Many newspapers, news blogs, and other sources have been discussing the revitalizing effects that economists believe the Tier 5 unemployment extension will have on the American economy. But a deeper look into the true roots of the Great Recession reveal a systemic problem that may be too great for even the fresh spending of 3 million desperate Americans to overcome.
What follows is a very brief summary of the economic and social conditions that created the Great Recession, the ’99ers, and the driving need for a Tier 5 unemployment extension.
The Great Concession
2005: US moneylenders wrote more than three trillion dollars in new home mortgages — but to do so, they had to lower their credit standards to unique rates in order to do it. These risky “sub-prime” mortgages were bundled into financial investing instruments, which were labeled as “AAA products” by credit-rating firms that had a vested interested in overrating the products. The products were then sold to legitimate investors who had no idea that they were purchasing instruments that were designed to fail.
This could all occur because of the strong deregulation stance taken by the Republicans under the early Bush administration. In the 1980s, five key laws were passed to prevent exactly these kinds of shenanigans. They were repealed by the Bush-era government in a Great Concession to the demands of financial institutions that wanted higher profits.
The Great Progression
The Bush Era was great for corporate profits, not just due to the deregulatory nature of the Administration, but because of the far-reaching effects of globalization in the wake of such economic agreements as NAFTA and the creation of the World Trade Organization. As the hands-off Administration watched, corporations that had been slowly shifting their production bases overseas began doing so en masse.
With American productivity declining, the economy started to weaken — but not at the corporate level. Corporate profits skyrocketed, nearly doubled between 2000 and 2006. At the same time, personal income plummeted as workers competed fiercely with cheap overseas labor. The only jobs that didn’t lose income during the same timeframe were medical doctors, corporate executives, and those jobs that required a Ph.D. — less than 4% of the total population. No one noticed, because the Administration was focused on the ‘success’ of deregulation (watching corporate profits soar.)
With individual income down, however, spending went down — and when spending goes down national interest rates follow. When the Federally-determined interest rate went so low (in an attempt to boost consumer spending) that people’s retirement funds weren’t even keeping up with inflation, they started seeking other less-secure investments that WOULD keep up with inflation — and the credit companies with their fake “AAA products” were right there to meet their needs.
The Great Regression
The “AAA products” eventually failed, of course, as groups like Goldman-Sachs have admitted they knew would happen. When the products did, the corporations that had invested billions in them turned to the Feds and asked for a bailout, which the Bush Administration set up as its last act before Bush left office. Individuals who had invested in the products were faced with an awful truth: they had lost their money.
With individual income already down due to the effects of globalization, and many people’s savings depleted due to the dysfunctional risk-taking on the part of the financial industry, the economy collapsed almost entirely. Since the 1980s, when globalization first became a factor in the US economy, families had been fighting the wage decline by adding wives and mothers to the workforce, relying on existing savings, taking out second mortgages, maxing out credit cards, and using a variety of other non-sustainable methods to add income to the family. As families’ hopes for a secure retirement vanished, their spending dropped to subsistence levels, as none of those old strategies were able to bring enough money into a household to maintain even the already-reduced levels of spending.
With no consumer spending, local businesses suffered, and stopped hiring. Multinational corporations started seeking other markets in which to sell their goods [as well as already producing them overseas], and stepped almost entirely out of the American economy while still holding their offices here and taking advantage of the lingering effects of the Bush deregulation and tax cuts. Unemployment skyrocketed, and has no statistically significant downward trend.
The Great Transgression
Today, many economists are touting the Tier 5 unemployment extension as the Great Hope for restarting the economy. Put billions into the hands of the unemployed, and consumer spending will increase. When consumer spending increases, local businesses benefit, and they’ll start hiring.
But the problem is more systemic than that — it’s with the very nature of globalization and the multi-national corporation. The unemployment extension money is just as likely to end up in the hands of megacorporations like Archer-Daniels-Midland and ConAgra (who control most of the food we buy) as it is in the hands of local businesses that will keep the money inside the borders of the USA.
If it does, how likely are the conglomerates to re-invest the money into America? They already know that they profit more by exploiting our laws to invest offshore than they do if they spend here in the Land of the Free, and if they commit that Great Transgression, no amount of unemployment extension is going to help the economy.
