Important Events Coming up. Mark your calendars

Jubilee Action Party: January 10
Where You Will Celebrate Jubilee Victories and Help Organize an Event for the February Change Not Chains National Week of Action
When: January 10th, 2009 2 pm-4:30 pm
Where: Hope Church, UCC
87 Seaverns Avenue Jamaica Plain
Parking is available, and you can access the meeting from the side entrance to Capen Hall.

Please join us for a Jubilee USA Action Party on Sunday, January 10th! It will be an exciting chance for Jubilee activists from across the state to celebrate our past victories and plan for the February Change Not Chains National Week of Action to pass the Jubilee Act.
The party will be hosted by Jubilee activists, Neeka Stanley and Stan Duncan

Come meet other activists, learn more about Jubilee, and take action! To RSVP click here. Please feel free to invite family and friends for what's sure to be an amazing event!

The Fourth Annual Pilgrim Association Mission Fair: February 6

This is an event which is hosted locally, but has participation from all over. The Missions Committee (of the Pilgrim Association of the Massachusetts Conference of the United Church of Christ) hosts a fair once a year for a broad range of mission and justice organizations. Organizations are invited to come, set up a booth and talk about their work. Typical organizations are Bread for the World, Equal Exchange, Church World Service, Heifer International, Jubilee USA, Habitat, and others.

If you are interested in faith-based mission and justice work, if you have a local project you would like to show off, if you would like to schmooze for a few hours on a Saturday with people who share your values and commitments, sign up and come.

The basics are:
Date: February 6
Registration 9:30
Beginning time: 10:00
Place: First Congregational church, UCC, Hanover, MA (For Directions, Click here)

For more information and/or to sign up, Click here to send an email to our registrar.

Ecumenical Advocacy Days: March 19-22
A movement of the ecumenical Christian community, grounded in biblical witness and our shared traditions of justice, peace and the integrity of creation. Our goal is to strengthen our Christian voice and to mobilize for advocacy on U.S. domestic and international policy issues.

This Year's Theme: A Place to Call Home: Immigrants, Refugees, and Displaced Peoples
And Jesus said to him, ‘Foxes have holes, and birds of the air have nests; but the Son of Man has nowhere to lay his head.’ -Luke 9:58

* Dates: March 19 – 22, 2010
* Registration: Click here for a form
* Location: DoubleTree Hotel in Crystal City, Virginia just outside Washington, D.C. Click here for directions and here for reservations at the special conference rate (Make your reservation under the name “Advocacy Days”).
* For a list of topics and workshops, click here (Warning one workshop in the Global Economic Justice track is being led by Stan Duncan, but don't hold that against them. The rest of the conference will be fine.)

Be a part of an action weekend with hundreds of faith-based advocates taking action on U.S. legislation that will welcome immigrants, protect refugees, and prevent displacement of millions.

We encourage groups from churches, denominations and regional councils of churches to charter buses and bring large groups to this important faith-in-action event. For more information about Ecumenical Advocacy Days, please visit on the Web.

President Obama's Nobel speech
Not an event, but I thought you might be interested since so many people have commented on the numerous links between Obama's speech and (UCC) theologian, Reinhold Niebuhr. Here are a few links.

The Text of the speech itself
From the Council on Foreign Relations web page

Thoughts on its roots in the theology of Reinholt Niebuhr
From the Faith World web page

And on the unfortunate interruption that took place during the speech.
From YouTube

Revised formula puts 1 in 6 Americans in poverty

By HOPE YEN (AP) – 2 hours ago

WASHINGTON — The level of poverty in America is even worse than first believed.

A revised formula for calculating medical costs and geographic variations show that approximately 47.4 million Americans last year lived in poverty, 7 million more than the government's official figure.

The disparity occurs because of differing formulas the Census Bureau and the National Academy of Science use for calculating the poverty rate. The NAS formula shows the poverty rate to be at 15.8 percent, or nearly 1 in 6 Americans, according to calculations released this week. That's higher than the 13.2 percent, or 39.8 million, figure made available recently under the original government formula.

That measure, created in 1955, does not factor in rising medical care, transportation, child care or geographical variations in living costs. Nor does it consider non-cash government aid when calculating income. As a result, official figures released last month by Census may have overlooked millions of poor people, many of them 65 and older.

According to the revised NAS formula:

_About 18.7 percent of Americans 65 and older, or nearly 7.1 million, are in poverty compared to 9.7 percent, or 3.7 million, under the traditional measure. That's due to out-of-pocket expenses from rising Medicare premiums, deductibles and a coverage gap in the prescription drug benefit.

_About 14.3 percent of people 18 to 64, or 27 million, are in poverty, compared to 11.7 percent under the traditional measure. Many of the additional poor are low-income, working people with transportation and child-care costs.

_Child poverty is lower, at about 17.9 percent, or roughly 13.3 million, compared to 19 percent under the traditional measure. That's because single mothers and their children disproportionately receive non-cash aid such as food stamps.

_Poverty rates were higher for non-Hispanic whites (11 percent), Asians (17 percent) and Hispanics (29 percent) when compared to the traditional measure. For blacks, poverty remained flat at 24.7 percent, due to the cushioning effect of non-cash aid.

_The Northeast and West saw bigger jumps in poverty, due largely to cities with higher costs of living such as New York, Boston, Los Angeles and San Francisco.

The Census Bureau said it expedited release of the alternative numbers for this month because of the interest expressed by lawmakers and the Obama administration in seeing a fuller range of numbers. Legislation pending in Congress would mandate a switch to the revised formula, although the White House could choose to act on its own.

Arloc Sherman, a senior researcher at the nonprofit Center on Budget and Policy Priorities, said that because the revised formula factors in non-cash government aid, the amount of increase in poverty from 2007 to 2008 was generally smaller compared to the current measure.

"Food stamp participation rose during the first year of recession and appears to have softened what could have been an even greater increase in financial hardship," he said.

Sherman said the revised formula could take on greater importance in measuring poverty for 2009 as more Americans take advantage of tax credits and food stamps under the federal stimulus program. Food stamp assistance currently is at an all-time high of about 36 million.
On the Net:

* Census Bureau:

Copyright © 2009 The Associated Press. All rights reserved.

Implications of the Census Bureau’s Poverty Report

by Stan Duncan...

The Census Bureau’s annual poverty statistics came out last week and the numbers were ugly. Not only were they (1) uglier than we had hoped, it turns out they are (2) even worse than the Bureau says they are, and (3) they may stay ugly for generations to come.

This week’s blog is a long one because it’s a long subject. If you want to read it, but don’t have much time, read a chunk of two, go drink coffee, and come back later and pick it up. I won’t be offended.

So, let’s take a look at the report.

First, the numbers were uglier than people had hoped.[1]

If you don’t have much time, you have my permission to press print, write the words “bleak” over this section, and then move on to the next.

· Poverty [Incidentally, as a rule of thumb, the government defines poverty as an annual income of $22,025 for a family of four, $17,163 for a family of three and $14,051 for a family of two.]

* Real median income declined by $1,860 from 2007 to 2008, a decline of 3.6%, the highest one-year decline in income on record.
* General poverty reached 13.2% in 2008, up from 12.5% in 2007 (and projected to be around 14% for 2009), which is its highest level in 11 years. This increase is because so much of our anti-poverty policies today are for paid work, and the so-called, “safety net” has been cut so much that it no longer does much when the job market is bupkis.
* The family poverty rate rose to 10.3 percent in 2008, up from 9.8 percent in 2007, and projected to be around 11% by the end of 2009.
* Median household income sank 3.6% to $50,303, after adjusting for inflation, and expected to drop at least 5% more this year. That’s more sharply than any time since the government began keeping records in 1947.

