"It's worse in America. The top 1% of earners took home 93% of the growth in incomes in 2010, while those in the middle had lower household incomes, adjusted for inflation, than they did in 1996."
"If the Bank of England and, indeed, the Federal Reserve wanted to help the middle and working classes, they would provide jobs and incomes by printing money to fund infrastructure and home-building programmes. As it is, history will record that when the crash came, they chose to help those who needed help the least."
Yep, I think that about sums up what happened in a nutshell. Govt policy protected the super-rich and trickle down is as successful as lighting a cigarette with a match in a hurricane. Quantitative Easing is about shoring up of bad debts on bank balance sheets and not lending money to small businesses to trade our way out of recession. Well said Nick Cohen.

http://1.bp.blogspot.com/-bxY8CJDrHWE/UK9XCQk2XfI/AAAAAAAAAx4/JCvXF5QT5mo/s1600/image001.jpg

Yep yep yep

Has anybody read "Take the Rich Off Welfare" by Zepezauer and Naiman? If you betcha, is it any good?

Printing money creates jobs? Bwahahahahahaha! Printing money further devalues the dollar or pound. It doesn't *help* anyone. Moron author!

It times of economic deflation you want to devalue your currency so that you become more competitive with other countries, that's how the exchange rate thing works, and that is why China, despite huge export surpluses have refused to let their currency appreciate in value, so they can erode Western manufacturing with artificially low-priced consumer goods.
Those who herald the free market, I bet you guys love cheap Chinese imports. Free trade only really works if we all play by the same rules, Adam Smith would be turning in his grave now if he could see what is happening. The dollar needs to devalue by about 20%, this would lead to a huge boost in US economic growth and World trade as lots of commodities are traded in US$ .... the best bit of economic news for the US I have heard ever is that they could be self-sufficient in oil/gas in the next 20 years.

Nut how does making what people currently make suddenly worth less create jobs? Explain that. I mean, if my 100K was suddenly only worth 80k, I'd have to sell my Mercedes or find a new job that would pay me 120K.

When the tax rate was raised to 50% on the rich in the UK, tax revenues declined on them.
http://online.wsj.com/article/SB10001424127887323751104578148820012847656.html

Britain is on the right side of the laffer curve, and so taxing the rich more would cause revenues to decline not increase.

In otherwords the poor are actually better off if you lower taxes on the rich, for now.

@nigeebaby: Given that Adam Smith never wrote about Monetary policy and actually wrote that prices don't matter, so long as economic output increases, I seriously doubt that he would be turning in his grave over the current monetary policy in the states. Its more probable that he wouldn't have an opinion.

Also devaluing a currency, especially in a country like America is a bad idea. Having a cheap currency is good for an exporter, but America is the country that imports the most in the world, so yes in Chinas case a devalued currency would be a good idea, in Americas it would just mean higher prices for the consumer, which isn't good news given that consumer spending is the backbone of the American economy. Having a stable currency with a solid 1-2% inflation every year (never higher or lower) is in 9 out of 10 situations the smartest monetary policy strategy.

In periods of high inflation or high deflation, buisnesses don't take risks, because of the unusually high uncertainty in the environment. Suggesting that the dollar needs to be devalued is a terrible idea at the current time.

Please note that "The Gruaniad" is a left leaning newspaper that's appears to be spouting Labour Party policies.

If Adam Smith is spinning in his grave...
http://www.dilbert.com/fast/2004-07-28

A lot of confusion in the article. We can discuss some of the topics and they do deserve to be discussed but mixing them up is a bad idea, example, the macho culture of Hedge Funds managers, the crisis of 2008, democracy and money, and, inequality.

If we stick just to the title, bankrolling the super rich, I would write the following:

1 after the crisis of 1929 we learned a few things and the answer of governments around the world and central banks plus the safety net of our Social States have stopped the worse of what COULD have happened. We live in the world of what happen and not could have happened, but believe, it could have been a lot worse. So millions of jobs have been saved and we all, super rich, rich and poor we all benefited from that.