The solution needs to start at the polls. The root of all of this mess is the deregulatory attitude and complete economic backwardness of the Bush-style Republicans who are, even now, calling for MORE tax cuts on businesses and the wealthy and LESS government oversight of how they spend their money.
At this point, there are only two options: either American law changes to enforce the corporations’ re-investment of American money into America, or we allow the economy to collapse entirely, millions of people to go hungry and freeze to death, and we reboot the economy the natural-selection way: by rebuilding it from the ground up.
Passing the Tier 5 unemployment extension is the beginning of the first solution. Failing to pass the Tier 5 unemployment extension is the beginning of the other.
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The left-wing trash promoted by sites like this helps absolutely nobody.
Sorry, but your democrats buddies don’t give a rip about the economy. They only care about creating larger goverment and expanding their power. But there is a push back against this.
Tier 5 will NEVER happen because it will only make unemployment numbers higher in time for the general elections. Do you really think they want that in the news when clearly the democrats are going to get a severe pounding already?
Face the facts. You best look for any job you can get and stop sitting around hoping for a free check until some magical high-paying job lands in your lap.
The Democrats don’t care about you.
Spoken like a true Republican; just let Wall Street, banks, mortgage companies, and any other large corporations run wild with no oversight or direction, let them gain all the wealth and let the middle class and the poor fight for the scraps. At least the Democrats have tried to put the economy back on track with no help from the Obstructionists who block, filibuster and throw everything but the kitchen sink at any possible solution to making the economy run again.
Maybe the Democrats aren’t perfect, but I’ll take them over fat, old, lazy, rich Republicans who couldn’t find a creative solution for fixing this nation’s problems if you drew them a diagram
chuckie dead on the money
Your manifesto just sounds stupid. That’s who you represent, right ?
Plus the only trash on this site is the load in your pants.
Dont worry Chuckie youll be joining us soon !
Hey Chuckie is the Republican propaganda web site machine hiring ? No thanks ! I would rather sleep under a tree and find my next meal in a dumpster than have your type employ me !
Chuckie I don’t think the Republicans care about any of us also. Smart people never sit around and watch the world spin by. Smart people are always productive even when they are out of work. They can’t help it. They volunteer and they help others and get results. And they fight for their rights. Or haven’t you heard we have rights. Great things come from us. They learn new skills and they learn not to judge. Any effort that is put forth whether you get paid for it or not is an effort to make change. No such thing as getting a low level job right now. We deserve the best because we are the best and we earned our way and will keep earning our way. People like you don’t make much sense or have much growth in life. Try and open up your mind. Only pesimistic people like yourself would go against his countrymen’s rights to fight for Tier 5. You have a problem.
Hey Chuckie…spoken by someone who hasn’t had to look for a job…any job…in this economy!!! Please don’t say anything unless you’ve been in our position.
BTW this money is NOT free…I’ve paid into the UI system for 38 years along with most of us who have worked for decades! Be careful because the way things are going YOU could be singing a different tune!
yea chuckie dont say anything becasue that would cut into my ui check and i would actually have to get a job…by the way try md’s there hiring everyday.. or are you like eddie in national lampoons vacation …. “holding out for a management position”
Will, I have applied to 2 McDonalds, they are not hiring and with higher education and experience we are termed “over qualified.”
Relax, read some truths and see there just are not jobs out there for us.
We are not looking for a free check, and to say we are lazy… I am a disabled Marine, I have probably more drive and determination than any nay sayer here, hell combined. They are just not hiring.
I would place a large wager of my debt to say that you would not be able to even get a callback if you sent out, say 50 resume’s.
And I see why some come here thinking that this is just liveral propaganda, well I read it that way as well. I will now probably read another article like this with another spin later tonight.
Both parties are old fat lazy and rich. Stop voting/thinking party lines, start thinking of the true issues.
People are really hurting, get away from your current surrounding and speak to people to find out. You are no better than anyone else, when Americans need help lets help them, not just other countries.
Your comments are tired puke.
Follow me here 99ers. You as a group have largely rejected capitalism. Most of you don’t even have the desire to learn about this magnificent system that made the western civilization great. Yet you demand, even with death threats, the benefits of the capitalist system that you hate.
