All Entries in the "Economy – Labor" Category

What will Congress do about the Bush tax cuts?

Howard Gleckman on the likely end game for the Bush tax cuts:

Unlike most recent congressional debates, the Democrats may have the procedural upper hand this time. With health care, for instance, Republicans would have “won” by blocking congressional action. Gridlock would have preserved the status quo, an outcome favored by about half of voters — and overwhelmingly supported by the GOP base.

But this time, stalemate means the Bush tax cuts expire for everyone. For most households, that will feel like a tax increase — an outcome favored by a handful of budget wonks but very few real people. Democrats believe this will give them the leverage they need to force the GOP to deal. Republicans, by contrast, feel they’d be able to blame the ruling Democrats for failing to tackle the pending tax hike.

Full Story: Ezra Klein – What will Congress do about the Bush tax cuts?.

Deflation, Not Deficit, Is the Real Threat

|William Greider – The Nation|:

The economic specter stalking Barack Obama is not the nonsense debate that captivates deficit hawks and witless political reporters. It is the threat of a full-blown monetary deflation that would truly put the US economy in ruin. In a general deflation, everything falls—prices, output, wages, profits. Unchecked, this can lead to another Big D—the Depression Obama claims he has avoided.

Depression was the fate that befell Herbert Hoover after 1929 and the outlines of this larger catastrophe are present again. It is easy to dismiss deflation warnings from curbstone critics, including from me. But it is more significant—and truly scary—when senior policy makers of the Federal Reserve begin to express the same fear, as the New York Times reported today. The Fed has done quite a lot in the last two years to prevent this disaster from unfolding, but some officials are now worried the Fed hasn’t done enough.

The central bank understands this danger far better than the over-confident technicians of the Obama administration because deflation led to the Federal Reserve’s historic disgrace after 1929. Fed officials then did not understand their wrong-headed policy moves were directly driving the economy into the Great Depression of the 1930s. Today’s central bankers do not wish to experience the same shame again.

The Times story reveals a rump group of decision makers within the Fed who are focused on the threat and urging their colleagues to consider more dramatic measures to reverse the deflationary pressures.

Full Story: Deflation, Not Deficit, Is the Real Threat | The Nation.

Dwindling Retirement Savings ‘Undiscussed Explosive Bomb’ Of Recession

After working in executive management for over ten years with a steadily increasing salary, Rick Stephens, 51, was laid off from his job in June 2008. Two years of steady unemployment later, he has sold his car, moved in with his 75-year-old father and blown through all his retirement savings to stay afloat.

“I pay my bills with what is left of the savings I accumulated by being frugal all my life, but I’m going through that pretty fast,” he said. “I have tapped my IRA, and the result of that is I will be heavily taxed on it next April. I honestly believe that there will be no recovery from this. If there is a recovery, it will be too late for me, as I will have exhausted my savings and my retirement that I had socked away by not living the high life.”

Stephens’ predicament is an increasingly common one. Aside from stagnant wages, soaring unemployment and plummeting home values, the major tragedy of this recession is the havoc it has wreaked on the retirement incomes of millions of Americans who have planned and saved their entire lives, only to watch that money drain out of their accounts much sooner than they anticipated.

Full Story: Dwindling Retirement Savings ‘Undiscussed Explosive Bomb’ Of Recession.

Recession was deeper than gov’t previously thought

The recession was deeper than the government previously thought.

The Commerce Department, in revisions issued Friday, estimates the economy shrank 2.6 percent last year – the steepest drop since 1946. That’s worse than the 2.4 percent decline originally estimated.

The economy’s plunge underscores why the unemployment rate surged to 10.1 percent in October, a 26-year high.

The revisions in gross domestic product, or GDP, now show zero growth in 2008. That compares with a 0.4 percent gain previously estimated.The economy also grew less in 2007 (1.9 percent) than earlier thought (2.1 percent).

Full Story: Business & Technology | Recession was deeper than gov’t previously thought | Seattle Times Newspaper.

