Jun 052010
 

I found this article by Robert Reich too good not to share.

GOP-Recession …The Labor Department reports this morning that the private sector added a measly 41,000 net new jobs in May. But at least 100,000 new jobs are needed every month just to keep up with population growth.

In other words, the labor market continues to deteriorate.

The average length of unemployment continues to rise — now up to 34.4 weeks (up from 33 weeks in April). That’s another record.

More Americans are too discouraged to look for a job than last year at this time (1.1 million in May, an increase of 291,000 from a year earlier).

Of the small number of jobs created by the private sector in May, many came from temporary help services.

Which is one reason why the median wage continues to drop.

Why are we having such a hard time getting free of the Great Recession? Because consumers, who constitute 70 percent of the economy, don’t have the dough. They can’t any longer treat their homes as ATMs, as they did before the Great Recession.

Businesses won’t rehire if there’s not enough demand for their goods and services.

The only reason the economy isn’t in a double-dip recession already is because of three temporary boosts: the federal stimulus (of which 75 percent has been spent), near-zero interest rates (which can’t continue much longer without igniting speculative bubbles), and replacements (consumers have had to replace worn-out cars and appliances, and businesses had to replace worn-down inventories). Oh, and, yes, all those Census workers (who will be out on their ears in a month or so).

But all these boosts will end soon. Then we’re in the dip.

Retail sales are already down.

So what’s the answer? In the short term, more stimulus — especially extended unemployment benefits and aid to state and local governments that are whacking schools and social services because they can’t run deficits.

But the deficit crazies in the Senate, who can’t seem to differentiate between short-term stimulus (necessary) and long-term debt (bad) last week shot it down.

In the longer term, we need a new New Deal that will bolster America’s floundering middle class. Expand the Earned Income Tax Credit and extend it up through the middle class. Finance that extension through higher marginal income taxes on the wealthy, who have never had it so good.

This post originally appeared at RobertReich.org [emphasis added]

Inserted from <Huffington Post>

Reich is spot-on.  What he didn’t tell you is who the deficit crazies are and why they are that way.  The first part is easy.  They are the GOP, abetted by a few corporate DINOs.  The second part required some thought.  As long as recession continues to plague the middle class, the Fed will keep the interest rates super low.  Who benefits?  Banksters get to pay almost no money in interest on savings and CDs.  Banksters get to borrow from the government at no interest, invest it in the stock market and pocket the profit.

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  2 Responses to “Why We’re Falling Into a Double-Dip Recession”

  1. Now on this, I agree with Reich – but I still like your idea of a CCC to put people to work, at least temporarily. There’s plenty of work to be done on our infrastructure (buildings, roads, bridges, etc.) and down in the gulf with adequate protection. I’d send Otis down there, but he’d fry like a lobster, plus he has a job. That’s the only way I see out of this mess. Some employers are now posting signs that the unemployed need not apply, which is complete BS. I call discrimination on that one.

    • Lisa, I usually agree with Reich, just not on the GOP Gusher. I don’t think that employers posting those signs is discriminitory, I think they’re just announcing that they are not hiring and do not want st spent the clerical time taking and filing job applications.

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