2 It is true that QE is probably having a major effects on the value of assets. Lowering the interest rates means that anything that gives a meaningful income will be worth more. That is houses with rents, and shares. It is therefore one of the reason why the real estate is picking up in the USA and elsewhere. If my money is giving me nothing in the bank, I have to try other portfolio strategies. Hence the rise of assets. As houses are the main assets of the middle classes it is also benefitting them. As for shares, it is true that they are owned by the richest persons. And too they are benefiting from that.

3 however, I would like to stress that the world has changed. And what is very valuable today is income security more than the amount of income you receive. Effectively the crisis of 2008 has destroyed a lot of value of a lot of assets. The super rich lost a lot of money in it and they suddenly realise how fragile their position in reality is. In that sense, and I know some of you, will scream at that, the job security of a civil servant in a rich country is something very valuable. Inequality is not only the amount of what you receive but also the variability of how you receive it. In that sense, hedge funds managers, super rich, private sector employees are a lot less secure and a lot less equal in variability that your average civil servant.

Think about it. Think differently about inequality.

@Mpc While I do agree with most of what you said, the only line that I don't like in that is: "super rich, rich and poor we all benefited from that."

That kinda talk is normally spouted by liberals stating that the superrich should want to be taxed because a strong middle class benefits everyone.

Normally small government is what benefits people (the rich and middle class alike) the most.

I also hate the similar rhetoric that the super richs wealth increased by 97% more then the average American. As long as everyone is getting richer, I don't care if the super rich are getting quicker faster.

In anycase, who makes up the rich changes from year to year. 40% of the 1% in 1996, were no longer in the 1% in 2005. Since who makes up the upper class changes from year to year, its not really fair to cite rising income inequality or rising wealth inequality as a problem. All it is is envy.

My favourite story about envy:

Lets say one day, while you were working in your working your boss came into the your cubicle and thanked you for your hard work. He declares that he wants to give back to some of the hard working individuals in his company and hands you a cheque for $100,000. Your overjoyed, for the next few hours all you can do is think about what your going to do with the money;
go on vacation, buy a new car, etc.
At lunch you decided to tell your workmates about this bonus, only to discover that the boss had given the exact same speech to all of them, only they had been given $500,000 instead of $100,000. Instantly this gratification turns to envy, you no longer think about what you could do with the $100,000 you were getting, but what you could do with the $400,000 that you weren't.
If the boss declared that either everyone had to cash these cheques, or noone was allowed too, many people would tear up their $100,000 then see all their peers get more money then them.

This is envy, and essentially what is happening in America and most of the world right now.

Even though almost everyone is getting richer, since other people are getting richer faster, were jealous of their success.

I don't see inequality as a problem.

@Fasces
I am an economic liberal as it is known in the "old" side of the Atlantic. I am very, very sceptical of State interventions in the Economy but also in the Social spheres. You need more than a market failure (or a so called discrimination). Politicians and activists have to prove that the intervention of the State will actually be beneficial. Most of the case it is not but " something must be done" just for the sake of it.

That said, the interventions from different States and central banks around the globe in 2008 were from the textbooks and most of it totally justified. And I repeat, we all benefited from that interventions. Everybody was bankrolled.

As for inequality, I tend to be like you (and your story), there is a lot of envy. However, in Economics, I am in favour of free and fair competition. "Too big to fail" should not exist, and implicit, real, monopolies and oligopolies must be fought, as Adam Smith would certainly agree.

In the social sphere, we must implement the equality of opportunities. Otherwise, we could end up in very unjust situations or equilibriums where self serving castes reproduce themselves without any kind of merit. It is not a far fetched scenario as some countries / cultures are living example of caste systems.

@Mpc - Too big to fail shouldn't exist, you are correct. But the reality is, it does. There are certain companies and industries whose collapse would simply devastate our economy worse than a bailout. In the States, these include the automotive industry which drives the economy of Detroit, and with it, Michigan. If the big three totally went bankrupt, Detroit, which is already a shadow of a ghost town, would simply cease to be and the state of Michigan would probably end up bankrupt.