Foreclosures Up In 75 Percent Of Top U.S. Metro Areas

Foreclosures rose in 3 of every four large U.S. metro areas in this year’s first half, likely ruling out sustained home price gains until 2013, real estate data company RealtyTrac said on Thursday.

Unemployment was the main culprit driving foreclosure actions on more than 1.6 million properties, the company said.

“We’re not going to see meaningful, sustainable home price appreciation while we’re seeing 75 percent of the markets have increases in foreclosures,” RealtyTrac senior vice president Rick Sharga said in an interview.

Foreclosure actions — which include notice of default, scheduled auction and repossession — in the first half rose in 154 of the 206 metro areas with populations 200,000 or more.

Full Story: Foreclosures Up In 75 Percent Of Top U.S. Metro Areas – NYTimes.com.

Republicans block small business lending bill

Senate Republicans have blocked a bill to increase small business lending, dealing a setback to President Barack Obama’s jobs agenda.

The bill would have created a $30 billion government fund to help community banks increase lending to small businesses, combining it with about $12 billion in tax breaks aimed at small businesses. Some Republicans, however, likened it to the unpopular bailout of the financial industry.

Democrats and Republicans will continue to negotiate amendments to the bill. But Thursday’s vote will make it difficult for Congress to pass the bill before lawmakers go on their summer vacation.

Full Story: Republicans block small business lending bill – Yahoo! News.

Schumer Promises Legislation To Help The 99ers

After Senate Democrats broke a 50-day filibuster and restored unemployment benefits to the long-term jobless, Sen. Chuck Schumer (D-N.Y.) vowed to do more.

“There are a number of people who have maxed out, they’ve been looking and looking for work and haven’t found it, and there is a separate act that would extend the unemployment benefits to them,” Schumer told New York’s WENY-TV. “Extending this was really important. There are some people who go beyond the 99 weeks and we’re going to try to do that next.”

Last year, Congress enacted several pieces of legislation that ultimately gave the unemployed in some states 99 weeks of benefits. With nearly 15 million unemployed competing for just three million jobs available, 99 weeks isn’t enough time for some people to find work. Hundreds of thousands had already joined the ranks of the “99ers” in April. The Washington Post reported recently that the total had reached 1.4 million.

Full Story: Tier 5: Schumer Promises Legislation To Help The 99ers.

Extending Bush Tax Cuts WON’T Create Jobs, Says Leading Economist

As Congress debates whether to extend Bush-era tax cuts for the wealthiest Americans at least one prominent U.S. economist has already cast his negative vote.

“Not all budgetary dollars are created equal,” said Alan Blinder, professor and co-director of Princeton University’s Center for Economic Policy Studies, in a conference Wednesday morning. “Some have a lot of bang for the buck, and some have very little. The GDP increase per dollar of budgetary cost is in the range of 1.6, 1.7 for things like food stamps and unemployment benefits, and in the range of .35 for extending the Bush tax cuts. We could get some substantial job creation by simply reprogramming the $75 billion that would be saved over the next two years by not extending the upper-bracket Bush tax cuts and spending it instead on unemployment benefits, food stamps, and the like.”

Blinder’s economic advice supports the tax policy of President Obama and the Democrats, who would like to maintain tax cuts for 95 percent of Americans, while letting the cuts for those with incomes above $250,000 expire. Letting the tax cuts lapse is projected to trim approximately $675 billion from the deficit over 10 years, according to the Center for Budget and Policy Priorities.

Full Story: Extending Bush Tax Cuts WON’T Create Jobs, Says Leading Economist.

OPS: No Shit! Do you really need an economist to tell you this or can you just take a look at how many jobs the Bush Tax Cuts for Millionaires and Billionaires created SINCE THEY WERE FIRST PASSED?  By the Time Obama took over we were loosing almost 800,000 jobs PER MONTH largely and in part due to the Bush insanity.

