Pearlstein: A New Bubble is Forming on Wall Street

Steven Pearlstein
Washington Post Columnist
Wednesday, September 23, 2009; 10:30 AM

Washington Post business columnist Steven Pearlstein was online Wednesday, September 23 at 10:30 a.m. ET to discuss The Fed and the new Wall St. Bubble.

Pearlstein won a Pulitzer Prize in 2008 and is co-moderator of the On Leadership discussion site.

Read today's column: A New Bubble of the Fed's Creation.

A transcript follows.


Panajachel, Guatemala: As I gather, credit is tight now. People with good credit have been reduced in their credit lines and even good credit doesn't guarantee a loan. So, then, it isn't so valuable anymore, a good credit rating, is it? And what makes the banks not realistically fear people with apparently nothing to lose rushing off to bankruptcy en masse? What will the banks do then for customers given their pickiness, and with suddenly the proverbial glut of bankrupts?

Steven Pearlstein: Well, a good rating is still better than a bad one. Whatever their relative position, however, the boats all rise and fall with the tide -- in this case a tide of bank lending that is going out.


Richmond, Va.: I would value your opinion.

Aren't expanding and bursting "bubbles" a part of our capitalist system? Bubbles expand and bubbles pop. Money is made, jobs are created, money is lost, jobs are lost, NEW bubbles start, etc. If bubbles were bad, industry would still be on the level of old blacksmiths. So, is there any room for social/economic Darwinism in the new Obama economy?

Steven Pearlstein: This is, I think, the key question. Not every stock market rally that goes a bit too far is a bubble. I understand that. But why I think this is a bubble is that there are lots of different financial asset classes all moving in the same direction, without support of the economic fundamentals, at the same time that there seems to be an inordinate amount of liquidity sloshing around the financial system at low prices. I don't think you have to have a Ph.D. in economics from Princeton to have a pretty good idea something is going on here that deserves attention.


New York: Do you think that Wall Street has discovered a new way to wrangle money from the government so that it can continue its way of thievery?

Steven Pearlstein: Wall Street is all about discovering new ways to wrangle money from anyone, anywhere so that it can continue to offer them "value added services." Is that what you meant to say?


Reisterstown, Md.: Steven,

Glad to see you finally writing about this. I think you've been giving Bernanke, Paulson and Geithner too much credit for too long. They avoided another great depression? It's more accurate to say they've done a handsome job of delaying the day of reckoning.

Problem is, you can't keep problems this big under the rug for long, nor can you cure one bubble by blowing up another - yet that seems to be the only solution the fed knows.

The Fed is apparently purchasing as much as 80% of mortgage backed securities (MBS). 80%! What happens when they pull out of that market? Likely a total collapse - where will interest rates go then?

Everything that is being done to solve the housing crisis is only delaying, and exacerbating, the problem. Rather than letting the huge bubble that formed over 2000-2006 deflate all the way to sustainable prices the government keeps trying to reinflate it (or at least keep it half inflated). Who is the big player in mortgages now? FHA is doing their best imitation of a subprime lender. They require only 3.5% down (requiring less than 20% tradition DP is why we've had so many foreclosures), and that can be essentially waived if you use the $8,000 credit. And they continue to use 36% (rather than traditional 28%) of gross earnings as a measure for how much home you can avoid. The result: FHA delinquencies are rising - almost 23% of all loans are late or in foreclosure. But at least housing prices are stabilizing! (And we won't see all those problems for another year or two!)

And now the FDIC is considering "borrowing" money from banks to use as their bank insurance fund? Does that mean I get to write my own insurance on my house and pay myself for doing it? I guess that's better than the FDIC going to the treasury and saying, "We can't do our job and now we're broke. Can we borrow $100 billion?" (I guess only the big commercial banks get to do that.)

Why can't we admit the problems and work to find real solutions, rather than try to delay the problem by sweeping it under the rug?

Steven Pearlstein: You make a good point and a not so good point.

The good point is that we ran up a massive bill during the bubble that needs to be paid in one form or another and there is no way to avoid that and avoid the painful adjustment to wealth, incomes, prices to get to a more sustainable equilibrium. Some of that adjustment, some of that bill paying, has gone on already -- quite a bit, I would venture to say. But a lot more still has to happen and it should not be the aim of policy to prevent that, even if it involves short term pain (slow growth, unemployment, necessary foreclosures, inflation, decline in the dollar).

