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Economy 2011: Shiller & Siegel Debate Recovery, Double Dip

Economists Robert Shiller and Jeremy Siegel look at the road ahead for the U.S. economy.

Traders work on the floor of the New York Stock Exchange, Jan. 3, 2011. (AP)

Judge by the New Year’s first day on Wall Street, and it looks like everything’s coming up roses for the U.S. economy.

The Dow is at a two-year high and animal spirits are back in gear. Economists are projecting maybe 4 percent growth this year – and that’s way up, too. Manufacturing firms are revving. Companies are loaded with cash. OK. Here we go.

Or do we?

Lots of people aren’t in the stock market. Lots of people don’t have jobs. Home foreclosures are still grinding along. Is this the year of the economic comeback?

-Tom Ashbrook

Guests:

Robert Shiller, professor of economics at Yale University. He’s co-author, with economist Karl Case, of the Case-Schiller home price index, the most widely cited database of housing prices in the U.S. Co-author of the new book, “Reforming U.S. Financial Markets: Reflections Before and Beyond Dodd-Frank.” You can also watch Professor Shiller’s Yale course on financial markets online here.

Jeremy Siegel, professor of finance at the University of Pennsylvania’s Wharton School of Business. He’s author of “The Future for Investors: Why the Tried and True Triumph Over the Bold and the New” and “Stocks for the Long Run: The Definitive Guide to Financial Market Returns and Longterm Investment Strategies,” now in its updated fourth edition.

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  • William Powe

    The gov’t should set up suicide parlors for the unemployed since that is the only way out of their
    misery. Then their bodies can be freeze dried and sent
    to China where they can make dog food out their bodies.
    Then this dog food can be sent back to Amerika and fed
    to the dogs of the rich like Paris Hilton little poodles.
    A modest proposal for economic development

  • cory

    Please define recovery. What is the best the AVERAGE American can hope for in the coming years considering the un-ending stream of cheap global labor.

    Should this AVERAGE American expect
    1. to ever own a home
    2. to retire and not live in poverty
    3. to help their children afford higher education.

    I’d appreciate straightforward, blunt answers to these questions. Thank you.

    Leftfield, Wisconsin

  • WMaher

    What happened? I thought the ever-burgeoning welfare state post-FDR/LBJ was supposed to evolve into the great and unassailable economic paradise? I’m so schocked the socialist ponzi schemes(read: Social Security, Medicaid, Fannie and Freddie, etc.) are finally recognized for the charades they were from day one. The socialists(oops, I forgot, they now call themselves “progressives” since they cannot be honest enough to stomach calling themselves socialists) have brought us here and deserve all the credit. Do you think economic competitors like China get discouraged when they here the U.S. is implementing the next trillion-dollar ponzi scheme(Forced healthcare)? Oh yeah, our economy is going to be so much more competitive! International investors are just giddy with excitement! Should we also consider the wonders the EPA is doing for our economy?

  • Pancake, frying in gulf oil, in NC

    Double dip has two meanings. There is the graphic representation of gross financial activity, abstract and meaningless to suffering families. And then there is the unstoppable big dipper of the wealthy investor class taking a bite out of increasing productivity, allowed and promoted because of crony capitalism and political bribery. It is this same Oligarch group that holds most of the national debt directly, and the rest indirectly through their overseas holdings in sweatshops under totalitarian regimes. Maybe there is a strange, perverted logic that the “Mr. Potter elite” do not want to pay taxes. Why should they prime a pump that is delivering like Macondo? See the hokey stock market balloon inflate again?

  • Brian

    It’ll be interesting if Tom takes the view of WMaher, thinking that Social Security – rather than, say, unfunded wars and a relentless corporate attack on the middle and working class – is responsible for our downturn.

    Social Security works. There is no reason to destroy it to save it.

    On the other hand, our financial system is a miserable failure that enriches few at the expense of nearly all. Yet we don’t talk about that.

    Social Security has never needed a bailout. Can you say the same for the banksters?

  • Nick from Massachusetts

    When talk shows like ON POINT discuss the economic recovery WHY DO THEY NEVER HAVE A PERSON FROM THE STREET on the panel? A person who is carrying the brunt of the economic mess caused by the banks.

    Instead, talk shows have well off economists and even bankers and Wall Street people who caused the problem and neither has been affected by the down turn. They sit there telling the unemployed, the families without health care and their house underwater, and private businesses that can not find funding that the economy is turning around. Of course it is turning around for them – they were bailed out with middle class taxes and continue to rape America.

    Makes me sick to my stomach listening to these people sit there in their expensive suits and have NO IDEA what the middle class is experiencing.

  • Zeno

    A hour about how Wall Street is the entirety of the US economy today. Jobs are meaningless, productivity is meaningless (unless it in China)… and how only the profits of Wall Street have any productive value, and keep the economy running. It will be explained that Wall Street IS THE NATIONAL ECONOMY, and is the ONLY hope for national survival.

    I remember the old economy before the revocation of Glass-Steagall Act of 1932. When Wall Street did not control the economy or the government. Since Reagan, the nation has been under the control of corporations. I can remember when defense contractors would have to bid for the public’s money, and there were prosecutions for malfeasance. Even NASA was constantly regulated and audited for its use of our money.

    Investment banking has perverted our government and is destroying the nation… and is at best a criminal enterprise.

    To fix the nations economy and government… Regain regulatory control of banking.

  • Yar From Somerset, KY

    Make an economic comparison of FaceBook and Caterpiller.

    CAT Ratios & Returns
    Price-to-sales 1.59
    Return on Equity 20.0
    Operating Margin 19.6
    Profit Margin 5.2%

    CAT Financials
    Sales $37.679 bil
    Profits $1.964 bil
    Assets $61.642 bil
    Employees 93813.0

    FaceBook
    1,700 employees

    I haven’t found any useful information that makes for good comparison, but if Facebook is a 50 billion dollar company then CAT is worth at least a trillion in my logic.

    It is like comparing art and food. What is a L’enfant a l’orange painted by Van Gogh worth to a child in Hati?

    I expect most children would prefer an actual orange that can be eaten.

    Our economy is based on a false logic, that social information has real value, a value only useful if the rest of the world is exploited to meet our needs of food and shelter so the privileged can trade bragging rights on trivia.
    The entertainment industry, sports, gambling, much of the service sector, including most of the internet, add little real value to our society, other than keeping the masses occupied. This is what I define as a bubble.

    We need employment, but not just any employment we need to make useful and real things, not just pretty pictures.

    Art has its place and entertainment is fun but they can’t be the center of an economic system.

  • Nick from Massachusetts

    YAR from Somerset, KY

    EXCELLENT !

    Thank you !

  • Mike Tabony

    From Gladstone, VA 24553
    No recovery in 2011 because Americans lost about $5 Trillion in real estate value in downturn and government has only added about $1 Trillion in stimulus and almost all of that was skimmed by the rich. Middle class and poor, the shoppers, are still suffering badly and will not return to the malls anytime soon. Giving more money to the rich is counterproductive as they invest it overseas for the cheap labor.

    IMO, the only thing that would get things moving again is a big reduction in military spending and a much more progressive income tax (90% on all income over $1 million a year) dedicated to financing massive public works projects in mass transit, smart grid, renewable energy, and better communications here in the US. Not much chance of this getting done with this Congress.

  • Pancake, between cheek and gum, in NC

    Let’s talk about that Caesar Augustus guy s’more. I think I read in a book one time that, “He called all the world to be taxed.” There was this pregnant girl, riding on a donkey, and the shaking made her have the baby early as she was going to town to file her taxes, and don’t you know it, her taxes doubled right there under a pallet beside the highway. I think I drove past her camping in front of a Baptist Church last week but she was gone this morning. They probably run her off. Couldn’t pay her damn taxes. Tell Con-gress- there oughta be a law!

  • Grady lee Howard

    Notice: Contact Goldman Sachs immediately if you are an analyst with strategies for off-shoring Facebook. Must be conversant in Swahili and Mandarin Chinese. If anti-social, please do not apply.

  • Yar From Somerset, KY

    Pancake,
    I want to hear an hour with you and Ellen Dibble as featured guests.
    You add much to this community.
    Thanks

  • Ralph M.

    While technically the US is no longer in a recession from a GDP perspective, isn’t it still very much in a recession and maybe even in a depression from an employment perspective. Isn’t declaring the recession over equivalent to the Federal Reserve ignoring unemployment and focusing soley on Inflation?

    Orchard Park, NY

  • Abel Collins

    Will you please ask the guests to discuss the risks associated with the big banks’ civil and criminal liabilities with regard to fraudulent foreclosures, fraudulent marketing of complex financial instruments, and fraudulent accounting practices that allow them to appear solvent. Without putting some sunlight on these issues, I don’t believe there can be a sustainable recovery.

  • JP

    Great!

    Dems now have the economy firing on all cylinders in record recovery time…

    now the Republicans can come right back in and screw everything up again with their moronic, backwards policies favoring no one but the wealthiest.

  • Gregg

    How is 2011-2020 going to beat 2000-2010?

    Where is middle America going to get the cash to fund the boost in GDP that we’ll need to justify a rising market?

    Middle America is making less money and their home values have fallen (no REFI piggy bank). They’re also out of work. So where is the money going to come from?

    And why should anyone ever trust the market again? The past ten years only benefitted the financial industry. Most people were taken advantage of and ripped off. by lousy returns and endless fees.

    It’s a bogus system!

