January 14, 2015--It's Not His (Obama's) Fault

My Florida friend Henry is counting the days until the end of the Obama administration.

"Only 664 to go. Days," he said jauntily the other day. "When I checked this morning on the Obama Countdown Clock that added up to 15,959 hours or 957,393 minutes. None too soon for me."

"You're pretty serious about this," I said. "I know you haven't liked him from the beginning but now you really seem to hate him. You're a smart guy otherwise, so tell me why you do."

"He's screwed everything up. In the Middle East, in race relations (and you know I'm not a racist), and especially the economy."

"The economy?" I couldn't let him get away with that. "I know you can't stand Obamacare and what you claim it means to you as a small business owner--though as I've pointed out to you through the years it's actually good for you with your staff of less than ten. But isn't the rest of the economy in pretty good shape exactly a week short of his having been in office six years?"

"Good shape? With so many still employed, salaries of middlc-class workers not growing, and all those young people still without jobs or underemployed?"

"Much of that is true. Things are far from perfect, but what do you say about his list of accomplishments--starting with gas prices. Aren't you impressed that that gas-guzzling pickup of yours is costing you at least $1,000 a year less to gas up than it did two, three years ago? You were blaming Obama for high gas prices then so does he get some credit now that they're lower?" He didn't respond.

"And what about your favorite--the stock market? When he took office it was languishing. But yesterday the S&P 500 Index closed at 2,023. That's a 145% percent increase. Not bad, yes? And a big deal for middle-class workers who have much of their retirement savings in stock funds. Does Obama get any credit for that?" Fiddling with his coffee, Henry didn't respond.

"And unemployment? The rate last week dropped to 5.6%, the lowest since 1999, the last year of the Clinton presidency. What do you think about Obama's role in that? You didn't hesitate to blame him when it was much higher so now that it's significantly lower, what do you think?" Again he ignored me.

"Then your actual favorite--inflation. You remember how five or six years ago you were touting Peter Schiff as your economist of choice who was predicted that because of Fed and Obama fiscal policies inflation would soon be at Weimar Republic levels and you were buying gold to protect yourself from the sky falling? How's the inflation rate looking to you now at 1.3 percent? These days we're actually worried about deflation. And how's your $1,900-an-ounce gold doing? The last time I checked it was way off its panicky peak and was selling for only $1,240 an ounce. And what's Schiff peddling these days? Not anything positive about the Obama Economy I suspect." More silence.

"I could go on but these are a few highlights which could also include low interest rates, a stronger dollar, how the deficit has been cut by more than a half--from $1.4 trillion annually to $514 billion-- and how America is becoming energy self-sufficient. So I guess this means you hate Obama for other reasons. Enlighten me. I'm willing to say you're not a racist, but what is it then?" He stared at his watch and said he needed to run. He had a meeting he needed to get to.

After he left Rona and I continued the conversation. She said, "One of my favorite things besides conservatives refusing to give Obama any credit for the improved economy is their explanation about why it's better. That they can't deny--that's it's better."

"I know where you're going with this."

"First, all of a sudden the leading Republican candidates for the presidential nomination are expressing concern about inequality and the plight of poor people."

"I saw that even Mitt Romney is. The same Mitt Romney who two years ago was moaning among rich people in Boca Raton about the 47 percent of Americans who are the 'takers.'"

"And then there was new Republican senate majority whip John Cornyn on Morning Joe two days ago ignoring the question about Obama's role in improving the economy while claiming that the reason things are better is because business leaders, when they saw the Republicans were about to take control of both houses of Congress, began to hire people. He suggested it was a sort of Mitch McConnell bump."

"This is so preposterous--the economy began doing better six years ago on the first day Obama took office and now Republicans are claiming that the good news is the result of the election in November, all of two months ago. I love it."

It was by then time for us to go. "One more thing," Rona said. "Is there really an Obama Countdown Clock?"

"Indeed there is. You can look it up on the Internet. In fact, you can even buy one."

"Amazing."

February 6, 2014--The Middle Class

Finally the 1 percent or the 5 percent or the 20 percent are noticing that the middle class, what's left of it, is struggling and that is bad for them--"them" being the 1, 5, 20 percenters.

It's one thing when the economy is in almost total collapse (as it was in 2008) and how that makes it awkward for those hardly touched to live opulently. Openly opulent that is. (See below.) It's another thing, however, when the shrinking middle class and their shrinking disposable incomes are so reduced that there are no longer enough markets or customers to fuel the bottom lines of the privileged.

Now they are concerned. Concerned because a diminished middle class is bad for business and thus bad for their assets.

On the other hand, the high-end continues to do very well. "Luxury is not a dirty word anymore, reports a consultant with Robb Reports, a lifestyle magazine for wealthy readers. "In 2008, luxury was a dirty word."

No longer.

Maserati, with sales up 55 percent in 2013, is opening dealerships all across the United States and Rolls-Royce had its best, most profitable year last year. The CEO of The Collection, a luxury car dealership in Coral Gables, Florida, was recently quoted in the New York Times as saying that "People were pulling back when they had to let people go. They'd come in to buy, but it would be the same car and same model so no one knew they got a new car." Now, once again, rich buyers are apparently not having a problem flaunting it.

In 2012, the top 5 percent were responsible for 38 percent of domestic consumption, up from 28 percent seven years earlier. And since 2009, the year the Big Recession technically ended, spending by this top 5 percent of earners rose 17 percent, compared with just 1 percent by the bottom 95 percent.