That said, you don't want it all to happen at once, because you get the kind of crash that develops a momentum that feeds on itself and gets you stuck in a vicious downward cycle you can't pull out of. So you want to let the air out of the bubble as slowly as possible so the adjustment process can be as orderly as possible. That's why Paulson, Geithner, Bernanke, et al had to come to the rescue, to avoid such a dynamic as occured during the Great Depression. Now that they stopped the dynamic, however, its time to begin pulling back and letting those painful adjustments continue in a manner that is both orderly and expeditious. That's easier said than done, I realize--there aren't a bunch of dials at a control panel here in Washington that can perfectly control the economy. But I think we know in what direction we need to begin moving.


Columbia, Md.: Well, Steve, I've made some money back off the bubble but now am wondering if I should cash in now or wait a couple of months. I expect the stock market to be looking hopefully to 2010 so investors will be buying more but at some point, investors have to see that the economy is not growing that fast and won't be for some time. So, how long to stay in stocks? Thanks.

Steven Pearlstein: I'd think it would be wise, given the size of this runup, to take some profits off the table.


Fort Worth, Tex.: Uh, I hate to bring this up Steven, but you've been scooped by the Onion - by over a year. I'm referring of course to their 7/14/08 article titled "Recession-Plagued Nation Demands New Bubble To Invest In". There have already been a lot of people pointing out that all we're doing now is creating another bubble and continuing the preferential treatment for the finance industry. What will it take to level the playing field?

Steven Pearlstein: You know, I was at a party last night where a prominent administration economist was in attendance and I mentioned the column I had just written, and his first reaction was to recall that same headline from The Onion. I wish I had known about it since it would have made for a great lead.


Washington, D.C.: Could you please explain a little more about the carry trade? Given that the bill for all of the Fed's activities will ultimately fall to U.S. taxpayers, are our tax dollars now effectively paying taxes to foreign governments and subsidizing banker salaries in the process?

Maybe it's hyperbolic to say we're paying taxes to other countries, but if debt backed by U.S. taxpayers is being used finance debt in other countries, how else should I interpret it?

Steven Pearlstein: This isn't something that is going to cost taxpayers any money, in the way you imply. Its just the effect of having different interest rates in different countries.


Chicago: Steve, Thanks for continuing to do a great job of explaining very complicated events in layman's terms without cutting out the detail that is the crux of the situation. I think your work is appealing regardless of the inherent knowledge of your reader. I can see the merits of the government monitoring pay at banks, but still I find it overstepping the government's mandate. Governments should be controlling bank risk, preventing meltdowns. Clearly in some cases, perhaps many, the government could make the argument that if companies do not reserve enough gains in the good times, rather than pay them out in bonuses, they are in fact putting themselves and potentially the system at risk. That is a long winded intro to my question. Do you think the government should limit its oversight on bank employee pay to the composition (salary vs. bonus) as compared to the overall level? I think they have no business setting pay levels in banks or anywhere else (at least where they are not a large shareholder). Interested in your thoughts.

Steven Pearlstein: Our government, or at least the Obama administration, wants to stay away from the levels of pay and deal only with the structure. That is probably the way to go, although that doesn't mean that the rest of us can't talk about the outrageous and unncessary levels of pay that are involved, and that are the results of an arms race that needs to be stopped through some sort of collective action. The way I prefer is that major institutional investors, working through an industry organization, should announce together that they won't be doing business in the future with companies that overpay their employees because, in the end, that money comes out of the returns of investors and customers. And they should be very specific about what overpayment means, both in terms of absolute numbers and percentage of the "profits." That would be perfectly legal and it would put companies on notice that if they continue fueling the pay arms race on Wall Street, they will wind up with fewer customers, less revenue and fewer profits with which to pay these bonuses.


Corbin, Ky.: As for the banking industry and Wall Street, would it not be simpler to limit leveraging or eliminate it totally? Place a "freeze" on income including bonuses for a short period of time. Break up the combined companies in the banking, Insurance & Brokerage Industry, i.e. neither industry could own another (as it used to be). Limit the banks to a geographical area. Limit the size of banks. Limit the size of Hedge Funds. Get better control of rating agencies, allow secondary rating agencies. At no time should one company, one hedge fund or one industry threaten the financial stability or our country. Big is not always better. Bottom line.... our leaders in D.C. are mere pawns of the Industrial Machine. They do not represent their constituents. Doesn't matter which party. So they will do what industry wants them to do while waving the flag. Term limits are a must, limits on the financial industry are a must. You can't trust our government nor our corporate leaders to do the right thing. Money controls their lives. Greed rules the day.