    Thank you,

    Gregg

  • Larry

    22+ unemployed. That’s the real numbers. 9% is pure USSA propaganda.

  • Panncake, waiting on a platter for you, in NC

    Yar, I was really attracted to you on Star Trek, the Next Generation. It broke my heart when you got it on with Data. I knew that tar pond monster couldn’t kill you. If that was a different Yar, maybe your sista Denise Crosby, then excuse my error.

    Your posts are exemplary too!

  • geffe

    My apologies to Robert Reich, but he sums this up better than I can.

    http://robertreich.org/post/2520478548

    New Years Prediction (II): The U.S. Economy in 2011

    Wednesday, December 29, 2010

    What will happen to the US economy in 2011? If you’re referring to profits of big corporations and Wall Street, next year is likely to be a good one. But if you’re referring to average American workers, far from good.

    The two American economies — the Big Money economy and the Average Working Family economy — will continue to diverge. Corporate profits will continue to rise, as will the stock market. But typical wages will go nowhere, joblessness will remain high, the ranks of the long-term unemployed will continue to rise, the housing recovery will remain stalled, and consumer confidence will sag.

    The big disconnect between corporate profits and jobs is likely to continue because America’s big businesses are depending less and less on U.S. sales and U.S. workers. Their big profits are coming from two sources: (1) growing sales in China, India, and other fast-growing countries, and (2) slimmed-down US payrolls.

    In a typical recovery, profits lead to more hiring. That’s because in a typical recovery, American consumers head back to the malls — and their buying justifies more hires. Not this time. All the hype about Christmas sales over the last few weeks masked the fact that American consumers demanded bargain-basement prices. And the price-cutting dramatically reduced sellers’ margins. In short, profits aren’t coming from American consumers — and profits won’t be coming from American consumers in 2011.

    Most Americans don’t have the dough. They’re still deep in debt, can’t borrow against their homes, and have to start saving for retirement.

    The Dow Jones Industrial Average is rising because of foreign sales. General Motors is now making more cars in China than in the US, and two-thirds of its total sales are coming from abroad. When it went public last month it boasted that soon almost half its cars will be made around the world where labor is less than $15 an hour.

    Wal-Mart isn’t doing especially well in America but Wal-Mart International is booming. And Wal-Mart is hiring like mad outside the US.

    General Electric is keeping its payrolls down in the US but plans to invest half a billion dollars in Brazil and hire 1,000 Brazilians, and invest $2 billion in China.

    Corporate America is in a V-shaped recovery. That’s great news for investors and everyone whose savings are mainly in stocks and bonds. It’s also great news for executives and Wall Street traders, whose pay is linked to stock prices. All can expect a banner 2011.

    But most American workers are trapped in an L-shaped recovery. That’s bad news for the Main Streets and small businesses in 2011. It’s also a bad omen for home prices and sales, and everyone whose savings are mainly in their homes.

    Home prices in major metropolitan areas sank last month, the third straight month-to-month drop. I expect home price declines to continue next year. We’re in a double-dip housing market, largely because unemployment remains so bad that millions of Americans can’t pay their mortgages.

    None of this bodes well for US employment next year. I expect the official unemployment rate to remain around 9 percent.

    In other words, whether 2011 is a great year economically depends which economy you’re in – the one that’s rising with the profits of big business and Wall Street, or the one that will continue to struggle with few jobs and lousy wages.

    Sadly, the next Congress is unlikely to do much to reverse any of this. Most Republicans and too many Democrats are dependent on corporate America and Wall Street. Their version of tax reform is to cut taxes on the wealthy and on big corporations, and either raise them on everyone else (sale and property taxes are already on the rise) or cut spending on programs working families depend on.

    At some point, perhaps, the disconnect between America’s two economies will become so big and so obvious it can no longer be ignored. Progressives, enlightened Tea Partiers, Independents, organized labor, minorities, and the young form a new progressive movement designed to reconnect America.

    One can always hope.

  • David in Wellesley, Mass.

    Kind of annoying, listening to guys with tenure laughing off unemployment.

  • Mac Harris

    West Union, IA

    There may be GDP growth and increases in productivity coming, but for the rest of this decade unemployment numbers will bump up against Moore’s Law (computer hardware exponential improvement).

    The way for an economy to gain GDP and get increased productivity is: get employees to work more hours, add cheaper employees, or automate. The next generations of computer technology will be taking more and more low end jobs as Moore’s Law looks to be valid for the next two decades.

    I really think 8 to 10 percent is the new unemployment standard for this decade.

  • Larry

    Kind of annoying, listening to guys with tenure laughing off unemployment.
    Posted by David

    Tenured professors are going to be completely blind sided by the wave that is going to engulf them.

  • Brian

    Tom,

    Will you ask your guests whether they will endorse your repeated calls for Social Security privatization and deficit reductions paid for by the middle and working classes?

    Do they think a 10% unemployment rate is something that we should, like, do something about?

    Or did we finish up our talk about unemployment in those 90 seconds so we could move on to the real economic talk: how to increase corporate profits.

  • Jon Weber

    But if home prices were already over-inflated to begin with, wouldn’t the growth of home prices be going back to where they should be? In other words the bubble of over-inflated prices had to burst at some point. Aren’t we just seeing a drop back to normalcy?

    Rock Island, IL
    Jon Weber

  • Yar From Somerset, KY

    Will you ask Robert Shiller if they can look at their data by year of construction? Housing is a little like fashion, what is currently in this year? I expect the houses of the 1950′s are more popular at the moment than the Mac-Mansions built in the last ten years. Lowering of hem-lines so to speak. I wonder what the data shows.
    Not all housing is the same even in a single city. School district, and other factors play into housing value.

  • Terry

    Happy New Year, Tom and Guests,
    If the Rich Tax Cuts had created Jobs the last ten years, which was their selling point,would we even be in a recession? Sixty percent of their tax cuts to create jobs would still left people like Rush Limbaugh plenty of money to doctor-shop for more oxycontin than even he could use himself.
    Many more examples exist, with very little searching.
    John Boehner, Mitch McConnel, George Bush, WHERE ARE THOSE JOBS THAT YOU PROMISED FOR THOSE TAX CUTS?
    I have not heard anyone dispute that the U.S. is in economic distress, just whose fault it is. The economy is improving.
    I could not invest in the stock market, even if I had the money, because it is so corrupt, and makes money only for the very rich, and their cronies.
    Thanks for the program, and the info.
    Terry

  • Erin in Cedar Rapids, IA

    I make $30K a year and I’ve stopped putting anything in my 401K and I don’t have any other investments. It’s a system designed for the rich power players to benefit and schmucks like me to absorb the risk. No thank you!

  • http://etsy.com/people/marilynn07 Marilynn–Tennessee

    I am not seeing that sort of recovery without jobs. What sector will provide jobs. They keep talking about a jobless recovery…that is not a recovery at all.

    Most of the people I know who are unemployed are not able to get jobs because the people hiring are not hiring unemployed persons but those who are already working at a job. What I think is happening is that the unemployment benefit runs out and those people fall off the list of unemployed??? Have they given up? Are they homeless? Are they new criminals? Are we ripe for a revolution? The situation in America is not very different economically and socially from that in 1917 Russia. The rich have gained exponentially while the poor were not able to make any headway, were deeper in debt and were not able to eat. At that point, Russia was bathed in blood and revolution. Is that what we want in America? I think not.

    I think that what is likely to happen is that people will end up not able to retire due to the fact they have had to dip into retirement and savings in order to pay utilities, gasoline and grocery bills. The young people entering the job market fresh out of college or trade school will face tighter competition as well due to the fact that older workers are not retiring.

    The greatest asset America has is her people and the innovations brought about by the workers. When will we begin to use wind and solar power to build the smart-grid, repair roads and bridges, and to rebuild the infrastructure? That would certainly create jobs and income that would then flow through the economy and help persons start to buy again.

    The large corporations have an incentive to move work offshore due to low wages and no taxes on the profits earned in offshore production. That needs to change. Large corporations should pay taxes on profits earned in offshore operations simply due to the fact that the government is now picking up the tab for all of those unemployed by the move to offshore work. The American workers are basically being shifted to service occupations which pay much lower than those occupations in manufacturing. The next new thing needs to come from America not India, China or Brazil.

  • Jameel

    Say it! Don’t be scared! History IS irrelevant!!

  • Larry

    But if home prices were already over-inflated to begin with, wouldn’t the growth of home prices be going back to where they should be? In other words the bubble of over-inflated prices had to burst at some point. Aren’t we just seeing a drop back to normalcy?

    Rock Island, IL
    Jon Weber

    That’s what they want. That’s what has been the goal of Obama and the Treasury. The banks are insolvent without it. Let’s see them make fantasy reality.

  • cognitek

    get these guys to argue. they sound like they are afraid to offend each other with a differing opinion.

  • at, form the fog draped shores of Santa Cruz

    Economists have such a great track record in predicting the economy. Just a little behind a trained chimp with a dart board. When are these cheerleaders going to admit that the economy is a complex system that is beyond their powers of modeling. This is bull. Some of their guesses may be right, mostly they are less correct than random chance in their choices. It’s all bull from a subjective perspective.

  • Donna from NYS

    The truth that American citizens (who not just “consumers”) know is that the real unemployment is a lot closer to 18% than 9%; that the only people who care about the stock market are the rich, and we are concentrating on reducing debt and getting used to having a permanent lower standard of living. The super bankers are fully in charge. If you don’t think so, look at who Obama is considering as chief of staff – a JP Morgan-Chase bigwig. The bankers sure have the best government money can buy.