I have a suggestion. Since you spit on capitalism you need to live like any indigenous people who had not yet thought of capitalism. Thats correct…stop using money, it is a product of the capitalism you hate. Animal skins and flint knives are the order of the day for your mentality. As you liberals say, there is no shame in this way, it is just “different”. Learn to make a bow drill and stop whining or you will go back to the days before the wheel was invented.
OK, follow me here Anthony. 99ers are NOT against capitalisim. Just the oposite. All we are asking for is a meaningful job to allow us to have the kind of life that all Americans aspire to. However, there’s just one problem with all of this; the current job market is the worst in over a generation. As a 99er myself, I am not looking to be put on the govt’s teat the rest of my life, but when you are trying to find work where there are nearly a dozen applicants for every one job that becomes available. To explain further, there is a new sporting goods store opening near where I live, and they had between 500 and 600 applicants for what amounts to 55 positions. And as far as our mentality, you sound like a typical Republican who has no idea what those of us who have to deal with this circumstance are going thru. You sound just like that other guy on this site, Chucky, or even like, dare I say it, Glenn Beck who called us “Un-American”. If you are going to comment about our mentality, please do some more research on what exactly we are going thru before you make the kind of comments you are making.
Follow me here troll. You as a group have largely rejected reality. No sale.
You need something new to say, clown.
hey chukie you dont know any shit about the economy .we re not looking for free check we already paid for that money for a long time go to the job market try to find a job for your info there is none .. so cut the bull shit chuckie chuckie
chuckie you wrong. again you republicans always been wrong i understand where you coming from because you still have your job
you make good money and you have your 41k plus you still have your house but the majority of the people in America are suffering including most republicans. so i know why !! you !! dont support us the Democrats because you rich and i know why most republicans dont supports because they are .1 Racist 2 Liars 3 bigots 4 hypocrites 5 lames Republicans are CANCER to America They are Evil VOTE OUT REPUBLICANS
I hope Obamacare gets you the prescription meds you’ll need by November because if you are delusional now I don’t know what is going to happen when your world implodes.
If you are a 99er, you better move on. Democrats will not pass a tier 5 because they don’t want that 2% spike across the board on unemployment as people file for their tier 5 benefits.
They will play the card that republicans are “obstructionists” but clearly only moronic lefties buy into that as the house doesn’t need any republicans and the senate only needs a couple… this isn’t health care! They will get votes (look at everyone who voted for Tier IV).
Republicans SHOULD vote for a tier 5 so the democrats will suffer the consequences of unemployment shooting from 8% to 10% in many places just before the november elections.
You want unemployment to get worse ? At least your garbage comments are consistent.
Hey, fellows,
Stop messing with “chuckie and Co.” brains. These guys are either living on allowance from their parents or manage McD kind of little business and want you for cheap real bad. Hate you is the best they can do. They do not comment on the article because it is hard to argue that. The article is pretty good though … and pretty scary. Don’t you guys see that the economy is agonizing. When it goes down fast, everyone – Rep or Dem – is screwed. Come to your senses, while there is still time – maybe. I completely agree that tier 5 is not going to be enough; everyone knows that. The Congress better come up with a sound program of how to get out of this. Call it the New New Deal, whatever.
People want to whine about jobs going overseas but they never understand the simple economics behind WHY they are going overseas.
Unions, high taxation, costly environmental (not the common sense kind but the highly political/controlling crap) regulation, and competing against manufacturers around the world who can use the same labor pools causes jobs to flee.
The dollar dropped, fuel costs are high, so one would think that now would be a great time for many jobs to return. WRONG. Pile on even higher taxes, make our goods less competitive in global marketplaces, and demonize employers until they are ran away or close shop.
Liberal democrats destroy economies.
I bet if I want to sell a 1c piece of candy on the corner I’d be piled on with so many laws and regulations that just to meet costs I’d have to charge 25X that. At this point, I can look forward to getting taxed on well over half that income.
The USA is broken. Liberal democrats are disastrous while the republicans who preceded them were not true conservatives who fully deserved the backlash they got.
