Economics // Current TV

The recession changes the relationship between age and youth

In a commentary that appeared in the Financial Times on Saturday, 46-year-old... more

belgacem
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A Very Scary Christmas And An Incredibly Frightening New Year

Can you hear that? It almost sounds like a little bit of peace and quiet. This year,... more

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If A Global Recession Is Not Looming, Then Why Are Bailouts Flying Around As If The End Of The World Is Coming?

I have learned that watching what people do is much more important than listening to... more

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Woman speaks planily about Irish Banking at Occupy Dame Street (22 Oct 2011)

This footage was recorded at #OccupyUniversity. Which is a series of talks and... more

TheInquiringOne
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Getting Worse: 40 Undeniable Pieces Of Evidence That Show That America Is In Decline

Is America in decline? That is a very provocative question. I have found that most... more

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Debt-Free United States Notes Were Once Issued Under JFK And The U.S. Government Still Has The Power To Issue Debt-Free Money

Most Americans have no idea that the U.S. government once issued debt-free money... more

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Financial Panic Sweeps Europe As The Head Of The IMF Warns Of A "1930s Depression"

Are we on the verge of another Great Depression? Christian Lagarde, the head of the... more

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China Keeps Slapping America In The Face And America Just Keeps Taking It

If you were playing a game against a dishonest opponent and you allowed that opponent... more

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The Collapse Of The Euro, The Death Of The Euro And The End Of The Euro

The euro was a doomed project from the start, and now we are starting to see the... more

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Child Poverty In America Is Absolutely EXPLODING - 16 Shocking Statistics That Will Break Your Heart

If the U.S. economy is improving, then why is child poverty in America absolutely... more

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Mega Fail: 17 Signs That The European Financial System Is Heading For An Implosion Of Historic Proportions

What happens when you attempt a cold shutdown of one of the biggest debt spirals that... more

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35 Shocking Facts That Prove That College Education Has Become A Giant Money Making Scam

College education in America is a bad joke. Instead of preparing the next generation... more

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The Tim Tebow Comeback Story Continues But There Will Be No Miracle Comebacks For The U.S. Economy

Never in the history of the NFL has there ever been anything like this. Today, Tim... more

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The Labor Market Recovery That Never Came

The recession has been officially over since last year, based on GDP growth. Although the NBER says that they take employment into consideration when they ame their assessment of economic activity, it does not count for much. When production begins increasing for 2 consecutive quarters, that is when the recession is over. However, the real recession is not over until employment reaches the level it was at before the recession started. Until then, any declaration of a recession being over is false.

Economists' joke: A recession is when your neighbor loses his job; a depression is when you lose your job. For many Americans, this country and the world for that matter, have been in a depression and it does not look like it is ending anytime soon. We are currently in a liquidity trap and have been for some time, as the Fed has kept interest rates at near zero, yet there is little or no increase in lending. Consumers are in the same situation, the current holiday spending not withstanding.

Economists warned back in 2009 and earlier that this recession would be close on a scale to that of the 20th Century's Great Depression. That come not just from not just Keynesians, but also from conservative economists like Martin Feldstein, Harvard professor and former economic adviser to Ronald Reagan, wrote in January 2009 that "this recession is likely to last longer and be more damaging than any since the depression of the 1930's." And a January 2009 survey of more than 100 economists, conducted by the National Association for Business Economics, found that that business conditions overall were the worst in the survey's 27-year history. At the time,78 percent of the economists said they expected GDP to keep falling.

The Wall Street Journal is reporting "Corporations have a higher share of cash on their balance sheets than at any time in nearly half a century, as businesses build up buffers rather than invest in new plants or hiring. Non-financial companies held more than $2 trillion in cash and other liquid assets at the end of June, the Federal Reserve reported Friday, up more than $88 billion from the end of March. Cash accounted for 7.1% of all company assets, everything from buildings to bonds, the highest level since 1963." While the Fed is reporting that U.S. households' net worth fell to $58.5 trillion in the second quarter, down $149 billion from the first quarter. With less money to spend and more Americans out of work, the economy will be depressed for many years to come.

The way out is to change the tax policies to increase spending by corporations to hire more workers. A corporate "tax holiday" to allow them to bring money back to this country, tied to an excise tax of 30% if the money is not used to hire new workers and build new infrastructure in addition to what is currently owned. This will get money back into circulation, get business hiring putting money in the pockets of Americans that will spend it on products that will in effect cause more employers to hire to meet this new demand.

Changing the tax policy on capital gains will also help to expand the economy and prevent speculative bubbles in the economy. Changing capital gains to a time and percentage based tax will slow the speculative nature of "investing", and put more emphasis on long term growth and stability. So holding a investment for less than 1 day would incur a tax of 90%. Reduce that over time and stability well come back into the markets, including those for sovereign debt.

Increasing the amount of industrial production in the US is another goal that must be achieved in order to prevent large scale, long term unemployment. We no longer have an industrial base which can absorb the unemployed. Service jobs and retail continue to utilize fewer workers to do the same thing. Further, those jobs do not create wealth. Wealth is created when raw materials are turned into finished goods. We are one of the few countries that have the capacity to provide the raw materials and the consumers to create wealth. We do not have to export our products, but will definitely help with growth. Nor do we need to import products on the scale that we do. If we have no manufacturing, we will eventually have no consumers.

We are beyond the point where the government has to get involved and start to create jobs. It has to be both the job creator, and the business motivator. Getting new infrastructure built (roads, bridges, sewers, water transport for drinking and navigation, electrical grid and high speed rail), spurring new economic activity in renewable energy and the export of that equipment, and in positive tax policies are what is needed to get this country, and subsequently the world out of this "recession".

http://www.huffingtonpost.com/2011/12/08/the-labor-market-recovery-unemployment_n_1137865.html

http://www.huffingtonpost.com/2011/12/07/jay-carney-economy-recession_n_1134196.htmlThe recession has been officially over since last year, based on GDP growth. Although... more