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Archive for Tuesday, November 15, 2011

Expert blames economic crisis on erosion of U.S. middle class

November 15, 2011

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Robert Kaplan

Robert Kaplan

If there is a Kansas University alumnus out there who knows how to fix what ails Wall Street, it may be Robert Kaplan, the former vice chairman of the Wall Street powerhouse Goldman Sachs.

But there’s one problem: Kaplan isn’t sure that fixing Wall Street is where America should be spending most of its time.

“This crisis didn’t start with Wall Street,” said Kaplan, who left his job of overseeing investment banking operations for Goldman in 2005. “They made it worse, but this crisis really is about the erosion of the middle class of the United States.”

Kaplan, now a professor at the Harvard Business School, will be the featured speaker at an event at 7:30 p.m. Thursday at the Dole Institute of Politics, 2350 Petefish Drive.

Kaplan — who is promoting a new book he has written on leadership — said the financial crisis that has resulted from the bursting of the housing bubble is in large part because “a family of four can’t make ends meet if they are making $45,000 or $50,000 a year.”

“The middle class is eroding, and we will continue to have volatility as long as that is the case,” Kaplan said.

But Kaplan isn’t giving Wall Street an entirely free pass on the role it played in the financial crisis. Kaplan — who grew up in Kansas City and received an undergraduate degree from KU in 1979 — said he had become uncomfortable at Goldman Sachs prior to leaving in 2005. He said that Wall Street had become dominated by the “zero sum game” of trading financial instruments — everything from simple bonds to complicated derivatives.

“It is a casino,” Kaplan said of the trading environment. “It is about too much trading and not enough client focus. Wall Street has to again become focused on clients.

“I think it is incumbent that Wall Street firms prove that they can make a positive difference in the world. I know most of the Wall Street CEOs, and I tell them that they need to prove it. Talk won’t matter anymore.”

Kaplan said he would like to see the government make a larger investment in infrastructure, which he believes will help foster growth that will benefit the middle class. He also supports an extension of the federal payroll tax holiday, and would like the government to create more certainty in the regulatory environment regarding small businesses.

“There is a lot of uncertainty right now, and it is undermining our growth potential,” Kaplan said.

On other issues, Kaplan:

• Is a founding member of the No Labels movement, which advocates for less partisanship in politics, and particularly believes the variety of pledges lawmakers are pressured to sign is detrimental to governing.

“Almost 60 percent of the members of Congress have taken some sort of pledge to not take some sort of action,” Kaplan said. “Our view is the only pledge they should be taking is the oath of office.”

• Believes Congressional leaders still have a chance to reach a significant agreement on reducing the deficit, but will “have to make everybody mad” by reforming entitlement programs and raising taxes.

• Thinks Europe’s current debt crisis should serve as a warning to the United States.

“We’re not as different from Europe as we would like to think,” Kaplan said. “The main difference between us and them is that we can print money and they can’t. Frankly, what we’re seeing in Europe is what can happen, if we let this go too long.”

Thursday’s event is open to the public. After Kaplan speaks, he will sign copies of his book, “What to Ask the Person in the Mirror: Critical Questions for Becoming a More Effective Leader and Reaching Your Potential.”

Comments

cato_the_elder 3 years, 1 month ago

Yeah, right. Barack Obama is a doctrinaire liberal, and his presidency has been a work of genius. Brilliant response.

Keith 3 years, 1 month ago

No, and no. But keep trying, you're bound to get something right eventually.

cato_the_elder 3 years, 1 month ago

Perhaps you will too, but I'm not counting on it.

cato_the_elder 3 years, 1 month ago

At least I have wit, rather than mere blather.

notanota 3 years, 1 month ago

Not that we've seen you demonstrate here.

cato_the_elder 3 years, 1 month ago

That presupposes that you have the ability to discern it, which the left-wing blinders you wear render impossible.

jafs 3 years, 1 month ago

Having read the article, I can't see any evidence that cato's comment is correct.

This guy's comments are a mix of liberal (government investment in infrastructure) and conservative (more certainty in the regulatory environment) ideas.

He says that reforming entitlement programs is necessary (conservative) and also raising taxes (liberal).

cato_the_elder 3 years, 1 month ago

It appears that I must irritate you. If you're a doctrinaire liberal, then I'm pleased.

cato_the_elder 3 years, 1 month ago

Once again, completely inaccurate. Based on your prior posts, you get irritated very easily. In fact, you remind me of a certain previously banned poster on this site.

