Inflation, Dow 13K, and the Second Great Depression
(snip)"The Second Great Depression is Here
For the past five years I’ve been saying ‘The second great depression will not be televised.’ In addition to paying homage to the 60’s civil rights activist and poet Gil Scott Heron (The Revolution Will Not Be Televised), it is a jab at the inadequacy of the mainstream news to actually report the news. The composition of the American economy is changing in fundamental ways -- ways that will not, in the long run, be favorable to most Americans if current trends continue. The younger generation is simply the first to bear the brunt of these changes, and as a result, is the first to grow up poorer than the generation preceding it. This, ladies and gentlemen, is known as national economic decline.
This is unpleasant news, and is therefore completely unacceptable to the mainstream media. It’s easier to sell the idea that the younger generation is just plain lazy, stupid and hopelessly screwed up. After all, didn’t you hear? The Dow just hit 13K! How can the economy be bad?
As a result, Draut and Kamenetz take the brunt of Boomer criticism from elders who dismiss their claims and only hear what they believe to be whining. But all these authors are doing is telling the story of their generation, pointing out how times have changed, and just how difficult it is to be young, broke, in debt and with little hope for the future. To me, it is the story of a second great depression. College, housing and food are more expensive, taxes, debt and interest rates are higher, (In spite of the fact that official rates hover near historic lows, one late or missed payment by a financially strapped young person sends credit card interest rates soaring across the board -- 29% or higher), wages are lower, competition is fiercer and most of the good jobs have moved away. Given the facts, it is amazing there is not more complaining or real demands for change. Draut points out that this younger generation was thoroughly “Reaganized” – raised under a steady diet of conservative rhetoric which they have fully internalized: The government is the problem, the free market is the solution – if you fail, it is your own fault, so don’t complain and don’t ask for help. Even though youths 18 – 24 are the most likely to hold minimum wage jobs, giving them a poverty rate of 30% in 2000, we’ve heard pitifully little about this in the MSM.
But poverty is a big impediment to getting higher education. Kamenetz points out that the nationwide high school graduation rate peaked in 1970 at 77%. It was around 67% in 2004….For every 100 young people who begin their freshman year of high school, just 38 eventually enroll in college, and only 18 graduate in a timely manner. This is especially worrisome as the world continues its march towards a knowledge-based economy. America is clearly falling behind.
The question of particular interest to readers of all ages should be whether the current decline in living standards is a one-generation anomaly, or the start of a new American trend. The problems afflicting the young – the outsourced jobs, the low wages and high levels of debt – are increasingly moving up the generational ladder. Just ask the entire city of Detroit, where a house can now be purchased for less than the price of a new car. This year also marks the first time in history that the median American home price is likely to decline.
Transition Ahead
What these two important books demonstrate clearly is that at the margins – where all the interesting economic (and other) activity takes place – the US economy is no longer able to provide its citizens with an increasing standard of living. Having read Jeremy Rifkin’s 1992 classic The End of Work a few years ago, the only surprise to me is that his scary predictions of the disappearing jobs are actually coming true. And with “Outsourcing 2.0,” things are only bound to get worse. Yet as Boomers retire – the first crop starts retiring next year – it is young people that they will be relying on (i.e. taxing) in order to maintain their disproportionately wealthy lifestyle. A Generational Storm indeed looms on the horizon. "(snip)
Re: Inflation, Dow 13K, and the Second Great Depression
Woot woot, all aboard the DOW 20K in 2008 train!!!
What you won't read about is the DOW, valued in Euro's, has actually gone down.