Income of very richest shot up by 281% since 1979

In the wake of BP’s calamitous oil spill in the Gulf of Mexico, CEO Tony Hayward is stepping down, but he will be receiving a severance package amounting to an estimated $18 million.

“That’s what he gets for presiding over a record oil disaster and massive losses,” commented Chris Hayes, Washington editor of The Nation, who was guest hosting MSNBC’s The Rachel Maddow Show on Tuesday.

Hayes went on to note, however, that “Tony Hayward’s $18 million payoff is an absolute pittance compared to the kind of cash top CEO’s are raking in.” He cited a recent Wall Street Journal story which revealed that over the past decade, the two highest-paid CEOs at public companies each took in over a billion dollars in compensation, while others in the top 25 received compensation in the hundreds of millions.

Full Story: Income of very richest shot up by 281% since 1979 | Raw Story.

The Great Decoupling of Corporate Profits from Jobs

Robert Reich:

Second-quarter earnings reports are coming in, and they’re making Wall Street smile. Corporate profits are up. And big American companies are sitting on a gigantic pile of money. The 500 largest non-financial firms held almost a trillion dollars in the second quarter, and that money pile is growing larger this quarter. Profits that plummeted in the recession have bounced back. Big businesses have recovered almost 90 percent of what they lost.

So with all this money and profit, they’ll start hiring again, right? Wrong – for three reasons.

First, lots of their profits are coming from their overseas operations. So that’s where they’re investing and expanding production.

GM now sells more cars in China than it does in the US, but makes most of them there. The company now employs 32,000 hourly workers in China. But only 52,000 GM hourly workers remain in the United States – down from 468,000 in 1970.

Full Story: Robert Reich (The Great Decoupling of Corporate Profits from Jobs).

A Decade of Declining Home Prices Ahead

The housing depression will last for a decade or more. This is by design. The Fed has been working with the banks to withhold inventory so prices do not fall too fast or too far. That way the banks can manage their write-downs without slipping into insolvency. But what’s good for the banks is bad for the country. Capital impairment at the banks, means no credit expansion in the near-term. It means the economy will continue to contract, unemployment will remain high, and deflation will push down wages and prices. Everyone will pay for the mortgage-backed securities scam that was engineered by the banks.

Typically, personal consumption expenditures (PCE) and real estate lead the way out of recession. But not this time. Both PCE and RE will stay depressed and act as a drag on employment and growth. Last week, in testimony before the congress, Fed chair Ben Bernanke made it clear that the Central Bank has no intention of providing extra monetary stimulus to make up for rapidly-dissipating fiscal stimulus or the winding down of government subsidies for auto, home, and appliance purchases. The economy must muddle through on its own. But without additional pump-priming, disinflation will turn to outright deflation and the economy will sink into negative territory. Bernanke knows this, but he’s absolved himself of any further responsibility. It’s just a matter of time before the next slump.

Look at housing. The facts are grim. This is from Charles Hugh Smith:

About two-thirds of U.S. households own a house (75 million); 51 million have a mortgage and 24 million own homes free and clear (no mortgage). Most of the other 36 million households are moderate/low income and have limited or no access to credit and limited or no assets.

If we look up all the gory details in the fed Flow of Funds, we find that household real estate fell from $23 trillion in 2006 to $16.5 trillion at the end of 2009. That is a decline of $6.5 trillion, more than half the total $11 trillion lost in the credit/housing bust. Home mortgages have fallen a negligible amount, from $10.48 trillion in 2007 to $10.26 trillion at the end of 2009. As of the end of 2009, total equity in household real estate was a paltry $6.24 trillion of which about $5.25 trillion was held in free-and-clear homes (32% of all household real estate, i.e. 32% of $16.5 trillion).

Full Story: A Decade of Declining Home Prices Ahead.

Poll: Public favors Obama’s economic policies over Bush’s by wide margin.

