Transcript Slide 1

The Great Recession of 2008,
the Passing of the Middle Class
& the Fragility of America’s Future:
Social Justice as a Response to Radical
Libertarian Individualism
Jeoffry B. Gordon, M.D., M.P.H.
(619)223-7164
San Diego, Ca.
[email protected]
I have no financial interests or conflicts of interest to
declare.
References: http://gordon.netrootz.com
PART 1
THE GREAT RECESSION OF 2008
Correlation Between Household Income and
Unemployment Rate in the Last Quarter of 2009
Household Income
Rate
$150,000 or more
3.2%
$100,000 to $149,000
8.0%
$75,000 to $99,999
5.0%
$60,000 to $74,999
6.4%
$50,000 to $59,000
7.8%
$40,000 to $49,000
9.0%
$30,000 to $39,999
12.2%
$20,000 to $29,000
19.7%
$12,500 to $19,999
19.1%
$12,499 or less
30.8%
Center for Labor Market Studies,
Northeastern University, Boston, MA
Prepared for: C.S. Mott Foundation, Flint, MI
February 2010
1643
The Great Recession at 30 Months Half of Work Force Has
Taken a Job-Related Hit PEW RESEARCH CENTER June 30, 2010
PART 2
THE MIDDLE CLASS TRAPPED
THE Middle Class Is Being Systematically Wiped Out Of Existence In America
Michael Snyder, Business Insider -- July 15, 2010
01 ) 83% of all U.S. stocks are in the hands of 1% of the people.
02 ) 61% of Americans "always or usually" live paycheck to paycheck, which was up from 49% in 2008
and 43% in 2007.
03 ) 66% of the income growth between 2001 and 2007 went to the top 1% of all Americans.
04 ) 36% of Americans say that they don't contribute anything to retirement savings.
05 ) A staggering 43% of Americans have less than $10,000 saved up for retirement.
06 ) 24% of American workers say that they have postponed their planned retirement age in the past year.
07 ) Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32% increase
over 2008.
08 ) Only the top 5% of U.S. households have earned enough additional income to match the rise in
housing costs since 1975.
09 ) For the first time in U.S. history, banks own a greater share of residential housing net worth in the
United States than all individual Americans put together.
10 ) In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about
30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to 1.
11 ) As of 2007, the bottom 80% of American households held about 7% of the liquid financial assets.
12 ) The bottom 50% of income earners in the United States now collectively own less than 1% of the
nation’s wealth.
13 ) Average Wall Street bonuses for 2009 were up 17% when compared with 2008.
14 ) In the United States, the average federal worker now earns 60% MORE than the average worker in the
private sector.
15 ) The top 1% of U.S. households own nearly twice as much of America's corporate wealth as they did
just 15 years ago.
16 ) In America today, the average time needed to find a job has risen to a record 35.2 weeks.
17 ) More than 40% of Americans who actually are employed are now working in service jobs, which are
often very low paying.
18 ) For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S.
Department of Agriculture projects that number will go up to 43 million Americans in 2011.
19 ) This is what American workers now must compete against: in China a garment worker makes
approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.
20 ) Despite the financial crisis, the number of millionaires in the United States rose a whopping 16% to
7.8 million in 2009.
21 ) Approximately 21% of all children in the United States are living below the poverty line in 2010 –
the highest rate in 20 years.
22 ) The top 10% of Americans now earn around 50% of our national income.
THE AGE OF ECONOMIC INSECURITY IS HERE
LOOKING AT THE ECONOMIC SECURITY INDEX DEVELOPED BY JACOB
HACKER AND THE ROCKEFELLER INSTITUTE
Aughts were a lost decade for U.S. economy,
workers
By Neil Irwin
Washington Post Staff Writer
Saturday, January 2, 2010
[The January 8, 2010 US Labor Department] report caps a
disastrous year for U.S. workers. Employers cut 4.2 million
jobs in 2009, and the unemployment rate averaged 9.3
percent. That's compared to an average of 5.8 percent in
2008 and 4.6 percent in 2007. The economy has lost more
than 8 million jobs since the recession began in December
2007.
Median household income, adjusted for inflation, fell
3.6% last year (2008) to $50,303, the steepest year-overyear drop in forty years. The largest decline, 5.6%, was
among Hispanics, a reflection of disappearing construction
and service jobs. The median income for Asians fell 4.4%,
while black incomes fell 2.8% and non-Hispanic whites fell
2.6%. The poverty rate, at 13.2%, was the highest since
1997.
