Tuesday, February 05, 2008

Meltdown Continued

Dean Baker is clearer today about why homeowners are defaulting on their houses before they default on their credit cards.

Glen Ford projects a historic loss of wealth for people of color. The report on which his piece is based suggests that African Americans will achieve home-ownership parity with whites in only 5, 423 years!

Very unpleasant data on US contraction sent the Dow and S&P 500 into a tailspin - they are around 3 percent down in one day. Markets were especially shocked by a survey of non-manufacturing sector managers that looked like the service economy in the US is going off a cliff. European bankers may be figuring out a US decline will start to sink them too.

The frequently awful Martin Wolf of the Financial Times is scared into making real sense today. He points out that "the banking sector is the recipient of massive explicit and implicit public subsidies," makes risk public and profits private, suffers from "massive agency problems," while society lacks the ability to monitor transactions until long after they're over. This is the FT equivalent of Bolshevism, and ends in a call for - regulation!

Take a careful look at that graph above. See where the US makes its money. Nearly half of all profits in the U.S. now come from the financial sector. This is about double their share at the end of the decade. Meanwhile, the last employment report showed that manufacturing employment in the U.S. feel for the first time in known history below 10 percent of the total.

Now look at the one below. See how much financials make.

I had a great day with Gaye and Chuck visiting from out of town - aside from the moment when Chuck predicted Mitt Romney will be the Republican candidate.

I tried to find something economically relevant on the candidates' websites. Well they do say things: Hillary Clinton for one; Barak Obama for another. He at least calls for raising the cap on social security taxes to pick up higher-income folks - some minimal tax fairness. They don't know what to do about the larger picture.

While you're waiting for the candidates' to say something effective, have fun with the NYT's class graphic.

The absence of a clear explanation of what's happening that people can understand - it's fairly mindboggling.

The absence in the mainstream of a coherent policy alternative to Blairite-Clintonish finance capital is equally interesting.

But it will come. As Chuck said, "The Giants won the Super Bowl on Sunday. Anything is possible."

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