wrote in the Times, "How the G.O.P. Elite Lost Its Voters to Donald Trump," while Thomas Black and Isabella Cota wrote in Bloomberg, "The 89% Pay Cut That Brought Trump-Mania to America's Heartland: Understanding the Republican candidate's anti-free trade, working-class appeal."
Bloomberg has another good piece today, "The Credit Collapse Opened the Door for Trump and Sanders: The pain of deleveraging is 'a big part of the political story.' " by Sarah McGregor and Victoria Stilwell. Money paragraph (my emphasis):
Between 2000 and 2007, borrowed money was adding about $330 billion a year to Americans’ purchasing power, according to the Federal Reserve Bank of New York. By 2009, households were diverting $150 billion to pay back debt — a swing of almost half a trillion dollars, even without counting the impact of lost jobs.
Debt —and the ability to repay it — aren’t distributed equally. Especially after the subprime lending boom, the lower-income groups have the heaviest debt burden, according to New America’s study. That’s one reason deleveraging is weighing so much on the recovery. It takes cash away from the people most likely to spend it.
How do we get out of this mess? Don't rely solely on the Fed:
Richard Koo, chief economist at Nomura Research, says the U.S. is going through something similar to the “balance-sheet recession” that hit Japan in the 1990s. After a credit boom-and-bust, Koo argues, it doesn’t matter how low interest rates go: Households and businesses want to repay debt, not spend or invest. So monetary policy can’t dig the economy out of its hole.
Nor spending (particularly with a Republican Congress):
Policy makers wouldn’t want a repeat of the borrowing binge anyway. The question is: What fills the gap? Fiscal spending isn’t doing it. The government has scaled back its post-crisis stimulus; business investment is slowing; and wage increases during this recovery are only barely outpacing inflation.
So the economy may be sluggish for a while.
I still think Trump and Sanders are dark horses for the presidency; but what they're tapping into is real. It'll be interesting to see what happens going forward.