Listen to this episodeGDP benchmark revisions came out this morning from the Bureau of Economic Analysis, along with the second quarter advance estimate. That number, which is little more than a guess, was 1.7%, higher than consensus expectations by the 0.7 markdown to the first quarter estimate.
The benchmark changes changed everything from 1929 to now. They were pretty big in the small sense of the word. Average annual growth 2009 to 2012 was 2.4, not 2.1 percent. That's 0.6 percent added to 2012 mostly. Some of the change comes from revising down inflation. In terms of GDP, though, the last four quarters have averaged 1.4 percent. This is not negative, as it would be under Demand Side's rules for health care and climate change accounting, but it IS bouncing along the bottom, about half the level the new normal folks need to convince us things are not going to hell in a hand basket.
Hidden in the numbers is the shift of income and wealth to the top. GDP per capita is kind of growing, but if you knock the 1% cap off, it is not growing. Knock the top 10% off, and you have the decline most Americans are experiencing. Even with the happy upper class, per capita GDP is not back to the 2007 level. If course it is still in the1980s when climate change and health care are accounted for properly.
Today's podcast is brought to you by Paul Krugman's posting the debt chart. We have that on the transcript, and maybe we have the link there. But it is true. Mr. "Debt doesn't matter because we owe it to ourselves. The man whose public service was in the Reagan White House alongside Larry Summers. Acknowledgement after a fashion of the relevance of household debt.
Before we get into that Senate hearing, James K. Galbraith has put the issue succinctly when he said in a recent interview that recovery is held back partly by "the financialization of energy and commodity markets, which allows the economic rents to be extracted very rapidly if there is a movement toward faster growth. Energy prices go up very quickly, and then you get basically a tax on the system and a drain on demand as a result. That's again part of the problem of having a financialized global commodities market."
and later,
"... the collapse of the financial system ... is universal in Europe and the United States. The banking sectors are vast institutions that have served very little public purpose, if any. At this point, they could be run as public utilities, and the fixed cost that they presently impose on the economy could be lifted, and you would then have some more scope for private profitability in everything else, which would be a good thing."
Here, by way of preface, Senator Elizabeth Warren with Prof. Saule Omarova.
AMAROVA-WARREN
Yes, long-time listeners to the podcast may remember that this was one of our hunches -- if a conviction not accompanied by a New York Times article is a hunch -- that when Enron was shut down, the coke-snorting high living traders just moved to Goldman Sachs. You can see by the behavior of the market that it is controlled. Remember the bunny hops?
That exchange is part of our feature today -- an extended and edited version of Senate Hearings entitled "Examining Financial Holding Companies: Should Banks Control Power Plants, Warehouses and Oil Refineries?" This is more evidence of the return of the Gilded Age. Not trusts this time, holding companies, specifically bank holding companies, well into controlling commodities using cheap money from the Fed. Get the link to the hearing on the website.
VideoWe have the second part this weekend for the flagship feed. Sorry we run out of bandwidth so quickly on the legacy site. Feel free to change. Use the brown icon on iTunes.
Link to session testimony
The chair here is Senator Sherrod Brown.
HEARING PART 1
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