Why are democrats fiscally irresponsible and why do republicans appeal to religious wackos? I’m left in the middle knowing both of these groups are wacked out of their minds!
Right on Chuckie. I call our kind “capitalist conservatives” vs. “religious conservatives”.
Like most left-wingers, Chuckie, you’ve lost track of history. Globalization didn’t steal our jobs away because of “Unions, high taxation, costly environmental (not the common sense kind but the highly political/controlling crap) regulation, and competing against manufacturers around the world”. If that were the case, the same thing would have happened in Canada, Europe, and Japan (where there are more and stronger unions, stricter regulations, and higher taxes).
Globalization happened because the Republicans bowed to the whims of their corporate overlords and took down the barriers that insulated the American economy from the rest of the world. NAFTA (formulated by Regan, signed by Bush Sr.) , the WTO (a broader effort largely accelerated in America by the efforts of Bush Sr.) and other “free-trade” and deregulatory organizations caused the globalization that killed the American economy.
You say things like “pile on even higher taxes” as though the Bush Tax Cuts didn’t exist — as though taxes weren’t lower than they’ve been in decades.
The free market isn’t the solution. In a very real, literal, and immediate sense, it’s the PROBLEM.
Michael,
It was President Clinton’s repeal of the Glass-Steagal Act in 1999 that led to mortgages being able to be bundled and sold as commodities. This is what directly led to the Subprime Mortgage Crisis.
Bush, neither of them, had anything to do with it.
Fred,
I didn’t say anything at all about the law that allowed mortgages to be bundled and sold as commodities. I spoke specifically about repealing laws that allowed regular oversight of financial industries.
So you are basically saying that, in your brief summary of what led to the Great Recession, the fact that the Glass-Steagal Act was repealed isn’t worth mentioning?
It pretty much, single handedly, led to why this recession is so bad.
Michael Danielson: Who was on the door last night? Didn’t everyone get the memo about checking for card-carrying Nazis?
Fellow Unemployed: Fear Not! The Washington Times is hiring! Look (but don’t read) at some of the Gestapo sludge above and you’ll know that you, too, can work as a trolling blogger. It appears that even one of our “own” has been compromised. (Exonerating either Bush regarding tyranny and stealth about the economy then and now brings to mind that old ‘forest for the trees’ deal.)
But, I digress. For you boys that are out carpet-bombing in your little Wehrmacht uniforms with your hats on backwards, is Goebbels having a tough day at the propaganda office? Throwing a hissy fit that not enough swastikas are being painted on synagogues or more book stores could be burned with more effort?
Go shave your heads, knock down some old ladies, and maybe map out some new hangin’ trees for future reference. Sell your HItler Youth apparel elsewhere.
If we only buy goods from foreign countries , and do not sell to them. Soon they will have all our money. If we can’t get these bureaucrats to do what is best for all of America
We need to fire up the steel mills, texiles and so on.
Stimulate the manufacturing companies. And put high tax on imports just as other countries do to us.
Republicans worship money at all costs, even selling out our great USA to China for a few dimes. Democrats are WORKING to rebuild our country after the Republican storm. IT IS STARTING to work and Republicans do not like that. Please vote Democrat and let’s take back our wonderful country from the Republican foreign interests.
vote for Glen Beck. He will solve all our problems
Clinton left office, the economy was strong and there was a 237 billion dollar surplus. GWB and his policies caused this problem. He left office with a spiraling economy and a 1.3 trillion dollar deficit.
I do not need to see or hear anything more. When GWB was elected Governor of Texas, a job he quit. There was a 2 billion dollar surplus in the state, Which was created by ANN Richards a democrat. When he left there was a deficit in the state.
You cannot change these facts, you can only lie about them.
The average consumer has no recourse in this except to vote. But if you are in a red state without a chance of changing it what else can you do?
There is one thing you can do to help the middle class and stop the economic tyrants. Do not buy anything from a national company if you can help it. Now of course some things you have to buy from them like gasoline. But you do not have to shop at Walmart or some other large store for your food. Shop at the farmers market. This takes the money out of the pockets of the large corporations, and gives it directly to the farmers.
