Striking similarities between Great Depression & today?
In this photo from the 1930s, a group of boys on a residential street run after their homemade go-kart. (PHOTO CREDIT: GETTY IMAGES)
FROM CNN's Jack Cafferty:
While the White House insists this is a "recovery summer," others say it looks a lot more like the Great Depression.
CNBC reports that economist David Rosenberg says like today, the Great Depression also had its high points - including big stock market gains and a series of positive GDP reports. Yet in both cases, these signs of recovery were unsustainable and gave people a false sense of stability.
According to Rosenberg, the U.S. economy is in "a depression, and not just some garden-variety recession." He compares how both during the 1930s and today people have a "euphoric response" to any glimmer of good economic news.
He says in the 1929-1933 depression, there were six quarterly bounces in GDP. So far, we've had four this time around.
Several top analysts have slashed their GDP projections for 2010... down to the 1.5 and two percent range.
The president of the Chicago federal reserve says that the risk of a double dip recession is growing, adding that the government programs meant to help homeowners aren't working.
Existing home sales plunged more than 27 percent last month - twice as much as analysts expected. And new home sales also fell by more than 12 percent to their slowest pace ever.
Economists warn that a double-dip in housing prices is also just around the corner - which could slow the recovery even more.
Add in the fact that there are no jobs, unemployment remains stuck near 10 percent, and the outlook is dark.
To top it off, Morgan Stanley says a global debt crisis is just beginning, and the bond market tussle we saw in Europe this past spring is just the beginning.
Here’s my question to you: What might it mean that there are striking similarities between the Great Depression and today's economy?
Interested to know which ones made it on air?
Federal workers earning double private sector workers
FROM CNN's Jack Cafferty:
While the economy - with nearly 10 percent unemployment - is struggling to get on its feet, it seems like it's still a pretty good time to work for the federal government.
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USA Today reports that on average, federal employees earn double what private sector workers make. In 2009, federal civil servants earned about $123,000 - that's the total of pay and benefits... compared to $61,000 for private workers.
For nine years in a row, federal workers have been getting bigger pay and benefit increases than private employees... and the compensation gap between the two groups has grown from $30,000 10 years ago to almost $62,000 today.
Unions for public employees insist this is because most federal jobs require a high level of skill and education; and because the government contracts out many lower-paying jobs to the private sector.
But a lot of people don't buy that argument. Critics say federal workers are overpaid. And Republicans in Congress want to cancel the 1.4 percent across-the-board pay hike for federal workers that Pres. Obama is calling for.
Consider this: federal compensation has grown nearly 37 percent since 2000... compared to less than nine percent for private sector employees.
It's no wonder our government can't keep a lid on spending with statistics like this... the federal budget deficit just for the month of July was more than $165 billion. Meanwhile millions of Americans are losing or have lost their jobs, and millions of others have been forced to take a pay cut.
Here’s my question to you: In this economy, should federal workers be earning twice what private sector workers do?
Interested to know which ones made it on air?
In light of skyrocketing deficits, is it time to raise taxes?
(PHOTO CREDIT: Getty Images)
FROM CNN's Jack Cafferty:
The Bush tax cuts are an 800 pound gorilla – set to expire January 1st. If Congress does nothing, everyone's taxes will go up. And so far, that's what Congress is doing. Nothing. Some of this nation's best economic minds say it's time to bite the bullet and raise taxes. Economically speaking, this country is going down the toilet.
Former Federal Reserve Chairman Alan Greenspan initially supported the Bush tax cuts, but now says that they ought to be allowed to expire.
Greenspan thinks higher taxes might mean slower economic growth, but he says it's more important to pay down our massive debt.
That debt has topped $13 trillion, and our annual deficits are sky high, expected to top $1.4 trillion this year.
David Stockman, the former budget director for Pres. Reagan, along with Former Treasury Secretaries Robert Rubin and Paul O'Neill all agree with Greenspan about higher taxes to some degree.
Pres. Obama only wants the tax cuts to expire for individuals making more than $200,000 and families earning more than $250,000.
But most Republicans are opposed; they want to extend all the tax cuts. And some moderate Democrats agree with them; they're concerned that even Pres. Obama's limited tax increase could hurt the weak economic recovery.
Opinions are all over the place on what should happen, but doing nothing is not a good option – unless the government does something about its runaway spending. Don't hold your breath.
Here’s my question to you: In light of skyrocketing deficits, is it time to raise taxes?
Interested to know which ones made it on air?
How much money makes you rich?
[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2010/images/08/10/art.money.cf6.gi.jpg caption ="How much money makes you rich?"]
FROM CNN's Jack Cafferty:
It's the American dream, get rich and retire early in the lap of luxury. But just how much money would it take for you to consider yourself rich?
You'd likely get a different answer from every person you asked. There are lots of factors involved: what part of the country you live in, how extravagant your lifestyle is, how much you save, and on and on.