A partial racial and ethnic breakdown:

* Non-Hispanic Whites, 8.6 % (17.0 million people) in 2008—up from 8.2 % (16.0 million people) in 2007.
* Blacks, 24.7% (9.4 million) up from 24% in 2007.
* Asians, 11.8 % (1.6 million), up from 10.2 % (1.3 million) in 2007.
* Hispanics, 23.2 % (11.0 million) in 2008, higher than 21.5 % (9.9 million) in 2007. (The large decline in Hispanic income in 2008 is likely related to that group's concentration in the construction industry, which has collapsed due to the bursting of the housing bubble.)[2]

Health care
* Costs continue to soar and in 2008 46.3 million people were uninsured, which was up from 45.7 million in 2007.
* [The unrelenting increases are of course why something like a “Public Option” to force the insurance companies into being more competitive is an absolute necessity for true reform. Not to sound political here, but it is interesting that as more and more people lost their job-related policies and were unable to afford private plans, more and more of them joined the government-controlled, single payer, socialized health care plans. Medicaid and S-Chip climbed from 83.0 million to 87.4 million.

Those hurt worst by the recession
* Worst hit were middle-aged households headed by 45-54-year-olds. They averaged a 5.4% drop in income.
* The only group that actually gained during the last year were people 65 and older, who participate in a radical, socialized, communist inspired, government-run, single payer health care plan and a radical socialized government-run income supplement program. Their incomes rose modestly by 1.2%.[3]

Second, the numbers are even worse than they say they are. The Federal guidelines for assessing poverty are based on ancient, out-of-date assumptions that hide much of the reality of poverty. They were developed in the 1960s and assumed that the average family spent about one third of its income on food. They set the income level for poverty to be the cost of three times a basic market basket of food. (It was later adjusted to five times, but is still just based on food.) However, since then the costs of other things have skyrocketed. What about, for example, child care, gas, commuting, home energy, or housing? All of these items have risen as a percentage of our personal expenses while food has actually gone down. Housing used to be about ten percent of a family’s annual expenses. Now it’s more than thirty. What about health care, which has gone up about thirty-five percent faster than the cost of living and has become unfordable for millions. Also, the amount of disposable income that the average family keeps after taxes (income, payroll, sales, property, etc.) is far smaller today than it was in 1960. The point here is that when all of these things are factored in, the number of people in “real” poverty is often twice that of the official numbers.[4]

To be fair, the Census Bureau knows this (see their report cited in the notes) but cannot factor these things in until Congress tells them to and don’t hold your breath. Congress has never shown an interest in changing the poverty formula. My guess is that it is because they also will prefer using a lower poverty number over higher ones because it makes us look wealthier as a nation than we really are.

Third, we may be in for some dark and stormy nights for years to come.
If you read closely in the poverty statistics you noticed some scary trends. The most ominous is that from 1998 to 2008, median incomes in America went down from $51,295 to $50,303 for a family of four, and the number of non-farm jobs — roughly 131 million — pretty much flat-lined.[5] That includes the years in the decade when we were going through the “Bush Recovery” and the economy was supposedly booming. The only time when our incomes looked like they were rising was in the last couple of years of the fake money of the housing bubble and not real money. That “growth,” as we now know, was like the pea in the old shell games. The magician keeps shuffling the pea from shell to shell giving the impression that there were many peas and each shell had a pea in it, when in reality there was just one pea moving very, very fast (and getting very tired).

To make this even scarier, here are four trivia questions for you: First, when was the last time that we have gone that long without any perceivable rise in median incomes? The answer is, 1982. Second, when was the last time we had this dramatic an increase in poverty in one year: 1991. Third, when was the last time we had a drop of 5% in employment over a period of just nine months? That was back before World War II. And finally, when was the last time we had more than twenty-seven weeks in a row of rising unemployment? The answer is nobody knows. There has never been that long a run of high unemployment since the Bureau of Labor Statistics has been collecting numbers. And that is what should scare us.

What does all of this mean?
There is a rule of thumb in economics, called “Okun’s Law,” which means roughly that when the Gross Domestic Product (GDP) goes down, jobs go down with it, and when the economy goes up, jobs (eventually) go back up with it. With all of the stimulation and economic growth we’ve had in the last six months, the “law” says that we should have around 8.5 % unemployment today. That, however, was the number we passed on our way up to 10% about four months ago. For some reason that economists can’t quite explain, Okun is letting us down. Something in the economy is broken, maybe fundamentally. Jobs seem to be unhooked from economic growth.

Presidential economic advisor, Larry Summers, back in the eighties when he was a lowly labor economist, wrote an important article analyzing Japan’s economy which had been stagnant for over a decade. He said that there were mysterious occasions when something kept Okun’s law from working and employment became unhooked from the rise and fall of the GDP. He called it “Hysteresis.” It comes from a Greek verb meaning “to lack in something central.” You have seen the word in the New Testament a few times. In Mark 12:44, for example, a widow gives alms out of her “lack” (hysterseos). Paul once said in Philippians that while he wasn’t rich, he didn’t have any real “need” (husteresis).

[A different definition and etiology comes from “path dependence” meaning that the future is dependent upon the path. Once you get started in a path, the harder it is to get out of it.]

When applied to the economy, it means that something is mysteriously missing and things aren’t working the way they should, and because it’s gone, we may never be able to return to “normal” again. Something is broken and may not be fixable. In our situation, the economy is growing but jobs are not. Trying to fix that with the old tools of monetary or fiscal policies may miss the problem because what’s missing is a deeper and more structural shift in the entire way we have functioned as a country. The term was applied to Europe in the eighties, Japan in the nineties, and it may well apply to the U.S. in the 2000s and beyond.[6] If true, it means that the old jobs just aren’t going to come back. When new jobs are created, they are invariably of poorer quality than the old ones, a trend that has no apparent likelihood of changing.

Part of the problem is, of course, inevitable. That is, seven million people lost their jobs and it’s hard to pull back to “normal” after that. People now buy fewer groceries, which means the grocer buys less from distributors, who buy less from the wholesalers, who buy less from the manufacturers. And so on until you get down to the coffee farmer in Ethiopia who can’t sell his beans and he grinds them up for mulch to sprinkle around next year. This is a downward spiral, and cannot be fixed quickly, no matter how much stimulus money is spent, even if most of it actually went to job creation, which in our case it did not.

Imagine income in America as a foot ball field. The median income is the fifty yard line. The left goal posts are the most poor. The right goal posts are the Wall Street oligarchy who rake in two and three hundred million dollars a year. The red line represents what used to be a gradual line of income going upwards.

But another important part is hysteresis, a critical “lack” of something in our economy that has kept us prosperous for generations. One thing increasingly lacking is justice in our politics, power, and income distribution. For at least the last thirty years there has been dramatic income growth for the top and stagnation or decline for all the rest. On average, incomes have declined by 2.5 percent among the bottom fifth of families since the late 1990s, while increasing by 9.1 percent among the top fifth. That is a structural problem and a justice problem and it will not be fixed in our lifetimes because of the enormous influence that the wealthy have over the politicians whose re-election campaigns they fund. It’s hard for a Legislator to believe one way on an issue when his re-election is being paid for by a corporate PAC that believes another.

Inflation adjusted percentage increase in after-tax household income for the top 1% and the four quintiles, between 1979 and 2005 (gains by top 1% are reflected by bottom bar; bottom quintile by top bar).[7]

A second place where the concept of hysteresis applies is in what has happened to us with economic globalization. Our historic engines of economic growth are crumbling with the advancement of international trade and nothing so far is taking their place. It is an interesting fact that whenever there has been an increase in trade, the gap between rich and poor has gotten larger with more power concentrating at the top and less at the bottom. In the most recent 25-year run of global trade (starting roughly in the early 1980s), some have become winners but many are losers. That has been true since ancient Israel traded wine for wood with its Phoenician neighbors to the north[8] and it hasn’t changed much today.[9] The spoils of trade flow upwards and with them come power and influence. That disparity will be a blight on democracy and our economic development for many, many years to come.

