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Waiting for the “Go”

“We wait. We are bored. (He throws up his hand.) No, don’t protest, we are bored to death, there’s no denying it. Good. A diversion comes along and what do we do? We let it go to waste… In an instant all will vanish and we’ll be alone once more, in the midst of nothingness!”
– Samuel Beckett, Waiting for Godot

The economy was, once again, a big story last week as the reality of a weak job market and potential defaults in Europe swept over stocks.  It was time to pay attention to things for a while before we move on and crank it up again as if nothing happened.  It’s a pattern that has repeated once a quarter since the meltdown of 2008.  But why are things stuck – and why does the financial world only seem to care in spurts?  The answers are complex, but it seems that one world seems to have everything it needs except for a solid connection to reality.  They only have to pay attention to it every once in a while, or so they think.

The situation for most banks and other financial institutions is what is often called a “liquidity trap”.  They have an awful lot of money on hand thanks to bailouts and Quantitative Easing, but they have little reason to loan it out to the general economy.  Interest rates run around 2-5% but inflation is currently running a bit higher, meaning there is no way to make money by making conventional loans.   So they sit on their cash, buying government bonds that have been appreciating and looking for riskier investments that will give them a decent return.  Every so often that risk looks worse than they might hope, at least until everyone can patch the operation together and then continue as if nothing is happening.

The two intrusions into an otherwise very quiet situation are Greece and the employment numbers.  Both are being watched not just for their own value but their status as harbingers of something else.  A wave of government defaults would cause a lot of trouble around the world due to the exposure owned by banks and continued unemployment could signal a return to “recession”.

Note that no one in the financial world is focused on the idea that this is a Managed Depression, which is to say that things will not get better on their own anytime soon.  They don’t really seem to care because they have the resources to wait it out – assuming nothing really bad happens.  The Federal Reserve has done just about everything they can to keep an even keel even if the government itself does little but fuss and fume about nonsense.

In short, the people with money appear to have given up.  They have theirs.  Keeping it safe is what they care about, not expanding it through investment.

How will we break out of this pattern?  There is no reason to believe that we can until people insist that the government do something to create jobs.  To the financial world, that means the creation of something that they can invest in to make more money than they have right now.  What could be better to invest in than the greatest resource that this or any other nation has, the skills and strength of its people?

It may not be obvious what the government can do to get things moving again to most people.  That’s because policy makers are completely lacking in imagination and leadership right now.  Reducing the overhead per employee remains the most effective possible tool to kick-starting the job market, but any direct investment in job creation through a kind of New Deal will soak up the excess labor and, if done well, define new opportunities that are worth investing in.  Note that it might also increase consumer spending, and thus corporate profits, but that’s not as important as it seems.  We need to break out of the dull patterns that have defined the economy since the crash.

It’s the investment in people, our one real resource, which has been lacking.

So the holding pattern continues.  The crises that flare up once in a while are telling us something, but those who have reason to understand them and solve the problems once and for all are stuck in a limbo between fat ‘n’ happy and scared silly.  They handle this dichotomy by ignoring things as long as they can.

I don’t know that I blame the financial world for this behavior, but I certainly don’t find it acceptable.  But we’re missing the leadership, political and economic, that could change it.  Until then, we’re just waiting … and periodically decrying the lack of anything other than wait.

There are many links in this post to deeper explanations reaching back to 2008.  So little has changed.  I’d love to know what you think and what you have questions about – perhaps we can, as a group, work a few things out and define a way forward. 

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39 thoughts on “Waiting for the “Go”

  1. I certainly feel like I’m trapped in Waiting for Godot. On a good day I’m bored and on a bad day I’m anxious about my job and situation. Everyone I know with a job just want s to hang on to what they have and not make any waves. So it’s not just Wall Street that has this attitude – it’s everyone. Excellent analysis as always.

    • So true, Jim. When I was employed, I did everything possible to improve my “value” to the company, accepted a lack of wage-increases as the company’s attempt to hang on, watched good people being laid off and worried that every day could be my last day. That day came November 4th.

  2. Erik, you and I have had “Boomerjack-appropriate” (speaking in broad generalities that I can grasp 😉 ) on this topic, and in general are in agreement. In a nutshell, I don’t believe the economy has a chance until living-wage employment increases pretty dramatically.