  • Ellen Dibble, Northampton, MA

    If Siegel of Wharton is right, then the money the corporations have, and per Tom Ashbrook’s statistics are using to hire overseas at approximately 3/2 ratio (1.5 million overseas to a million here), then the proportion of Americans (retiring babyboomers?) who get their income from capital gains, from interest and dividends, and who are looking to spend 4% of their gross holdings, they will be confident consumers.
    And the retirees (or those with stocks) will start to buy, and the jobs for those serving them (shopkeepers etc) will go up.
    It’s a circular argument. It sounds Old Economy. If we can reglue the ExxonValdez, we will float ourselves again. It doesn’t talk about New Economy (new energy sources etc).

  • http://www.ritterbin.com Mike Ritter

    I do invest with some confidence but only because I do it passively with index funds. This method is proven most effective over long periods of time but does come with the caveat as long as the economic / political structure stays intact.

  • Webb Nichols

    From Watertown, MA.

    With all do respect to your panelists. The situation looks and feels very simple. The Stock market is up, corporate profits are up , corporations are stuffed with cash because the corporations are hiring and making their products outside the United States. Corporations are holding their cash to see where their next foreign investment and market will be.

  • Brian

    I don’t think the tenured professors are laughing off unemployment as much as the radio host, who has been insisting for months that the middle class dream of moderate comfort and educational opportunity must be sacrificed to fund upper-bracket tax cuts.

    New York, NY

  • at from the slowly brighening shores of Santa Cruz

    Ask them what income bracket they are in.

  • Alex

    “What happened? I thought the ever-burgeoning welfare state post-FDR/LBJ was supposed to evolve into the great and unassailable economic paradise?”

    What happened? I thought Reagan’s trickle-down voodoo economics were supposed to bring us all into the economic paradise? I also thought Bush’s tax cuts were supposed to lead the country to unbelievable prosperity.

    Since LBJ, we have had 28 years with a Republican in the White House vs. only 14 with a Democrat. Maybe there was something with Reagan?

  • Ellen Dibble, Northampton, MA

    Schiller has a housing specialty? I’m wondering if he only thinks about sprawl-type housing, or does he read Neal Peirce’s column about the future depending on what this week’s column calls “Lure of the old: urbanism,” living in the greener apartment-style homes, referring to architect’s Peter Calthorpe’s “Urbanism in the Age of Climate Change,” newly out by Island Press.

  • P-cake in NC

    I saw that sign in the yard next door, Larry. Fantasy Realty… so we can hire all the unemployed as agents, on commission?

  • jj

    not long after he abdicated power, dick cheyney mentioned on a talk show that no one could have predicted the crash. and yet
    “Demos & The Institute on Assets and Social Policy at Brandeis University” sited the federal gov’t's own standards on household economic sustainability as indicating a crises back in 2007.

    The generally accepted definition of affordability is for a household to pay no more than
    30 percent of its annual income on housing. Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care.

    The United States Department of Housing and Urban Development

    Twenty-eight percent of middle class families spend 30 percent or more of their income on housing expenses, putting them above federal guidelines for housing affordability….

    About four out of five middle class families do not have sufficient assets to cover three quarters of essential living expenses for even three months should their source of income disappear…

    Middle class families have a median debt of $ 3,500 and median net assets of $0. …

    Demos & The Institute on Assets and Social Policy at Brandeis University (2007)
    Source: “By a Thread: The new Experience of America’s Middle Class”

    our expected lifestyle requires too much debt. the 90′s are over, globalism is here to stay, the USA must adjust in the long term.

  • http://brainmindinst.blogspot.com Peter Melzer

    The housing industry is such an important provider of jobs in this country that it cannot be ignored. Our homes constitute one of the few things we possess, and at that the most expensive one, that is truly made in the U.S.A. by workers who live their lives and pay their taxes here.

    Only when the last homes that have been foreclosed in the wake of the bubble’s burst are sold will this country’s economy recover. For that to happen we need massively more jobs that pay the mortgage. Alas, hiring seems to remain slow. If employment is not going to improve dramatically, little is going to improve this year.

    Read more here:
    http://brainmindinst.blogspot.com/2008/09/subprime-lending-truthiness-delusion-of.html

  • Ben Morton

    I cannot get credit to take advantage of good deals because of debt from school.

    Also why is housing prices going up good but inflation is generally a problem in other goods. Housing is a commodity that most of is need on a daily basis rather than being a stock that you can put away for retirement. Increased housing values just seem to increase wealth inequality.

  • at from the luminious shores of Santa Cruz

    He doesn’t understand why the concentration of wealth is happening? See most of the posts above. Theft

  • Corey in Boston

    Richard C Koo’s book “The Holy Grail of Macro-Economics: Lessons from Japan’s recession” talks about the fact that Japan and the U.S. in the Depression and likely currently is in a balance sheet recession.

    A balance sheet recession, under his thesis, causes a collapse in demand from business and households. As a result, business repair their balance sheets by paying down debt and households as well even though borrowing costs are low.

    What do your guests think of this?

  • Peter Bannigan

    The edconomy is not going to improve because of the layoffs comweing from State and Federal government, the pull back in support programs such as Pell and other types of programs and the expantion of work force ocverseas.

    The fact is with the Republicans coming in they are going to target most of the programs that support the economy. They believe that if you can not pay for it you are not entitled to it. This means cash on the barrelhead for medical care, education, housing, etc. This means people making $300K a year or less no longer have disposable income to support the economy. With two or three children you now have to save for college, by teh time they are ready they will need a masters at least and it will cost close to a $1.0 MM per kid. Next, with the demise of the SS you then have to save for that.

    The country is going to be stuck in this stage untill such time the leadership of this coutry wakes up.

  • Aaron

    I’d like Messrs. Shiller and Siegel to comment on the coming “austerity” that is going to occur at the level of state and municipal government. Most states have massive budget shortfalls that have to be made up for somehow and the GOP has no stomach for bailing them out at the federal level. This will lead to large layoffs and will take much needed demand out of the economy.

    Best,

    Aaron in Jamaica Plain, MA.

  • Larry

    “This crisis is not as bad as she is suggesting. We’ll own a home, we’ll retire ok, we’ll send our kids to college. There’s nothing really fundamentally bad coming.”

    He forgot to add: “for his class, the top 5%”. The rest of us, it’s all bad coming.

  • Lisa

    So the fabulously wealthy will continue to become more and more wealthy by owning all the apartment buildings that the middle class/poor will have to rent?

    Just more of a vision of the Very Rich and the Rest of Us.

  • http://etsy.com/people/marilynn07 Marilynn–Tennessee

    What happens if the dollar is not the world currency? What happens to our economy if China’s yuan or the Euro become the world currency? I think we haven’t considered the ramifications of the dollar not being the trade currency of choice globally.

    I have a few investments in the Stock Market, and did not sell off everything at the crash, in fact, I bought more stock while the price was lower. Now, I’m sitting tight…not buying…not selling.

  • Larry

    So the fabulously wealthy will continue to become more and more wealthy by owning all the apartment buildings that the middle class/poor will have to rent?

    Just more of a vision of the Very Rich and the Rest of Us.
    Posted by Lisa

    Yes, welcome to the Rentier way of life. Otherwise known as serfdom.

  • Ellen Dibble, Northampton, MA

    Schiller says more will be living in rental situations. Great. But the local housing specialists are saying that many of the foreclosures are in apartment buildings, because the owners are not making enough profit off it, and they are not personally invested in the community. Not that type of apartment building owner.
    So what is the solution? Make more subsidized single-family homes.
    The solution is to push for home ownership, NOT to make it more likely that being a landlord in a community is a revered position. (I still have to argue locally that it is greener to live in apartments than in a separate house. Homeowners say, oh, but the waste that goes into heating those hallways. Hmm.)
    By the way, Schiller does NOT point out the huge advantage to the BANKS of having so many people paying mortgages to them.
    To decrease the power of the banks, get rid of that mortgage tax deduction, and re-privilege local landlords (the laws they have to adhere to) and maybe renters in some way.

  • Rebecca

    Most average stock holders are invested in 401k’s for retirement. They are not benefiting from stock prices in the present like wealthy stock holders who use them as their income. When are economists going to separate the stock market from the rest of the economy? When did the stock market become the economy?

  • http://challenginglachesis.blogspot.com Dave Eger

    Most folks I know who have work right now are too busy to have the time to pay attention to any news other than the local weather. They just do what their bosses tell them and take whatever they can get. Meanwhile the bosses are trying to keep up with the changes that are happening so fast, no one knows the best strategy. This creates an environment where the only people in a position to capitalize on the changes is the big investors who lobbied for them to happen from the start. The economy therefore becomes a pump to make the rich richer… and no one sees it coming except for the unemployed who will try to warn everyone, but no one listens to them because they’ve been out of work so long people assume there must be something wrong with them.

    Personally, I think that there’s something wrong with economic analysts who say that everything will be alright without being able to give any idea of how. “Oh, according to some graphs of statistics I’ve looked at I think things will swing back up”. What are these jobs that people are going to be doing? More security officers to protect all of the gold that the rich are buying up? Use the excess of construction workers to build internment camps next to dog food plants? What do they expect us to do that will keep us busy next so that we don’t get pissed at how skewed the economy is?