Thanks for disproving your own point.

cato_the_elder 3 years, 1 month ago

From my memories of having watched "Gunsmoke" some years ago, perhaps "Festus" would be more appropriate.

cato_the_elder 3 years, 1 month ago

What are you ? I note that you began posting on this site under your current name on September 22 of this year, or less than a month and a half ago. You remind me very much of a previously-banned poster on this site.

cato_the_elder 3 years, 1 month ago

If you're a previously-banned poster, a subject that is often brought up on this forum using specific names, which I haven't ever done (but you have - see your references to "Arminius" on November 9, 2011, at 8:12 p.m. and 9:42 p.m.), then people other than I ought to care. In reality, no one who just started posting on this site on September 22 of this year could possibly know who "Arminius" was. You've been around for a long time, pal.

cato_the_elder 3 years, 1 month ago

No, I was curious as to how you could make the broad statement that I am "never accurate" on anything I say when you'd only been posting under your current name since September 22 of this year. I've commented on a wide variety of subjects, not just politics, during that time. I'd never seen your current name before, and I found it surprising that you would post such an ad hominem comment when you'd never responded previously to anything I'd said during the short time that you'd been posting here under your current name.

jonas_opines 3 years, 1 month ago

"This guy's comments are a mix of liberal (government investment in infrastructure) and conservative."

Operative word here is mix. If you have Anything other than the standard regurgitated conservative screed, you're obviously a doctrinaire liberal. You know, the 85% that are to the right of the standard Newsmax readers, the liberals.

cato_the_elder 3 years, 1 month ago

Only 20% of Americans identify themselves as liberals.

just_another_bozo_on_this_bus 3 years, 1 month ago

Until you start asking them about actual policy, and they don't support your preference for elitist, corporate oligarchy.

cato_the_elder 3 years, 1 month ago

I have no "...preference for elitist, corporate oligarchy," nor do I share your preference for government-managed, nanny-state socialism.

notanota 3 years, 1 month ago

No Labels is pretty similar to Reagan era republicans, the socialists.

pace 3 years, 1 month ago

Since so many economist have tied the growing deficit to the growing tax cuts, maybe it isn't liberal versus conservative, Since so many liberals tie the defense budgets to unconnected pork and so many conservative would like the government to waste less. I think it is politician's play, building on the sports fever, demonizing one side over the other, win win win, The losers, the economy, jobs, housing stock, the middle class, the poor, the productive, the sane. Power or leadership, two different roads. Too many people are looking for a Daddy, who can fix everything, I am not looking for a Daddy. I expect the community has a bigger responsibility than most want to take on. Leaving it to the guy or gal in Congress or Senate or White house will not fix what we need fixing. They actually follow us. What are we doing? The conservatives complain the Occupy movement are offering no simple answers, the liberals complain the teas offer too simplistic answers. I wish we lived in simple times but we don't. I am surprised more conservatives aren't taking the Occupy points as their talking points. Many of the issues were conservative talking points, the solutions are probably not easy.

dncinnanc 3 years, 1 month ago

Hard to dignify comments like this with a response.

cato_the_elder 3 years, 1 month ago

It's hard for me to conclude that you could make such a strong statement about me, which is similar to one you made earlier on this thread, if, according to J-W information publicly available, you have only been participating on this forum since September 22 of this year. You remind me very much of a previously-banned poster who often displayed an intense hostility toward my comments.

cato_the_elder 3 years, 1 month ago

See my post of 8:59 p.m. above, in response to your threats related to my posts. Under your own definition, you twice violated TOS on November 9, 2011, as I pointed out above. Throwing in threatening words like "stalker" is not helpful to your case. I'll say it again: It's obvious that you've been around for a long time.

cato_the_elder 3 years, 1 month ago

See my response at 6:10 a.m. today to yet another attempt on your part to brand me a "stalker." I rather think that the shoe's on the other foot.

cato_the_elder 3 years, 1 month ago

Something tells me that I've haven't read through your entire history.

Alex Parker 3 years, 1 month ago

Let's stay on topic, please, and not subject all of our readers to your personal disagreements. Thanks.

Alexander Smith 3 years, 1 month ago

First of all, President Obama has done more good for the USA in his first 2 years then any other president in the past 20 or so in their terms. TWO,the economic problems was already there. It took a bold president to finally sit down and say " our government is broken". Obama finally took a stand and took the needle to the bubble that was growing before it got out of control.