We are a country that became rich on small farms and big industry. Neither are sustainable any longer and we haven’t invented a new model to take their place. Since the thirties small farms have been getting larger and since the seventies industry is getting smaller. We don’t have the will to pay living wages to factory workers while China has millions of poor and starving people willing to make the same items for a dollar a day. It may very well mean that high paying jobs for middle class America are gone forever—or at least for a generation. Joe Stiglitz, speaking at a conference in Pittsburgh just before the meeting of the G-20 last week said that the American economy needed to expand at a rate of 3.2 percent a year to create more jobs than we are losing, and there was nothing visible on the horizon for many, many years that could make that happen. Something is broken in the economy and nobody knows how to fix it.

As you probably know, the U.S. manufacturing base began moving from the northeast to the south about forty years ago. Then in the mid-nineties, with NAFTA, it moved over the border to Mexico. Then beginning in 1999, when China joined the WTO, it began moving from Mexico to China. And manufacturing will probably continue to grow there for generations more. China is so large and poor and undemocratic that it will take multiple decades before its people are free enough to demand living wages. And when that happens, manufacturing will start searching out other poor countries for production. By then the U.S. will have dismantled its entire manufacturing base and suffered through profound emotional and social changes making the transition. It is unlikely that we will ever be the wealthy country we were just twenty years ago. Now, that may not be bad in terms of global justice and a vision of God’s peaceable realm. The U.S. has had too much wealth and too much power for far too long. And the damage done to the environment to keep us there is unconscionable. However, this kind of rapid re-alignment of power never comes without wrenching pain and hardship for those going through it. And as people of faith we need to gear up for a long, hurting period where our wisdom, compassion, and pastoral skills will be tested. In addition, power never gives up its perch without inflicting pain on those around it on the way down. So, look for continued punitive bitterness and reprisals from the wealthy (and those who identify with them) as they try to maintain their wealth and privilege.

How should people of faith respond to these inevitable hardships? What are the issues that our churches should become involved in to help direct the changes in more humane and environmentally friendly directions? Those well may be the most important questions that churches and faith groups will be asking themselves for the next generation.

I’m working on an article right now with some biblical reflections on that. It includes discussions of Jesus on goods and services distribution, the Apostle Paul on the establishment of a functioning regulatory framework for trade, and Moses on derivatives trading. I’ll post a draft of it next week and I would very, very much appreciate your thoughts and comments. It’s half tongue-in-cheek, of course. There’s not much in the Bible that has to do with derivatives or credit default swaps, but I do think there are a few faithful, biblically grounded principles for a progressive response to the long-term poverty prospects that loom out in front of us. And I’d like to draw out a few of them for your comments.

In the meantime, print out this post, write the word “bleak” all over it and go drink a cup of coffee.

[1] Carmen DeNavas-Walt, Bernadette D. Proctor, Jessica C. Smith Income, Poverty, and Health Insurance Coverage in the United States: 2008 (U.S. Census Bureau P60-236(RV): September 2009).
[2] Heidi Shierholz, “New 2008 poverty, income data reveal only tip of the recession iceberg” (Washington, DC: Economic Policy Institute, September 10, 2009),
[3] Stephen Lendman, “US Census Bureau Confirms Rising Poverty, Falling Incomes, and Growing Numbers of Uninsured: Wall Street is improving but Main Street is worsening in every way. (The Baltimore News Network/Baltimore Chronicle), September 14, 2009.
[4] Shawn Fremstad, Measuring Poverty and Economic Inclusion: The Current Poverty Measure, the NAS Alternative, and the Case for a Truly New Approach, Washington, DC: Center for Economic and Policy Research, December 2008.
[5] David Leonhardt, “A Decade With No Income Gains” (New York Times, September 10, 2009); Clive Corcoran, “U.S. Median Income from 1999-2009: No Gain, Much Pain,” Seeking Alpha, September 13, 2009,
[6] Joshua Cooper Ramo, “Jobless in America: Is Double-Digit Unemployment Here to Stay?” Time Magazine, Friday, Sep. 11, 2009, p. 45.
[7] Source: Aron-Dine, A. & Sherman, A. “New CBO Data Show Income Inequality Continues to Widen: After-tax-income for Top 1 Percent Rose by $146,000 in 2004” (Center for Budget and Policy Priorities: January 23, 2007), p. 2.
[8] Roland de Vaux, Ancient Israel Vol. 2 (New York: McGraw-Hill, 1965), p. 481.
[9] See for example, Mark Weisbrot, Robert Naiman, and Joyce Kim, The Emperor Has No Growth: Declining Economic Growth Rates in the Era of Globalization (Washington, DC, Center for Economic Policy Research, November 27, 2000). Also, Aron-Dine, A. & Sherman, A. op.cit., pp. 2-4.

The Continuing Disaster of Wall Street, One Year Later

by Robert Reich

Robert Reich is a professor at the University of California at Berkeley and a former U.S. Secretary of Labor.

Week of 9.18.09

As he attempted to do with health care reform last week, the President is trying to breathe new life into financial reform. He’s using the anniversary of the death of Lehman Brothers and the near-death experience of the rest of the Street, culminating with a $600 billion taxpayer financed bailout, to summon the political will for change. Yet the prospects seem dubious. As with health care reform, he has stood on the sidelines for months and allowed vested interests to frame the debate. Nor has he come up with a sufficiently bold or coherent set of reforms likely to change the way the Street does business, even if enacted.

Let’s be clear: The Street today is up to the same tricks it was playing before its near-death experience. Derivatives, derivatives of derivatives, fancy-dance trading schemes, high-risk bets. “Our model really never changed, we’ve said very consistently that our business model remained the same,” says Goldman Sach’s chief financial officer.

The only difference now is that the Street’s biggest banks know for sure they’ll be bailed out by the federal government if their bets turn sour—which means even bigger bets and bigger bucks.

“As with health care reform, [President Obama] has stood on the sidelines for months and allowed vested interests to frame the debate.”

Meanwhile, the banks’ gigantic pile of non-performing loans is also growing bigger, as more and more jobless Americans can’t pay their mortgages, credit card bills, and car loans. So forget any new lending to Main Street. Small businesses still can’t get loans. Even credit-worthy borrowers are having a hard time getting new mortgages.

The mega-bailout of Wall Street accomplished little. The only big winners have been top bank executives and traders, whose pay packages are once again in the stratosphere. Banks have been so eager to lure and keep top deal makers and traders they’ve even revived the practice of offering ironclad, multimillion-dollar payments - guaranteed no matter how the employee performs. Goldman Sachs is on course to hand out bonuses that could rival its record pre-meltdown paydays. In the second quarter this year it posted its fattest quarterly profit in its 140-year history, and earmarked $11.4 billion to compensate its happy campers. Which translates into about $770,000 per Goldman employee on average, just about what they earned at height of boom. Of course, top executives and traders will pocket much more.

Every other big bank feels it has to match Goldman’s pay packages if it wants to hold on to its “talent.” Citigroup, still on life-support courtesy of $45 billion from American taxpayers, has told the White House it needs to pay its twenty-five top executives an average of $10 million each this year, and award its best trader $100 million.

“The mega-bailout of Wall Street accomplished little. The only big winners have been top bank executives and traders...”