Buy your meat directly from the person raising the cattle. Buy your eggs directly from the farmer. The eggs in stores are being recalled anyway. Anything you can buy local, buy local. I have also stopped buying things from the biggest companies, I buy from the smaller companies.
I have closed all my Chase bank accounts and credit card accounts and now use a local credit union. It is cheaper to have a credit union account and they do not gamble with your deposits. Your deposits are still guaranteed.
If everyone who is hurting financially stops using banks and start using local credit unions, that will send a message.
I stopped using Sprint mobile and now use a smaller company, they have better customer service, cheaper rates and no contract.
I am still looking at things to see what I can switch from a national level to a local level. The more money you can keep at a local level the better off you will be.
If everyone redirects half of their spending to locally owned and locally supplied stores, that money stays in your community longer. If you eat at a restaurant, do not choose MacDonald’s choose a locally owned and locally supplied restaurant.
Again you cannot direct every penny to your local community, but if you can redirect half of what you spend, and everyone does it, it will have an impact.
Sammy D, you are correct, you can’t change the facts, you can only lie about them… and that is what Clinton did.
You can’t have a surplus if you also had an increase in debt. Every single year of Clinton’s term, he increased the debt, so he couldn’t have had a surplus. Below are the actual numbers. He left Office with an additional $1.4 Trillion added to the Deficit.
I won’t deny that this is far better than most Presidents. But the fact remains, not even in a single year, did he have a surplus.
Fiscal
Year Year Ending National Debt Deficit
FY1993 09/30/1993 $4.411488 trillion
FY1994 09/30/1994 $4.692749 trillion
FY1995 09/29/1995 $4.973982 trillion
FY1996 09/30/1996 $5.224810 trillion
FY1997 09/30/1997 $5.413146 trillion
FY1998 09/30/1998 $5.526193 trillion
FY1999 09/30/1999 $5.656270 trillion
FY2000 09/29/2000 $5.674178 trillion
FY2001 09/28/2001 $5.807463 trillion
Sorry to say a tier 5 will not help the economy. We need to focus more on updating our resumes and looking harder for that job. There are jobs to be had. I also think we need to focus on getting Glen Beck to run in 2012. He is a great man, almost as good as Rush. Hope is well, go 49ers.
I am evicted as of tomorrow. Well over 350 resumes…..knocking down doors….cannot even get a cash job. 27 month’s ago I had a new house….we had 2 cars…..didn’t live beyond the means. She is gone…my house got foreclosed…..lost my job…..sold my only vehicle I had for half of bluebook value. Ramen noodles tonite ( again ) I have $1.30 in my pocket. Credit rating is shot. I live in a state that is the worst (mi). This Govt is beyond be a joke……the people that are going postal these days…..you wonder why ? My last nite on here. All my stuff will be deposited on the sidewalk tomorrow. CANT WAIT !
Hey Brad Madden, do you make up your own facts or what? How about looking them up next time or maybe your thinking of the Bush years but with President Clinton there was a surplus of $1.9 billion in fiscal 1999 and $86.4 billion in fiscal 2000. So any way you count it, the federal budget was balanced and the deficit was erased, if only for a while
Excuse me Fred Madden.
People just don’t realize alot of jobs are gone to China to Mexico to India through Nafta. Bush increased the potency of that bill and has sent jobs over seas forever outsourced.
So you uneducated idiots saying to these Unemployed left behind Americans that there lazy, I work for unemployment I talk to idiots like you everyday, people who thought they’d never need it, people who thought they were to good for it, well my friends you too can and probably will be laid off soon, so you too can the pain that these hard working Americans go though everyday…
You people are something else. It’s not the Bush policies that have put us here, it’s the policies of the Democrats. The last time that Republicans had control of Congress was back in 1994.
For the past 16 years, Democrats have controlled Congress and it was also the Democrats who stripped the Constitution so that Americans would have less freedom than was granted under the U.S. Constitution.
Warrantless Wiretapping, The Patriot Act and the Dreaded NSL’s which the DOJ have classified as a “National Security” issue. When the threat of Iraq, Afghanistan was over, th ose protections should have been restored but apparently Obama and his thuglike Democrats think that Americans should not have any protections and that the Federal government should be ablke to violate everyone’s civil rights by continuing the Bush Administration’s policies of tapping your phone, surveiling your activities, all of this without a warrant, it’s the Democrats who overwhelmingly passed these threats to our way of life.
