Forum Post: US Economic Depression for Homeowners and Workers

The US economy should be called “The US Economic Depression for Homeowners and Workers”. I have always been very interested in economic issues. Ever since the economic recession hit in 2008, I have been very concerned with how both the President and his administration, and members of Congress, have handled it. It seems as though members of both major political parties have been more concerned with the welfare of large corporations and the “one-percenters” than the welfare of average US citizens.

The government bailed out General Motors and the banks that were “too big to fail”, but has provided very little help for individuals hit with foreclosure and being underwater on their mortgages. Because of the collapsing homeownership and job losses, both the US government and especially local governments have been hit with declining taxes, leading to a vicious cycle of government layoffs and lessening payments for programs like welfare. In addition, people who have lost their homes and jobs are unable to spend as much, leading to further declines in an economy based on purchasing.

Too many people are unaware of the degree of the economic devastation. The major news outlets publish articles stating that the economy is recovering. That is true of the stock market (more money for corporations and “one-percenters”!) but is not true of the job market.

Here are some articles that show the true picture of the economy.  An article in the Tampa Bay Times from 2008 “Hard Numbers: The economy is worse than you know” http://www.tampabay.com/news/hard-numbers-the-economy-is-worse-than-you-know/473596 describes how presidents since Kennedy have fiddled around with economic numbers such as the GDP, CPI and monthly unemployment data, to make them appear better than they should.

An economist cited in that article, named John Williams, publishes a website called Shadowstats (www.shadowstats.com), which shows graphs of the various data as reported by the government, compared with his calculations of the true raw numbers. For example, the government is currently touting an unemployment rate of 6.3%, but Shadowstats states that the true unemployment rate is 23.2%. Over the past several years, the Shadowstats rate went from 18% to 20% to 22%, and now it has been over 23% for the entire year.

In February of 2012, Benjamin Bernanke gave a talk at the International Builders' Show and indicated that homeowners lost 40% of the value of their homes, more than 7 trillion dollars in lost household wealth, after the bubble popped  http://money.cnn.com/2012/02/10/news/economy/bernanke_housing/.  That lost wealth has led to a cascade of nonpurchasing and additional problems such as the closing of many schools because of reduced property values and thus property taxes.

An article on the Socialist website, “Pennsylvania faces a $1 billion tax shortfall, setting stage for new budgets cuts” http://www.wsws.org/en/articles/2014/05/19/penn-m19.html says that nearly 400,000 PA residents are unemployed. That is more than 100,000 more than before the start of the recession in 2008. Governor Corbett has continued corporate tax cuts enacted by former Governor Rendell and has also refused to raise taxes on the gas industry. Meanwhile Wall Street is demanding that PA cut pensions for state employees and teachers. I tried to find this information somewhere else on the Internet but didn't find any news media reporting these sad facts.

The National Employment Law Project published a report stating “US economic 'recovery' dominated by low-wage jobs” http://www.nelp.org/page/content/lowwagerecovery2014/. Job growth since 2008 has been heavily concentrated in low-wage industries. As a result, median household income in the US plummeted 8.3% between 2007 and 2012. Meanwhile, the net worth of US billionaires more than doubled from what it was in 2009.   Finally, Paul Krugman in “Springtime for the bankers but winter for everyone else”http://www.pennlive.com/opinion/2014/05/the_bankers_spring_paul_krugma.html  criticizes Timothy Geithner, the former Treasury Secretary who has written a book entitled “Stress Test”. In that book, Geithner touts the financial bailout of Wall Street and says that mortgage relief would not have helped the economy. Krugman says that two mortgage economy experts named Atif Mian and Amir Sufi say Geithner's analysis is totally wrong.   Too many people hear that the economy is recovering and wonder why they still can't find a job or have to take a part-time position because they can't find fulltime employment, etc. Maybe if people knew how bad it really is (23.2% true unemployment), they would demand that our elected officials quit bailing out large corporations and billionaires, and start helping individual tax-payers.