And thus goods and services that have traditionally targeted the middle class are hurting. Sears and J.C. Penney, as evidence, are in dire straits. Both are in danger of going out of business. Sears is closing its Chicago flagship store and J.C. Penney recently announced it will be shuttering 33 stores and laying off 2,000 employees. Loehmann's, where generations of middle-class women clamored to buy discounted designer-label dresses is bankrupt and already out of business. As another sign of the times, high-end retailer Barneys, which moved out of its original New YorkCity store and rented the space to Loehmann's, is moving back in, feeling that the exponential growth of downtown gentrification will assure the store's success.

As bellwethers, restaurants that depend on middle-class diners are suffering. Foot traffic at Red Lobster and Olive Garden has dropped every quarter since 2005. An average meal at Olive Garden is $16.50 a person and that relatively steep ticket requires middle-class customers. And with fewer and fewer of these every year, places such as Olive Garden and Red Lobster are in trouble.

But now the affluent are worried. Not because they will soon no longer be able to get their garlic knots at Olive Garden but because its stock price is way down, as are other companies' that traditionally draw on the middle-class.

Something that I find curious is the passivity of the middle-class as they see their prospects shrinking. Unlike in the past when there were serious downturns and structural reshaping of the larger economy, this time, with the exception of the short-lived Occupy Wall Street movement and aspects of the Tea Party agenda, there is silence.

Economic downturns are common. In fact, they were so common during the late 19th century through the World War II that hard times for the majority was the norm. Also the norm were the ways in which displaced and exploited working people responded to the recessions and panics and depressions.

I've been reading Doris Kearns Goodwin's Bully Pulpit, her biography of Presidents Theodore Roosevelt and his successor and friend, William Howard Taft. From the economic tumult during their collective 11 years in office there is a lot to learn about our current troubles and how the public responded to it.

Between 1901, when Roosevelt became president after the assassination of William McKinley, and 1913, the year Woodrow Wilson took office, there were no fewer than four crises--the Recession of 1902, the Panic of 1907, the Panic of 1910, and the Recession of 1913.

And in every case, right through until the end of the Second World War (there were a total of seven severe economic downturns between 1913 and 1945), including, in 1929, the biggest Depression in American history), each recession and panic elicited direct and credible threats to the United States' economic system.

There were bomb-throwing anarchists and fierce socialists and communists who organized nationwide strikes that paralyzed entire industries from the railroads to the steel mills to the coal fields.

There were many times when our political leaders thought that unless the economy picked up, unless something was done to reform factory work and bust trusts and legislation was passed to provide the beginnings of a social safety net to take care of people falling through the cracks, unless this and more was accomplished, our very capitalist system might be overthrown. All the agitation the result of aggressive investigative journalism (an important subject in the Goodwin book) and pressure from the bottom up, very much including union activity and progressive political advocacy.

Now, again with the exception of a few months of non-violent demonstrations by Occupy Wall Street protestors, things have been preternaturally quiet.

Is there anything ticking out there? Any undercurrent of threat to the system itself?

Nothing of this sort appears to be looming on the horizon.  Perhaps, though, it things for the middle class continue to deteriorate, if they see opportunities for their children more permanently threatened, the great sleeping giant--the American people--will rise from their Barcaloungers, put aside their iPhones,  and . . .

No wonder the 5 percenters are worried.

May 30, 2013--Dow Wow!

Though stocks gave back some of their gains yesterday, the Dow Jones Industrial Average is at an all time high. Even pessimistic bears on CNBC are looking less dour, even suggesting that maybe, just maybe this is not another blip or bubble but reflects a much stronger American economy.

Looking for explanations about the positive economic news, some are saying that U.S. investments are doing well because everywhere else--from Europe to Japan and China--things are heading in the opposite direction. South Americans, the French, Russian oligarchs, Middle East sheiks are all looking for safe havens, and America is pretty much it.

No one, of course, is giving Barack Obama any credit, even though the Dow has more than doubled during his watch; housing prices are dramatically rebounding; and Obamacare, though not yet fully rolled out, is already significantly cutting the cost of health care. And we know that if things were doing poorly here he would be getting all the blame He can't win for losing.

Thus I've been wondering again why this is true--why Obama (who has many leadership faults) is so vilified. Listen to late night talk radio if you want a taste of who is living under rocks. The stuff they spew is borderline seditious.

One reason is that he likes to be the smartest person in the room, especially when with Republican members of Congress. At those times there's not that much competition for who's brightest. You've got Mitch McConnell, John Boehner, Paul Ryan, Michele Bachmann, and Barack Obama. Not much of a contest. But if Obama were really smart--I mean politically smart--he'd tone it down to see if there might be some way to get some things done.

And then they also know, in addition to rubbing their faces in their--how to put this--ignorance, he also can't stand them as individuals. He even hates having a very occasional drink or dinner with Republicans. To cite Maureen Dowd, he seems to be missing the "schmoozing gene."

He has those few people he likes and then there is everyone else. Being so obviously contemptuous of his congressional colleagues (including most Democrats) is a huge impediment to working together on some of our really big problems.

Then, of course, there is the problem that he's cool and they're not. Even their children and grandchildren think Obama is cool, and one can only imagine how that makes Mitch and company feel.  Old, cranky, out of touch. Not a good basis for a relationship.

Finally, there is the unspoken issue that probably for many in the GOP trumps all the others--Obama's otherness. His "foreignness," the way he grew up in Indonesia, and the fact that he's . . . black.

It's probably too late for Obama to mend any fences or forge a few good relationships--like the one he clearly has with his bromantic partner Chris Christie--but I would like to see him give it a try. For our sake or, if that is not sufficient motivation, for his place in history