About 700,000 more people didn't have health insurance
in 2008 than the year before. While the number of people
with health insurance declined, the number of people
covered by government insurance increased by 4.4 million
people, in part because of surging Medicaid rolls.
— U.S. consumers and businesses are filing for bankruptcy
at a pace that made 2009 the seventh-worst year on
record, with more than 1.4 million petitions submitted, an
Associated Press tally showed Monday.
The AP gathered data from the nation's 90 bankruptcy
districts and found 1.43 million filings, an increase of 32
percent from 2008. There were 116,000 recorded
bankruptcies in December, up 22 percent from the same
month a year before.
America Without a Middle Class
Elizabeth Warren Chair of the Congressional Oversight Panel created to oversee the banking bailouts.
HUFF POST December 3, 2009 10:00 AM
“Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't
make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight
Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis
has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and
threatens to put ten million homeowners out on the street.
To cope, millions of families put a second parent into the workforce. But higher housing and medical costs
combined with new expenses for child care, the costs of a second car to get to work and higher taxes combined to
squeeze families even harder.
Even with two incomes, they tightened their
belts. Families today spend less than they
did a generation ago on food, clothing,
furniture, appliances, and other flexible
purchases -- but it hasn't been enough to
save them. Today's families have spent all
their income, have spent all their savings,
and have gone into debt to pay for college,
to cover serious medical problems, and just
to stay afloat a little while longer.
The end of the American dream?
by Steve Schifferes
BBC News Website, September 4, 2006
THE HIDDEN ROOT CAUSE
Manufacturing isn’t gone from America yet, but it’s at serious risk of leaving.
•Manufacturing employs 14 million people, generates nearly 12 percent of U.S. gross
domestic product and accounts for 60 percent of U.S. exports.
•Manufacturing is at least the third- largest sector or greater in 40 states.
•But manufacturing has sharply declined from 27 percent of GDP in 1950 to only 11.5
percent today.
•And a quarter of the nation’s 282,000 remaining manufacturing companies -- 90,000 in
all -- are now deemed severely "at risk."
National Health Expenditures per Capita and Their Share of Gross
Domestic Product, 1960-2007
$8,000
$7,000
$6,000
$5,000
$4,102 $4,296
$4,522
$4,789
$5,149
$5,560
$5,967
$6,319
$6,687
$7,062
$7,421
$4,000
$2,814
$3,000
$2,000
$1,100
$1,000
$148
$356
$0
1960
1970
1980
1990
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
NHE as a Share of GDP
5.2% 7.2%
9.1% 12.3% 13.5% 13.6% 13.7% 13.8% 14.5% 15.3% 15.8% 15.9% 15.9% 16.0% 16.2%
Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at
http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2007; file
nhegdp07.zip).
STOCK INVESTMENT PERFORMANCE
1999 --- 2009
THE WALL STREET JOURNAL December 20, 2009
1999 - 2009 STANDARD & POORS 500
1999 - 2009 DOW JONES 30 INDUSTRIALS
1999 - 2009 NASDAQ 100
TOTAL RETURN
(-10.19%)
+12.79%
(-42.19%)
PER YEAR
(-1.07%)
+1.21%
(-5.35%)
includes reinvesting all dividends
The Wealth of Older Americans and the Subprime Debacle
Barry P. Bosworth, Senior Fellow, Economic Studies, Global Economy and Development Rosanna Smart,
Senior Research Assistant , Economic Studies
Center for Retirement Research at Boston College, BROOKINGS INSTITUTE, Saturday January 23, 2010
This study explores the consequences of the housing price bubble and its
collapse for the wealth of older households. We utilize micro survey data to follow
the rise in home values to 2007, observing which households enjoyed home price
appreciation and how they responded in terms of equity withdrawal. We then use
the SCF survey data on wealth holdings from 2007 in combination with national
price indexes to simulate the magnitude and distribution of wealth loss from the
2008-2009 financial crisis. The collapse of the housing market triggered a broad
decline of asset prices that greatly reduced the wealth of all households. The FoFs
[Flow of Funds] report a $13 trillion (15 percent) loss of household wealth
between the peak of mid-2007 and March 2009; and, as shown in Figure 1, the
wealth-income ratio has basically fallen back to the levels of the early 1990s.
WHAT IS A TRILLION ANYWAY?
