Jerry wrote:
"You forget that things were going nicely until the subprime mortgage meltdown started the cascade of failures, or near failures, that almost brought down the global financial system."The rich invested in risky financial instruments. That is what caused the bubble and the crash. I certainly did not put any of my money into overpriced real estate or overhyped derivatives.
Wealthy people chased money. They had the money to invest and could have invested it in American manufacturing industries or products, but they chose not to because they could not make the outrageously huge sums of money they wanted to make by investing in real American factories, by paying American wages to prospective American consumers.
The top 1% could have bet their money on American workers and consumers. They didn't. So, yes, the recession is the fault of the disparity between the haves and the have-nots in America and that is the fault of the rich and the Bush tax cuts as well as other aspects of our tax code.
We're in a Recession Because the Rich Are Raking in an Absurd Portion of the Wealth.
Consider this article:
<snip>
Wall Street's banditry was the proximate cause of the Great Recession, not its underlying cause. Even if the Street is better controlled in the future (and I have my doubts), the structural reason for the Great Recession still haunts America. That reason is America's surging inequality.
Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation's total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America's total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928—with 23.5 percent of the total.
Each of America's two biggest economic crashes occurred in the year immediately following these twin peaks—in 1929 and 2008. This is no mere coincidence. When most of the gains from economic growth go to a small sliver of Americans at the top, the rest don't have enough purchasing power to buy what the economy is capable of producing. America's median wage, adjusted for inflation, has barely budged for decades. Between 2000 and 2007 it actually dropped. Under these circumstances the only way the middle class can boost its purchasing power is to borrow, as it did with gusto. As housing prices rose, Americans turned their homes into ATMs. But such borrowing has its limits. When the debt bubble finally burst, vast numbers of people couldn't pay their bills, and banks couldn't collect.
China, Germany and Japan have surely contributed to the problem by failing to buy as much from us as we buy from them. But to believe that our continuing economic crisis stems mainly from the trade imbalance—we buy too much and save too little, while they do the reverse—is to miss the biggest imbalance of all. The problem isn't that typical Americans have spent beyond their means. It's that their means haven't kept up with what the growing economy could and should have been able to provide them.
more . . .
http://www.alternet.org/economy/147469/we\'re_in_a_rece...
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