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Obama's Depression

By       Message Stephen Lendman     Permalink
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Obama's Depression - by Stephen Lendman

Deepening global Depression.

Chosen to serve power, not popular interests, Obama wrecked America's economy to save giant Wall Street banks. He's still doing it, despite claiming he's been out in front doing all he can.

By bailing out too-big-to-fail banks and waging multiple imperial wars, he intensified social misery.

As a result, Main Street is mired in protracted Depression. Economist David Rosenberg believes we're in the "third inning" of hard times malaise.

Four occurred in the 19th century. Until now, the 1930s Great Depression was America's last severe downturn, lasting a decade, punctuated by failed bounces.

America's Greatest Depression began in late 2007. Rosenberg calls is a "modern-day" one similar to what Japan experienced for over two decades. It's still ongoing, boding ill for US workers if America replicates Japan's experience.

Depressions occur "once it becomes painfully obvious" that conditions don't improve despite "repeated bouts of policy stimulus."

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Most of America's went for banker bailouts, tax cuts for corporate favorites and super-rich elites, as well as quantitative easing money creation for speculation, not economic growth. 

In contrast to recessions lasting six to 18 months, depressions last years.

From 2002 - 2007, America's economy was massively manipulated and levered. As a result, financial activities comprised 40% of profits. At the same time, household debt to income and assets "surged to unprecedented levels and the personal savings rate" was negative when the housing bubble peaked.

As a result, America experience levered prosperity. Conditions are now reverting to the mean. A long way down remains.

Since fall 2007, GDP, production, real income, and other major economic indicators never recovered to previous cycle highs. In normal times, post-recession tops are achieved and surpassed in a year or less.

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Not now. Home sales are 22% lower than in late 2009. Employment growth, in fact, has been stagnant for over a decade. The S&P 500 is no better than in spring 1998.  In terms of job creation (what matters most on Main Street) and equity appreciation, America's had a lost decade well into another one.

Recessions usually reflect inventory cycles. Traditional monetary and fiscal stimulus reignites demand.

In contrast, "balance sheet compression and deleveraging" characterize depressions, including debt reduction, asset liquidation, and rising savings as consumers hunker down in hard times.

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I was born in 1934, am a retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.

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