    I agree with the caller that it’s really hard these days to find anyone that is worth working for. Very few are doing anything that actually looks like it makes sense, and the ones who are aren’t getting the funding from the financial institutions for some reason.

    Also, self employment isn’t just American as your guest said. The Vietnamese are much better at it than we are.

  • Marilynn–Tennessee

    The reason people are not buying houses is that home loans are impossible to get for all but the very rich. The rich are waiting for the prices to drop further before they invest…and they are not looking to buy a home, but an investment property. The property confiscation by the very rich is under-way.

    The war on the middle class is under way, and very soon there will be no middle class simply the very rich and the rest of us…and those nice roads paid for by tax dollars…upon which the very rich would like to drive their BMWs, Volvos, and Lamborghinis will have potholes big enough to swallow an elephant due to infrastructure break-down.

    Without a strong middle-class, the basic way that our infrastructure, schools, and government services are maintained is by the tax dollars contributed by workers and property owners paying the taxes that support those government services. Tax income in most states is at an all time low, states such as California are in trouble due to the foreclosures and unemployment.

  • at from the scintillant photon washed dawn of Santa Cruz

    Why should the people consider the money industry anything but a den of thieves? Have these people ever made anything other than money. They have shown time and time again that they will deceive everyone then cut and run.

  • Ann, Barrington, RI

    A QUESTION FOR ON AIR:

    Perhaps we have been losing our jobs to outsourcing BECAUSE businesses have pitched the over-arching idea of buys things FOR LESS.

    Could we keep our jobs here while also improving our expertise if we SWITCHED TO AN ARTISANRY ECONOMY?? We would make things, design things, create ideas of QUALITY, not of cheap materials or “stolen” ideas.

    (Recently I can tell that products (made overseas) are getting even thinner! First it was smaller, now the gauges on the materials is getting thinner — check it out!)

    These two guests are fantastically CLEAR! Thank you! Along with Elizabeth Warren, they are the most articulate of the speakers on the economy! That helps!

  • Larry

    Why doesn’t he talk about the current sell off rate of stocks of the insiders? It’s through the roof. Suckers is about right.

  • Jennifer

    Stocks? Bonds? 401K? These are upper middle calss terms that are not even applicable to most of us.

    The demise of the middle class in here.

    My husband is a teacher who has to take on three online courses as well as a fulltime teaching job in order for us to maintain our lower middle class status for our family of four & my educated, trained & working as a pilot, brother makes under $18 an hr, is tremendously in debt & has no prospect of even maintaining his bills with his job for his family of three without food stamps, medicare & help from family.

    Not what it was like when we were kids. Making ends meet is a thing of the past for our family & many many others.

    As always, the only people getting richer, this year or any year, is the rich.

    Jennifer, Amherst, MA

  • Larry

    Yes, don’t miss out on the employer 401k match. It will make you feel twice as good when you lose it all in the stock market. (which you can’t write off on your taxes)

  • P-cake

    Sell your plasma (not the TV) and put it in stocks, says he. (So he can sell and retire.) Buy bonds? Well, we are in 5 or 6 wars. You got to save half a million on 30K a year?

  • Ellen Dibble, Northampton, MA

    To Aaron/Erin? the self-employed at $30,000 a year. Agreed! In order to play the game, you need stocks. In years when I was employed (at $10,000 a year), I saved, but had no time or money extra. However, once I was sick and started my own business (1989), I earned about $25,000 a year, which continued for 20 years (I typed that “tears”), which shrank annually as health insurance took greater and greater shares of that.
    You have no “life” if you are saving what Siegel is just now saying: “You’ve GOT TO SAVE ENOUGH.”
    Yeah, but then you work two jobs till you break, and you have no “life.” No cable, no refrigerator. No local newspaper. Lots of things a citizen should have.

  • Ann, Barrington, RI

    A QUESTION FOR ON AIR (corrected version!! — sorry!):

    Perhaps we have been losing our jobs to outsourcing BECAUSE businesses have pitched the over-arching idea of buying things FOR LESS.

    Could we keep our jobs here while also improving our expertise if we SWITCHED TO AN ARTISANRY ECONOMY?? We would make things, design things, create ideas of QUALITY, not of cheap materials or “stolen” ideas.

    (Recently I can tell that products (made overseas) are getting even thinner! First it was smaller, now the gauges on the materials are getting thinner — check it out!)

    These two guests are fantastically CLEAR! Thank you! Along with Elizabeth Warren, they are the most articulate of the speakers on the economy! That helps!

  • Larry

    You should factor in depreciation. Because housing prices are going down much further.

    These 2 guys are really living in the top 5% universe aren’t they?

  • Yar From Somerset, KY

    The stock market is the tail waging the dog.
    Long term inflation is on the horizon, stocks are not set for a large shift out of the market. As boomers retire, their investments are not liquid ‘in-mass’ the market value only allows for trading, not liquidation. The boomers are a problem because the represent a mass movement of retirement needs. Ripples that continue from World War II.

  • Ellen Dibble, Northampton, MA

    Either Siegel or Schiller: Why when “affordable housing” figures what a renter should pay do they figure said-renter should pay 30 percent, the same figure the gurus figure a home-buyer should expect to pay for housing?
    If you’re buying an asset, 30 percent makes good sense. If you’re buying the services of the landlord, the heat, paying your property taxes via someone else, with no asset accruing, maybe 30 percent is not valid.
    Not valid if you’re building a business, paying your health insurance, paying off student loans.
    Renting is viewed as a deal for losers who are sitting ducks for profiteers, so that homeownership has had its draws.

  • Erin

    My husband and I watched older people at our place of work have to put off retirement when the market crashed. They are well beyond the age of retirement. We decided that we did not want to big a victim of the roulette table called the market. You only profit a little off of these investments. I don’t see the point in gambling that much with our future, especially when we don’t know if social security will be around. I am 28 and my husband is 30.

    We have found bank accounts that yield at 3.5% and 4.5%. We save everything we can and keep our cash in these high yield checking accounts. The next time the market crashes, we know we will be safe unless the FDIC fails.

    Quincy, IL

  • http://challenginglachesis.blogspot.com Dave Eger

    What if we are all still slaves and indentured servants of some foreign investors that they have brainwashed to think otherwise, and when we we started to organize and stand up for our rights, they just moved the work to plantations elsewhere in order to starve us out to punish our insubordination? Our military is already fighting wars that aren’t in the interest of the American people. What about the other work we do? Cui bono?

  • Larry

    This conversation is painful to listen to. Nothing but propaganda.

    Wages higher? It’s all about wage suppression now.

  • jj

    sorry about the hasty punctuation..this should be clearer. (from new england btw)

    not long after he abdicated power, dick cheyney mentioned on a talk show that no one could have predicted the crash. and yet
    “Demos & The Institute on Assets and Social Policy at Brandeis University” sited the federal gov’t’s own standards on household economic sustainability as indicating a crises back in 2007.

    “The generally accepted definition of affordability is for a household to pay no more than
    30 percent of its annual income on housing. Families who pay more than 30 percent of their income for housing are considered cost burdened and may have difficulty affording necessities such as food, clothing, transportation and medical care.”

    The United States Department of Housing and Urban Development

    “Twenty-eight percent of middle class families spend 30 percent or more of their income on housing expenses, putting them above federal guidelines for housing affordability….

    About four out of five middle class families do not have sufficient assets to cover three quarters of essential living expenses for even three months should their source of income disappear…

    Middle class families have a median debt of $ 3,500 and median net assets of $0.”

    Demos & The Institute on Assets and Social Policy at Brandeis University (2007)
    Source: “By a Thread: The new Experience of America’s Middle Class”

    our expected lifestyle requires too much debt. the 90’s are over, globalism is here to stay, the USA must adjust in the long term.

  • at, from a slowly warming Santa Cruz

    Still have 90% employment?!!!!!!! AHA HA HA HA HA.
    How can you let him get away with this nonsense.

  • P=cake, not in urinal, in NC

    Hear that…Don’t show any weakness, the Gestapo guards are watching. Play for time.

  • Larry

    Still have 90% employment?!!!!!!! AHA HA HA HA HA.
    How can you let him get away with this nonsense.
    Posted by at, from a slowly warming Santa Cruz

    What he meant to say but couldn’t because it doesn’t fit the official line of happy speak is 75% still have jobs.

  • Ellen Dibble, Northampton, MA

    Schiller says he worries for the vulnerable because the country does not appear to be sympathetic to them.

    Agreed. I read it in Scientific American “Mind” yesterday at the drugstore. Any animal (or human) will ostracize a member who is seen to be a burden.
    And there is a photo of a raccoon who is being herded away from, left apart to makeshift “independently” for whatever perceived reason.

  • at,

    90% employment? I guess if you don’t count all the people who have been on the streets or out of the system and unemployed for too long to any longer be counted. What a ruse

  • Marilynn–Tennessee

    The “real” unemployment rate is more like 20% instead of 9%. http://articles.moneycentral.msn.com/learn-how-to-invest/The-real-unemployment-rate.aspx

    People are being cut in their days and hours to 3/4 or 1/2 of their regular working hours. State workers have had furlough days (days off without pay). And, that causes under-employment, yet you can’t leave your job due to insurance and other benefits that are tied to that job.

    I think part of the problem in the economy is that people purchased homes based on their income/job status right before the company outsourced the job. Then, there was not a job to go to when the company’s factory moved to “Mexico” or “China”. So, people cannot pay the mortgage, foreclosure happens and it becomes a domino effect.