‘’TIME IS MONEY’’
TURN DOLLARS INTO SECONDS
1 MILLION SECONDS EQUALS 12 WEEKS
1 BILLION SECONDS EQUALS 32 YEARS
1 TRILLION SECONDS EQUALS 32,000 YEARS
PART 3
THE FAILURE OF GOVERNMENT
Effect of continuing the Bush Tax cuts vs Obama’s plan
THE WASHINGTON POST September 13, 2010
Ed Rendell Speaks: 2.2 Trillion Infrastructure Deficit
Wednesday February 11, 2009 9:00 am
On August 1, 2007 thirteen commuters were killed
and more than 100 were injured when the eight
lane bridge in Minneapolis, Minnesota carrying
Interstate 35W over the Mississippi River collapsed.
On September 8, 2010 a natural gas line
explosion in San Bruno, California killed at
least 4 and injured at least 20, destroying 53
Homes and damaging 120 more.
Recession Continues to Batter State Budgets; State Responses Could Slow Recovery
By Elizabeth McNichol and Nicholas Johnson
Updated December 23, 2009 Center on Budget And Policy Priorities
The worst recession since the 1930s has caused the steepest decline in state tax receipts on record. As a
result, even after making very deep cuts, states continue to face large budget gaps. New shortfalls have
opened up in the budgets of at least 39 states …totaling $34 billion or 6 percent of these budgets for the
current fiscal year (FY 2010, which began July 1 in most states). In addition, initial indications are that states
will face shortfalls as big as or bigger than they faced this year in the upcoming 2011 fiscal year. States will
continue to struggle to find the revenue needed to support critical public services for a number of years.
Struggling Cities Shut Firehouses in Budget Crisis
By MICHAEL COOPER THE NEW YORK TIMES August 26, 2010
SAN DIEGO — Fire departments around the nation are cutting jobs, closing firehouses and increasingly
resorting to “rolling brownouts” in which they shut different fire companies on different days as the economic
downturn forces many cities and towns to make deep cuts that are slowing their responses to fires and other
emergencies.
Philadelphia began rolling brownouts this month, joining cities from Baltimore to Sacramento that now shut
some units every day. San Jose, Calif., laid off 49 firefighters last month. And Lawrence, Mass., north of
Boston, has laid off firefighters and shut down half of its six firehouses, forcing the city to rely on help from
neighboring departments each time a fire goes to a second alarm….
The risks of cutting fire service were driven home here last month when (in San Diego) Bentley Do, a
2-year-old boy who was visiting relatives, somehow got his hands on a gum ball, put it in his mouth, started
laughing and then began choking…. It is only 600 steps from the front door of the neatly kept stucco
home where the boy was staying to the nearest fire station, just down the block. But the station was
empty that evening: its engine was in another part of town, on a call in an area usually covered by an
engine that had been taken out of service as part of a brownout plan. The police came to the home
within five minutes and began performing cardiopulmonary resuscitation, officials said. But it took nine and a
half minutes — almost twice the national goal of arriving within five minutes — for the fire engine, with a
paramedic and more medical equipment, to get there. An ambulance came moments later and took Bentley
to the hospital, where he was pronounced dead. The San Diego Fire-Rescue chief, Javier Mainar, said it
was impossible to say whether the delay contributed to Bentley’s death on July 20. But he said there was
no doubt that the city’s brownouts, which take 13 percent of firefighters off the streets each day to
save $11.5 million annually, led to the delay.
Fire service was once a sacred cow at budget time. But the downturn has lingered so long that many
cities, which have already made deep cuts in other agencies, are now turning to their fire
departments.
The Fat Lady Has Sung
By THOMAS L. FRIEDMANTHE NEW YORK TIMES February 20, 2010
A small news item from Tracy, Calif., caught my eye last week. Local station CBS 13 reported: “Tracy residents will now
have to pay every time they call 911 for a medical emergency. But there are a couple of options. Residents can pay a $48
voluntary fee for the year, which allows them to call 911 as many times as necessary. Or there’s the option of not signing
up for the annual fee. Instead they will be charged $300 if they make a call for help….”
Indeed, to lead now is to trim, to fire or to downsize services, programs or personnel. We’ve gone from the age of
government handouts to the age of citizen givebacks, from the age of companions fly free to the age of paying for each
bag.
Let’s just hope our lean years will only number seven. That will depend a lot on us and whether we rise to the economic
challenges of this moment. Our parents truly were the Greatest Generation. We, alas, in too many ways, have been what
the writer Kurt Andersen called “The Grasshopper Generation,” eating through the prosperity that
was bequeathed us like hungry locusts. Now we and our kids together need to be “The Regeneration” — the
generation that renews, refreshes, re-energizes and rebuilds America for the 21st century.