As for the hard working folk, sadly that is a statement that does not hold true fully to all Americans as you portray it to be. In general, Americans today are willing to work hard IF they get the pay they want. We have become lazy, greedy beyond belief, let the private sector rape our economy, let banks and wall street get away with murder on our financial stability. A perfect example is how expensive it is to live in Lawrence. Look at the new homes, $250 to 300 starting price for house that are built like crap? I used to help build homes back in Iowa and have been through these NEW developments during construction and its appauling on the poor workmenship.

I am a hard working middle class that puts in 60+ hours a week to support my family. I don't mind if we raise our taxes if it helps provide a brighter future for my children. What is funny is that most of the people that are screaming against raising taxes... is oddly.. those who make higher incomes. Got to be able to afford those 40+K cars and 300+K homes..rather then live in a 150K home and help rebuild the neighborhoods and understand what our Constitution is about... WE THE PEOPLE.. odd reason the GOP thinks its I the people.

Oh one last thing, the guy righting the book, before you condem him.. lets take alook at his success in the business world.. NOW lets look at yours?? HUMM who should we listen to? For sure not you.

parrothead8 3 years, 1 month ago

Who are these "wealth creators" you speak of, and whose wealth have they created?

jayhawkinsf 3 years, 1 month ago

I really like that cheese flavored popcorn. Also caramel popcorn. And it's usually so popular around the holidays. My spousal unit likes regular popcorn 365 days a year. So, to answer your question, Yes.

jayhawklawrence 3 years, 1 month ago

It is always hopeful when a member of the American "aristocracy" makes an honest and common sense statement.

It is not genius. It is just common sense.

How do we get rid of the political ideologues that are hurting our country? These people are like a plague.

jayhawklawrence 3 years, 1 month ago

Yes, the middle class is eroding and like global warming, there may be a point of no return.

Kendall Simmons 3 years, 1 month ago

Simple? What on earth are you talking about???

Never mind that a President doesn't have anywhere near as much power you apparently want to give Obama credit for. Never mind that US worker productivity has gone up...so hard workers are actually working harder, not being the quitters you seem to think they are. They aren't cutting off their noses to spite their faces by not trying to better themselves because maybe perhaps possibly sometime in the future their taxes might maybe possibly would go up.

The fact of the matter is that, contrary to your apparently firmly-held belief, federal taxes have actually gone DOWN under Obama. Yup. For all the fear-mongering, Obama has not increased taxes...on anyone!!! Not even on the rich. Certainly not on "hard workers".

Indeed, federal taxes have gone down for over 90% of Americans...and stayed the same for the rest. Please, oh, please, oh please tell us how that translates to increased taxes in your mind??? Translates to taking money from hard workers and giving it to "idle bums"...which, like it or not, includes those hard workers whose jobs were offshored so that the wealth amassers could amass even more wealth...and to heck with the American hard workers who got them where they are in the first place.

Like it or not, you believe in a myth. And you obviously like that myth so much that you apparently aren't interested in actually checking out the reality. You'd obviously rather believe in conspiracy theories. ("illegally enthroned", indeed.)

Kendall Simmons 3 years, 1 month ago

This was meant as a response to lawrenceguy40's comment, but somehow ended up here. Oh well.

tomatogrower 3 years, 1 month ago

Yet, you never were concerned when spending rose under Bush? At least Obama is spending the money more on us. Bush sent it overseas.

verity 3 years, 1 month ago

". . . this crisis really is about the erosion of the middle class of the United States.”

Duh! Talk about stating the obvious.

“This crisis didn’t start with Wall Street, . . .” They certainly helped in a big way with the erosion of the middle and working classes.

He does have some good ideas, but looks to me like he's talking a good talk while coming in the back door with more ways to hurt the middle and working class.

And one more self-help book for people to spend money on, hoping for a magic bullet, which no doubt says virtually the same thing as the thousands of other self-help books--but it will certainly help his bottom line.

1southernjayhawk 3 years, 1 month ago

I really think that the beginning of the decline in the middle class, both in numbers and in income, started with the beginning of a global economy. We have also been the beneficiaries of this global economy in terms of products that are available to us and the prices for which they are available. How do we compete in this global economy? Better education in science, math, engineering, and reading. Many, many good jobs have been shipped overseas.