    How can the guests on the show laugh off unemployment. People are going without food, housing, living on the streets or couches of relatives. Elderly folks are living without heat or A/C due to lack of money.

  • Gordy

    I have heard many economists speak, that say on this hand this is going to happen. But the other hand this might happen, but than again nothing at all may happen. I guess that’s why they say most economist have three hands. There is no recovery with out jobs. The American Dream has been sold to china

  • Pancake, whipped full of air, in NC

    They’re blowing that sunshine up your wazoo, with Tom’s breathy assistance. Blow out the candles and call it a cake.

  • Larry

    Schiller says he worries for the vulnerable because the country does not appear to be sympathetic to them.

    Agreed. I read it in Scientific American “Mind” yesterday at the drugstore. Any animal (or human) will ostracize a member who is seen to be a burden.
    And there is a photo of a raccoon who is being herded away from, left apart to makeshift “independently” for whatever perceived reason.
    Posted by Ellen Dibble

    On the other hand there are societies all around the world that take care of the weak. But not in America because the rule of uber rich prevails and it is about crushing those beneath you.

  • David Henry

    Tom did a fantastic job of getting to the crux of the matter with his questions today. Keep at it. What do we do about the 30 year plus stagnation in wages and repeated jobless recoveries. In the mean time keep studying your math and science kids-or else.

  • Bob

    “Still have 90% employment?!!!!!!! AHA HA HA HA HA.
    How can you let him get away with this nonsense.”

    Surprising no one called him on that. I wonder how much of his optimism is based on silly numbers like that.

  • Ralph M., Western New York

    What happens if the dollar is not the world currency?

    Foreign goods and services will most likely become more expensive, possibly significantly more so. The ones we are significantly dependant on, e.g., foreigh oil, will result in a significant increase in the cost of US goods and services, however, US goods and services could be more attractive to foreign consumers and to US consummers. Accordingly, while we could see a significant increase in overall cost of living and an associated decrease in living standards, that could be offset to some extent by an increase in job opportunities and employment. There are other factors, but I’ll leave them to another reply.

  • Cady G

    The statistic that 90% of the American People have jobs is absurd. Most of the people where I live HAD jobs and when those jobs where lost, where not eligible to be counted as “unemployed”
    In the Nashville area this would include temp workers, self employed, those that worked less than 40 hours a week, musicians, manual laborers, etc.
    The economist interviewed today are totally clueless as to how the economy works down here where the wealth does not trickle and factories do not provide the bulk of the employment.
    For instance, Dell had a factory here, they hired only “temp” workers, at 6 months at a stint. In this way, they had to pay NO unemployment, no benefits, no workers comp, etc. After your 6 months, they would re-hire you, work you as much overtime as they wanted, because you had no rights. When they moved this factory overseas a few years back, those temp workers lost their jobs and were not eligible for unemployment, thus, they are not counted in your economists figures.
    Myself, I am self employed small scale cottage industry, I WAS making a decent living, when the economy went south, my sales did too. I am making about 1/2 what I was, but I am NOT counted in your unemployment figures. I can not find a “real” job anywhere.
    5 of my friends are currently unemployed and not counted, because they are musicians and concert ticket sales are down and concerts they had booked have been canceled.
    If I walk around in my neighborhood, I find unemployed drywall hangers, brick layers, burger flippers, backhoe drivers, waitresses from small restaurants that have closed, etc. NONE of these people are counted in the unemployment rolls, as they were not eligible because of their self employed, or contract, or temporary employee status.
    When will the economists wake up to the reality of your unreal statistics!!!

  • Larry

    What happens if the dollar is not the world currency?

    Foreign goods and services will most likely become more expensive, possibly significantly more so. The ones we are significantly dependant on, e.g., foreigh oil, will result in a significant increase in the cost of US goods and services, however, US goods and services could be more attractive to foreign consumers and to US consummers. Accordingly, while we could see a significant increase in overall cost of living and an associated decrease in living standards, that could be offset to some extent by an increase in job opportunities and employment. There are other factors, but I’ll leave them to another reply.
    Posted by Ralph M.

    Get ready, it’s coming in the next decade. We had to invade Iraq in order to stop Saddam Hussein from trading their oil for Euros instead of Dollars.

  • Larry

    When will the economists wake up to the reality of your unreal statistics!!!
    Posted by Cady G

    They know all about it. But just like the old Soviet Union it doesn’t serve the state propaganda line to say the real unemployment is 22+. That is a failing state.

    So they just discount over half the people in their propaganda stats and voila, not so bad after all.

    We can go back to spending 1.4 trillion every year on the military. After all, homeless people can’t vote, right?

  • Ellen Dibble, Northampton, MA

    Taking a hint from a producer’s post last Friday, I was posting in specific reference to what Siegel and Shiller had to say, but I may have thwarted the objective by misspelling Shiller as Schiller (in spite of perusing his website links last night). SORRY. (I think I got Siegel right, however.)

  • Ann, Barrington, RI

    Brian, you said (Jan. 4, 10:32 a.m.) “I don’t think the tenured professors are laughing off unemployment as much as the radio host, who has been insisting for months that the middle class dream of moderate comfort and educational opportunity must be sacrificed to fund upper-bracket tax cuts.”

    ???!!!??!! Are we listening to the same show? Tom plays Devil’s Advocate sometimes to bring out the guest, or to make sure that all sides of an issue are addressed, knowing that some listeners will be THINKING what he MUST ask, or it will surface out there in the world without analysis. That’s good journalism; and this show has so many journalistic skill sets at work at once — for me, that’s one reason I learn so much! But, I certainly disagree with you regarding your statement. I do not know Tom personally, but I do not believe that he shares the ideas you assign to him!!!

  • Lon in Appleton, WI

    Why do I think that a so-called public radio program with a listenership in the upper stratosphere of age is schmoozing the geezers into thinking that their stock market “rally” or whatever you prefer to call it is permanent?

    Two words to remember and say together: Pump ‘n’ Dump. The industry lingo of the grifters and their mouthpieces is rarely used in public.

  • Ann, Barrington, RI

    Mac Harris,

    You said (at 10:19 a.m., Jan. 4), “The way for an economy to gain GDP and get increased productivity is: get employees to work more hours, add cheaper employees, or automate.”

    I asked this question in this commentary section once before, but if someone answered, I’m afraid I may not have seen it. My question is this:

    IS THE WORK OF ROBOTS TAXED as if the robot were earning income??? If NOT, then the governments (federal & states) are losing money. A human worker pays income tax (except the rich people, probably!), but if a robot doesn’t, the governments have less income to spend on what MUST be invested in. Probably the corporation should pay that missing income tax, but there is a problem (tho one I think COULD be solved if citizens were in charge instead of lobbyists!): how much automation does it take to make a robot taxable? An electric typewriter allowed faster typing than the old manual typewriters, but that electric t/w didn’t replace a full person. When computers came along, a lot of secretaries lost their jobs because the bosses did their own typing; but that boss is still not a robot. What level of automation makes a robot equivalent to a person with a job??? If we could figure that out, or just agree to agree about it, would that automaton be taxed for income, and/or IS IT ALREADY IN SOME OTHER WAY? IF the automaton is already taxed, is it TAXED SUFFICIENTLY TO SUGGEST TO CORPORATIONS THAT THEY HIRE A PERSON INSTEAD??!! IF that were worked out, would the companies still outsource the work to a third world country until we become one ourselves? Is there a radical economist out there who has done the math to figure out WHEN EXACTLY DO WE BECOME COMPLETELY A THIRD WORLD COUNTRY? It must be something that could be looked at as a mathematical model!!!

    Capitalism searches for the lowest wages. American capitalists thrived on slavery (some of my relatives WERE the slaves) and from tenant farming and from peonage. When they didn’t thrive financially, they sometimes manumitted their slaves, because it cost the owners too much to keep them healthy enough to work (see the selfishness in even some of the manumissions??!) This now is the sad trajectory of Capitalism after slavery and after the century of Jim Crow exploitation of African-American workers, so poorly paid and under-compensated in all other ways — the trajectory is now the search worldwide for free, or the cheapest labor. And corporate leaders don’t want the “expense” of keeping their workers healthy (good working environments, health insurance, manageable working hours, etc.) anymore than the old slave owners wanted to pay for food and lodging for their “property” once their farm, plantation, smithery, etc., wasn’t making them enough money to “thrive”. That’s why I think we HAVE to become a Social Democrat economy, like the Scandinavians — not only for our Economy, but for our Souls, and for how we CHOSE to live while we are here on this earth!!!!!

  • Ann, Barrington, RI

    Lon (1:40 p.m., Jan. 4),

    Could you explain “Pump n Dump” a little bit more? Maybe a toned down explanation without much slang so I can get it? I can tell that you’re talking about something I should know, but I need more info.

    Thanks. I’ll get back to it later.

  • Jack Shultz

    I read it in Scientific American “Mind” yesterday at the drugstore. Any animal (or human) will ostracize a member who is seen to be a burden.
    And there is a photo of a raccoon who is being herded away from, left apart to makeshift “independently” for whatever perceived reason.
    Posted by Ellen Dibble

    I have seen evidence that shows that wolves will care for members of the pack that are old, ill or injured. Also, it is believed that neanderthals cared for members of their groups that were too old or too sick to care for themselves.

    It seems to me that the fact that we have developed a dog eat dog, devil take the hindmost economic system demonstrates that we live in a regressive society.

