October 31, 2012


The progressive case against Obama : Bottom line: The president is complicit in creating an increasingly unequal -- and unjust -- society (MATT STOLLER, 10/27/12, Salon)

So why oppose Obama? Simply, it is the shape of the society Obama is crafting that I oppose, and I intend to hold him responsible, such as I can, for his actions in creating it. Many Democrats are disappointed in Obama. Some feel he's a good president with a bad Congress. Some feel he's a good man, trying to do the right thing, but not bold enough. Others think it's just the system, that anyone would do what he did. I will get to each of these sentiments, and pragmatic questions around the election, but I think it's important to be grounded in policy outcomes. Not, what did Obama try to do, in his heart of hearts? But what kind of America has he actually delivered? And the chart below answers the question. This chart reflects the progressive case against Obama.

The above is a chart of corporate profits against the main store of savings for most Americans who have savings -- home equity. Notice that after the crisis, after the Obama inflection point, corporate profits recovered dramatically and surpassed previous highs, whereas home equity levels have remained static. That $5-7 trillion of lost savings did not come back, whereas financial assets and corporate profits did. Also notice that this is unprecedented in postwar history. Home equity levels and corporate profits have simply never diverged in this way; what was good for GM had always, until recently, been good, if not for America, for the balance sheet of homeowners. Obama's policies severed this link, completely.

The link between the recovery of corporate profits and the decline in housing prices is direct, both were a function of the recession.  Profits just went up because excess employment was trimmed back after a thirty year social experiment.  The resulting economy, more efficient, productive and profitable, will help drive housing prices back up.

Posted by at October 31, 2012 5:34 AM

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