CNNMoney.com takes a look at the question "how rich is rich?" Some of the experts they talked to say it takes between $2 and 12 million in savings to be rich.
One definition of "rich" is being able to live comfortably without working. By that standard, in New York it would take about $300,000 a year to cover living expenses, taxes, plus a monthly spending allowance. For someone wanting to retire at 35, that means they'd need $12 million in savings. Who retires at 35?
But in other parts of the country, about $100,000 a year should be enough to live comfortably – which means you'd need about $4 million in savings to retire at 35. Of course, retiring at 35 doesn't happen for too many people – especially in this economy.
If you're willing and able to keep working until 65, you will only need about $2 million to retire.
According to the Obama administration, $250,000 is the cut-off point that makes someone rich. The president wants to extend the Bush tax cuts for all Americans, except people making more than $250,000 a year. That's about 2 percent of the population.
Here’s my question to you: How much money makes you rich?
Interested to know which ones made it on air?
First Lady takes glitzy Spanish vacation in current economic climate?
(PHOTO CREDIT: Getty Images)
FROM CNN's Jack Cafferty:
The U.S. economy, with nearly 10% unemployment, has millions of Americans struggling to make ends meet – but you might not know it by watching the First Lady.
Michelle Obama, her youngest daughter, Sasha, and several of the First Lady's "closest friends" are on a glitzy vacation in Spain. They're staying on the southern Mediterranean coast with friends at a luxury hotel.
The resort in Marbella on the Costa del Sol is a playground for the rich and famous... including members of the Saudi Royal family, Spain's jet-setting crowd and Hollywood actors.
The First Lady and her pals are expected to take up 60 to 70 rooms, or more than a third of the whole resort, where prices start at about $400 a night and reportedly go up to $2,500 a night.
A piece in The New York Daily News compares quote "Material girl Michelle Obama [to] a modern-day Marie Antoinette” staying in the lap of luxury and not exactly cutting back in troubled times.
The taxpayers are paying for transportation and housing of an estimated 70 Secret Service agents who will accompany Mrs. Obama, not to mention the cost of Air Force Two.
The Daily News suggests that while the Obamas like to portray themselves as common folk, it doesn't really jibe with what we're seeing. The piece suggests a vacation on the coast of California where money would have pumped into the local economy might have been a more politically astute idea.
Michelle Obama's lavish trip comes at a time when 8 in 10 Americans describe economic conditions as "poor” and the "economy" is overwhelmingly cited as the top problem facing the U.S. today.
Here’s my question to you: What message does it send when the First Lady takes a glitzy vacation to Spain given the current economic climate?
Interested to know which ones made it on air?
Where do you feel the economy is headed?
(PHOTO CREDIT: KAREN BLEIER/AFP/Getty Images)
FROM CNN's Jack Cafferty:
When it comes to the economy - it's tough to find much to be optimistic about these days.
For starters, economic confidence is sinking again. A Gallup index shows fewer people say the economy is "getting better" than at any time in the past year.
As for the jobs picture - it just keeps getting more bleak. Last week's employment report showed job recovery hitting a wall - with the U.S. economy losing jobs for the first time this year in June.
And even though the unemployment rate fell to 9.5 percent from 9.7 percent - this was due mainly to discouraged job seekers not even looking for work anymore. That means they're not counted as part of the labor force.
A whopping 1.2 million people want to work but say they aren't looking because of the weak job market; and it's not so surprising when you consider there are five workers for every available opening.
What's more, many of the people - who worked in sectors like manufacturing and construction - will need entirely new skill sets to switch industries.
Since the start of the recession - 7.9 million jobs have been lost; and it's likely that many of them will never come back.
Even for people who have jobs, it's not necessarily all good. In California, they're looking to cut the salaries of more than 200,000 state employees to federal minimum wage. It's a way to save money since government officials can't agree on a new budget.
To top it all off, the $787 billion in stimulus money is almost all spent. If that was supposed to jump start the economy, then what now?
Here’s my question to you: Where do you feel the economy is headed?
Interested to know which ones made it on air?
What's the answer to America's financial crisis?
FROM CNN's Jack Cafferty:
The United States' national debt level is the highest it's been since World War II. The Congressional Budget Office is warning President Obama's deficit commission that something must be done - and quickly.
[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2010/images/02/17/art.debt.clock.jpg caption="FILE PHOTO: A shot of the National Debt Clock on July 13, 2009"]
By the end of this year, it will represent 62 percent of the nation's economy and will rise to 80 percent in 2035. That means that simply paying the interest on the national debt will consume one-third of all federal revenue. And that's the CBO's most optimistic scenario.
Their worst case scenario has the debt hitting 185 percent of GDP by 2035 and interest payments consuming nine percent of GDP, or more than two-thirds of all federal revenue.
And getting to that point is not at all improbable. The CBO says it has just extend the tax cuts of 2001 and 2003 for most people, permanently protecting the middle class from the Alternative Minimum Tax, and permanently increasing Medicare payments to doctors, and Presto! We're there.