    • Ruthgfeldman

      You are right.  We are less humane than wolves and Neanderthals.  We allow politicians to take essential rights from most of our people.  They are encouraged to place the wealth in the hands of a few, choke the shrinking middle class, press on to get rid of public education, avoid letting millions have health care, delete social services that other countries consider civilized behavior, destroy unions and the voice of working people, move industries out. US will be a Third World Country soon. Gosh, who will buy China’s goods?
      R. F. California

  • Ellen Dibble, Northampton, MA

    Jack et al., the photo of the ostracized raccoon turns out to be a lemur. “Like all social animals, ring-tailed lemurs will ostracize a member of their group if the animal becomes a burden. A lonesome lemur usually does not fare well.” Page 32, Scientific American Mind, Jan/Feb 2011, by Kipling D. Williams. The rejected lemur in the photo sits there on green grass with its striped tail like a bridal train gracefully arranged back to front, and its hands by its sides, its blackened eyes and snout looking a bit like that of an abused wife. She is speechless. But about a foot in front of her, in front of her neatly arranged tail, that is, is this crowd of lemurs, facing AWAY, except one turning back with an exceptional frown on its puss. (One other looking back fiercely too.) All the retreating tails are held high, like flags of war. There is a regular fence of high tails high-tailing it out of there, across the field stage right.
    Someone posted we are a nation based on exploitation (native Americans, slaves, come to think of it women whose domesticity had elements of legalized exploitation to it). If there is no obvious exploitees, read Shirley Jackson’s “The Lottery” (I’m going by memory), a short story by which a small Vermont town annually picks someone to stone to death. I read that at about age 12, and might as well have received a concussion; it rewired my head; here I thought we were a non-torturing nation, safe to its bones. Nope.)
    On an individual level, this can’t be helped. One can write novels about it and so on. But on the level of national legislation, it really shouldn’t be winner-take-all. Especially not winner-take-all and take it overseas, to Shanghai or wherever.

  • Tony

    I feel sorry for most of the posters who commented on this show because you have been brainwashed on a massive scale. Fortunately, I do not share or ever shared your hatred of hardworking Americans who are succeeding in their chosen professions.

    I grew up in a one stop light town in the south over 25 years ago, and I put myself through undergraduate school. I’ve always intentionally worked for a company that would reimburse me for my graduate degree. I have an MBA, no debt, just bought my second home three months ago (strategically sold the first one in 2007 after living in it nine years without raping it for equity), I remain fully invested in the stock market from the proceeds of that home sale and have continued to contribute to my 403b.

    I am not struggling because I’ve always lived significally below my means (I’ve had my current car 10 years and had my previous car 12 years) even when family and friends were telling me to live for the moment. Each day I am coming closer to reaching my goals.

    Stop complaining and adjust you mindset – you will then succeed financially. The world is not static people!

  • Ann, Barrington, RI

    Tony (3:03 p.m., Jan. 4)

    You make some mighty negative presumptions about other people! Lots of people have lived extremely close to the bone, donated to those less fortunate, helped with volunteer time within the civic realm and within their own families. Some have gone back to school based on intelligent sense of self and of our overall environment; yet misfortune comes to visit. Does that mean these people are “negative”? Not necessarily; instead, they may have significant questions to ask about our status quo and/or suggestions to make for improvement of our individual, group, national, and global circumstances. Perhaps you aren’t comfortable around creative brainstorming??

    Karmically you seem to have learned little about compassion, sad to say. There is REAL suffering out there.

  • Larry

    “The American Dream has been sold to china”
    Posted by Gordy, on January 4th

    And now we have a Senate majority leader, Mitch McConnell, who owes his financial allegiance to China, through his wife, Elaine Chao, and her family connections. We’ve not only sold the American dream to China, we have put it in charge of one of the branches of our government.
    Posted by Jim

    Sadly Jim, much more of that is coming with the Citizens United Supreme Court Ruling.

    Now, China and Saudi Arabia can buy a Senator for a mere few million dollars. They could buy the whole senate, and they will, for a pittance of what they will get back in just one bill. That’s America now. Weep for us.

  • Ellen Dibble, Northampton, MA

    I thought it was very telling that Jeremy Siegel was so very assertive in conclusion that everyone must put as much money as possible into the stock market. I pointed it out before, saying that doing so to the necessary degree is quite handicapping for some (like yours truly who did just that). I mean, I am secure exactly because I did that. I am secure (enough, I think) because I knew that back in the 1980s, when the handwriting was on the wall: Wall Street was clear as clear; even a Hollywood actor was proclaiming from the seat of power (Reagan in the presidency) about retirement plans being the most promising thing since sliced bread. The nation was backing Wall Street. It was okay to believe in trickle-down and rising-tide-lifts-all-boats because your boat would be on Wall Street. And the government meant to guarantee Wall Street. Trickle-down would trickle-down to you because you would own stocks in corporations that the government would foster (tax-wise), and the dividends would trickle into the pockets of the stockholders. And we would all be stockholders.
    Woe be to you if you don’t get ENOUGH money into the stockmarket to compensate for the COST to Americans of subsidizing all those profitable enterprises (Enron, Exxon, Big Pharma, Big Farma — I’m not a stocks specialist, but that’s the gist of it). How much is “enough”? Just enough to keep you honest; more than that is arguably being part of the whole ornery system of excess.
    But you don’t want to have to rob banks; for that matter, it seems to me in a solid economy, nor should you have to support the Wall Street profit-machine (support by investing, which in theory is the way we can direct our way into a greener economy, but that’s another story) in order for you to stay solvent in stingy stretches of time (between jobs for instance). But that’s the way it is.

  • http://Washington,DC Tony

    Ann, Barrington, RI

    I beg to differ with your supposition that I do not have compassion. I was in a position to financially rescue my parents after my father lost their retirement savings after the dot com stock market bust. I donate to my childhood church – it makes my parents happy. I’ve encouraged friends to begin investing in their 401k accounts, assisted friends and family develop financial goals that will enrich their and their family’s lives, and by extension other people’s lives in their sphere. And guess what; they have all thanked me for directly or indirectly encouraging them to live their lives without allowing popular culture to influence their life choices.

    I suppose I’ve never been one to overly concern myself with other people’s wealth and success. I tried to learn from their wealth creating strategies.

    If my earlier comment displayed a lack of compassion, I apologize to you and anyone else who may have been offended.

  • William

    It is time to downsize the empire and bring the troops home. Iraq, Afghanistan, Japan, Germany, South Korea and anywhere else where we don’t own the land. Bring them all home and say “good luck” to the world and their problems.

  • geffe

    Ann, it’s all about Tony. That’s the way it is in this country. People don’t care about the people next door.

    It’s really why this nation is going to fail in the long run. Why we can’t get health care solved.
    People don’t know the difference between political rhetoric and reality.

  • Jim in Omaha

    Tony,

    I can say the same for virtually every aspect of my “financial life” as you have claimed and, despite my personal financial security, I have come to a completely opposite opinion from yours. I don’t know where you live, what you do or the type of people you encounter on a regular basis, but if truly believe that there aren’t significant numbers of hard working, frugal people who despite their best efforts can not maintain suitable employment, you live a very sheltered existence. I would say that it is YOU who has a deep contempt for many hardworking Americans. On the other hand, good for you personally.

  • Ellen Dibble, Northampton, MA

    Secretary of Defense Gates is going to China, as I understand from the Charlie Rose Show, the end of this week. China’s president is coming here later this month. And the president is conferring with Gates this afternoon last I noticed, the only thing on his schedule today after his flight back from Hawaii. A wise move in this post-Cold War world, per Zbigniew Brzyzinski on that show, is not to recreate a Cold-War type standoff, not to try to produce an enemy out of China because that’s the only model we know. Rather, acknowledge them as competitors with plenty of shared objectives. Work with them, rather than against them. He says the USA has more money annually in its defense budget than all the rest of the world combined, and the idea of seeing China as a military threat, the idea of dividing up “spheres of influence” globally as if influence had to be either/or — either Soviet or “Western”; now either American or Chinese — that idea is useless/ dangerous. A cooperative approach to global evolution is finally possible; let’s seize the opportunity.
    But William, that doesn’t mean going into isolationist mode. It means emphasizing diplomacy. Brzezynski said that after 1989 we spent a decade “frittering” away the advantage of not having the USSR trying to defeat us. And the next decade he says we spent tarnishing our reputation, embarrassing ourselves, wasting money and making enemies, something like that. Then he smiles as if to say, okay, take it from there.

  • Ann, Barrington, RI

    Tony,

    I appreciate the apology, especially on behalf of those people who have been doing all the right things, or who have been doing their personal best, only to wind up in one form of distress, or maybe even in several forms of difficulty. I believe that a forum like this gives us the opportunity to analyze every aspect of bad things and good things, so that we might find some constructive solutions to our nation’s problems.

    I apologize for accusing you for lack of empathy; in a way, we both made the same mistake: blanket judgment. That said, I do stand by my objection to your blanket criticism of people in this forum; but I will remove my judgment about your capacity for empathy.

    Our democracy has been hijacked by lobbyists, huge corporations, and, yes!, by that Citizens United Supreme Court ruling. We need to have dialogues so that we might come up with creative solutions to this predicament! Those dialogues aren’t always going to be optimistic if they are going to be helpful.

