Reflections on Garden World Politics Douglass Carmichael

Such an excellent summary

The trillions of dollars that the Bush and Obama administration have given away to Wall Street would have been enough to buy a great bulk of the mortgages now in default – mortgages beyond the ability of many debtors to pay in the first place. The government could have enacted a Clean Slate for these debtors, financed by re-introducing progressive taxation, restoring the full capital gains tax to the same rate as that levied on earned income (wages and profits), and closing the tax loopholes that effectively free finance, insurance and real estate (FIRE) sector from income taxation. Instead, the government has made Wall Street virtually tax exempt, and swapped Treasury bonds for trillions of dollars of junk mortgages and bad debts. The “real” economy’s growth prospects are being sacrificed in an attempt to carry its financial overhead.

via CounterPunch: Tells the Facts, Names the Names.

Continuing the documentation..

The Commerce Department’s National Income and Product Accounts (NIPA) for May show that U.S. “savings” are now absorbing 6.9 percent of income.

I put the word “savings” in quotation marks because this 6.9 per cent  is not what most people think of as savings. It is not money in the bank to draw out in  rainy-day emergencies like losing one’s job, as thousands are every day. The statistic means that 6.9 per cent of national income is being earmarked to pay down debt – the highest savings rate in 15 years, up from actually negative rates (living on borrowed credit) just a few years ago. The only way in which these savings are “money in the bank” is that they are being paid by consumers to their banks and credit card companies.

via CounterPunch: Tells the Facts, Names the Names.

I’ve suspected stabilization, but at a lower level of employment, and a lower level of the economy. GDP down by say three percent from the high, unemployment up by 7 percent. That means that the richer can maintain the same level of income, while the poorer take the hit. This is the new reality, the new stabilization.

From the Financial Times: Romer upbeat on US economy

Ms Romer, chairman of the US president’s council of economic advisers, told the Financial Times in an interview she was “more optimistic” that the economy was close to stabilisation.

via Calculated Risk.

This is just terrible. Let’s decrease benfits for the bottom in order to not tax the top. Martin Feldstein writes

It would be wrong for the Obama administration and Congress to reduce the fiscal stimulus in 2009 or 2010, since there is no clear evidence of a sustained upturn. But it would be equally wrong to allow the national debt to double to 80 per cent of GDP a decade from now. Increasing taxes even more than proposed would weaken demand in the near term and hurt economic incentives in the long run. The fiscal deficit should therefore be reduced by curtailing the increases in social spending that the president advocated in his election campaign.

Higher braket taxpapers do not cut demand. It is ordinary people lower down who spend what they get and with more income and benefits keep demand higher. The hidden fact in the paragraph is whath  he means by taxes. Is this lying, bad intent? Tthe workings of a mind can be strange.

via Economists View.

I’ve mentioned her before. The key is she says financial services are eating up so much profit that not enough is available for the nextphase of ubiquitous computing, the phasw where returns on invesment at the whole of society really take off. But now stunted.

TECHNOLOGICAL REVOLUTIONS

AND FINANCIAL CAPITAL:

The Dynamics of Bubbles and Golden Ages

Carlota Perez

via CARLOTA PEREZ.ORG – Carlota Perez Official Website.