“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.
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David Cay Johnston: The antidote to economic anxiety is better government
The stock market will recover. Whether jobs and pay will come back for most people is less certain
Sharp recent drops in the U.S., Chinese and European stock markets and the large crowds drawn by two very different men seeking to be president, Sen. Bernie Sanders and Donald Trump, point to the same issue: widespread economic anxiety. [..]
Although the news coverage is clamorous, the stock market will recover. Monday’s sudden stock market drops from Beijing to New York simply reflect the leverage of high-speed traders, many buying shares with $30 of borrowed money for every $1 of equity. With that much leverage, panic easily sets in when stock prices become volatile.
Encouraging this reckless behavior are the near zero interest rate policies of the Federal Reserve and other central banks. Artificially low interest rates decrease the costs of speculation and encourage frothing the market for quick profits, enabling traders and their clients to accumulate money without creating wealth.
This scenario is entirely preventable: If the government limited stock trades to ban or minimize borrowed money, there would be less speculation and less instability. In the long term, stock prices would move in greater accord with the profits and expected profits of each company.
There has been much talk in recent years about inequality and the poor life chances of children who grow up in poverty. Even many conservative Republicans have been putting forward proposals that are ostensibly designed to give people the opportunity to raise themselves out of poverty and into the middle class and beyond.
While the usefulness of the various proposals for combating poverty can be debated, the stated intention is increasing the income and opportunities for those at the bottom. This stands in sharp contrast to what the Federal Reserve Board seems prepared to do this fall. It plans to implement policies, specifically higher interest rates, which will reduce the income and opportunities for those at the bottom. [..]
However it is important that the public have a clear idea of what is at stake in the Fed’s decisions on interest rates. While many politicians and policy experts are grappling with ways to try to lower the poverty rate, by raising interest rates, the Fed will be directly preventing people in poverty from getting jobs and seeing pay increases. We can argue over the best policies to get people out of poverty, but a good place to start would be to end policies that keep them in poverty.
It’s been a chaotic few days for the world’s markets. Recent events do not paint the picture of a stable economy guided by rational minds. Instead, the world of global finance looks more like a playground in need of adult supervision.
Like other nations, we have a central bank. What should the Federal Reserve do in troubled times? For that matter, what is the Fed’s role in preventing them from occurring in the first place? [..]
The Federal Reserve was created by the American people through an act of Congress. Its governors and its policies are there to protect and serve the public. The Fed should use its oversight capabilities to ensure that banks don’t behave in a reckless manner or help private funds and other unsupervised institutions to behave recklessly.
We are still paying the price for allowing big-money interests to dominate both lawmaking on Capitol Hill and monetary policy at the Federal Reserve. That must change. Congress and the Fed, acting together, should ensure that our nation’s policies benefit the many who are in need of help, not the few who already have more than they need.
Robert Reich: The Upsurge in Uncertain Work
As Labor Day looms, more Americans than ever don’t know how much they’ll be earning next week or even tomorrow.
This varied group includes independent contractors, temporary workers, the self-employed, part-timers, freelancers, and free agents. Most file 1099s rather than W2s, for tax purposes.
On demand and on call — in the “share” economy, the “gig” economy, or, more prosaically, the “irregular” economy — the result is the same: no predictable earnings or hours.
It’s the biggest change in the American workforce in over a century, and it’s happening at lightening speed. It’s estimated that in five years over 40 percent of the American labor force will have uncertain work; in a decade, most of us.
Mark Weisbrot: US and Europe face common political problems
Resistance to economic insecurity and inequality is growing on both sides of the Atlantic
As the ever-lengthening U.S. election season begins to heat up, it is interesting to compare the U.S. and Europe regarding the evolution of their politics since the world financial crisis and recession (2008-09). In Europe, there has been quite a bit of political upheaval, with center-left parties often losing a large part of their voters. In Greece, to take the most dramatic example, the Panhellenic Socialist Movement (PASOK) is now polling just 3 percent of the electorate, after decades of wining around 40 percent or more of the vote. There have been significant losses of popularity for similar center-left parties in Spain, Italy, France and other countries – although some have yet to materialize in elections. In Greece, the leftist Syriza party has gotten most of the disaffected voters and took power this year; in Spain, the newly created leftist Podemos party shot up to the top quickly, although it has fallen some in polls recently. In France it has been the extreme right National Front that gained most, and in Italy, the new populist Five Star Movement.
The U.S. is an oasis of political stability by comparison, partly because of our different political system. But the main reason for Europe’s political turmoil, to mangle political strategist James Carville’s over-used slogan for the 1992 election: It’s the stupid economy.