How to End the Great Recession By ROBERT B. REICH
THIS promises to be the worst Labor Day in the memory of most Americans. Organized labor is down to about 7 percent of the private work force. Members of non-organized labor — most of the rest of us — are unemployed, underemployed or underwater. The Labor Department reported on Friday that just 67,000 new private-sector jobs were created in August, while at least 125,000 are needed to keep up with the growth of the potential work force.
The national economy isn’t escaping the gravitational pull of the Great Recession. None of the standard booster rockets are working: near-zero short-term interest rates from the Fed, almost record-low borrowing costs in the bond market, a giant stimulus package and tax credits for small businesses that hire the long-term unemployed have all failed to do enough.
That’s because the real problem has to do with the structure of the economy, not the business cycle. No booster rocket can work unless consumers are able, at some point, to keep the economy moving on their own. But consumers no longer have the purchasing power to buy the goods and services they produce as workers; for some time now, their means haven’t kept up with what the growing economy could and should have been able to provide them.
This crisis began decades ago when a new wave of technology — things like satellite communications, container ships, computers and eventually the Internet — made it cheaper for American employers to use low-wage labor abroad or labor-replacing software here at home than to continue paying the typical worker a middle-class wage. Even though the American economy kept growing, hourly wages flattened. The median male worker earns less today, adjusted for inflation, than he did 30 years ago.
But for years American families kept spending as if their incomes were keeping pace with overall economic growth. And their spending fueled continued growth. How did families manage this trick? First, women streamed into the paid work force. By the late 1990s, more than 60 percent of mothers with young children worked outside the home (in 1966, only 24 percent did).
Second, everyone put in more hours. What families didn’t receive in wage increases they made up for in work increases. By the mid-2000s, the typical male worker was putting in roughly 100 hours more each year than two decades before, and the typical female worker about 200 hours more.
When American families couldn’t squeeze any more income out of these two coping mechanisms, they embarked on a third: going ever deeper into debt. This seemed painless — as long as home prices were soaring. From 2002 to 2007, American households extracted $2.3 trillion from their homes.
Eventually, of course, the debt bubble burst — and with it, the last coping mechanism. Now we’re left to deal with the underlying problem that we’ve avoided for decades. Even if nearly everyone was employed, the vast middle class still wouldn’t have enough money to buy what the economy is capable of producing.
http://www.nytimes.com/2010/09/03/opinion/03reich.html?src=me&ref=general
Jobs and Politics
Editorial - New York Times
The economy is short over 11 million jobs.
http://www.nytimes.com/2010/09/05/opinion/05sun1.html?_r=1&ref=opinion
Will the Stock Market Rally This Fall?
ONE THING SEEMS CLEAR AS THIS fitful season draws to a close: The recently range-bound stock market has the capacity to rally this fall. Whether it will is another matter.
http://www.smartmoney.com/investing/stocks/will-the-stock-market-rally-this-fall/
5 Doomsday Scenarios for the U.S. Economy
1. Housing’s Mini-Bubble Pops
2. You Break the Economy
3. Toxic Assets Return
4. Europe Falls Apart
5. Debt Finally Catches Up to Us
http://finance.yahoo.com/family-home/article/110576/5-doomsday-scenarios-for-the-us-economy
Follow the Yellow Brick Road & Buy Gold
Should you buy gold coins?
Glenn Beck is clearly not the only person trumpeting gold right now. That’s why it’s near record-high prices.
And while there are many ways to invest in gold through exchange-traded funds, mutual funds and mining companies (read “The new golden rule: Invest in gold” for examples), for some, only the actual metal will do.
But if it’s security you’re looking for, don’t start cashing out your 401k’s, and do keep gold to no more than 10% of your portfolio, say most experts, although dealers will suggest a higher percentage.
http://articles.moneycentral.msn.com/Investing/Extra/should-you-buy-gold-coins.aspx
Job Market Still in Recovery Ward
Underneath the noise, private sector employment is improving, but we’re far from a full recovery.
The 7 Habits of Highly Effective People
Stephen Covey’s Seven Habits of Highly Effective People®
habit 1 - be proactive®
This is the ability to control one’s environment, rather than have it control you, as is so often the case. Self determination, choice, and the power to decide response to stimulus, conditions and circumstances
habit 2 - begin with the end in mind®
Covey calls this the habit of personal leadership - leading oneself that is, towards what you consider your aims. By developing the habit of concentrating on relevant activities you will build a platform to avoid distractions and become more productive and successful.
habit 3 - put first things first®
Covey calls this the habit of personal management. This is about organising and implementing activities in line with the aims established in habit 2. Covey says that habit 2 is the first, or mental creation; habit 3 is the second, or physical creation. (See the section on time management.)
habit 4 - think win-win®
Covey calls this the habit of interpersonal leadership, necessary because achievements are largely dependent on co-operative efforts with others. He says that win-win is based on the assumption that there is plenty for everyone, and that success follows a co-operative approach more naturally than the confrontation of win-or-lose.
habit 5 - seek first to understand and then to be understood®
One of the great maxims of the modern age. This is Covey’s habit of communication, and it’s extremely powerful. Covey helps to explain this in his simple analogy ‘diagnose before you prescribe’. Simple and effective, and essential for developing and maintaining positive relationships in all aspects of life. (See the associated sections on Empathy, Transactional Analysis, and the Johari Window.)
habit 6 - synergize®
Covey says this is the habit of creative co-operation - the principle that the whole is greater than the sum of its parts, which implicitly lays down the challenge to see the good and potential in the other person’s contribution.
habit 7 - sharpen the saw®
This is the habit of self renewal, says Covey, and it necessarily surrounds all the other habits, enabling and encouraging them to happen and grow. Covey interprets the self into four parts: the spiritual, mental, physical and the social/emotional, which all need feeding and developing.
http://www.quickmba.com/mgmt/7hab/
19 things your millionaire neighbor won’t tell you
Although having a million bucks isn’t as impressive as it once was, it’s still nothing to sneeze at.
In fact, Reuters reports that in 2009 there were 7.8 million millionaires in the U.S. That’s a lot of people, people. And the odds are one or two of them are living near you.
http://articles.moneycentral.msn.com/SmartSpending/blog/page.aspx?post=1800240