    I am extremely fortunate to have health coverage since I have metastatic cancer. Because I am personally lucky does NOT cause me to think that our health care in America is fair; nor do I think it is well-organized. I have friends who desperately need medical attention, but even with the proposed changes, they will have to wait until 2014. NOW those same people are going to have to hear NOT ONLY that the Republicans want to squash the Obama health care plans, but that the Republicans are doing this because this is “what the American people want”!!! I am extremely grateful for the health insurance that I have, but I am NOT pleased to be living in “the richest nation on earth” when it disempowers people in this way!! “Life, Liberty, and the Pursuit of Happiness”? Just exactly what IS “life” if it isn’t that thing that we tote around with us everyday, called our body (plus the larger environment that we inhabit and its other residents)? It needs maintenance; sometimes it needs repair.

    Many, many thoughtful people already blame themselves for their predicaments, when, in fact, much larger forces are at work. My current biggest problems were caused NOT by my greed, but by my excessive humility and by my doing my best to help other people. Into that “crack” came the vultures — that’s where the greed was; the result is my personal set of problems that could throw me into a ravine in a “global economy” moment!

    You are rightly proud that you paid for your undergraduate degree. I paid for my graduate degree; yet, my experience (as I stated earlier) was that it only got me un-employed or under-employed. Employers for decades said that my degree entitled me to a higher salary than my experience did. They said this even tho I DID have experience in my field and never quite stopped gaining more experience in it!

  • Ann, Barrington, RI

    When I said, Jan. 4, 10:44 a.m., “These two guests are fantastically CLEAR! Thank you! Along with Elizabeth Warren, they are the most articulate of the speakers on the economy! That helps!” …

    … what I MEANT was their lack of JARGON!

    I can only listen and try to compare what they say with what I know, or have heard about from other reliable sources; what I was referring to was their LANGUAGE USAGE — IT was clear!

  • http://tnns.org/energy Walt

    It’s the FED & BANKS!!!!!!!!!!!!!!!!
    License to create credit & money out of nothing, plus set interest rates arbitrarily, artificially whereever they like completely circumvents the supposed / pretend “FREE MARKET” and is LEGALIZED THEFT!!! – and it is happening to the tune of TRILLIONS — and they (the FED – Federal Reserve) are NOT EVEN AUDITED!!!!!! They create money from nothing, loan it to us, and charge us interest on this money – if anyone / anything should be doing this, it should be “WE THE PEOPLE” – OUR GOVERNMENT!!!!!!!
    If it were not for what the FED and big banks (mainly J.P. Morgan, Goldman Sachs, BA) were doing, everyone’s income and assets would be roughly twice as much as they are!!!!!!!!!
    Nothing should be considered “TOO BIG TO FAIL.”
    The big banks committed FRAUD & THEFT and should be liquidated and disolved, but instead are BAILED OUT – GIVEN BILLIONS TO BAIL THEM OUT!!!!!!!!!!!!!!!

    TOTALLY INSANE!!!!!!!
    CRIMINALS RUNNING THIS COUNTRY!!!!!!!

    MUST GET BEHIND RON PAUL – and to start – AUDIT THE FED – and get rid of them. This would immediatly solve and end most of the problems!!!!!!!
    Must view (free on Google, also I think on youtube):
    “The Money Masters video”

  • Ellen Dibble, Northampton, MA

    I wonder how familiar Tony is with this forum. Every now and then I read about what a bunch of losers we are, what a bunch of whiners we are. If you look at Quantcast.com (I believe that is the name of it), where they analyze the visitors to this site, we are sort $100,000-a-year sorts, with graduate degrees showing up in about the proportion that one would think the economy needs. The fact those who post tend to focus on the totally undeniable problems the economy has obviously suffered, is obviously suffering, and is highly likely to endure in the future if not corrected, that fact suggests that they/we do not view this forum as a boasting place. Put it like that.
    Whining place. Okay.
    There is a piece on All Things Considered NPR tonight about a prison near Capetown which offers a course in acting, where convicts get a chance to put themselves in others’ shoes, to imagine, to empathize, and it converts them, transforms them. Hamlet for instance. They learn to “act” their way into a more civil way of being.
    If we aren’t too good at whining on behalf of those too unfortunate to have the time and opportunity to access computers like this, well, it’s not for lack of trying. Especially those of us who are older, it seems to me, are using the internet as a voice into human terrain that we otherwise could not reach in our lifetimes. It is an act of giving, with a kind of exposure that if we did not feel it would help others — a lot of others — one would never undertake.
    No one applauds. Family do not come around to see and appreciate. It is an act of imagination whose reflection and reception depends on our years of living on earth.
    Ann, when people are deprecating, what do we know about that? What have you noticed about insecure people and how they behave.
    Ironically, there seems to be enough insecurity about being totally successful that one needs to defend that. Oh, America, that is interesting. People begin to defend themselves on grounds of being fine-thank-you-very-much and what’s-the-matter-with-being-fine.

  • John Storlie

    Stocks are super-inflated by the shift of retirement money into 401Ks. What will hapen to when the mass of baby boomers retire and withdraw?

    No safe bet on Wall Street.

  • Kate, Columbus, Ohio

    These two “experts” really infuriated me this afternoon. Either they are blind to reality or they are doing propaganda for the rich. Invest…invest…invest
    Only the rich profit from middle class investing. Middle class in the mean time has less overflow to invest. Even the banks penalize you now if your account is small with fees and charges, and of course you gain no interest. Accounts with substantial amounts do not pay fees and might even make interest. Everyone does not have the chance to “make it”. A small percentage succeed financially on the backs of the masses. That’s how the math goes. The pie is only so big:one person can get a big piece, and the rest get very small crumbs, or everyone gets a small piece? Hm. What is the American Dream?

  • TomK

    Tom, you did a nice job of going after the inequality question. Unfortunately, you’re right, after 30 years of voodoo economics, GDP growth is decoupled from middle class wages.

    There are two principal reasons, namely, the 2 pillars of reaganomics, deregulation and tax cuts. You got to one, offshoring of middle and working class jobs. Too bad we’ll never do anything about that, so long as we grant the right of the corporations to do whatever they want, ie, deregulation.

    You did not touch on the other, tax cuts. With tax rates at the top near an 80 year low, how obvious can it get that the wealth will redistribute to the top? We desperately need a much more progressive tax structure.

    The right has been wildly successful in demonizing taxes. However, if you look at the evidence instead of theories from the American Enterprise Institute, the best times for the middle class have been times of high taxes.

  • TS

    Your guests sound like two people floating in a bubble of arrogant ignorance, insulated from an atmosphere of economic injustice surrounding them that they don’t want or have to look at. With jobs being sent overseas, any leftover unions being attacked, 10% unemployment, a government bailing out banks that have criminally bankrupted US civilians, and a “recovery” for the wealthy at the expense of the working people and unemployed, not to mention a bankrupt government, may I ask what planet these guests flew in from? When will you have guests that actually represent most of the people, rather than representing Wall Street, large banks, and other economic power mongers? Also, will you stop using “recovery” as a word, when most people who ARE working, are working just to survive. NOTHING has improved for anyone, except the profits of large corporations and large banks. I thought your station is supposedly PUBLIC radio, not business radio. I could easily find this sort of programming and choice of guests on FOX TV. I suppose I should be happy according to your guests, since 90% of people are working ( for less wages, and in many cases, temp or part time), so I guess I shouldn’t care about the other 10% (it’s only 1 of every 10 people), after all, corporate and bank profits are all that are important in this brave new world.

  • Marsha

    I thought this morning’s (1/4/11) show with Shiller and Siegel was a complete waste of time. First of all, Tom Ashbrook’s format was too general and he never got to discuss anything concrete with his guests about why jobs are not being created. In fact, one listener’s comments who seemed to be heading in the right direction was completely shunted off by the host in another direction.

    NPR needs to do better than this if they want to remain prominent in radio.

  • New jersey

    can anyone remind prof. Siegel that the dow jones is today lower than where it was in January 2000, and this is without taking into count inflation!!! These business professors and economists sound like propaganda operatives; they don’t seem to have a clue as to what is going on in the economy or business.

  • TomK

    NJ I noticed that too….we have been in a long term bear market following the 2000 peak and it was bizarre for Siegel to reference the 2007 peak only.

    Actually, starting from their peaks, the S&P since 2000, the Dow after 1929, and the Japanese Nikkei following the 1989 crash look amazingly similar:

    http://dshort.com/charts/mega-bear-2000-comparisons.html?mega-bear-2000-extended

    To be sure we’re somewhat above the other bears, but the timing of the up and down legs is amazingly similar so far. If the pattern holds we’re about to start another leg down. Of course that could be easily wrong, but it’s crazy to not worry about it.

  • Jim

    Ann Arbor

    It was hard for me to believe the activity in the mall before Christmas. I wanted to ask people why they were spending like crazy. The big companies are growing overseas, not hiring here. People who get jobs here after unemployment make 30% less than they did before. Pay down debt. Work for yourself if you can. Save and cya. The oligarchy is doing fine, but those in the former middle class and below need to be smart enough to stop playing the game.

  • Ann, Barrington, RI

    Thank you, Ellen! Thank you for the gift of your insight! You said it so well that I won’t try to tell you what I appreciated, because I’d do far better quoting you!! Instead, please know that I’m stashing away that wisdom to re-read often! (Select/Copy/Paste is a Beautiful Thing!)