A few banks like Goldman have officially repaid their TARP money but look more closely and you’ll find that every one of them is still on the public dole. Goldman won’t repay taxpayers the $13 billion it never would have collected from AIG had we not kept AIG alive. (In one of the most blatant conflicts of interest in all of American history, Goldman CEO Lloyd Blankfein attended the closed-door meeting last fall where then Treasury Secretary Hank Paulson, who was formerly Goldman’s CEO, and Tim Geithner, then at the New York Fed, made the decision to bail out AIG.) Meanwhile, Goldman is still depending on $28 billion in outstanding debt issued cheaply with the backing of the Federal Deposit Insurance Corporation. Which means you and I are still indirectly funding Goldman’s high-risk operations.

So will the President succeed on financial reform? I wish I could be optimistic. His milktoast list of proposed reforms is inadequate to the task, even if adopted. The Street’s behavior since its bailout should be proof enough that halfway measures won’t do. The basic function of commercial banking in our economic system—linking savers to borrowers—should never have been confused with the casino-like function of investment banking. Securitization, whereby loans are turned into securities traded around the world, has made lenders unaccountable for the risks they take on. The Glass-Steagall Act should be resurrected. Pension and 401 (k) plans, meanwhile, should never have been allowed to subject their beneficiaries to the risks that Wall Street gamblers routinely run. Put simply, the Street has been given too many opportunities to play too many games with other peoples’ money.

“[President Obama’s] milktoast list of proposed reforms is inadequate to the task, even if adopted.”

But, like the health care industry, Wall Street has platoons of lobbyists and an almost unlimited war chest to protect its interests and prevent change. And with the Dow Jones Industrial Average trending upward again—and the public’s and the media’s attention focused elsewhere, especially on health care—it will be difficult to summon the same sense of urgency financial reform commanded six months ago.

Yet without substantial reform, the nation and the world will almost certainly be plunged into the same crisis or worse at some point in the not-too-distant future. Wall Street’s major banks are already en route to their old, dangerous ways—now made more dangerous by their sure knowledge that they are too big to fail.

US Census Bureau Confirms Rising Poverty, Falling Incomes, and Growing Numbers of Uninsured

Wall Street is improving but Main Street is worsening in every way.

by Stephen Lendman
Monday, 14 September 2009

In early September, The US Census Bureau released its new report titled, "Income, Poverty, and Health Insurance Coverage in the United States: 2008" showing disturbing data that portends much worse ahead under a president and Congress doing nothing to address it.

In 2008, poverty reached 13.2% of the population, its highest level in 11 years, the result of millions losing jobs during the first year of the gravest economic crisis since the 1930s. For blacks, the figure was nearly double at 24.7%, and 31% of all Americans were impoverished for at least two months between 2004 and 2007, years of economic expansion.

At yearend 2008, even by the Bureau's conservative measures, 39.8 million people were impoverished, the highest level since 1960, and 17.1 million lived in extreme poverty at below one-half the official threshold. In addition, for the first time since the 1930s, median household income failed to increase over a 10-year period from 1999 - 2008.

The Census Bureau states that it "presents annual estimates of median household income and poverty by state and other smaller geographic units based on data collected in the American Community Survey (ACS)" covering population areas of 20,000 or more. The Bureau's Small Area Income and Poverty Estimates (SAIPE) program also produces yearly figures "for states and all counties, as well as population and poverty estimates for school districts." It uses data from a variety of sources, including surveys, administrative records, inter-censal population estimates, and personal income data published by the Bureau of Economic Analysis.

Critics maintain that official government figures way understate the gravity of today's crisis, and the Bureau says:

"The official poverty thresholds were developed more than 40 years ago and have been criticized for not taking into account rising (or since the 1970s inflation-adjusted falling) standards of living, expenses such as child care that are necessary to hold a job, variations in medical costs across population groups (that have skyrocketed nationally and are now unaffordable for millions), and geographic differences in the cost of living."

In addition, income and poverty estimates are pre-tax and exclude non-cash benefits, usually employer-provided. Disposable personal income, after income, payroll, sales, property and other taxes, reveals a far higher poverty level than the Census Bureau reports and a much graver crisis for growing millions as the economic decline deepens.

The Bureau reported that 2008 median (inflation adjusted) household income fell 3.6%, the largest single-year decline on record to the lowest level since 1997 and falling as conditions continue to worsen.

The plight of the poor and impoverished shows up in numerous other reports that paint a darker picture than the Census Bureau and suggest much worse ahead:

  • an unprecedented, growing disparity between the very rich and other income groups;
  • economists Thomas Piketty and Emmanuel Saez's research showing the top 1% of households got two-thirds of the national income growth during the last recovery, a larger share than at any time since the 1920s;
  • wages losing ground to inflation;
  • millions of children dependent on school lunches for a hot meal;
  • an Economic Policy Institute estimate of one-quarter of all children living in poverty by yearend 2009;
  • the continued erosion of employer and government-provided benefits, including at the state and local levels; the growing uninsured crisis is discussed below;
  • greater numbers of households unable to meet expenses, even with two working members;
  • added duress from state budget cutbacks;
  • record numbers of food stamp recipients;
  • persistent and growing hunger and homelessness; and
  • job losses and higher unemployment continuing for many more months with some analysts projecting record high numbers before peaking.

A September 11 Kissinger Associates Joshua Ramo story in Time magazine highlighted the problem. Titled, "Jobless in America: Is Double-Digit Unemployment Here to Stay," it quoted Larry Summers' remarks last July before the Peterson Institute for International Economics about the disturbing rate of job losses. He suggested something strange was happening, unpredicted by experts:

"I don't think that anyone fully understands this phenomenon," he said. Will job losses mount longer than expected? At the "recession's" end, will low numbers of new ones follow, and will double-digit unemployment persist and remain common?

Without saying it, Summers wondered if America's economic model was broken, and if so how to fix it. Or can it be fixed? According to the Peterson Institute's Jacob Kirkegaard, "It is entirely possible that what started as a cyclical rise in unemployment could end up as an entrenched problem."

Summers earned his reputation as an employment theorist. He now believes that earlier unemployment views are "importantly wrong. I thought if you could have areas where there was long-term substantial unemployment, then that raised some questions about the functioning of markets."

In 1986, he wrote an article titled, "Hysteresis and the European Unemployment Problem." Hysteresis is the Greek word for late, referring to what happens when something snaps and can't be fixed. It's an idea economists deplore applying to economies, preferring instead to cite normal business cycle ups and downs. Yet in 1986, Summers argued that Europe's unemployment might be chronic and persist in times of growth.

Today's are another matter at a time of a changing economic landscape perhaps suggesting that hysteresis is confronting America, and many lost jobs aren't coming back, especially better paying ones. That's Kirkegaard's view in saying growth won't put Americans back to work, and new jobs created will be poorer quality than old ones.

So what can be done going forward? Unlike in the 1930s, machines now do much of the work that people did then on infrastructure projects. And it's a lot harder converting white collar workers to blue collar ones. Moreover, Summers' own research concludes that the traditional Western economic model won't alleviate the jobs crisis, so what will?

Summers won't say it, but short of a total remake of "free market" economics, likely nothing and perhaps that's America's future with growing millions consigned to a permanent underclass, while an elite few at the top grow richer, until one day "hysteresis" snaps the system in a disruptive convulsion, the old model passes from the scene, and nothing is the same again.

More Evidence of Economic Duress in the Latest Federal Research Report on Consumer Credit

On September 8, the Federal Reserve reported that total consumer credit fell by a record $21.6 billion in July (the sixth consecutive monthly decline) and year-over-year by $2.47 trillion or 10.4%. According to Bernard Baumohl, The Economic Outlook Group's chief global economist:

"It is one more important sign that consumers are not going to be contributing very much to the economy for the balance of this year and probably for (at least) a good part of next year." Shrinking credit's impact on consumption indicates an economy in decline. It shows up in growing poverty, falling incomes, and greater duress for growing millions, sure to be reflected in the Bureau's 2009 report.