The banking industry bailout was a bit different in that orders from the government helped put it in the situation it was in. It wasn't just pure greed, but the government saying "give everyone a loan, Fanny and Freddie!" that fostered the sub-prime mortgage bubble. Had banks not been giving out such high risk loans (and they wouldn't have without F/F backing) then there would have been none of the sub-prime loan packages floating around being bought and sold.

A good example of when it works right is when the dot com bubble burts. YEs, people lost money and some people lost jobs, but we learned and improved and no bailouts were required. Instead, a few companies went under and some venture capitalist had to sell their Bentleys and Aston Martins.

The European definition of Economic Liberal= The American definition of Economic Conservative.

The American definition of Economic Liberal= The European definition of Economic Socialist.

So when I said that liberals like to say "rich and poor we all benefited from that." I meant that people who like high taxes and big government say that all the time.

Regarding the bailouts: I disagree, I think we should have given the markets time to correct themselves. Also doesn't this contradict your too big to fail argument, the bailouts happened because those who were failing where too important to not be bailed out.

@Draugnar: But continually bailing out an automotive industry that shouldn't exist is frankly a waste of time. 3 times in the last 40 years they've been bailed out, and when they go belly flop in another 15-20 years, I don't want to be the one left with the bill.

Ford and GM can't compete with their European and Asian counterparts, so give up and let the economy correct itself. Bailouts destroy jobs because of the taxes that are needed to pay for the bailouts.

GM and Chrysler. I don't' think Ford took money this time around.

Ford didn't take money.

I wonder how Calvin Coolidge would handle it. Where's Sbyvl?

"God if only Sbyvl was born a hundred years earlier"
-Calvin Coolidge.

"Hmph mmph ffphh" - Sbyvl living in 1920 with a mouthful of Calvin Coolidge.

I don't know if it matters, but GM has paid back quite a bit of their bailout, and had to give over assets (at least in part stock) rather than everything being dumped into a big empty pit then covered over, like the bank bailouts where it was legitimately illegal to tell the government what you were doing with the money.

@ Fasces
The 2008 crisis is a bit like the wines in France ;)You have bad years, average years, good years and exceptional years. 2008 was an exceptional crisis, like 1929. Admitting that twice in a century we had a complete melt down of the markets is not a communist rant. It is simply understanding that markets are made of human beings. They are intrinsically imperfect. And sometimes we have catastrophes. Most of the times, we should let markets find an equilibrium. But sometimes authorities need to step in. In 2008 the worse was averted.

@Draugnar
I am not familiar about US auto industry, so I will not comment wether the intervention was justified or not. I do know that it is a very "emotional" industry around the world, with a lot of nationalistic innuendos. But also because for the parties on the left of the spectrum it often represents the origin of their long gone blue collar roots. Mines have the same effect. So the social impact is often out of proportion with their economic importance or their contribution to the GDP. The too big to fail argument is simply making sure that markets are free and fair, and, there is not an implicit State subsidy. Some huge banks can get funds cheaper, because the taxpayers are bound to step in if the company wobbles. Totally unacceptable. The solution? Cut the size of the banks. Now.

@ Fasces:

"If the boss declared that either everyone had to cash these cheques, or noone was allowed too, many people would tear up their $100,000 then see all their peers get more money then them."

Rubbish. Don't talk out of your arse.

People would grumble, and then cash the cheque. Suddenly being $100,000 better off would have a big impact on most working people's lives. They'd be cross that their colleagues were seen to be unfairly getting a bigger bonus, but they'd still want to have $100,000 rather than not have $100,000.

I agree with jamiet, under no circumstances would I short myself 100k to prevent someone else from getting 500k.

But what if it was just $100 and $500? How about $1000 and $5000? Where do you draw the line?

I wouldn't.

I don't think there is any amount of money that I would intentionally destroy in order to prevent a co-worker from making more. When it goes under 100, I might inadvertently destroy it because it's relatively meaningless to me to get 10 bucks or whatever, but I can't imagine a situation where I would do it intentionally.