President Obama’s bad luck was that he showed up just as we moved from the fat years to the lean years. His calling is
to lead The Regeneration. He clearly understands that in his head, but he has yet to give full voice to it….
To be sure, taking over the presidency at the dawn of the lean years is no easy task. The president needs to persuade the
country to invest in the future and pay for the past — past profligacy — all at the same time. We have to pay for more
new schools and infrastructure than ever, while accepting more entitlement cuts than ever, when public trust in
government is lower than ever.
On top of that, the Republican Party has never been more irresponsible. Having helped run the deficit to new heights
during the recent Bush years, the G.O.P. is now unwilling to take any responsibility for dealing with it if it involves
raising taxes.
PART 4
GOVERNMENT BY and FOR THE
CORPORATIONS
FEBRUARY 15, 1999
Ryan Grim and Shahien Nasiripour [email protected] |
Revealed: See Who Was Paid Off In The AIG Bailout
HuffPost Reporting First Posted: 01-27-10 02:47 PM | Updated: 01-27-10 09:05 PM
A key question at the heart of the controversial bailout of AIG is just how much money the government lost. The
Federal Reserve and Treasury Department have worked to keep that number secret and to conceal who was on the
winning end. An unredacted document obtained by the Huffington Post list the damage in detail….
The list was produced as part of a congressional investigation led by the House Oversight and Government Reform
Committee into the federal bailout of AIG. The troubled insurer tried to publicly disclose these details in December
2008 before being thwarted by the Geithner-led New York Fed. A month later Geithner left to head the Treasury
Department.
The Federal Reserve Bank of New York, then led by now-Treasury Secretary Tim Geithner,
purchased a slew of souring assets from the world's biggest banks for 100 cents on the
dollar in November and December 2008. A scathing report by a government watchdog held Geithner
responsible for the overpayments. Those insurance contracts, called credit default swaps, are what the New York Fed
ultimately took off AIG's books, paying the banks 100 cents on the dollar for toxic mortgage bonds -- home mortgages
that were bundled together and securitized. The banks could never have gotten anywhere near such a generous deal on
the open market, so the move served essentially as a direct subsidy to those banks from taxpayers .
At the time the document was prepared, Goldman's $14 billion in souring derivatives had a market value of just $6
billion. Goldman had more than $8 billion in collateral from AIG to protect it from losses, meaning it was still about $6
billion short. But more than $2 billion of those collateral payments came from AIG after it was bailed out on Sept. 16 of
that year, according to a Nov. 2008 presentation prepared for the New York Fed that was released this week. So that $2
billion was made possible partly due to taxpayer assistance.
Combined with the $6 billion deficit it faced in the face value of those securities, Goldman Sachs ultimately received
about $8 billion from taxpayers via AIG. Goldman posted a $1.3 billion profit for 2008…. A government audit this
month found that as of Sept. 30, 2009, the Treasury Department was expecting a $30 billion loss on its TARP-related
AIG investment. The value of the securities could ultimately rise, though.
Banks’ Self-Dealing Super-Charged Financial Crisis
IN “CITIZENS UNITED” THE SUPREME COURT
GIVES CORPORATIONS THE POLITICAL
POWER OF NATURAL PEOPLE
PART 5
THE USA IS NOT ALONE
SHANGHAI, CHINA
% JOBS LOST TO CHINA DUE TO CURRENCY MANIPULATION
ECONOMIC POLICY INSTITUTE, Robert E. Scott, March 23, 2010
By Bruce Hoffman
Sunday, January 10, 2010
THE WASHINGTON POST
First, al-Qaeda is increasingly focused on overwhelming, distracting and exhausting us. To
this end, it seeks to flood our already information-overloaded national intelligence
systems with myriad threats and background noise. Al-Qaeda hopes we will be so
distracted and consumed by all this data that we will overlook key clues, such as those
before Christmas that linked Abdulmutallab to an al-Qaeda airline-bombing plot.
Second, in the wake of the global financial crisis, al-Qaeda has stepped up a strategy of
economic warfare. "We will bury you," Soviet Premier Nikita Khrushchev promised
Americans 50 years ago. Today, al-Qaeda threatens: "We will bankrupt you." Over the
past year, the group has issued statements, videos, audio messages and letters online
trumpeting its actions against Western financial systems, even taking credit for the
economic crisis. However divorced from reality these claims may be, propaganda doesn't
have to be true to be believed, and the assertions resonate with al-Qaeda's target
audiences.