Continued Erosion of Health Care Coverage

In 2008, the Bureau also collected data on health insurance coverage, putting the number of uninsured at 46.3 million last year (15.4% of the population), or an increase of 682,000 over 2007. It was the eighth consecutive year that fewer workers got employer-provided coverage, and those with it had to pay more of the cost.

Other estimates are far grimmer. Some, including the Congressional Budget Office, place the current uninsured total at about 50 million, and a May 2009 Todd Gilmer - Richard Kronick study estimated that 191,670 more lose coverage monthly, 2.3 million annually at the present rate, and an expected 6.9 million more Americans (over 2007) will lack it by yearend 2010 if the present trend continues.

Add to these the underinsured. According to the American Public Health Association, at least another 25 million at great risk if they face a serious health problem not covered by their present plan. In addition, Families USA estimates about 90 million Americans had no health insurance during some portion of 2007 or 2008. The Henry J. Kaiser Family Foundation reported that over 80% of the uninsured come from working families, and the Agency for Healthcare Research and Quality estimated that 27% of under aged-65 year old Americans lack coverage.

Still other estimates project up to 60 million uninsured if the commonly reported U-3 unemployment rate hits 10%, and the Urban Institute sees around 66 million without coverage by 2019, given the present trend of rising costs forcing employers increasingly to cut back.

Bureau data show that coverage weakened across most sectors of the population, including full-time workers and the middle class, the result of economic decline and years of employers putting a greater burden on their workforce.

Since at least 2001, the percent of workers with employer-provided insurance has steadily eroded, and it's the main reason behind growing numbers of uninsured and underinsured. In 2008, 61.9% of the below-aged 65 population had job-provided coverage, down from 67% in 2001 and falling due to cost cutting, continued job losses, and the trend to lower-paying ones.

In addition, holding a job no longer guarantees coverage. Plans offered have been greatly eroded, and medical expenses today are the leading cause of personal bankruptcies. America is the world's only industrialized country denying its citizens universal coverage, yet spends on average more than double the other 30 OECD countries and delivers less for it because of unaffordable private insurance and overpriced drugs.

Nothing being debated in Washington addresses this, so whatever legislation emerges will make a dysfunctional system worse with the American public betrayed by "a slick-talking street hustler"- what analyst Bob Chapman calls Obama, or according to James Petras, "the greatest con man in recent history." Make that plural with Congress under Democrat or Republican leadership because both parties are beholden to the corporate interests that own them and are indifferent to growing public needs.

Since taking office in January, Obama kept reform off the table, made progressive change a nonstarter, and achieved the impossible by governing worse than George Bush on virtually all of his domestic and foreign policies.

Since taking office in January, Obama kept reform off the table, made progressive change a nonstarter, and achieved the impossible by governing worse than George Bush on virtually all of his domestic and foreign policies. Along with looting the federal Treasury, wrecking the economy, selling out to Wall Street, and continuing imperial wars, Obamacare is the centerpiece of his failed agenda and a betrayal of the public's trust.

On September 9, he presented his vision to a joint congressional session, reassuring providers that their interests are secure. Rejecting universal single-payer coverage, he said it "makes more sense to build on what works and fix what doesn't, rather than try to build an entirely new system from scratch." And while favoring a "public option," he assured private insurers that it's not a deal-breaker, guaranteeing that no final plan will include one because enough votes can't be gotten in the Senate.

Key also is lowering costs by:

  • cutting hundreds of billions in Medicare and Medicaid benefits as a prelude to eliminating or greatly gutting these programs with perhaps Social Security and other social gains to follow;
  • placing caps on what tests and treatments doctors can provide;
  • putting "medical expert" gatekeepers in charge of deciding the most cost-effective care, thus preventing doctors from prescribing what's best for their patients and denying people the right to make their own health care choices if their cost exceeds what Washington will allow;
  • taxing so-called "Cadillac" plans (mostly covering state employees, municipal union members, and other working Americans, not just the super-rich) to encourage employers to provide fewer benefits, thus placing a greater burden on workers; forcing everyone to have insurance; and placing a surtax on non-compliars with incomes of between 100 - 300% of the poverty level under the Baucus Senate plan;
  • creating a "deficit trigger" to reduce the growth of Medicare and Medicaid spending if anticipated savings aren't met; and
  • making everyone more responsible for their own care by forcing them to cover more of the cost in return for less coverage when they need it most.

Numerous details remain hidden from the public, but the goal of Obamacare is clear. It's a scheme to ration care; charge people more for it; enrich private insurers, PhRMA, and large hospital chains; mandate insurance for everyone; and penalize non-compliars. It's up to public outrage to stop it.

Steve Lendman

Stephen Lendman is a Research Associate of the Centre for Research on Globalization. He lives in Chicago and can be reached at

Also visit his blog site at and listen to The Global Research News Hour on Mondays from 11AM to 1PM US Central time for cutting-edge discussions with distinguished guests on world and national topics. All programs are archived for easy listening.

Mr. Lendman's stories are republished in the Baltimore Chronicle with permission of the author.

Copyright © 2009 The Baltimore News Network. All rights reserved.

More on "Who Knew" About the Coming Crash

Financial Regulators Held Secret Meeting With Hedge Fund Short Sellers In 2007

John Carney|Aug. 26, 2009, 8:40 AM|

The Evening Standard's Paul Waugh reveals today that G7 finance ministers were warned about the dangers of US subprime loans and shaky banks back in April 2007. Famous hedge-funders Jim Chanos and Paul Singer sounded the alarm but were completely ignored.

From Waugh:

Chanos has now revealed that the pair of them warned of "radioactive" securitisations held by banks - and even named those his firm was shorting. But they were "officially ignored" by the G7 ministers.

Chanos picks up the story (forgive me quoting at length but it's worth it):

"It was the April 07 G7 Finance ministers meeting in Washington. It was a rotating chair and the Germans were rotating the meetings. And at the time if you recall the Germans were quite concerned about hedge funds and private equity as being a future source of problems in the market place.

"And Bob Steel, who was the Under-Secretary to the Treasury, who was fighting these German efforts at the time, felt that it would be helpful if two hedge fund managers came down and address the finance ministers and central bankers on the last day. So I was invited along with Paul Singer, who has gone public now, he was the other manager.

“Paul got up and proceeded to give a tour de force presentation on the coming crack-up in structured finance, how all these structures were very unstable and triple A [the ratings given to the securities] was not going to be triple A..."

The meeting was just five months before the run on Northern Rock and more than a year before Lehman Brothers collapsed.

Chanos and Singer pointed out that HSBC had announced that January that its US sub-prime loans were going bad at 'an alarming rate'.

“So there were some canaries in the coal mine by April 07 and Paul pointed them out,”

"I then segued into my presentation which told the assembled regulators that in fact if Mr Singer was correct and I believed he was, that the problem would not be hedge funds it would be the regulated banks and brokers who were leveraged 30-1, many of which held glowing, toxic radioactive pieces of securitisation which they could never sell.

"The German finance minister who was chairing the meeting thanked me politely and then thanked Paul and said 'so what do you think about Hedge Funds?'“

So despite having received this stark warning, the only response from the politicians was 'yeah, yeah but what about tightening up regulation on you guys?'

Mr Chanos, founder of Kynikos Associates, said that immediately after the presentation, the G7 ministers issued a statement continuing to insist that their economies were strong and made no mention of the warnings. Check out the G7 Communique of the time - you won't find a clearer example of the complacency of world politicians and regulators.

“We were completely and officially ignored,” said Chanos.

