How bailing out the rich created the Depression

Crooks and Liars

The other day, Krugman wrote that we’re in the beginning of a new Long Depression.

Forgive me, but he’s wrong: this isn’t the beginning, it’s been going on for about two years now.

During a Depression there are periods where GDP grows. There are periods where jobs grow. It’s just that the periods of job growth don’t last.

There were opportunities to end the Depression before it really dug in its heels. The last one was at the beginning of Obama’s term. Kicking out of the Depression required two things.

The first was an adequate stimulus. This didn’t just mean a large enough stimulus, though the one offered was not large enough, it meant one properly constructed. Tax cuts for ordinary Americans are not stimulative, because folks like banks who have pricing power (you must have a credit card, loans, etc…) will simply take that money away by raising rates and fees. And it doesn’t mean short term shovel-projects, it means making commitments which will last for years so that businesses, when making plans know that hiring is worth it because those employees will be needed for more than a year or so.

Likewise the US has some serious problems with the structure of the American economy. The cornerstone of the stimulus had to be reducing US dependence on oil because as long as the US economy is so dependent on oil, full fledged growth is simply not possible. The days of $20/barrel oil aren’t coming back, and every time the price of oil gets too high, it puts great pressure on the US economy (and every other modern nation.)

more here


Just a reminder: the GD didn’t go away until the massive spending, job creation, and sacrifices of WWII. No such salvation is in sight this time. Hunker down.

As long as we have a system that creates the delusion in ordinary minds that they too have a chance to be “rich” we will have a system that privileges monetary wealth over all else and leads, as in every other historical example with parallels to our own, then all real wealth will be sacrificed on the alter of speculative finance since money will always seek the greatest return and that return is available only to those willing to take the risk of indulging in criminal activity. It is in the nature of dominator culture to destroy itself.