R.G Smith

Steven Pearlstein: A populist manifesto from Corbin, Ky. Thank you.


L'enfant Terrible: Looks like you're arguing that financial assets in general are bubbly. The S&P 500 is right about where it was at the beginning of its October slide, more than 30% below its 2007 peak. Do you believe the stock market is overvalued, and if so, does this reflect a belief that we face a prolonged period of slow corporate profit growth?

Steven Pearlstein: The stock market is overvalued. The bond market is overvalued. Commodities are becoming overvalued. We face a prolonged period of slow economic growth in the U.S., with the natural effect of that on company top lines. Bottom lines, I'll leave to your imagination.


Kensington, Md.: Sir,

A minor technical point: To my knowledge, the Fed does not buy Treasuries "directly" as you wrote, except when it is "rolling over" securities in its portfolio that are maturing. That would be disastrous for this country, because it would allow the Fed to print money to directly fund the national debt. The architects of all this were smart enough to not allow this to happen. The Fed still buys all of its securities from the secondary market, so bankers and financial institutions themselves must have a demand for them (granted, the ability to pay is being provided by the Fed-provided liquidity).

Also keep in mind, this "rediscounting" concept, that is, providing temporary liquidity for illiquid stuff, is one of the fundamental powers of the Federal Reserve from the original Federal Reserve Act (predating any concern about employment and inflation by over 6 decades). People see this as an innovation, but it is not: Originally the Fed did a lot of such operations with primarily rural, farm banks that did not have access to large money centers. Even to this day, the Fed still props up the entire farm bank system through its seasonal credit facility.

Last point: Though it is true that, looking at the monetary base, the amount of total liquidity has about doubled, keep in mind that this was preceded by historically low--unsustainably low--levels of liquidity. The Greenspan Fed worked with banks to find ways for them to hold as few reserves as possible. Prior to this crisis, banks held the bare minimum of required reserves (with the Fed continually providing hints about how to dodge these requirements), and almost no excess reserves, and, of course, as little vault cash as possible. The Fed itself actually was very worried that the anemic level of total system liquidity would become a problem should banks become the least bit spooked (but hoped the discount window would save the day). The Fed had already seen numerous days where interbank markets were rocked by minor technical issues.

The St. Louis Fed provides a nice tool that shows all this:]-id]=BOGUMBNS&s-1]-transformation]=log This is the monetary base on a logarithmic scale. You can see that total liquidity tailed off and become flat from 2000-2006. If you draw a trendline using data up to about 1990 (prior to Greenspan's war on reserves) and extend it to the present, you'll see that yes, there is a bit of a liquidity bubble, but it is nowhere as pronounced as you might believe (roughly 30 percent higher than it ought to be by historical standards). That's not so much of an outsized reaction in light of the circumstances.

Thank you for reading this long comment.

Steven Pearlstein: As part of its crisis initiatives, the Fed announced that it would directly buy Treasuries, and did. It was a big mistake, because it made it clear to the world that the U.S. was monetizing its debt -- printing up money with paper and ink to pay for the deficit operations of the U.s. government. Terrible options, which the Fed soon realized and cancelled the iniative, but not before buying about $300 billion.


Atlanta, Ga.: Bernanke often warns we must not repeat the mistakes of 1937 when he claims the stimulus was withdrawn too quickly. Yet that was a full eight years after the stock market crash. Indeed many on Wall Street assert any cutting back on Fed programs, limits on banker pay, or regulatory reform would lead to financial apocalypse. Do you think another economic slump is a reasonable price to pay for the Fed changing its relationship with Wall Street?

Steven Pearlstein: Per the earlier question, slow economic growth and a long stock market trough is the price we will pay for our earlier profligacy. The Fed cutting back and causing a selloff on Wall Street is simply recognizing that reality, not causing it. Whenever the Fed decides its time to sop up the liquidity, the market will react negatively. Better now than later.


Albuquerque, N.M.: Any estimate as to when the Fed will have to start actually withdrawing liquidity?