Alexander Smith 3 years, 1 month ago

Agreed. in away. To add, the reason for the global economy ties directly to the constant need for profit even thought there is already plenty of profit. It is the constant need for more for less which in the end state is looking for cheaper production which leads to the moving of jobs over seas thus creating a global economy. Here is the kicker, who is controlling this? Ironically its the stock holders, the greed of them to have more money. It is also the citizen, who wants more and less and will go to all ends to find easier ways to do that. We waste more time and money on finding cheaper and faster ways to do something rather then just be more productive with what we have and the big thing is to SLOW DOWN. Technology is gaining speed on becoming more of a negative rather then a positive. Sounds odd but they are two different theories.

Either way, if we want the middle class to stop eroding we need to do a few things. FIRST is get our jobs BACK in the USA. TWO, its obvious the giving the companies all the breaks is teh WRONG thing to do. The bailouts proved that theory. THREE, the governemt NEEDS to have more control on the economy. leaving it up to the private sector and the greed that goes with it is outright stupid. The failing housing industry is proof of that. and the BIG thing,, fix the freaking loop holes in the tax system.

Armored_One 3 years, 1 month ago

And, sadly, you ahve taken offense over something that you can't be offended about unless you want to be offended.

Honestly, does the opinion or a random online entity truly define and dictate who and what you are, or is that something that you do yourself?

If you say the former, I don't know whether to point and laugh or be depressed over it.

If you say the latter, then stop posting tripe like your above post.

As I've said for a long, long time: "I have two cheeks, feel free to pucker up and choose one, but if the choice is too hard for you, split the difference and entertain me that much more"

Armored_One 3 years, 1 month ago

You are just too cute, Liberty.

Here, have a cookie and go play with the rest of the ankle biters at the park.

Although I am just so glad that you could pause your extraordinarily busy day to point out exactly what my frame of mind was when I posted. I was just so confused, apparently, and needed the guidance of someone I wouldn't know if I hit them with my car.

Really?

Really?!

You honestly think I was offended? I was mocking more than anything else, although sarcasm probably came into play as well.

Liberty, all you do is entertain me, and even that is stretching the boundaries of polite conversation. What I find to be truly sad is not only did someone take offense to an anonymous comment online, you felt the need to try and belittle me, which you failed at miserably I might add, for simply stating that your opinion of the other person should have about as much impact as a mouse fart three counties away.

I think you took more offense than I did.

Then again, I think my cat took more offense than I did.

Armored_One 3 years, 1 month ago

just laughing in your face

In person, I would still laugh just as hard.

Thank you, please drive through.

Oh, and as to the "essay"...

Character width restrictions tend to make short posts look much longer. Kind of like your functional brain cell count.

patting you on the head and giving you a cookie

Nice try, though. You get a cookie for the effort.

Armored_One 3 years, 1 month ago

Not my fault you don't have a strong enough grasp of the English language to formulate any indepth responses, or to understand the concept of sarcasm.

Yer a putz. It's obvious. Accept your short comings and press on.

Or post again and entertain me further, because I am purposely poking at you with that proverbial stick, just to get you to jump again.

Funny thing is you will still post, despite knowing exactly why I post what I do.

Armored_One 3 years, 1 month ago

"Funny thing is you will still post, despite knowing exactly why I post what I do."

I must be psychic.

And yes, I choose the words that I write. Your lack of understanding is neither my fault nor my concern.

So, are you going to post again, because I am once again willing to bet you can't resist trying to improve your self esteem by convincing yourself that you are actually accomplishing anything other than amusing me.

You can't take offense if you don't want to be offended. Words have no more weight than the listener/reader gives them.

I have never, and will never, consider your opinion of me to be anything more than comic relief. Why do you think I mock you? Because I want you to entertain me just a little bit more.

Shane Garrett 3 years, 1 month ago

My mother sent me that one several weeks ago. Made me laugh.

Richard Heckler 3 years, 1 month ago

The Erosion of the middle class can be associated with all of the following. What has been left out is the one big Reaganomic factor that began eliminating the middle class.

Does anyone remember the reckless period of leveraged buyouts,hostile takeovers and questionable mergers? And how this recklessness was financed? This brought on huge numbers of layoff's by USA industry who soon opened up in China and other slave labor markets. What replaced all of this? "Shop Till YOU Drop with credit cards.

Richard Heckler 3 years, 1 month ago

Other large nails in the coffin of the middle class:

The RINO party has a long history of economic destruction and crime to include Iran-Contra and Watergate. Like or not a consistent and disturbing pattern has developed by their choosing.