Teddy's Letters

Back in the eighties I led a number of delegations to Central America. Usually they were for US church groups. But some were for a human rights organization.

This was during the days when the Reagan Administration was supporting the rebels against the government in Nicaragua and the government against the rebels in El Salvador. Our delegations would talk to human rights organizations, faith groups, government officials, displaced people, etc. and give people in the US a sense of what was really going on down there because the media seemed so baffling about it all.

On one of my early trips a social worker from Ponca City, Oklahoma, recommended that I write Ted Kennedy's office and ask him if he would send along a letter of safe passage, just in case we got in a difficult--that is, dangerous--situation. I hadn't thought about that, but I did write to him and weeks later I got a personal letter from the Senator saying "to whom it may concern" that Stan Duncan was a big deal and was traveling under his guidance and that I should be taken care of and treated with respect in any situation that might come up. It was great.

Every year after that, just before my trip I would write him again and every year dutifully he would compose the same letter. I never met him and he never met me, but we had a funny relationship. I was his pet project, the guy he would write the annual letter for and he always asked how I was doing and how the trips went. I'd always write back saying the trip was fine and all was well, but never much more than that. He was, after all, an icon: Senator Edward Moore Kennedy from Massachusetts, and I was just some kid from Oklahoma who was freelancing trying to save the world and trying to not get killed while doing it.

I didn't need his letters all that often, but every now and then it felt good to have one with me just in case. I would take it out and show to a guard or official when they were getting a little testy or suspicious about our intentions. We were there as a church group, and that should have been safe, but occasionally we traveled into areas we weren't totally certain about. It was important to me to do that so that North Americans could get behind the scenes and look first hand what was really happening, since our tax dollars were paying for much of the carnage across the region. And the governments of many of those countries, especially El Salvador and Guatemala were not fond of our doing that at all.

There was one time, however--it was March, 1988. I was up in the Suchitoto region of northern El Salvador. Which was the center of the rebellion and all gringos, doctors, teachers, development workers and human rights representatives were ordered out. I had been living in El Salvador for about six months at that time, ostensibly doing research on economic development projects, but also still doing human rights documentation, this time with journalists from Australia, Britain, and Scotland. We were interviewing refugees from the villages that had been the scenes of bloody massacres by the Salvadoran military. We got into the region by bus, pickup, foot, and on one occasion hiding under bags of grain on a supply boat going up a river. We were able to get some good interviews, notes, and pictures, and I was very pleased about that, but on the way back government troops stopped our bus and took us in. They confiscated all of our bags (which included all of our documentation) and destroyed everything (including a Bible that had been given to me by my aunt when I graduated from high school). And they kept all of us in jail for three days. I don't know about the others--we were kept in different quarters--but I was terrified. The military guards working with me did not treat me badly, but they grilled me day after day about why I was there and what I was doing and who I worked for. I couldn't just say that I was there documenting their own human rights abuses, so I continued my line about doing economic development research.

That wasn't totally untrue. There were a number of re-population villages in the area that I had in fact been looking at--those were villages made up of people who had fled into Honduras from the fighting in El Salvador and were now coming back and "re-populating" new villages. They were a form of economic development model and I claimed I was there to study them. But they didn't quite believe it (and with good reason).

Finally after my third day there someone came to see me who could speak English. I think he had just arrived at the compound because I had not seen him before. He asked me all of the same questions all over again with an increasingly impatient, angry, ominous tone. This time, since he probably could read, I hauled out Teddy Kennedy's letter. He looked at it silently for a long time (I remember wondering if he was having trouble with some of the words). Then when he got to the end he grew even more angry. He tore it in half and threw it to the ground saying that this was nothing, it means nothing, it was irrelevant to their questing, and they still needed to know the truth about why I was there or I would never go home.

He turned and walked out of the room and left me alone. I picked up the pieces of the letter, folded them up, put them back into my back pack, and started to sit down, but before I could do that the door came open again and the guards that I had been interrogated by for the last two days came in and escorted me out of the compound and, without saying a word, pushed me into the street. I was free. Moments later, while I was still standing there trying to understand what had happened, my friends were pushed out the same door and there we all were.

We were exhilarated about being out and alive and through the ordeal. We jumped up and down screaming and laughing and decided to celebrate by going to a local bar and having a beer.

But unfortunately I never thought much about the letter after that. I've told this story a number of times to all of my friends, but one person I never told it to was Ted Kennedy. I have never written him to thank him for saving our lives.

It's true that he may not have. It's possible that we would eventually have been set free, after all back in those days the worst thing that the Salvadoran government wanted to be known for was killing off a citizen of the country that was giving it one million dollars a day in aid.

On the other hand, you never know. Our situation looked pretty grim for a while and who knows how many days would have gone by? Each day the guards were growing angrier and angrier at us and at our stone wall of silence about why we were there and what we were really up to.

There's a real chance that none of us would have made it home alive had it not been for that yearly letter that Kennedy sent with me, saying (incredulously) that I was an important somebody and that I was to be taken care of and treated with respect, with the implied threat that if I was not, then there would have hell to pay from the Kennedy office.

I never thanked him. I never saw him. I never called up or wrote or dropped by, and never told him that I might not be alive today had it not been for his help. After that trip I came back to the United State and moved to Boston and became a student again at Harvard. I started a new life and a new career and never remembered to express the gratitude I owed him for his help. And now I can't.

Except that in an improbable, unlikely, and slightly impossible way, it is just slightly possible that the big ball of life and fire and laughter and compassion and humor and drive and strength that he was for so many years might still be with us in another way and in another realm. Who knows? And if that is so, and if he is perhaps mysteriously or spiritually or cosmically listening in, then perhaps it is time to finally say thanks.

I never did that when you were alive, Teddy. I never thought about it until you were no longer alive. But the truth is, I may well be one of the hundreds of thousands of people across the country and the world whom you helped over the years in simple and easy, and sometimes heavy and profound ways. I wish I had said it earlier, but at least I'm saying it now. I might not be able to be here writing this had it not been for you.

Thank you.

The Public Option's Last Stand, and the Public's

Robert Reich

Reprinted from his Blog, Aug 16, 2009

I would have preferred a single payer system like Medicare, but became convinced earlier this year that a public, Medicare-like optional plan was just about as much as was politically possible. Now the White House is stepping back even from the public option, with the President saying it's "not the entirety of health care reform," the White House spokesman saying the President could be "satisfied" without it, and Health and Human Services Secretary Kathleen Sebelius saying that a public insurance plan is "not the essential element."

Without a public, Medicare-like option, health care reform is a bandaid for a system in critical condition. There's no way to push private insurers to become more efficient and provide better value to Americans without being forced to compete with a public option. And there's no way to get overall health-care costs down without a public option that has the authority and scale to negotiate lower costs with pharmaceutical companies, doctors, hospitals, and other providers -- thereby opening the way for private insurers to do the same.

It's been clear from the start that the private insurers and other parts of the medical-industrial complex have hated the idea of the public option, for precisely these reasons. A public option would cut deeply into their current profits. That's why they've been willing to spend a fortune on lobbyists, threaten and intimidate legislators and ordinary Americans, and even rattle Obama's cage to the point where the Administration is about to give up on it.

The White House wonders why there hasn't been more support for universal health care coming from progressives, grass-roots Democrats, and Independents. I'll tell you why. It's because the White House has never made an explicit commitment to a public option.

Senator Kent Conrad's ersatz public option -- his regional "cooperatives" -- won't have the scale or authority to do what a public option would do. That's why some Republicans say they could buy it. What's Conrad's response? "The fact of the matter is there are not the votes in the United States Senate for a public option. There never have been," he tells "FOX News Sunday." Conrad is wrong. If Obama tells Senate Democrats he will not sign a healthcare reform bill without a public option, there will be enough votes in the United States Senate for a public option.

