IMO, the USA built up so much private debt primarily as a result of so called "inequality" (I call it a "a great wage depression). American workers sense that average income is steadily expanding over the decades -- they know they SHOULD be living better -- and debt is how they attempt to live it.
I now see from Kevin Phillips article that the financial industry both feeds on this labor weakness and in turn squeezes even higher pay (squeeze a toothpaste tube on the bottom; it all comes out the top) out of the feed because of labor weakness. Shades of WalMart keeping wages so low people have to shop at WalMart.
Ditto, for Bush's tax cuts for the rich to fight the recession instead of for the middle class who would spend more and actually boost demand more -- forcing the Fed to cut interest rates more then it would have had to -- flooding the market with so much cheap money that it had to find a place to (irresponsibly) be lent -- leading to the next bubble bursting recession.
It is all a matter of USA labor losing its POLITICAL as well as economic muscle.
It all a matter of a lack of unions.
Posted by: Denis Drew May 6, 2008 11:53:36 AM