As congressional Republicans double down on President Bush’s failed economic policies, a new National Journal/Pew Research poll finds that Americans believe President Obama’s “policies offer a better chance at improving the economy over the policies of his predecessor.” Interestingly, more Democrats favor Obama’s policies than Republicans favor Bush’s, while independents overwhelming side with Obama. Overall, despite continued tough economic times, 46 percent of Americans say Obama’s policies will do more to improve the economy, compared to just 29 percent who say the same of Bush’s:

Full Story: Think Progress » Poll: Public favors Obama’s economic policies over Bush’s by wide margin..

The Great Decoupling of Corporate Profits from Jobs

Robert Reich :

Second-quarter earnings reports are coming in, and they’re making Wall Street smile. Corporate profits are up. And big American companies are sitting on a gigantic pile of money. The 500 largest non-financial firms held almost a trillion dollars in the second quarter, and that money pile is growing larger this quarter. Profits that plummeted in the recession have bounced back. Big businesses have recovered almost 90 percent of what they lost.

So with all this money and profit, they’ll start hiring again, right? Wrong – for three reasons.

First, lots of their profits are coming from their overseas operations. So that’s where they’re investing and expanding production.

GM now sells more cars in China than it does in the US, but makes most of them there. The company now employs 32,000 hourly workers in China. But only 52,000 GM hourly workers remain in the United States – down from 468,000 in 1970

Full Story: Robert Reich (The Great Decoupling of Corporate Profits from Jobs).

Goldman Sachs Gave Billions of Taxpayer Money to Foreign Companies

Goldman Sachs Group Inc. documents, released by Senator Chuck Grassley, show that the investment banking and securities firm paid out $4.3 billion of American taxpayer money to foreign companies.

The foreign companies received the money as a reimbursement from Goldman Sachs for losses on investments in credit default swaps. These swaps were initially sold by AIG to Goldman Sachs, who in turn sold them to customers including foreign banks and companies. When the government, to the tune of $182.5 billion, bailed out AIG, Goldman Sachs was the recipient of $12.9 billion of that money indirectly. Much of the bailout money “given” to AIG consisted of funds used to pay its obligations to its Wall Street trading partners on credit default swaps, with Goldman Sachs being the biggest recipient.

Well, what is a credit default swap? A credit default swap is a contract in which party A agrees to pay party B a series of payments, and in return party B gives insurance on the default of a credit instrument, whereby if the credit instrument (such as a loan) were to go into default, party B would pay party A the value of the loan.

Full Story: Goldman Sachs Gave Billions of Taxpayer Money to Foreign Companies | Economy In Crisis.

Multinationals Costing U.S. Billions

Large American multinational corporations are evading their domestic tax obligations through a variety of schemes costing the U.S. Treasury billions of dollars each year, according to a report released last week by the Joint Committee on Taxation.

Companies are shifting profits to nations with lower tax rates, sometimes cutting their tax U.S. tax obligations in half each year, the report found.

“I always find it impossible to explain why a pharmacist in Bastrop, Texas, or a small retail store in San Marcos is having to pay higher rates on the income that their hard-working small business owners are earning than some multinational that can duck and dodge taxes in Bermuda or the Cayman Islands,” Rep. Lloyd Doggett (D-TX) said, according to The Kansas City Star.

Full Story: Multinationals Costing U.S. Billions | Economy In Crisis.

Good news gives Dow 3rd straight triple digit gain

The Dow Jones industrial average gained more than 100 points for the third straight day Monday after traders got some unexpected good news about the economy.

A report on the housing market came in better than traders anticipated. And shipping giant FedEx Corp. released a forecast that was more upbeat than the prediction it made just six weeks ago.

The news pulled stocks out of a slow start and sent the Dow up 100 points by the close for a three-day gain of 405. Traders who a week ago were selling on a pessimistic view of companies’ earnings and the economy are now buying on the belief that the economic recovery, while slow, is proceeding.

Full Story: Good news gives Dow 3rd straight triple digit gain – Yahoo! News.

