Saturday, February 2, 2008

subprime disaster: when economic growth doesnt lead to increased wages

The Boom Was a Bust For Ordinary People

"And why were so many Americans poor enough to turn to subprime mortgages and other dodgy credit schemes? The chief reasons are low wages and job insecurity... For years now, we've had a solution, or at least a substitute, for low wages and unreliable jobs: easy credit. Payday loans, rent-to-buy furniture and exorbitant credit card interest rates for the poor were just the beginning. In its May cover story on "The Poverty Business," BusinessWeek documented the stampede to lend money to the people who could least afford to pay the interest on it: "

Posted by happyrenterz @ 07:23 PM (492 views)
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One thought on “subprime disaster: when economic growth doesnt lead to increased wages

  • Some great quotes:-

    ‘But hellooo, we’ve had brisk growth for the past few years, as the president has tirelessly reminded us, only without those promised increases in personal income, at least not for the poor and the middle class.’

    ‘Growth, some of the economists are conceding in perplexity, has been “decoupled” from widely shared prosperity.’

    ‘In the past five years, America’s briskly rising productivity has been the envy of much of the world. But again, there’s been no corresponding increase in most people’s wages.’

    ‘our productivity also relies on fiendish schemes to extract more work for less pay. Yes, you can generate more output per apparent hour of work by falsifying time records, speeding up assembly lines, doubling workloads and cutting back on breaks.’

    ‘”full employment” would create a workers’ paradise, with higher wages and enhanced bargaining power for the little guy and gal. But we’ve had nearly full employment, or at least an official unemployment rate of under 5 percent, for years now, without the predicted gains. What the old liberals weren’t counting on was a depressed minimum wage, weak unions and a witch’s brew of management strategies to hold wages and salaries down.’

    ‘For years now, we’ve had a solution, or at least a substitute, for low wages and unreliable jobs: easy credit.’

    ‘When personal finances are squeezed hard enough, you have the possibility of a genuine recession. People buy less, so growth declines to the point where even the economic overclass has to sit up and take notice.’

    ‘A century ago, Henry Ford realized that his company would only prosper if his own workers earned enough to buy Fords. But, like Wal-Mart, too many of our employers today haven’t figured out that their cruelly low wages would eventually curtail their own growth and profits.’

    Now tell me that the UK is not like the U.S.

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