Steven Pearlstein: To a degree, they've begun already. They cancelled the Treasury purchases. And in the coming months they'll have to decide what to do about the purchase of Fan, Fred and agency bonds. There are some initiatives that they desperately need to continue, like the buying of new commercial backed mortgage securities, to get that market operating again. But they might want to throttle back on some of the others, like tightening the requirements for its repo operations. I'd like to see them leave out the reference to "extended period of time" in today's announcement, and by the end of the year begin to raise rates a bit, just to get over the psychological hump of doing it the first time.


Anonymous: I realize you have to make a living, but scaring people into believing this is a new bubble is really over the top. It is just a correction (to the upside) because the market oversold. In other words, I think we are just seeking equilibrium.

Steven Pearlstein: For the reasons I gave in the column, and in this chat, I suspect you're wrong. But, hey, that's why we have markets, of the financial kind as well as the market of ideas.


Anonymous: Your column was excellent today. I got out of the stock market in the spring based on projections of (1) further defaults in consumer mortgages and (2) looming defaults in commercial real estate (3) consumer sentiment being so negative and contributing 70% to GNP and (4) escalating unemployment. Yet the stock market continues to go up, 20% since I sold out (wanting to conserve my savings from further price deterioration, which seemed likely. I have been so disillusioned by the recent trends, combined with losses from the 1999-2000 tech bubble and last year's market meltdown, I think long-term I will do better just investing in FDIC-insured CD's which hopefully will return to 3-4% returns in 1-2 year maturities. Especially if a correction is likely in the market due to the developing hedge fund driven increases.

At the same time, while interbank rates are still near zero, bank CD rates have continued to decline. I purchased 8 month CD's last October at almost 4%. Citibank now is promoting 5 year CD rates of 3.25% and 2 year rates of 2.25%. Pretty pathetic. All local/national banks seem to be working in tandem to decrease CD rates to offset their losses in mortgages etc, yet the Fed doesn't seem to care.

My 2 questions- 1. What do you think will happen to CD rates over the next 6 months, 1 year, 2 years? 2. Do you think a correction is likely to occur in the stock market soon? If so, when that happens, what effect will it have on CD rates?

Steven Pearlstein: Thanks for your observations. I don't have a strong opinion about the direction of CD rates, although I'd say the medium- to long-run prospect of all rates is up. On the second question, I'd point out that experience shows that things that look like they shouldn't be able to continue can, in fact, continue for a very long time.


New York: Thanks so much for the chat. Do you have a sense of why the large institutional investors and organizations, college endowment funds, etc., don't follow your suggestion, which seems so very sensible? These groups have objectives other than profit. So much money is in the care of non-profits that you would think their behavior would affect Wall Street.

Steven Pearlstein: I don't, really. To some extent they are all competitors, so that kind of collaboration doesn't come naturally. And it would be quite controversial and strain relations with people they do business with every day.


Somerset, Wash.: How are the real economic interests of the U.S. represented on the board of governors of the 12 banks of the Federal Reserve when the overwhelming folks elected to those boards are bankers? Isn't the fear of politicizing the Fed is that it is already done... just for not the broad politic?

Steven Pearlstein: A fair point, although the regional banks have made an effort to broaden their board memberships. I believe the chairman of the NY Fed board is now a labor leader, which probably has JP Morgan turning over in his grave.


Stuart, Fla.: At what level, if any, do you think the Fed will defend the dollar?

Steven Pearlstein: They won't defend a level, but they will take the dollar into account if its decline is precipitous and has impact on growth, inflation, or financial system stability.


Columbus, Ohio: Steve, Good column. Assume the Fed does not issue a warning to the banks this afternoon and continues their policies unchanged. What flourishes in that environment?

Steven Pearlstein: Speculation.


Washington, D.C.: Gee, your column was the first I'd heard of Obama's "innovative strategy" talk in upstate New York. Everybody else has been obsessing over whether the president sandbagged the governor and what they might have said to each other. Is this just another sign that we are all fiddling while our economic future burns?

Steven Pearlstein: Yeah, well, gossip trumps policy. First rule of journalism.


Arlington, Va.: Why are deposit interest rates so low and going lower? The banks are still making enormous profits and yet the rates they are paying on deposits in basic accounts are less than miniscule. Even CD rates are tiny and getting smaller. I have been shopping around for a new bank to get away from Bank of America and all of their fees. But there do not seem to be many real choices out there.