The Democrats are the true terrorists of our Country.
Kemcha: It appears you neglected to factor in some actual facts to your post. Maybe the following info will help clear things up for you.
The 97th Congress (1981-1983) saw a relatively thin Republican majority in the Senate (53-46, so not enough for the 60% override) and a Democrat majority in the House.
In the Senate, Republicans held the majority until 1987. From 1987-1995, the Democrats held control. Republicans regained the majority in 1995, which they held until 2001. The 107th Congress (2001-2003) saw a tie, with the Senate split 50-50. Republicans regaind a majority for the 108th and 109th Congresses (2003-2007), and then the Democrats had the majority in the 110th and will have it in the 111th.
In the House, Democrats had the majority through both Reagan and Bush, Sr.’s Presidencies, until the Republicans gained the majority (in both the House and Senate) in 1995 (election of 1994). The Republicans ruled the Senate from 1995-2007. Now, the Democrats have a majority, and will see their majority through at least until January 2011.
Care to support the basis for making such a claim, or do you feel a retraction of your post to be more fitting?
You people need a reality check. Forget the phony left-right paradigm. The phony democrats shake their fingers at the phony republicans and say its their fault. The phony republican shake their fingers at the phony democrats and say its their fault. But at the end of the day they all sit down together for martinis and crumpets at their private clubs and rejoice in the wealth they have acquired that day from the special interests of the one world corporate mafia, that is, the royal family, the Bilderbergers, the CFR, the IMF, the WTO, and the Federal Reserve, the one-worlders.
Try to get this through your thick heads. Our industrial base is completely destroyed and those responsible for destroying it have been paid well to do so. Things are going to continue to get worse until we come together as the Americans we are supposed to be, take it back, take back the wealth that has been stolen, kick their sorry asses out, and reestablish a constitutional government which they do not own and rebuild our country from the bottom up.
I am at present watching the one world corporate propaganda machine as it is trying to tell me that a rise in unemployment is a good thing. The one world corporate media has become like a high school cheer leading squad, the home team is down 48 – 7 with two minutes left in the 4th quarter and they are jumping up and down and shouting with smiles on their faces, “Obama, Obama, he’s our man, if he can’t do it, no one can.” Its like them telling me the sun is shining outside, I walk outside and it is darker than the devil’s hip pocket, I come back in and they are still telling me what a beautiful sunny day it is.
To clarify, George Bush had the same cheer leading squad and there’s not a dime’s worth of difference between the two. Bush spent more than any other president before him and Obama has spent more than all other presidents before him combined.
The demopublicans and the republicrats are nothing more than treasonous con men and women actors, and they’re not even good ones. Their corporate spokesmen (the media) will continue to blow sunshine up your ass until you take your final breath and die of starvation under the bridge.
Get your heads out of your asses and come to the realistic conclusion that it is them or us. The one world order is either going to destroy us or we are going to destroy them.
Take a look at Germany after the treasonous Treaty of Versailles. Their children lying in the streets, their stomachs bloated with flies buzzing around them while they starved to death. I promise you that if you continue to bury your heads in the sand you will see your own children and grandchildren in the same condition.
We are out of choices. The only change we are going to get is change for the worse. So unless you want to see your children starve to death in the richest country in the planet you had better steal yourselves and prepare for the inevitable. A revolution to rid our country of the one world corporate gangsters, hell bent on our destruction.
Seek out a local militia and join.
I am a 99er and personally I despise war but I would rather fight to the death than watch my grandchildren starve to death in the country my forefathers conquered. God bless the Republic, death to the new world order, we shall prevail.
Straight UP…I hope Chuckie gets hit by a car, or bus, or train, wait, wait, wait…I hope he gets hit with unemployment you greedy son of a bitch!
Join our hole Chuckie, you lonely, hypocritical, probably controlling, self-centered prick. These sites are for hope and prayer, not for some pig faced moron to try and put people and there hopes down. Go yell at your wife, oh wait, people like yourself are incredibly lonely and don’t have feelings, or anyone to share them with. your hand may just be your best friend!