Deflation concerns: U.S. may face deflation, a problem Japan understands too well

Economists worry that America could be edging closer to the trap that cost the other nation more than a decade of growth.

The White House prediction Friday that the deficit would hit a record $1.47 trillion this year poured new fuel on the fiery argument over whether the government should begin cutting back to avoid future inflation or instead keep stimulating the economy to help the still-sputtering recovery.

But increasingly, economists and other analysts are expressing concern that the United States could be edging closer to a different problem — the kind of deflationary trap that cost Japan more than a decade of growth and economic progress.

And as Tokyo’s experience suggests, deflation can be at least as tough a problem as the soaring prices of inflation or the financial pain of a traditional recession.

Full Story: Deflation concerns: U.S. may face deflation, a problem Japan understands too well – latimes.com.

Timothy Geithner: Allow Bush Tax Cuts For The Wealthy To Expire (VIDEO)

Treasury Secretary Tim Geithner said that allowing tax cuts for the wealthy to expire would be “the responsible thing to do.”

This is the last year for the tax cuts enacted under President George W. Bush. Republicans have generally favored extending all of them. While Democrats are divided on the issue, President Barack Obama has favored allowing the expiration of cuts he says have applied to the wealthiest people.

“It’s responsible to let the tax cuts expire that just go to 2 percent to 3 percent of Americans, the highest earning Americans,” Geithner told ABC’s “This Week” in an interview broadcast Sunday.

Full Story: Timothy Geithner: Allow Bush Tax Cuts For The Wealthy To Expire (VIDEO).

Schakowsky: Want to cut the deficit? Get with our new public option

Rep. Jan Schakowsky (D-IL) said Saturday that serious deficit hawks ought to get behind a new “robust” public option bill that she and more than a hundred other members introduced days ago.

In an interview with Raw Story at the Netroots Nation conference, Rep. Jan Schakowsky (D-IL) predicted that a new “focus on deficit reduction” and rising public distrust of the insurance industry would generate stronger support for it among members of Congress.

“We’ve seen the cost [savings], and we’ve seen the behavior of the insurance companies,” she said. “I think that really puts a new atmosphere on the prospects for a new public option.”

Full Story: Schakowsky: Want to cut the deficit? Get with our new public option | Raw Story.

U.S. Bank Failures In 2010 Surpass 100

U.S. bank failures this year have surpassed a bleak milestone of 100 as regulators shut down banks in Georgia, Florida, South Carolina, Kansas, Nevada, Minnesota and Oregon.

The seven bank seizures announced Friday bring to 103 the failures so far in 2010. The pace of bank closures this year is well ahead of that of 2009, which saw a total of 140 banks shuttered amid the recession and mounting loan defaults. That was the highest annual tally since 1992, at the height of the savings and loan crisis.

The pace has accelerated as banks’ losses mount on loans made for commercial property and development. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans. That has brought delinquent loan payments and defaults by commercial developers.

Full Story: U.S. Bank Failures In 2010 Surpass 100.

How Outsourcing Impedes Recovery

If the U.S. ever plans to recover from our economic tailspin, we need to focus our efforts on job creation. The rapid development of Asian economies can be accounted for by their state economic policy, which places job creation as the number one priority.

Andy Grove, former CEO of Intel, the world’s largest maker of computer chips, knows that outsourcing is destroying Middle America and our economy.

In the July 1 issue of BusinessWeek, he writes, “You could say that shipping jobs overseas is no big deal because the high-value work — and much of the profits — remain in the U.S. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work, and masses of unemployed?”

This is not man to ignore. In 1997, he earned Time Magazine’s Man of the Year, CEO magazine’s CEO of the Year and Industry Week’s Technology Leader of the Year. In 2001, he won the Strategic Management Society’s Lifetime Achievement Award. Furthermore, according to a cited Wikipedia entry, “Grove is credited with having transformed Intel from a manufacturer of memory chips into one of the world’s dominant producers of microprocessors. During his tenure as CEO, Grove oversaw a 4,500 percent increase in Intel’s market capitalization from $4 billion to $197 billion, making it, at the time, the world’s most valuable company.”