I'm not stating the bailouts were right or wrong (or who, although I think Ford and Gm got bailouts this time and Schrysler didn't). I'm just pointing out that the cat is out of the bag and it is too late to say no company is "too big to fail" when it isn't one company but an entire industry that employess way too many people to fail. Failing would bankrupt a nation, several states, and a whole lot of cities in some cases justt rying toc over the unemployment costs.

As a continuation of Draugnar's point, Detroit (as a city) and Flint are already in pretty tough situations, and already experiencing severe problems. Putting some money into making sure they still have a tax base of some sort (even if only insomuch as some people who live there would still be making taxable income) puts a bit of a band-aid on the problem rather than solving it, but it's a better solution than letting it fester.

Of course, being in the Detroit area, I have some bias.

No Draug, it was definitely GM and Chrysler that got the bailouts. Ford had the option, but declined.

Just playing devils advocate here, as I approve of the automotive bailouts, but had they been allowed to fail, they probably would have been bought out or restructured as more efficient companies. And the hit to the economy wouldn't be as bad as you think. Many "foreign made" cars sold in the US are already produced in the US, so the blue collar jobs wouldn't leave. Somebody would have stepped in to fill the gap.

"Ford and GM can't compete with their European and Asian counterparts, so give up and let the economy correct itself. Bailouts destroy jobs because of the taxes that are needed to pay for the bailouts."

I would just amend that to couldn't compete. They're doing quite well for themselves at the moment. And the taxpayer did make a handsome profit off of the loan to GM.

The foreign made cars made in the US are made in a totally different area of the US, mainly Tennessee and further south. It wouldn't have been much solace to the rust belt, which is the people the bail-out was primarily trying to help.

"GM and Chrysler. I don't' think Ford took money this time around."
My mistake, GM and Chrysler, I confused Ford and Chrysler for whatever reason.

"The 2008 crisis is a bit like the wines in France ;)You have bad years, average years, good years and exceptional years. 2008 was an exceptional crisis, like 1929. Admitting that twice in a century we had a complete melt down of the markets is not a communist rant. It is simply understanding that markets are made of human beings. They are intrinsically imperfect. And sometimes we have catastrophes. Most of the times, we should let markets find an equilibrium. But sometimes authorities need to step in. In 2008 the worse was averted. "
I agree a once in a century mistake happens once a century. Its not that the bailouts happened that I am complaining, its that size and number of those who were bailed out.

GM shouldn't have been bailed out. I supported the bank bailouts because of how necessary banks are to the economy, but I think the banks should have been split up to diversify the risk in the future.

Why the banks but not GM, Fasces? GM had a bad business model, but it only bit them when the recession hit. They thought things were going well until it was too late. The banks had a bad business model, knew that it was bad, and kept doing it anyways. AIG should have still been bailed out since it was a victim, in some respects, but the banks? Let them fail, break them up, and divest commercial banking from investment.

@goldfinger.
I agree with the last sentence except, maybe, with the "let them fail". What does it mean?

The savings of depositors under a 100k€ (in Europe) should be wiped out?
The savings of depositors over a 100k€ (example Cyprus) should be wiped out?
The bonds holder should be wiped out? Senior? With collaterals? Cocos, etc?
Shareholders should be wiped out?

I agree with some losing their shirts, but not all of the above.

@Mpc - Here in the US, small despositors are insured by the FSLIC or FDIC so your under 100k folks are protected even if their bank goes under. And major investors are diversified plus don't tend to keep all their money in banks, but in the markets where they can make more money. I can't speak to how Bonds are handled if a financial organization goes under, but there was a time when banks couldn't be brokerages and were limited in the products they offered. That line has been blurred and it is time to return to separating brokerage firms from banks.

And any shareholder wiped out deserves it. He was too stupid to diversify his portfolio and put it all in the financial sector? Then he was too stupid to hold onto his money. Investments come with risk, that is why you should always have a diverse folder amongst companies, industries, and even markets (NASDAQ versus NYSE versus London SE versus OTC).