An Empire at Risk
We won the cold war and
weathered 9/11. But now economic
weakness is endangering
our global power.
By Niall Ferguson | NEWSWEEK
Published Nov 28, 2009
From magazine issue dated Dec 7, 2009
…if the United States succumbs to a
fiscal crisis, as an increasing number of
economic experts fear it may, then the entire
balance of global economic power could shift.
Military experts talk as if the president's decision about whether to send an
additional 40,000 troops to Afghanistan is a make-or-break moment. In reality, his
indecision about the deficit could matter much more for the country's long-term
national security. Call the United States what you like—superpower, hegemon, or
empire—but its ability to manage its finances is closely tied to its ability to remain
the predominant global military power.
PART 6
A HOUSE OF SAND: MASSIVE INCOME INEQUALITY
THREATENS US STABILITY
Emmanuel Saez, UC Berkeley, August, 2009
GROUPS 1, 2, AND 3 (the top 10% of all income producers) ADD TO A TOTAL OF
50% 0F TOTAL NATIONAL FAMILY INCOME
Bear in mind that the drive to cut taxes largely benefited a small minority of Americans: 39 percent of the
benefits of making the Bush tax cuts permanent would go to the richest 1 percent of the population.
And bear in mind, also, that taxes have lagged behind spending partly thanks to a deliberate political strategy,
that of “starve the beast”: conservatives have deliberately deprived the government of revenue in an attempt to
force the spending cuts they now insist are necessary. Paul Krugman, NYT, May 13, 2010
Jacob S. Hacker and Paul Pierson Politics & Society June
2010 38: 152-204
Winner-Take-All Politics: Public Policy, Political
Organization, and the Precipitous Rise of Top Incomes
in the United States
[email protected] JUNE 28, 2010
Country
UN R/P 10%
UN R/P 20%
UN Gini
CIA R/P 10%
Year
CIA Gini
Year
Sweden
6.2
4
25
6.2
2000
23
2005
Denmark
Slovenia
Iceland
Austria
8.1
5.9
N/A
6.9
4.3
3.9
N/A
4.4
24.7
28.4
N/A
29.1
12.0
5.9
N/A
6.8
2000 est.
1998
N/A
2004
24
24
25
26
2005
2005
2005
2005
5.2
3.5
25.4
5.2
1996
26
2005
5.6
N/A
6.7
3.8
N/A
4
26.9
N/A
25.8
5.7
6.8
6.7
2000
2000
1996
26
26
26
2005
2005
2005
5.4
3.8
26.2
5.5
2001
26.2
2001
7.2
4.8
31.1
7.2
2004
26.7
2005
Belgium
8.2
4.9
33
8.3
2000
28
2005
France
9.1
5.6
32.7
8.3
2004
28
2005
Germany
6.9
4.3
28.3
6.9
2000
28
2005
Cameroon
15.7
9.1
44.6
15.4
2001
44.6
2001
Côte d'Ivoire
16.6
9.7
44.6
17.0
2002
44.6
2002
United States
15.9
8.4
40.8
15.0
2007 est.
45
2007
Uruguay
17.9
10.2
44.9
17.9
2003
45.2
2006
Jamaica
17.3
9.8
45.5
17.0
2004
45.5
2004
Uganda
16.6
9.2
45.7
16.4
2002
45.7
2002
46
2006
Czech Republic
Finland
Luxembourg
Slovakia
Bosnia and
Herzegovina
Albania
Ecuador
44.9
17.3
53.6
17.5
2006]
Malaysia
22.1
12.4
49.2
28.0
2003 est.
46.1
2002
Mexico
Rwanda
People's
Republic of
China
24.6
12.8
46.1
24.6
2004
46.1
2004
18.6
9.9
46.8
18.2
2000
46.8
2000
21.6
12.2
46.9
21.8
2004
46.9
2004
It was the best of times, it was the worst of times, it
was the age of wisdom, it was the age of
foolishness, it was the epoch of belief, it was the
epoch of incredulity, it was the season of Light, it
was the season of Darkness, it was the spring of
hope, it was the winter of despair, we had everything
before us, we had nothing before us, we were all
going direct to heaven, we were all going direct the
other way - in short, the period was so far like the
present period.
Charles Dickens, A Tale of Two Cities
English novelist (1812 - 1870)