The president's bipartisan deficit commission has until December to come up with some ideas on how to bring down debt and stabilize the deficit. But none of their recommendations will be binding on anyone. And it's no accident their report isn't even due until after the midterm elections. In the meantime, we have a ticking financial time bomb on our hands and our government is sitting on theirs.
Here’s my question to you: What's the answer to America's deepening financial crisis?
Tune in to the Situation Room at 6pm to see if Jack reads your answer on air.
And, we love to know where you’re writing from, so please include your city and state with your comment.
Is U.S. entering a depression?
FROM CNN's Jack Cafferty:
Forget all the talk about an economic recovery - the U.S. just might be headed in the opposite direction.
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Paul Krugman - who has a Nobel Prize in economics - writes in the New York Times that he fears we are in the early stages of a depression.
Krugman says a failure of policy is to blame - that it's a mistake for governments around the world to raise taxes and cut spending at this time. Krugman says nations should be spending more to stimulate the economy.
And, at the end of the day - it is the unemployed and their families who will pay the high cost of this depression. Krugman writes about the "tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again."
Speaking of the unemployed - almost one million Americans are losing their unemployment benefits because the Senate failed to extend the deadline.
The bill didn't get the 60 votes needed to pass because lawmakers are looking for ways to put the brakes on skyrocketing deficits.
The same bill also contained another $24 billion for Medicaid funding for various states. And since they won't be getting that money right now, they will be forced to cut hundreds of millions of dollars, on top of what they've already cut.
It's getting very ugly out there.
Despite the Obama administration crowing about the so-called recovery summer - 78% of Americans say the economy is still in a recession according to a new CNN/Opinion Research Corporation Poll. Some recovery.
Here’s my question to you: Is the U.S. entering a depression?
Interested to know which ones made it on air?
What would fiscal austerity look like in the U.S.?
FROM CNN's Jack Cafferty:
It may be a sign of things to come here in the U.S.:
Running out of money and drowning in debt. Governments across Europe are cutting, cutting and then cutting some more... and the pain is palpable.
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CNNMoney.com reports what fiscal austerity looks like... and countries including Greece, Italy, Spain, Hungary, Portugal, and Ireland are living through it now.
These governments are implementing a wide range of tough measures - and in the process imposing a dramatic change in lifestyle for their residents.
These include - freezing public-sector wages and state spending, cutting jobs, social welfare benefits, and state and local budgets.
Some governments are raising retirement ages and reducing pension payments... others are increasing taxes - from the value-added tax to higher taxes on gasoline and cigarettes... and income and profits taxes.
It gets worse - with the added concern that economic instability will lead to political unrest.
Top European officials are warning that Democracy could "collapse" in Greece, Spain and Portugal unless they take urgent action to fix the debt crises. They worry these countries could fall victim to military coups or popular uprisings.
Meanwhile on this side of the Atlantic Ocean, as America's national debt tops $13 trillion - there's no indication the federal government will stop spending anytime soon.
Just this week, President Obama asked for another $50 billion in emergency aid to state and local governments.... but no word on how to pay for it.
At the same time some state governments, which are actually required to balance their budgets, are threatening to cut services if lawmakers can't agree on spending cuts.
Here’s my question to you: What would fiscal austerity look like in the U.S.?
Interested to know which ones made it on air?
Do you feel better or worse about your financial situation?
[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2010/images/06/14/art.cashregister.cf.gi.jpg caption="Do you feel better or worse about your financial situation?'"]
FROM CNN's Jack Cafferty:
While Washington touts the recovery, fewer Americans are feeling "better" about their own financial situation these days.
A new Gallup poll shows 50% of those surveyed say they feel better about their personal finances. But that's down 4 points from April... and so far the drop is holding in the month of June.
Not good.
The poll also shows that several other important measures of personal financial well-being are holding steady...including:
- 34% of Americans say they have more than enough money to do what they want.
- 77% say they have enough money to buy the things they need.
- and 21% say they worry they spent too much money yesterday.
These numbers have remained virtually unchanged in the past couple months.
But, the fact that more people say they're feeling worse about their personal financial situation could spell trouble.
For one thing, it's a turnaround from April when consumers were feeling better about their own pocketbooks.
There are several possible reasons for this decline, including the stock market having its worst month in 40 years in May.
Also, there's the ongoing and worsening financial crisis in Europe as well as the deteriorating conditions resulting from the Gulf coast oil spill. And the May jobs report was disappointing, showing an artificially high number of new jobs because of the hiring of temporary workers for the census.
Whatever the reason, if people are worried about their finances they're less likely to spend money – and without consumer spending, our economy has lost its motor.
Roughly two-thirds of the American economy is driven by consumer spending.
Here’s my question to you: Do you feel better or worse about your financial situation?
Interested to see which ones made it on air?
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