I think the first economy, rather than being in a state of recovery, is
more accurately in a state of unrecognized near-extinction. Tax payers
won't bail them out again, and it is with their funds that they resumed
gambling. I'd like to say Wall Street's demise is just around the
corner, but because they own the government and the media, it will take
years more for the realization that an illusion of financial success
won't possibly restore the government treasury.
Natalia
***America's two economies: one in recovery, one in depression
<http://www.huffingtonpost.com/robert-reich/post_1687_b_818991.html>
***
***Robert Reich, Huffington Post *- We have two economies. The first is
in recovery. The second remains in a continuous depression.The first is
a professional, college-educated, high-wage economy centered in New York
and Washington, that's living well off of global corporate profits.
Corporations continue to make money by selling abroad from their foreign
operations while cutting costs (especially labor) here at home. Wall
Street is making money by taking the Fed's free money and speculating
with it. The richest 10 percent of Americans, holding 90 percent of all
financial assets, are riding the wave. And their upscale spending has
given high-end retailers and producers a bounce.
The second is most of the rest of America, and it's still struggling
with a mountain of debt, declining home prices, and job losses. In
coming months most Americans will also be contending with sharply rising
prices of food and fuel. Our representatives in Washington see and hear
mostly the first economy. The business press reports mainly on the first
economy. Corporate and Wall Street economists are concerned largely with
the first economy.
But the second economy will determine our politics in 2012 and beyond.
And not even the first can be sustained permanently on its own.
Corporate profits cannot continue to rise on the basis of foreign sales
(which are slowing as Europe adopts austerity and China raises interest
rates), the purchases of the richest 10 percent of Americans (which are
dependent on a rising stock market), and cost-cutting measures at home
(which are necessarily limited). Without a strong and broadly-based
middle-class recovery, America's big money economy will fall in on
itself. A major stock market "correction" is a certainty.
**
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