marmar Donating Member (1000+ posts)
The Mirage Crumbles Updated at 3:58 PM
from the WorkingLife blog:
The Mirage Crumbles
by Jonathan Tasini
Wednesday 24 of February, 2010
I do not like to be negative. I'm actually quite the optimist, generally speaking. So, I admit to feeling uneasy that I've been presistently, regularly disbelieving about the talk of "economic recovery". I think that such talk ignores the actual FACTS and is largely driven by political imperatives--meaning, politicians who want to be re-elected and believe that they have to appear to be leading the people out of the deep economic crisis we find ourselves in.
People don't have money to spend:
Consumers remain reluctant to open their wallets with unemployment stubbornly high and home prices falling and unlikely to turn up soon, executives and economists say. While business purchases and other indicators point to an improving economy, unemployment is now at 9.7% and expected to fall only gradually over the next two years.
That should certainly not be surprising. It's the natural end game of a 30-year assault on wages. Credit is gone. People do not have decent-paying work. How could they spend money?
And the banking sector is still in crisis:
U.S. banks posted last year their sharpest decline in lending since 1942, suggesting that the industry's continued slide is making it harder for the economy to recover.
While top-tier banks are recovering at a faster clip, the rest of the industry is still suffering, according to a quarterly report from the Federal Deposit Insurance Corp. Banks fighting for survival, especially those plagued by losses on commercial real estate, are less willing to extend loans, siphoning credit from businesses and consumers.
Besides registering their biggest full-year decline in total loans outstanding in 67 years, U.S. banks set a number of grim milestones. According to the FDIC, the number of U.S. banks at risk of failing hit a 16-year high at 702. More than 5% of all loans were at least three months past due, the highest level recorded in the 26 years the data have been collected. And the problems are expected to last through 2010.
This is going to be a long, difficult road--until we start having a serious debate about the nature of our economy and the robbery that has taken place
--and is still taking place--in the country.