I urge you to make it absolutely clear to everyone you know, everyone who cares about universal health care and what it will mean to our country, that the bill must contain a real public option. Tell that to your representatives in Congress. Tell that to the White House. If you are receiving piles of emails from the Obama email system asking you to click in favor of health care, do not do so unless or until you know it has a clear public option. Do not send money unless or until the White House makes clear its support for a public option.

This isn't just Obama's test. It's our test.

Who Knew?

Stan G. Duncan...

Here's a joke that economists used to tell at conventions, that is, until 2008 when it stopped being funny:

Once upon a time two people were walking along the beach. One looks up and sees an enormous cloud gathering on the horizon. He says, “Hmmm, that looks a lot like a hurricane. Perhaps we should take cover.”
The other says, “Naw, it can’t be. If it was a real hurricane, the sun bathers on the beach would be running and hiding, and nobody’s doing that. Nobody’s acting worried. Therefore it can’t be a hurricane if people aren't acting scared. At worst it’s a mere rain storm.”
Moments later the beach, the bathers, and both walkers were all washed away by the hurricane.

A few months ago Dick Cheney was being interviews on PBS’s The News Hour by Jim Lehrer, and Lehrer asked him why he didn’t see the financial meltdown coming. Cheney responded that “nobody” saw it coming. “Nobody” could have known that this was about to happen. Then he turned to Lehrer and said, “Did you? Did you see it coming?” The truth was, Jim Lehrer did see it coming. He had had numerous people on his show for years reporting that an unnatural bubble in housing and finance was growing out of control and that it would have to eventually pop and would do so with great damage to the economy. But instead of saying that, he politely deflected the question back to Cheney saying, “Well, you’re the Vice President. You are supposed to see these things on the horizon and make plans for them.”

If it had been me, of course, I would have said something like, “Damn straight Mr. Vice President! And I can give you a truckload of names of people who tried to warn you. So, why the hell were you, and that Bush guy who worked for you, so asleep at the wheel?” But then, that’s one of the reasons why Jim is on the air and I’m not.

In actual fact there were a large number of people who saw what was happening and were alarmed about it. In this note I’m going to offer you a laundry list of notables. This isn't something you need to read to the end, but think of it as a resource. You might want to keep the list close to hand so that if one of these people shows up on TV, you will know to pay close attention to what they say.

And also, you never know. One of these days you might be walking down the street and run into Dick Chaney and he might turn to you and say “could anybody have known?” and you can haul out your list and say, "Hell yes. These guys did."

After you've read through the list, I have two questions for discussion. Write me a note if you have an answer (you'll be graded on this):
First, why is it that not one person on this list is from the far right politically? They are all from the moderate left to the far left. What is it about the hermeneutical ideology of progressives that they had the eyes to see and the ears to see what we were doing to ourselves?

And second, an even more interesting question: why is it that not one of these very smart perceptive people, who saw the crash coming, and tried in vain to warn the powers that be about the dangers of it, are employed today in the Obama administration? Instead of calling upon the wisdom of the people who saw the brewing fiasco and called it, why has Obama only hired foxes to clean up the hen house?

Blessings on you all. Here is the list.



a. Nassim Taleb. A political moderate, Greek Orthodox, born in Lebanon, is a mathematician and philosopher who worked for years as a derivatives trader on Wall Street, while growing increasingly critical of its reliance on arcane mathematical models to make financial decisions rather than simple human intuition. He is most famous for his 2006 book, The Black Swan (which you can find by clicking here) which is about how things we never believe could happen eventually do happen. Some scientists claimed that it was impossible for nature to create a Black Swan…until one day one was spotted. And Wall Street said it was impossible for the complex web of derivatives trading to ever implode…until one day it did.
Here's a relevant quote from his book:

"The financial ecology is swelling into gigantic, incestuous, bureaucratic banks -- when one fails, they all fall. The increased concentration among banks seems to have the effect of making financial crises less likely, but when they happen they are more global in scale and hit us very hard... I shiver at the thought."

b. Paul Krugman. A Nobel Prize winning progressive economist who teaches at MIT and writes for the New York Times. Among other times, in 2005 he wrote

"The U.S. economy is currently suffering from twin imbalances. On one side, domestic spending is swollen by the housing bubble, which has led both to a huge surge in construction and to high consumer spending, as people extract equity from their homes. On the other side, we have a huge trade deficit, which we cover by selling bonds to foreigners. As I like to say, these days Americans make a living by selling each other houses, paid for with money borrowed from China. One way or another, the economy will eventually eliminate both imbalances."[1]

c. Dean Baker. Co-director of the Center for Economic and Policy Research. He has written numerous warnings about the dangers of a housing bubble and the dangers of it bursting, too many times to mention. In 2004, he got so convinced that there was a growing burstable bubble that he sponsored a $1,000 essay contest to see who could write the best argument for why there was not a bubble. The winner’s essay was posted on his web page along with his rebuttal.[2]
Here is a quote from an article in The Nation magazine in 2004:

“At the end of the day, housing can be viewed like Internet stocks on the NASDAQ. A run-up in prices eventually attracts more supply. This takes the form of IPOs on the NASDAQ, and new homes in the housing market. Eventually, there are not enough people to sustain demand, and prices plunge.
The crash of the housing market will not be pretty. It is virtually certain to lead to a second dip to the recession. Even worse, millions of families will see the bulk of their savings disappear as homes in some of the bubble areas lose 30 percent, or more, of their value. Foreclosures, which are already at near record highs, will almost certainly soar to new peaks.[3]

In his column December 15, 2008, he said that Wall Street and the Federal Reserve and the Wall Street Journal and the Washington Post, etc, did not want to hear from people who were bearing bad news about the upcoming train wreck.

“One of the key lessons of this economic crisis should be that there is a remarkable lack of capacity for independent thinking in our most important institutions: government (both the executive and legislative branches), business, the media, and academia. It is possible that an important authority figure could force a re-examination of deeply held views of the world, but we all must recognize that there is a huge amount of dogma to overcome.”

Here’s a link to a 2007 New York Times article about people who saw the crisis coming that focusses mainly on Baker, called “They Cried Wolf. They Were Right.”

d. Robert Kuttner. Editor of The American Prospect, and columnist for the Boston Globe. He wrote a really fine article a couple of years ago in The American Prospect called, “The Bubble Economy.”[4] In it he discussed what he called “the sub prime mess,” what caused it (mainly focusing on a history of deregulation) and where it would take us (a depression). Bob’s a bright guy, but he’s no genius. How come he could see all of that coming and Alan Greenspan said the burst blindsided him?

e. Doris Dengley. I know least about her, except that she is credited as smelling something fishy in the arcane, obtuse, obscurant, Byzantine, financial pages of corporations and wrote about the inherent dangers in them on her blog, “Calculated Risk,” and that she tragically died about a year ago before her prophesies came true.[5]

f. Joseph Stiglitz. Former president of Clinton's panel of economic advisors, chief economist at the World Bank, and Nobel Prize winner in economics. Now teaches at Columbia. He has not been a crusader against the bubble, but has written about it and its potential damage for a long time. Here's a quote from a journal article he wrote for the Economist's Voice. The most telling part of it is the title, "It Doesn't Take Nostradamus."[6]

"I warned roughly two decades ago of the need for greater government regulation of mortgage securitization. I don't think my prediction showed any astounding brilliance. Others no doubt felt similarly. Economic theory--and historical experience--made the risks apparent. Unfortunately, the call for the regulation of mortgage securitization reached deaf ears at that time. Let's hope that this time is different. The next crisis may well be different than the present one, but I'd like to see appropriate regulations that make sure of it. "

g. Robert Shiller. Professor of economics at Yale. Famous today for predicting both the bubble burst of the late 1990s and now the housing and finance bubble of 2007. He did it by tracking housing values (adjusted for inflation) from 1900 on, and finding that prices were remarkably stable—at least until the late 1990s, and they exploded in the 2000s. In the past, every time--emphasize every--time they have gone up, they have eventually come down. This boom would be no exception, he said, and as soon as that happens there will be economic shrapnel all over the American economic landscape.