  3. Excellent commentary. It really always comes down to one thing; greed. As you said, the “too big to fail” banks got to go on Welfare otherwise known as TARP. The people? We lost our homes, our health care, our jobs, our access to food or medicine, our pride, really everything that matters to us aside from maybe people. Actually, I take that back, there have been people who have been lost as well. People without health insurance who committed the sin of getting cancer which may or may not have happened before a job loss and in some cases caused a job loss. I won’t get into specifics about my personal life other than to say that as a result of this global economic crisis and the wealthy FEW having so much greed, I’ve lost a lot of anything I previously considered “assets”. I also find it quite irritating anytime I meet certain people (be they Republicans OR Democrats) who work for Wells Fargo and spew out the PR garbage that Wells feeds them. “Wells Fargo was FORCED to take TARP money and Wells paid it all back! Wells was doing the country and federal government a FAVOR!” Really? So there was a gun to the corporation’s head? (Because the corporation having “personhood rights” does you know, have its own head and other bodily organs..) WHY then am I charged $3 just to get MY money out of an ATM that happens to be owned by that saint of a company called Wells Fargo? Didn’t they already get their Welfare (TARP) handout? And now because of a 2010 U.S. Surpreme Court decision (Citizens United v FEC), Wells Fargo or for that matter the “on every damn corner in the entire borough of Manhattan” Chase or the “we can’t figure out how to mail Kristin her own debit card” U.S. Bank or the “we’re another greedy bank” Wachovia or really ANY of them…can donate whatever they damn well please (from their TARP Welfare fund) to some made up glorified PAC or super PAC or whatever to Sarah Palin or Mitt Romney or Obama or Ron Paul or whoever THEY think will help them keep all of THEIR money. Hint, it won’t result in more jobs or lowered taxes for “real” people.

  4. This explains a lot, thank you. I am beginning to understand how big the idea of “restructuring” is. We really do have to do things a lot different than we have been but I don’t think anyone is really up to the challenge.

  5. Well, to be fair to both Bush II and Obama and to both major parties, we are still a nation at war. The “prosperity” we saw during the years when Clinton Democrats and Congressional Republicans achieved a fiscal policy negotiated balance were made possible by the fall of communism in Europe and the success of Desert Storm, both of which occurred during the Presidency of Bush I.

    In other words, “It’s the war, stupid!” So far, the economic impact of the war since September 11, 2001 hasn’t been nearly as devastating as that of Vietnam. The aftereffects of that one lasted well into the first Reagan term. But we need to be doing better.

  6. Thanks, everyone. I hadn’t thought about how everyone is in the same holding pattern as Wall Street – so I guess we do have something in common after all! Who knew? 🙂

    Rafferty: I’m not against the TARP, per se, as it certainly seemed necessary to prevent general collapse. But to not have that effort matched with what was necessary to create a genuine restructuring through this depression and create jobs is mind-boggling. A New Deal is good for people and Wall Street alike. I chalk most of this up to laziness, to be honest – on the part of both Wall Street and the gummint.

    Edward: You have an excellent point. Sadly, most people think war is good for an economy – a delusion that comes from the mistaken notion that it was WWII that really ended the Great Depression of 1929. So it’s worth saying over and over again until you are sick of it. I’ll do my part as well, because you are quite right. However, the underlying fragility of the economy and lack of any attention to detail has been a serious problem as well – 2.5 wars have only made it worse.

  7. I see a lot of young people (and by that I mean people under 30) who are just struggling to get by any way they can and I have to wonder. Some of them are driven but a lot are resigned to the life they will have to lead. I don’t know what will become of them when they are older and don’t have much to fall back on. Maybe it was wrong to think that one good skill would make a career and it would set you up for life but the way kids today just bounce along from one thing to make money to another I don’t see them having much of a future. And it’s not their fault at all, there just isn’t the opportunity out there for them to settle in and have a career and a family. We’re all just waiting for something to happen to give us direction but we could wind up waiting our whole lives at this rate.

  8. There is incredible consumption in this land especially amongst some of the middling classes and even amongst the poor (hereby forever defined as those earning a living wage with paltry benefits but supporting a family or those at near minimum) But if one perhaps look at Europe even their quality of life is unsustainable and dependent upon migrant labor and low fuel costs altho not as much as here in the land of OZ. Last nite I lay awake pondering society if such exists a ol Maggie once said and the difference between continental philosophy and Anglo cartesian philosophy . Maybe cognitive science can teach us something yet and I don’t mean the dreck David Brooks spews out.

