Achilles, just curious about the 7% figure. Isn't it more like 60 % of U.S. citizens are directly affected by the equities market via their IRA's, 401K's, 403B's, etc. ?
Not concerned about another housing bubble at the moment, we are just seeing a slow return to a more normal housing market. The bubble was caused by mortgage industry excesses and malfeasance, and that's been fixed. Is the current shortage of inventory in some real estate markets being influenced by bank owned real estate being kept off the market? For example there is a low inventory available in New Orleans, yet there were many, many foreclosures. There should be more houses on the market in New Orleans, for example, than there is.
The minimum wage should go up to $10.50 to bring it back to mid 1960's level in constant dollars. That will boost consumer spending and create a more honest labor market by reducing taxpayer subsidy of low wage employers. I agree with you that Congress is at least partly responsible for "destroying" wages.
We need to move jobs from sectors where they are less needed, into sectors where they are more needed. To do that, without undue upheaval, you have to create the new jobs before you eliminate the old ones. That requires that the government step in with temporary funding. You can't rely on the private sector to create those changes because the private sector will always create jobs in the sectors where the money is now. Right now the money is in the medical and defense sectors, but for a healthier economy going forward it needs to be less in those sectors and more in education, research, and infrastructure.
You borrow and spend now so the economy will be stronger later. Then pay yourself back later. As the economy recovers, tax revenues will increase and deficits will decrease at a natural pace. Then it will be time to pay down the debt, but not now.
The country has experienced disastrous wealth redistribution starting in the late 1970's onward. This must be reversed in order to rebuild a strong middle class.
The current levels of defense and medical spending are not sustainable without further weakening of the middle class. Something will have to be done about this. The imbalances are too great to be correctable by increasing efficiency and productivity alone. That means necessarily that some wealth will move out of these sectors into other sectors. When that is going to happen you have a political problem. Currently, our U.S. government is too dysfunctional to handle that. This kind of situation can be expected to create a crisis eventually. That's the point at which effective measures will be taken. This is more or less standard procedure in the U.S. The boat doesn't get rocked until there is a crisis.
We are more or less already at the point of crisis with regard to medical care, but the crisis has to get a little more severe before effective measures will be forced on the medical industry. That's coming over the next few years as Obamney care gets tweaked to force costs down. I would not be surprised if the Obamney care 2014 version bears virtually no relation to the 2034 version. This is clearly a work in progress.