The U.S. recovery from the Great Recession is still one of the worst recoveries in history (see red line).
Adam Rifkin stashed this in Economics!
Henry Blodget writes:
The U.S. recovery from the Great Recession is still one of the worst recoveries in history (see red line above).
Why is the recovery so slow and weak?
One of the main reasons is that average American consumers, who account for the vast majority of the spending in the economy, are still strapped.
Five years after the recovery began, unemployment remains high. And the Americans who are lucky enough to be working are getting paid less as a percent of the economy than they ever have in history.
Meanwhile, America's corporations and their owners have never had it better. Corporate profits just hit another all-time high, both in absolute dollars and as a percent of the economy. And U.S. stocks just hit yet another record.
Many people seem confused by this juxtaposition. If corporations and shareholders are making such gargantuan piles of money, why is the economy so crappy?
The answer is that one company's employees are other company's customers. Americans save almost nothing, so every dollar your employees earn in wages gets spent on other companies' products and services (including, in some cases, yours). The less American companies pay their workers, the less American consumers have to spend. And the less American consumers have to spend, the worse the economy is.
This isn't a complex concept. We're all in this together.
There's also no "law of capitalism" that says that companies have to pay their employees as little as possible or "maximize profits" to please their owners. That's just a story that the owners made up to justify taking as much of the company's wealth as possible for themselves.
And the longer American corporations and shareholders insist on taking an ever-greater share of the country's wealth for themselves, instead of sharing it with the people who create it (employees), the longer our economy will suffer.
The recovery is slow because of collective corporate greed.
Until consumers make more, the economy will have sluggish growth.
The mechanism for higher profits is greatly reduced interest payments and stock buybacks. The firm is a consumer of labor and cap-ex both are abismal.
Financials are taking free money and cornering Etf markets driving prices of underlying
Traders are max margin.
All while sovereign debt markets live on the edge of default.
How can we change this? Or is the complex machine too self-protecting to stop?
First order has to be international ban on "private wealth management" in places such as Jersey, Switzerland, caymans etc.
Jersey alone holds up to 3 trillion in wealth and no regulation or audit trail.