The Economic Reality Show

Several years ago, in an effort to make sure that I had no excuse for not getting enough exercise, I bought a treadmill.  Multi-tasker that I am, the plan was that I would do catch up on my inevitably overflowing reading pile while doing the cardio-vascular thing.  Turns out that I am not one of those walks and chews gum let alone runs well with scissors types.  So  I broke down and started to watch television while I exercise.

Before going further, I should perhaps share that I didn’t watch much television as a child, an hour a day at most, well below today’s norm.  We didn’t even have a color television until I was almost in college, not that we couldn’t, it was just deemed unnecessary.  After I graduated college and got my first apartment, one of my first purchases was a small television.  I actually bought that before I bought a bed or a table.  And I sat down and watched it.  And watched it.  I watched soaps, I watched Dallas.  The  cheesier the better.  This went on for a few years.  And then I was over it and since then, my limited  television watching, by national standards, has been practically unpatriotic.

But now thanks to my treadmill, I am catching up with what makes America tick, and it isn’t pretty, and I”m not even watching Fox (it might get my heart rate up a bit higher, the gastro-intestinal risk is just too high).  While there is no shortage of edifying entertainment options out there , I’m finding the advertisements far more interesting.  For instance, after a lifetime of being told to worry if my butt is too big, now there are undies that make your butt look bigger.

Not only that, but ‘news’ programs that you are supposed to take seriously actually spend  time analyzing if this is a good product or not.

This is serious stuff, it is our ticket out of economic malaise according to Robert Reich who tells us that we need to spend if we are going to recover:

The truth, of course, is that the most important fiscal indicator is the ratio of the debt to the GDP. And the most important issue there is how quickly America can get jobs back and the GDP growing again. More spending in the short term is the only way to accelerate a jobs recovery, and reduce the debt-GDP ratio over the longer term.

So spend, baby, spend, get that 2nd pair of Booty Pops free, you just have to spring for the extra shipping and handling.  But first we might want to do a wee bit of thinking about the economy those fancy new undies are helping to save.

First the good news, at least if you happen to work in the top echelon of a large financial institution:

Major U.S. banks and securities firms are on pace to pay their people about $145 billion for 2009, a record sum that indicates how compensation is climbing despite fury over Wall Street’s pay culture.

An analysis by The Wall Street Journal shows that executives, traders, investment bankers, money managers and others at 38 top financial companies can expect to earn nearly 18% more than they did in 2008—and slightly more than in the record year of 2007. The conclusions are based on an examination of securities filings for the first nine months of 2009 and revenue estimates through year-end.

JPMorgan Chase & Co.,

earned $11.7 billion last year, more than double its profit in 2008, and generated record revenue. The bank earned $3.3 billion in the fourth quarter alone.


on Friday announced a record $9.3 billion payday for its investment-banking employees, setting the stage for competitors like Goldman Sachs Group Inc (GS) to also make eye-popping payouts. On a per employee basis, JPMorgan investment bankers, sales staff and traders, on average, are set to make about $379,000 for 2009, up more than $100,000 from 2008, when the broader financial sector was mired in crisis.

“People looking at it from the outside look at the dollars and say they are high,” said Kenneth Raskin, the head of law firm White & Case. “There is no question the dollars are high. The question is whether they were deserving.

No, actually the question is how do these people live with themselves and why has this been allowed to happen. Based on the above, they earned as much as $279,000 a piece in 2008 while the economy imploded. There is no question of whether they are deserving.  They are not, and no amount of Booty Pop wearing women is going to  make them look better.  Incidentally, according to the same article, median U.S. household income in 2008 was $50,303.

Meanwhile back here in reality land:

Consumer inflation was tame in 2009, with prices rising 2.7 percent. Yet families felt squeezed as their spending power sank in the face of falling wages, job losses and higher prices for energy, medical care and education.A surge in energy prices last year offset the biggest drop in food costs in nearly a half century.

The Labor Department says its Consumer Price Index rose a modest 0.1 percent in December. Excluding food and energy, prices were also up just 0.1 percent last month.


The Commerce Department said on Thursday retail sales fell 0.3 percent last month, the first decline since September, as consumers spent less on vehicles and an array of other goods during the holiday shopping month.

Analysts had expected an increase of 0.5 percent, but disappointment was tempered by upward revisions to prior months’ data. November sales were revised to show a 1.8 percent gain from an initially reported 1.3 percent increase, and October sales were bumped up a touch as well.

A separate report from the Labor Department showed initial claims for state unemployment benefits rose 11,000 to 444,000 last week, higher than the 437,000 claims analysts surveyed by Reuters had forecast.

A separate report showed inflation-adjusted weekly wages for the 12 months ending in December were down 1.6 percent, the biggest decline since 1990. Slack wages and scarce job creation have slowed consumer spending, hindering the economy’s ability to mount a strong recovery…

…While the economy remains on a steady recovery path, the housing market — the main trigger of the economic downturn — continues to show signs of stress.

The nation closed out 2009 with a record number of foreclosure actions and is poised to set a fresh record this year, real estate data company RealtyTrac said.

According to the group, 2.8 million properties with a mortgage received a foreclosure notice last year, up 21 percent from 2008 and 120 percent from 2007.

And in case you were curious, even the porn industry is suffering.

This is what a buy stuff so we can make more stuff economy looks like when it goes bad.  Mr. Reich’s solution is to prop that system up, including more military spending, which the President and Congress keep happily ponying up,

President Barack Obama will ask Congress for an additional $33 billion to fight unpopular wars in Afghanistan and Iraq on top of a record $708 billion for the Defense Department next year, The Associated Press has learned..

Compare that to the amount of aid that the U.S. is offering to Haiti, as Jesse Hagopian points out,

Yesterday, Secretary Hilary Clinton was sent to Haiti and gave a speech saying that the US is doing “every thing we can” to help the Haitian people. But that fact that her trip to the Haitian airport stopped all aid from arriving for three hours – three critical hours on a day when the difference between life and death for tens of thousands is a drink of water – should tell you everything you need to know about the US relief effort.

Obama has pledged $100 million, which will only just begin to help; and only if it is used for direct aid at all and not squandered on private contractors looking to make a dime (or many millions of dimes) off the suffering of Haitians.

U.S. Bankers got bonuses totaling over $100 billion last year. The US is spending trillions to destroy countries in the Middle East. We can raise the money needed to help our brothers and sisters of Haiti, but it is going to take ordinary people doing extraordinary things to push even the liberals in power to help.

Then there is the healthcare bill, which whatever the cost, will still leave some of the most needy in the lurch,

At any given time, an estimated 1.8 million disabled workers languish in the Medicare coverage gap, a cost saver instituted nearly 40 years ago. Many, like Walker, are uninsured. Lawmakers had hoped to eliminate the gap as part of health care overhaul, but concluded it would be too expensive.

Too expensive to care for those most in need…And just a little over a week ago, Secretary Clinton pledged “$63 billion over six years to improve global health by investing in efforts to reduce maternal and child mortality, prevent millions of unintended pregnancies, and avert millions of new HIV infections.”

So there you have it, our national economy--$63 billion over 6 years for global health, $100 million in aid and not enough to care for the most medically needy…$145 billion to bankers on Wall Street…$708 billion for ‘defense’, and $19.95 (plus shipping and handling) for Booty Pops.  Not technically the definition of a depression, but definitely depressing.

Until we redefine what a healthy economy is, one that supports caring and sustainability, Wall Street may continue to thrive.  For awhile.  But the downhill spiral for Main Street and our national soul is picking up momentum and the current prescriptions from economic talking heads will not save it.

Comments are closed.