    I heard much of that piece about the acting classes in Capetown. When I did, I was reminded of my own suggestion a few months ago, when the topic was education. Having seen the fictional relationship between an adolescent male and a Mardi Indian Chief in the series Treme, I just keep seeing the possibilities for communities to create local — really local — Mardi Gras (broadly speaking) organizations for solid multi-discipline, community-involvement educational purposes. Similar ideas and examples, designed & experienced as the solid heart of real learning, were highlighted this month in my graduate school alumni magazine in a set of articles called “Re-imagining the Possible”!!!

    I have some inchoate sense that our society, our economy, our individual lives, and our communities could get out of some of our mess if we came together to make our OWN arts, rather than “consuming” the art of “famous” people, or of people who are “pretty/handsome/sexy” enough to be considered “worthy” enough to be highly produced & processed into “having” adequate skills worthy of our “adulation”.

    A lot of the people who shop at their local farmers’ markets and eat at locavore restaurants seem to readily SEE those who are homeless and hungry in their communities to the point that these shoppers often give to or volunteer at food banks and homeless shelters. Local arts of all sorts, if NOT seen as elitist, can ALSO bring people together in ways that lead not just to aesthetic experience and/or pleasure, but to empathy, as you point out! Then, one thing leads to another, usually for the better!! And, of course, involvement in the arts can help tremendously in the comprehension of math and science, and often help those in math and science to have a creative relationship with their field! Isn’t that one of our national goals??

    I think you & I have spoken about the farmers’ markets before, and I mentioned that statistics show that even when that farm produce costs more per pound than supermarket foods, that the cost of that local farm land becoming developed has a “hidden” set of costs that FAR outweighs that difference in price/lb.!! What hidden costs do we have due to the choices we make or the choices we are FORCED to make? For several decades now, we have been prodded into a corner where the choices we are supposed to see as best to make, are those involving going for the “least expensive” item. I think I mentioned this recently, but my Braun alarm clock was purchased in 1976 and runs beautifully today. Needing a second one, I’ve gone thru 3 others that never lasted more than a few months, even tho they mimic the Braun look & come from recognizable brand names! Land fill expenses, anyone?

    If we could make the choice to buy locally made products and/or locally provided services, we wouldn’t see THOSE jobs outsourced. In my town, there is a local bagel shop; into town came a chain bagel shop. As far as I can tell, people are being true to the store that has hired local people and used local services for decades. On the other hand, people regularly drive 5-7 miles across state lines to shop in the big box stores. Not only does that use gasoline, but the other state gets the sales tax revenues! And, if a kid wants an after-school job, they’d have to have a car (or get mom or dad to drive them that distance, back & forth), AND they’ll have to fill out a second state income tax form (quelle ordeal!)

    A town just a little south of here has many locally-owned service businesses and shops. Now, it’s on a peninsula and many, many people are related to everyone else, because families love the town, and folks stay around or return, so the impetus to buy local may be the incentive to buy from your own family. But, it works! The town’s finances are thriving (it’s also well managed!); and the local businesses help sponsor so many activities for kids, for the elders, for the civic events that are held thruout the year that the civic pride is thru the roof! The civic pride brings family members back and other people to the town for holidays, thus infusing the town with the money spent — lots of people, lots of spending! And, that civic pride … what is it really? It is really “AN ACT OF THE IMAGINATION”, to use your phrase!!! And that Act of the Imagination works both to successfully bring people together and as a bedrock for the town’s economy!!! If there WERE a cheaper bucket to buy by traveling 10 miles to a Walmart, people probably wouldn’t bother — it’s worth more to support their cousin’s shop! And, it feels better to participate in being part of the town!

    What goes around, comes around. Of course that phrase can be read in the positive, or in the negative. It is a positive phrase in the example I gave of the nearby town. With our national economy, the shareholders of major corporations want to sell us too many cheap goods which require outsourcing our jobs and frequent re-buying, and which create over-taxed land fills. I also repeat myself to ask, would an artisan economy work? We’d gain skills, at the very least! What would a discussion sound like about this topic? I know that it would include reminiscences about Work Pride!

    I think we need to totally re-think not only our economy, but our RELATIONSHIP to our economy — what do WE want?! Surely shopping in local shops alone won’t do it; but does that example give us any other ideas about how to RE-structure our economy and our society?

    By the way, there ARE lots of ideas from people about this on this page alone! So, thanks everyone!

    And, Thanks, Ellen!

  • Ann, Barrington, RI

    Hey, everyone!

    Look at what I just found!!! “Plotting Economic Complexity”!!! It’s less than one web page in length.)

    Here’s the LINK: http://www.hks.harvard.edu/news-events/publications/impact-newsletter/archives/autumn-2009/plotting-economic-complexity

    (No, Harvard is NOT my graduate school I mentioned. I was just cruising the internet and serendipity helped me!)

  • Ellen Dibble, Northampton, MA

    If someone wonders how Ann’s proposal for a locally based artisan economy is relevant to this show, I refer you to tonight’s Charlie Rose show, specifically the presentation of Michigan’s Republican Representative Thaddeus McCotter, who with outgoing (retiring after 30 years, and member of Alan Simpson and Chester Bowles’s ad hoc committee on the future of the deficit) New Hampshire Republican Senator Judd Gregg was presenting the prospects.
    McCotter laid out clear as hymn, set verses with repeated refrain, that Michigan has learned apparently Ann’s position: We need local control. We need to get the bureaucracy out of our hair. (And Wall Street?) We obviously can’t depend on corporate America. Didn’t we hear Tom Friedman? The world is flat, and a flat world has local controls.
    So that is apparently the Republican tune for 2010. All I can say is that’s good news because that is apparently the tune for the Democrats as well.
    The former (Republicans) emphasize taking our lives back from big government; the latter (Democrats) emphasize taking our lives back from big corporations.
    I’ve been paying attention for a while, and I thought McCotter is too slick. That’s why the positions seem to be sliding out a hymnal. It is apparently a compendium of what Michigan has learned since 1910. Yet I could imagine half those who post in this forum pulling apart those slippery points.
    Apologies to him, though, I had formed that slippery judgment watching the NewsHour earlier, with Senator Tom Udall (D-NM) discussing with Senator Lamar Alexander (R-TN) the prospects of changing the senate rules to allow more transparency and governance. OMG, OMG, OMG. How can mere mortals make sense of the layers of polite twist, political spin, on top of strategic positioning on top of plain let’s smile and stop this dog-and-pony show.

  • TomK

    Ellen,

    “So that is apparently the Republican tune for 2010. All I can say is that’s good news because that is apparently the tune for the Democrats as well.
    The former (Republicans) emphasize taking our lives back from big government; the latter (Democrats) emphasize taking our lives back from big corporations.”

    Unfortunately, the GoP agenda is to “free us” from gvt interference with the corporations running of our lives, and to free us from whatever good the gvt does, like our minimal safety net. The Dems TALK about controlling the corporations, and keep appointing voodoo economists to high positions. Things don’t look good.

  • Rob in Seattle

    First year macro economics:

    GDP = private consumption + gross investment + government spending + (exports − imports)

    How can these “esteemed” economists say they care about jobs without mentioning the persistent trade deficit with China? The only conclusion I can come to is that they care more about propaganda for the elites than about honest economics or protecting the workers of this country.

  • http://www.beccar.wordpress.com Eugenia Renskoff, Brooklyn NY

    Hello, Tom, I will only be satisfied when we the borrowers who got scammed because of the mortgage fraud/predatory loans/foreclosure mess get our money back. That is the very least that we deserve. The rest about the banks being bailed out, etc. mean nothing to me. We borrowers cannot afford not to be bailed out. Eugenia Renskoff

  • Ann, Barrington, RI

    Thanks Ellen and TomK for your responses, right above. I only just saw them after hours zonked out with chemobrain, but I will try to track down the individuals you mentioned, Ellen. Thank you! I think we have a different Charlie Rose schedule tonight.

    I just think that looking at this long trajectory towards cheaper and cheaper goods might be worth looking at — is it really that good for us any longer? Was it ever? What are the downsides and compromises it entailed and/or still requries, etc., etc. My auto mechanic has a craft. He is working right now with several high school students who have senior projects to work on. There are kids nearby studying industrial design. They could ask me a host of questions about medical needs for those with illness, disabilities, and I could answer, not only from personal experience. I’m sure we have the capacity to generate whole new businesses, even new industries if we shift our focus, if we consider different trajectories. I’m just a brain-stormer more than much else (I apologize to ALL that my pieces are usually so long; it’s just that I “see” in examples and don’t usually have the vocabulary, or, more negatively, the jargon, to explain my ideas in other terms; I DO seek to do better!); but brainstorming is part of the creative process; and we humans are creative! If we think only “famous” people are creative, we might denigrate our own capabilities!

    Thanks, folks! (By the way, TomK, I AM more afraid of corporations and do believe in a good set of safety nets, some of which are preventive!!!!, like education.)

  • Fred in Cincinnati

    Siegel’s remarks are pure nonsense. Wishful thinking and fantasy. Facts working against his rosy projections:

    1) Demographics – An aging society requires more economic resource.

    2) Debt – National debt and deficit spending pose a structural problem for the next 10-20 years.

    3) Housing – It will be 5+ years to work off the shadow inventory.

    4) Consumer Psychology – Sentiment has turned us into a nation of savers, not spenders. Think Japan.

    5) Unemployment – Skills degrade over time. The longer this goes on, the less likely is a robust recovery.

ONPOINT
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Apr 23, 2014
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