Here’s a link to a great article about Shiller in 2005 in which he correctly forecasts a recession and a drop in housing prices of forty percent. “Be Warned: Mr. Bubble's Worried Again.”
Relevant quote:

"This is the biggest boom we've ever had," said Mr. Shiller…"So a very plausible scenario is that home-price increases continue for a couple more years, and then we might have a recession and they continue down into negative territory and languish for a decade.
"It doesn't even attract that much attention," he continued. "…even though [by then] prices may have gone down in real terms by 40 percent."

He was right.
Here are some pieces of an interview with him in 2007 on CNN about the bursting of the bubble just before it happened. It can be found here: “Shiller: Mr. Worst-case scenario”[7]

"[T]his is the biggest boom in housing prices since, well, ever. Nothing seems to explain it, and nobody forecast it. It seems to me…human thinking is built around stories, and the story that has sustained the housing boom is that homes are like stocks. Buy one anywhere and it’ll go up. It’s the easiest way to get rich.
From 1890 through 1990, the return on residential real estate was just about zero after inflation. Since 1987 it’s been 6 percent [or about 3 percent a year after inflation]. [but in the last ten years real estate has risen by about 10 percent a year.] It can’t be true that homes rise 10 percent a year. If they did, in the long run no one would be able to afford a house. (In 2005 they went up 14 percent.)
[A $25,000 home in 1957 should be worth roughly $3 million now.] And that flies in the face of common sense. In fact, I’m inclined to think there’s a good chance that the return on real estate will be negative, substantially negative, over the next 10 years because all booms reverse in the end.
Today (July, 2007:…Avoid concentration of risks. You need a house, but I would avoid a second one - or at least avoid an outsize house. Over-investing in real estate now would be a recipe for disaster.

h. William Brennan. A little more than a decade ago, he foresaw the financial collapse of 2008 coming and tried to warn people, but to no avail. As director of the Home Defense Program at the Atlanta Legal Aid Society, he watched as subprime lenders earned enormous profits making mortgages to people who clearly couldn’t afford them. The loans were bad for borrowers — Brennan's experience in working with struggling new home buyers told him that knew that. But he could also see that the loans were eventually going to be bad for all the Wall Street investors who were buying up these shaky mortgages by the thousands. And he spoke up about his fears.
Relevant Quote from his testimony before the Senate Special Committee on Aging in 1998:

“I think this house of cards may tumble some day, and it will mean great losses for the investors who own stock in those companies.”

i. Nouriel Roubini. Professor of international Economics at NYU. Iranian Jew, born in Turkey. Past senior economist for the Council of Economic Advisers for Bill Clinton. As far back as 2005, Roubini was saying that home prices were riding a gigantic speculative wave and that they would soon slide downward and sink the economy. At the same time that Federal Reserve chair, Ben Bernanke was testifying in Congress about how the real-estate problem was "contained," Roubini, bless his heart, was publishing a paper that said that the depressed housing market was nowhere near its bottom and that its contraction would be the worst in decades. His was a very grim prognosis, and was laughed at and called a "Cassandra." The New York Times belittled him by calling him "Dr. Doom." Because he had the brains to look at reality and say it looks like reality, today he’s considered a sage.
Relevant quotes:

Fall 2007: "The FDIC spent 10% of its reserves to bail out IndyMac, and that was the first in a wave of failures. Will we soon have to bail out the FDIC?"

September 2006, in a report to the IMF: "The United States was likely to face a once-in-a-lifetime housing bust, an oil shock, sharply declining consumer confidence, and, ultimately, a deep recession."

For the best recent article on him, see James Fallows, "Dr. Doom Has Some Good News," the Atlantic, July/August 2009.[8]

J. Brooksley Born. Now retired, but during the 1990s, she was the chair of the Commodity Futures Trading Commission (CFTC). She is notable on this list because she tried unsuccessfully to bring over-the-counter financial derivatives under the regulatory control of the CFTC. The government’s failure to regulate such financial deals has been widely criticized as one of the causes of the current financial crisis. In the booming economic climate of the 1990’s, Born battled other regulators in the Clinton Administration, skeptical members of Congress, and lobbyists over the regulation of derivatives. Her argument was that unregulated financial contracts (such as the evil "credit default swaps") could wreck the entire economy. For her efforts to save the world she was vilified by everyone from Wall Street to the Clinton Administration, all of whom who believed deregulation was wonderful and peaceful and kind and a cure all for all economic ills.
A relevant quote from her acceptance speech for receiving the 2009 Profile in Courage Award [9]:

When I spoke out a decade ago about the dangers posed by the rapidly growing and unregulated over-the-counter derivatives market, I did not do so in expectation of award or praise. On the contrary, I was aware that powerful interests in the financial community were opposed to any examination of that market. Yet I spoke out because I felt a duty to let the public, the Congress and the other finan-cial regulators know that that market endangered our financial stability and to make every effort I could to address that problem.

K. Sheila Bair. Head of the Federal Deposit Insurance Corporation. She, like Born, tried hard to sound the alarm within the system, but was resisted and ignored. A good history of her work is found in the words of Caroline Kennedy when she was bestowing (along with Brooksley Born) the 2009 "Profile in Courage" award.

"As early as 2001, then working in the Treasury Department, she saw the potential for abuse in the sub-prime lending business, and urged the industry to adopt a set of best practices to minimize risks to the economy. In 2003, she called for serious reform of the federal regulatory system, arguing that existing policy was insufficient to protect the economy and the public from the risks associated with an increasingly complex and rapidly growing financial industry.

As FDIC Chairman at the height of the bull market in 2007, she again recognized the economic threat posed by subprime loans, and the danger of unchecked greed and negligence by well-connected interests. She proposed that subprime mortgage rates be permanently fixed before they ballooned and forced hundreds of thousands of homeowners into foreclosure. Last July, she halted all foreclosures on loans owned by IndyMac Bank following its failure. And she urged that mortgage relief for distressed homeowners be part of the economic rescue plan of 2008.

She stood up for average, taxpaying Americans, and held her ground under intense criticism from political adversaries. Her efforts to include borrowers in the financial rescue plan met with fierce opposition from other officials in the Bush Administration, who blocked her efforts even as the housing crisis and the economy worsened.[10]

A relevant quote (from her acceptance speech)"

I am very direct. My family tells me that I'm too direct. I wanted to make sure our policies helped the average homeowner on Main Street," said Bair. "We could see the train wreck coming."[11]


[1] These quotes can be found here: Also see, Paul Krugman, "Lest We Forget," New York Times, November 27, 2008, on why people should have seen it coming,
[3] Article found here: Similar others found here: or here: Or here: Also see articles in about him here
[4] Robert Kuttner, “The Bubble Economy,” The American Prospect, September 24, 2007.
[5] See her long article in 2006 about Citi-Bank at
[6] Stiglitz, Joseph E. (2008) "It Doesn't Take Nostradamus," The Economists' Voice: Vol. 5 : Iss. 8, Article 1. Vol. 5 (2008) / Issue 8 / Columns. (
[7] Jason Zweig, “Shiller: Mr. Worst-case scenario” Money Magazine; CNN/, July 6 2007)
[8]You can also find it online here.