On the blog War On You, Pam Martens offers an assessment of the problem facing President Obama and her submission “Our Economy Is Going to Keep Tanking Until We Stop Shoveling Billions to Rich People” is accurate. I applaud the expertise she brings to this issue.
While she is addressing the problem of allowing money to be concentrated in the hands of the rich, I want to throw in my two cents worth.
The middle class is the engine of our economy and the rich supplies the ‘fuel’ to keep it going. We need each other to make this thing work.
We also need an incentive for companies to hire more people and pay a higher wage instead of allowing them to stash their earnings in foreign banks to avoid taxes.
Likewise, if the rich had an incentive to work with the government to help the poor and disadvantaged there would not be such a overwhelming burden on the government to do it by itself.
The benefit of living in a capitalist economy is that people can become rich. I would not disparage anyone from using this system to better themselves and their families unless they do it illegally or unethically. Ethics unfortunately is the one aspect of this system that is the most perplexing. Which is why we need regulation.
Regulation is one of those necessary evils in a free-market economy only because there will always be dishonesty surrounding the game of making more money. And nothing grabs the attention of money makers quicker than financial incentives.
As the gap between the haves and have-nots widens we can only sit helplessly by and watch it happen. It is a very frustrating and debilitating feeling. People are losing their homes, their jobs, their hope for their families.
We know we cannot simply rely on the rich to just give their money away to help close this gap. We have seen too much money go to the rich as a means of re-starting the economy. It obviously is not working. The banks hang on to it instead of loaning it out to help people save their homes.
My sister-in-law works in a mortgage lenders office that has an excessive amount of foreclosed homes. Her problem is not unique. Buyers come to her every day hoping to take advantage of depressed prices but the bank refuses to sell at less than what is owed on them. This situation does nothing for the economy or the banking system. The homes sit there empty, the banks continue to lose money on them. If the government continues to give banks bailout money they have no incentive to get these homes off of their books. This is an untenable situation.
The banks need to understand that if the economy does not get on its feet all the money they are holding will be worthless.
This is a crisis situation and the banks and mortgage lenders need to loose this round, taxpayers have already lost all they possibly can.
2 comments:
This depression is going to get a lot worse for most of us. Millions will go cold and hungry. It didn't have to be this way. Greed ruins everything. Its true. Ask any professor of economics.
"As mass production has to be accompanied by mass consumption; mass consumption, in turn, implies a distribution of wealth -- not of existing wealth, but of wealth as it is currently produced -- to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery. Instead of achieving that kind of distribution, a giant suction pump had by 1929-30 drawn into a few hands an increasing portion of currently produced wealth. This served them as capital accumulations. But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants. In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When their credit ran out, the game stopped."
Marriner Eccles, FDR's Chairman of the Federal Reserve Bank - 1959
In other words, the first Great Depression was caused by greed. The rich couldn't settle for reasonable pay. They had to have more and more and more. That caused a giant shift in buying power from the majority to the rich. When the majority lost their buying power, they lost their ability to support the economy. Einstein said basically the same thing in 1949.
Its even worse now. Ordinary people havn't only lost their relative buying power. They have also lost their savings, home values, pensions, and benefits. Meanwhile, the rich have become super incredibly rich. The richest 500 Americans are worth about 2 trillion dollars. More than the bottom 40% of American housholds combined. The richest 1 percent are worth about 18 trillion dollars. More than the bottom 98% of American households combined. Thats just insane. I don't care how much work for humanity the rich claim to do. Its nothing but a cover for their own greed. We don't need anymore rich people to create jobs or make donations for charity. We need them to get reasonable about how much money and assets they keep for themselves.
Don't believe their excuse about paying more income taxes. They don't pay enough. For every tax the rich pay, they get an obscene profit, bailout, contract, or kickback from our government to cover it. We had a progressive tax system that worked for over 40 years. It prevented too much wealth from being concentrated. In 1976, the middle 80% owned about 2/3 of America's total wealth. Reagan lowered taxes for the rich. Bush lowered them again. Now, the richest 5% own about 2/3 of America's total wealth. The lower 95% own about 1/3. America's wealth has been transfered from poor to rich again. Now, we have another depression.
Don't believe it when the rich claim to be getting poorer. Property values have gone down for everyone. Thats because of the concentration of wealth and income. When the economy slows down, property values tank. So when rich people complain about lower net worth, its a trick. They still have the same buying power on average.
Too much wealth has already been taken away from the majority and concentrated into the private vaults of rich people. The same ones on TV telling us how much they want to help the world. Its a big lie. Just another way to promote their own names. Rich people don't want to help the world. They want to own it.
Now, the economy is ruined. Obama can't fix it because the rich won't let him raise their taxes. There will be no bailout for the people because the rich won't let it happen. The rich always want more. The same thing has been happening in other economies around the world. The world's rich have been getting richer. Now, we have a global recession. Its going to get a lot worse. It didn't have to be this way. Greed ruins everything.
Please copy and spread the word.
Excellent analogy between poker and the economy.
Also, amazing statistics. I knew there was a connection between Reagan and the mess we are in but could not put my finger on it.
Thank-you for helping clear this up.
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