STOP electing RINO’s ! My My father in law left the RINO party because he is a fiscal conservative republican with at least 50 years under his belt. Evermore stunning he is working with the democrat party in Pennsylvania.

After spending so so many decades in Washington D.C on tax dollar payrolls RINO’s are sure they learned all they needed to know about taking YOUR money and establishing reckless economies by way of Facism.

Introducing the RINO Economic Destruction Platform Written In Stone:

  1. TABOR is Coming by Grover Norquist and Koch Bros sells out state governments, public schools,SRS services etc etc to private industry = Grab Your Wallets! http://www.dollarsandsense.org/archives/2005/0705rebne.html

  2. The Reagan/Bush Savings and Loan Heist aka home loan scandal sent the economy out the window costing taxpayers many many $$ trillions (Cost taxpayers $1.4 trillion), Plus millions of jobs, loss of retirement plans and loss of medical insurance. http://rationalrevolution0.tripod.com/war/bush_family_and_the_s.htm

  3. Bush/Cheney Home Loan Wall Street Bank Fraud cost consumers $ trillions, millions of jobs, loss of retirement plans and loss of medical insurance. Exactly like the Reagan/Bush home loan scam. Déjà vu can we say. Yep seems to be a pattern. http://www.dollarsandsense.org/archives/2009/0709macewan.html

  4. Bush/Cheney implied more than ONLY 3 financial institutions instead of several were at risk so why $700 billion in bail out money? One of the biggest lies perpetrated to American citizens. Where did this money go? Why were some banks forced to take bail out money? http://www.democracynow.org/2009/9/10/good_billions_after_bad_one_year

  5. Tax cuts the ENTITLEMENT program for the wealthy which do nothing to make an economy strong or produce jobs. Tax cuts are a tax increase to others in order to make up the loss in revenue = duped again.

Still A Bad Idea – Bush Tax Cuts - The ENTITLEMENT program for the wealthy at the expense of the middle class = duped one more time. http://www.dollarsandsense.org/archives/2001/0301miller.html

In the end big debt and super duper bailouts were the results which does not seem to bother Republicans, as long as they are in power.

In fact, by the time the second Bush left office, the national debt had grown to $12.1 trillion:

  • Over half of that amount had been created by Bush’s tax cuts for the very wealthy.

  • Another 30% of the national debt had been created by the tax cuts for the wealthy under Presidents Reagan and George H.W. Bush.

• Fully 81% of the national debt was created by just these three Republican Presidents. http://www.dollarsandsense.org/archives/2010/0111orr.html

Flap Doodle 3 years, 1 month ago

Have you posted that 1000 times on this award-winning website yet, merrill? (from a source)

budwhysir 3 years, 1 month ago

thats what I like to see,,,, more political scare tactics aimed at increasing the national debt and focusing on what the average American is doing wrong...but a I will agree one thing, a family of 4 CANT make it on 45 to 50,000 per year if they are carrying enough debt to be supporting a family of 12.

For some strange reason wall street is not having a large impact on my daily living. Maybe that is because I am not entrusting these morons with my life savings and or my retirement. I am putting myself in charge of being what I want to be. Investors that work wall street are looking to do what many others have done, make money the easy way by investing your money on a gamble, and then if things pan out, they get a cut and then let you have some. Let these guys work a few days in the real world and make money to invest. I aint given them my money.

middle class is just a placement society puts on a group of people so the upper class feels better when the economy takes a dip. Who cares about classifications of lower, middle, and upper class living?

Flap Doodle 3 years, 1 month ago

The way the current regime is paying off donors with billions of dollars of tax money isn't helping the millions of Americans who don't have the proper connections. http://minx.cc/?post=323805

Lawrence Morgan 3 years, 1 month ago

1southernjayhawk and theironmouse may be right on. I, too, think that when the global economy really took hold, that is when the middle class went down in income and hopes.

But - I know no one ever says this, but - what about tariff elimination? There is no way that Americans can expect jobs at the wages people are making in the developing countries. Perhaps we should have tariffs again, so that jobs can come back to the United States?

tbaker 3 years, 1 month ago

Americans don't demand large, sweeping change unless enough of them are suffering some injury real or perceived. Things aren't bad enough yet. Compared to the rest of the world, we are doing quite well. Sure there are some very serious problems on the horizon, but most people don't pay attention to them until they start to feel the pain. The question is will the motivation the pain provides come soon enough to avert disaster? Part of that answer comes in 355 days. The next government we elect will be at the wheel when we run out of road and reach the cliff. Stay tuned.

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