How the Economy Helps Trump

The American economy suffers from a split personality, and Donald Trump appears to be the chief beneficiary of this illness. A study just released by Pew shows that for the first time in decades, the middle class is no longer in the majority in the United States. Instead, the upper and lower classes are. Now the middle class—defined as people earning between two-thirds and twice the median income (from $42,000 to $126,000 a year)—constitute just under 50 percent of the earning populace. Twenty-nine percent are in the lower brackets, and 21 percent in the upper.

Read more

Ben Bernanke, the Grown-Up in the Room

Ben Bernanke’s new memoir, The Courage to Act, is neither easy nor scintillating reading. But clunky and dry as it is, the 600-page tome serves as a provocative reminder that not all high officials in our largely dysfunctional government are motivated by partisanship or the desire to protect bureaucratic turf. It offers proof that Bernanke and the Fed were the grown-ups in the room during a period of crises unprecedented since the Great Depression, regardless of whether you believe they have conducted themselves brilliantly or poorly.

Read more

Lead, America, or Get Out of the World’s Way

The United States is doing a poor job of leading the global economy. But apparently we won’t let anyone else lead it either. In a world increasingly defined by the global flow of goods and services, Washington finds not just curiously adrift but actively at odds with itself and a coherent approach.

Read more

The Upside of a 'De-Americanized' World

This current bout of Washington absurdity has reached its denouement, for now. Though resolved for the next few weeks, these debates seem certain to continue, especially with the debt compromise only good until February. Overall, the result has been to accelerate a trend that has been gathering steam for at least the last five years: the move away from a Washington-centric world and towards a new, undefined, but decidedly less American global system.

Read more

Banks Are Hurting? It’s All Relative

The latest out of Wall Street-land is a warning by analysts at Citibank that profits at Goldman Sachs and Morgan Stanley (and to a lesser degree at other banks as well) will show a sharp contraction for the second quarter of 2011. Leaving aside the inside baseball nature of one Wall Street firm issuing a negative report on other firms, the decline in profitability stands in contrast to the widespread perception that banks and investment houses are booming while the rest of the economy is suffering. Or does it?

Read more

Larry Summers’ Stimulus Dream Right—But Impossible in Current Political Climate

Larry Summers, former treasury secretary, former president of Harvard and the former head of President Obama’s National Economic Council, made waves yesterday with an unequivocal and passionate call for a new round of stimulus to address what he rightly perceives as a weak recovery for American jobs and economic activity in general. In his view, the U.S. economy is hobbled by weak demand for goods and services, compounded of course, by high unemployment.

Read more

Stimulating

After months of confusion, we are about to close a painful chapter in the economic crisis of 2008-2009. With the imminent passage of the $800 billion stimulus package combined with the roll-out of the next stages of the government-orchestrated bank bailout and recapitalization, we are about to end the talking phase and enter the doing phase. While no one can say for sure whether these plans will work, it’s certain that they will have an effect.

Read more

Debt: The Third Rail of Journalism

Last week, I published an essay in Time magazine about debt, arguing that our current preoccupation with the federal deficit and with debt in general is a dangerous distraction from the real issue (namely, our inability to invest and spend wisely to create the economy of the future). The problem isn’t debt per se - after all, the U.S. government took on much more debt during and after World War II, and few would argue that was bad policy or led to disaster. The problem is that we aren’t spending our debt productively; instead, we’re frittering it away on consumption, tax rebates, military budgets to pay for Cold War-era weapons systems, pork projects, or other forms of spending that will not yield returns in the future.

Read more

Easy Money Is Back

Since the financial meltdown, it's become conventional wisdom that prior to the crisis, the world was awash in too much easy money—and that now it doesn't have enough. It's a tidy thesis, widely accepted. It's also wrong. What's remarkable about our post-crisis reality isn't that we're not capital-starved; on the contrary, we're still swimming in excess liquidity. During those months of panic, all that cash didn't evaporate. A lot of it just got stashed on the sidelines. Now the global pool is growing again, and the next market bubbles are already popping up.

Read more

Enough Already

The financial markets are again getting pummeled, both domestically and globally; the nearly $800 billion stimulus package signed with fanfare by President Obama has done little to alter the mood. In fact, if you read through financial websites and assorted blogs on politics, economics, or anything related to those, you will find a nearly endless sea of misery. The level of anger, pessimism, despair, and sheer hopelessness seems to reach new peaks every week, in inverse relation to the movement of global equity prices and the size of individual retirement accounts.

Read more

As Main Street Rejoices, Wall Street is a Basket Case

If you were not one of the 2 million people watching the inauguration on the Mall in Washington, you could watch the spectacle on any number of television channels. Flipping between ABC, CBS, NBC and PBS would have yielded different commentary but largely the same mood: euphoria, awe at the magnitude of electing the first African-American president, and somber urgency about what confronts our financial system and the world. Yet, even as Obama warned of a difficult road, the crowds were wildly enthusiastic, and millions were moved. Main Street has turned a corner.

Read more

The Rise of the Rest

The current economic crisis has claimed many victims, but what has changed most is the way that the United States is viewed, perhaps permanently. That isn’t ideology; it isn’t declinism; it’s a fact. For all the talk in past year about the shifting balance of power globally, until now it has been just that — talk. Saying that the emerging world of China, India, Brazil and the rest have assumed a new place is like saying that a new army is well-equipped with sharp uniforms and cutting-edge weapons. That doesn’t mean it can fight. Until tested in battle, it’s just a guess. The economic crisis of the past two months has been such a test, and the results are clear: talk of the emerging world as the wave of the future isn’t just speculation; it’s a permanent reality.

Read more

There’s Only One End of the World... and This Isn’t It

So here we are once again on the precipice, at least in terms of global stock markets and credit markets. Another bout of nail-biting panic is hardly unexpected, though it’s always surprising when otherwise sane people veer sharply into hysteria. It’s a good, albeit painful, reminder that the bonds of what we call civilization are always more tenuous than we would like to believe, that things like “value” and “worth” and “the economy” are ultimately the products of human beings simply agreeing on a set of rules. Stocks, bonds, gold, silver, none have any intrinsic value, nor do Gucci handbags, Deere lawnmowers, and GM trucks (in case anyone was wondering about that one). We act as if they do, because it gives us some sense of an orderly world, and because the alternative is just too unsettling to live with on a daily basis.

Read more