Steven Pearlstein: Funny about that. Can you say oligopoly?


Boston: Seems Wall Street is back at it with the huge bonuses. Rather than limiting the bonus amount as the White House seems to want to do, why not (and what chance of it happening) go back to the pre-Reagan tax rates on income taxes- tax them 80% on amounts in excess of say $5M income?

Steven Pearlstein: Probably not a good idea. The better question, it seems to me, is why these firms are earning such profits that they have the money to pay these ungodly sums? Why hasn't competition driven down prices enough? The Justice Department may be looking into that, although the Treasury will probably put pressure on them to hold off since we wouldn't want to do anything to "upset" the markets at such a fragile moment, would we?


Ithaca, N.Y.: You decry the carry trade investing borrowed dollars in Australian bonds. Asking the Fed to warn that the liquidity will be extracted soon will have no effect on the carry trade. Smart Market participants believe that GDP and profits will rise much more rapidly in Australia, Brazil and the emerging world and so are investing there rather than in the US. We need policies that differentially favor investments in the US. What are they?

Steven Pearlstein: That's a nice way to characterize the shift of investment, and if it is based on economic fundamentals, then that is the market doing a good job of allocating capital. But I think you give these guys too much credit. Its interest rate arbitrage, pure and simple, and it results from a zero interst rate policy that has more to do with reflating the balance sheets of banks than it does with normal workings of monetary policy. Nice try, though.


New York: Steven, have you ever heard of Monthly Review? Their editor, John Bellamy Foster, has a book out, The Great Financial Crisis, which collects essays going back six years. The book shows their incredible prescience in how the economy was becoming increasingly fragile and what would be the likely fallout. I mean these guys make Nouriel Roubini look late. He gave an interview on Democracy Now last week if you are curious. Philosopher Grace Lee Boggs and Sociologist, Monthly Review Editor John Bellamy Foster on the Financial Meltdown, Social Change and Redefining Democracy

Steven Pearlstein: Was not aware, no.


Arlington, Va.: The value of the dollar seems to finally be sliding. How much longer will people keep on buying U.S. debt that we have no prospect of ever repaying? All those extra trillions being added to the system from thin air should be making the dollar worth even less, right?

Steven Pearlstein: People will continue buying because the US government will not default. But the rates will rise, in part in anticipation that the dollar will fall.


Austin, Tex.: Good article this morning, but if I could put on my engineer's cap and nitpick the phrase "quantum leap" meaning something large. Literally it means quite the opposite.

It's on par with the supposedly-indifferent saying "I could care less".

Steven Pearlstein: Sorry, I always thought it meant "really, really big." Won't do that again.


Evanston, Ill.: Hey Steven, Stephen Mihm had a great article on Hyman Minsky in the Boston Globe last weekend. He focuses on Minsky's more radical ideas of employer of last resort. If the Government is going to be lender, creditor, asset purchaser and all around backstop of last resort for wealthy corporations, why shouldn't it be an employer of last resort for actual people? I am not partial to the means but to the principle. Michael Spence has made some similar recommendations recently suggesting subsidies to employers who hire low wage workers. Why Capitalism Fails

Steven Pearlstein: I didn't see Mike's piece but I'll get a hold of it. In fact, the stimulus package does, implicitly, have the government take on the role of employer of last resort. Not in an entitlement way. But to the extent that it extends unemployment benefits, provides money to states so they don't have to lay off teachers and police officers and tries to prime the pump through public works investments, it effectively assumes this role.


Washington, D.C.: Steven, isn't one of biggest bubble producing schemes out there that no one talks about the "401k/stock market" hustle? Most people with 401s have limited choices in investments which are largely tied to the U.S. stock market, specifically the large indexes. Based on 2007 wage figures and assuming that only 2% of wages go into 401s, every Friday $2.25 billion dollars hits the brokers/401 managers' desks with order to buy stock, mostly those in the indexes, regardless of the performance of the market or those firms. Hasn't this driven up stock prices based on non-market factors? If you look at market return in the 40 years before 401 and compare it to the period with 401, you can see some of the influence of this. Most 401's don't offer investors the opportunity to buy treasuries, or even CDs.

