The Good Times Can Roll On', WSJ, p. A15,  where Edward  C. Prescott and Lee E. Ohanian wrote:

"The emergence of better job opportunities has reduced the number of people  on disability."

Well, maybe, but only because hundreds of thousands of disability CLAIMS have been tied up in the respective bureaucracies.  For example, we learned two days ago ('Backlog Stalls Veterans' Appeals', WSJ, p. A5):

"As of August, 2018, the appeals backlog (for VA disability) stood at about 238,000 according to VA data'"

The basic reason for so many appeals and their backlog is because the process itself is complex and difficult-- designed to thwart easy access to  disability monies. As the article notes "many veterans claim multiple injuries each of which requires its own decision."

Meanwhile, tens of thousands of civil  (e.g. Social Security Admin.- related) disability claims are tied up here in Colorado and other states - preventing genuinely disabled workers-citizens, as well as economic "refugees",   from gaining access to benefits.  In the latter case, the "refugees"  have made the rational determination they are on more secure footing with disability benefits than toiling in a low wage job for which they are getting chump change and can't even afford basic food or rent.  If the jobs for which they are qualified paid more, they likely wouldn't need to go the SSA disability (or for that matter, Medicaid)  route.  But the sheer number of claims puts the lie to the WSJ's "good times"   claptrap.

William Galston for his part is clear on what the solution needs to be (ibid.):

"There is only one way to go. The high earning Americans who have done so well in recent decades must pay higher taxes to support the portion of the workforce that is falling behind. This isn't charity, nor is it welfare. It's simple common sense, or self interest - rightly understood.  Because an economic system that fails to offer broad gains will end up with disruption."

Or worse, with extinction. So basically, Galston is proposing  - like FDR with his multiple programs after the 1929 stock market crash- of saving capitalism from itself. But perhaps the solution begins and ends with ditching American 'cowboy' capitalism for the more humanized manifestation of Rhine capitalism  (Google!)- say as practiced in Germany and Scandinavian nations.

See also:

http://brane-space.blogspot.com/2016/10/did-you-know-poor-have-gained-most.html

And:

http://www.smirkingchimp.com/thread/paul-street/80803/trump-corporate-media-are-both-enemies-of-the-people