  9. Dale: I think you really hit the nail on the head – this is a generational problem. It’s been a generation in the making and will take a generation to get out of. But what does this generation have to fix the problems and move on? I don’t know that they have anywhere near the resources that are necessary to move ahead without moving back pretty far first. Which brings me to …

    Dan: Yes, our standard of living as we know it has to drop, I’m sure of that. But can we have a high standard of living without so much consumption? I say we can, too, and the comparison with continental Europe is a good one. It’s also worth thinking about Brasil and Malaysia, who are rising in standard of living – what model will they follow? I think we have a lot to learn.

    As for the Western Cartesian / reductionism, I also think you are onto something. My whole concept of Connections Theory is based on a bridge between reductionism and holistic thinking of Asia, because both have good points. Forest and trees. 🙂

  10. Thank you for your response. I am trying to adopt a Lyndon Johnson form of communicating; listen, nod like a reporter in order to get more info, don’t necessarily divulge your feelings in order to get more info, maybe let something personal pass in order to get more info… This is where politics is going to start to get ugly. Thru last nite the Republicans are going to try to convince the American electorate that they have the answers even as they continue to focus on some of the wrong things. They will probably nominate someone who is a little warm and fuzzy but also of presidential timber or standing, Romney and Pawlenty come to mind. They are going to promise that their program will work and perhaps it will provide a little juice which would quickly dry up. They also convince a large segment of the electorate that their standard of living will go down unless we elect them (Harry and Louise come to mind)

  11. Sorry the computer and I don’t get along sometimes. When they are elected they will push back even farther on labor laws. Remember post Katrina when migrant labor was bussed in, dormed and double bunked in shipping containers and paid far below substandard wages. They will push for even more flexibility in labor laws where for example a nurse might work 60 hours one week and 30 the next and only get paid/compensated for 10 overtime hours. Or a seasonal worker might work 70 in high demand periods and be let go in low demand times and this could be in the primary economy and I’m not even talking about the secondary economy where labor law is rarely enforced.

  12. Before the ‘go’, the shrinking of the middle class financial strength has to be reversed. Real wages have been nearly stagnant for decades. Remember 70% of US economic growth is fueled by the consumer, and much of the economic growth over the last few decades has been achieved via equity extraction and debt assumption. That game is up. The middle class has finally caught on, and for those that haven’t the banks are doing it for them. And the outlook gets worse when everyone sees all the attempts to cripple social security and medicare. Who is going to go out and spend anything but the bare minimum given this bleak history and outlook? It does not look good.

  13. Well fine. I think what we need, in political terms, is for bankers to be widely hated, demonized, held responsible, such that government will be forced to take control of the economy away from them. This calls for political awareness on the part of the general population and its not there for various obvious and non-obvious reasons….

    But it’s worth noting that the “Great Depression” didn’t really end until the “stimulus” of WWII. To many if not most people coming up in the 1930s, economic stagnation seemed like a permanent feature of the landscape….

  14. Dan: I think we’re past convincing people that their standard of living will go down unless X or Y happens. A little more desperation and people will understand that it is going down already. That’s a lot of the reason I want to use the word “Depression” and create an appropriate sense of urgency.

    Werner: Yup. I’ve been writing about this for a while and I do think that it’s finally at an end. You can’t have real (inflation adjusted) wages stay stagnant for so long and not expect upheaval. I’m only shocked that it’s taking so long for people to wake up.

    Alan: I accept your argument that it is time to demonize bankers and talk in revolutionary terms, even if we’re not ready to start having proper riots in the street. They add nothing to our lives but take away so much. Work, especially hard work, has to be valued again.

  15. Had a good riot over losing the Stanley Cup, not sure if we can make one over banking. People have pretty weird priorities.

  16. Everyone I know is just waiting too. Its as if something bad is about to happen but we do not know what. I guess anyone could lose their job tomorrow. It is not like we are waiting for anything good to happen anymore and the whole recovery idea is not on anyone’s mind that I know.

  17. I don’t know what the answer is, but it’s clear that someone has to get something going. It may be old school to ask the government to just spend money to make things but at least the system would get started again and people would have jobs. I don’t know why we don’t do this a lot more than we have been. Giveaways to banks has not helped anyone except the very rich.

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  21. Jim: Riots happen over stupid things mostly. A real waste, iddinit?

    Jan, Anna: We are all waiting. That’s why I followed this up with a plan of action. I’m tired of waiting – we need to get it moving again! Try anything and see what happens, I say.

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