Steven Pearlstein: Yes, for the moment that dynamic gives a slight upward bias to the stock market. But don't forget that over time, as stock prices rise and the cost of equity capital goes down, more companies issue more shares, so that supply of stock catches up with the demand. And when the baby boomers retire and stop putting money in and start pulling money out, the reverse will be the case -- a slow, secular downward pressure on stock prices.


Freising, Germany: "As a result, 'spreads' between what banks pay for money and what they charge are near record highs."

Yes, but why is this? Aren't market forces supposed to drive down the interest rate to us folks at the bottom of the food chain? Is there some kind of price fixing being allowed under unusually abnormal conditions?

Steven Pearlstein: It is curious, isn't it. But probably the bigger factor now is that with the Fed providing them a ready source of cash at no cost, and bank reserves so high that they are lending to each other at a quarter of a point, and money market funds overflowing with case, the banks don't need to get in to a price war to attract your deposit.


Potomac, Md.: And putting on my physicist's cap, a quantum leap is indeed a discrete jump, not a small increment from the previous position. Mr. Pearlstein used it absolutely correctly.

Steven Pearlstein: Hey, can't you engineers agree on this? I thought engineering was a real science, not like economics.


Chicago, Ill.: For the person who seems to think that banks are colluding to bring down CD rates: No, the fact is, they went abnormally high for bit because banks were desperate for deposits to shore up their funding as the interbank borrowing rates were so high. The fact that interbank rates are back to normal is one reason why they are lower. Another reason is the increase in FDIC insurance costs. I know for a fact that my bank is losing money on every FDIC-insured CD offered at those rates you mentioned. It's not collusion, its just that banks are as willing to lose as much money on deposits as they were a couple of months ago when they were more desperate.

Steven Pearlstein: Thank you for that clarification. You wouldn't happen to be a banker, would you?


Anonymous: In my estimation, we are still not addressing a central issue that has plagued us for over a decade and that was obscured, purposefully or not, by the great financial bubble. This issue is the increasingly limited purchasing power of most Americans. We took action to ensure that our wealthiest citizens received major tax cuts to coincide with the increasing share of the wealth they were amassing. We offered cheap money to the mass of consumers and told them to go shopping, whether their income was rising to support it or not. The inevitable happened. While we must deal with the excess on Wall Street and in our trade imbalances, unless we find a way to reverse the declining income trend line of our middle class, we will remain in a doldrum for which the easy remedies, debt especially, are exhausted. Your thoughts?

Steven Pearlstein: I wish I could say you were right, but I think you describe another problem than that of financial bubbles. The only thing I would say about that is that, to the degree the labor market is skewing income to a few people at the top, and those people all want to buy the same things (houses in the Hamptons, Mercedes SUVs, condos in Aspen at Christmas), they are probably bidding up the price of those things to ridiculous levels. But that's not enough to explain the countrywide mortgage bubble or the third world debt bubble or any of the other bubbles that have burst.


Eye Street: re: "particularly if the money is used to inflate bubbles rather than finance real, sustainable economic growth."

Really, isn't it just that old invisible hand directing these funds into asset bubbles? The current system seems to favor rewarding bankers and brokers with huge profits and commissions based on volume, not quality, of transactions. We won't see any appreciable increase in the quality of investments until we find a way to align the motives of bankers and brokers with the needs of society at large. Perhaps it's time to rethink the nature and role of the corporation and other non-corporeal entities in a post-industrial Western world.

Steven Pearlstein: Yes it is time, and that will have to be the subject of discussion in another column on another day. I'm out of time, I'm afraid. "See" you all next week.


Quantum leap: Your engineering friend is correct that, in the sciences, a quantum leap generally refers to a change of state that is the smallest possible. Fortunately, you're writing in English, not technical jargon, and the common English definition of the phrase is indeed the sense in which you used it, "an abrupt change, sudden increase, or dramatic advance."

Steven Pearlstein: Late entry. Thanks for that -- its now 2 to 1.


Chicago, Ill.: Hey Steven, Is it possible that we are entering a period of secular stagnation? Average growth rates have fallen every decade since WW2. If you take away the housing bubble the US already had a lost decade. What if we need bubbles to grow? Barring some revolutionary innovation might we be entering a period with a 10 percent "natural" unemployment rate?

Steven Pearlstein: Couple of years of stagnant growth, yes. Decade of it -- I have more faith in the dynamic nature of the American economy.


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