Full Story: How Outsourcing Impedes Recovery | Economy In Crisis.

U.S. Commiting Economic Suicide

What if the economy had always operated as it does today with companies being sold abroad whereby they divert wealth, jobs and production to other countries? Imagine the consequences if any international and global strife were to commence. We would be unable to manufacture any significant amount of our own weapons or products

America’s ability to competitively manufacture on a global scale is waning fast. Over the past 20 years, America has lost millions of manufacturing jobs, 3 million of them since 1998. Our manufacturing trade deficit contributed to almost 60 percent, or 1.78 million, of those manufacturing jobs lost.

It didn’t happen because we were less qualified manufacturers, or because the world would have no use for our goods. It happened simply because we made it happen. We gave businesses the go-ahead to move jobs overseas, (i.e. to China where hourly pay rates barely make it over 50 cents, and in some cases are as low as 33 cents) and we flatly abandoned capital and knowledge intensive industries.

Due to these low wages offered in China, and many other places, American businesses have left the domestic arena to save money. This is supposed to be mutually beneficial, because Americans theoretically would see reduced prices for goods produced overseas, and therefore enjoy a better standard of living, but as we know in the real world savings are rarely passed onto the consumer, and certainly not to the extent that will allow it to make up for losing our manufacturing infrastructure.

Full Story: U.S. Commiting Economic Suicide | Economy In Crisis.

Federal budget deficit to exceed $1.4 trillion in 2010 and 2011

The latest forecast from the White House budget office shows the deficit rising to $1.47 trillion this year, forcing the government to borrow 41 cents of every dollar it spends. Contrary to official projections, the budget gap will not begin to narrow much in 2011, because of an unexpectedly big drop in tax receipts.

White House budget director Peter Orszag said in a conference call with reporters that Obama is still on track to cut the deficit in half by the end of his first term. But the forecast provides no relief from the gloomy outlook that has been forcing Obama to consider deeper cuts to defense and non-security programs as well as additional tax increases. This week, the administration also repeated its intention to let tax cuts for the wealthy expire in January.

With polls showing high public anxiety over the economy and government borrowing, Republicans wasted no time blasting the new forecast. They accused Obama and congressional Democrats of orchestrating a government expansion that threatens to push the nation toward a European-style debt crisis while failing to create jobs.

Full Story: Federal budget deficit to exceed $1.4 trillion in 2010 and 2011.

Running for the Door: German Giants Flee Wall Street

With expensive accounting rules, an increased threat of litigation and hundreds of millions of dollars in fines for some firms, the once prestigious New York Stock Exchange and other American markets have become unattractive to Germany’s biggest companies. Daimler and Deutsche Telekom have fled this year and the few remaining are likely to follow.

On June 18, the symbol of the German company Deutsche Telekom, DT, made its last run across the ticker at the New York Stock Exchange. Europe’s largest telecom company left the world’s biggest and most recognizable exchange after nearly 14 years of trading.

The company is currently in the process of delisting from all foreign exchanges and will soon only be traded on its home stock market in Frankfurt.

Deutsche Telekom is just the latest German blue chip to say goodbye to the American capital market. In an emblematic departure, Daimler, the first German firm to be listed in New York in 1993, officially quit trading on the NYSE on June 4, saying that it no longer needed a presence in New York to attract international investors. And Munich-based insurance and financial services giant Allianz abandoned the NYSE last fall.

Full Story: Running for the Door: German Giants Flee Wall Street – SPIEGEL ONLINE – News – International.

Mike Whitney: Shadow Banking Makes a Comeback

Credit conditions are improving for speculators and bubblemakers, but they continue to worsen for households, consumers and small businesses. An article in the Wall Street Journal confirms that the Fed’s efforts to revive the so-called shadow banking system is showing signs of progress. Financial intermediaries have been taking advantage of low rates and easy terms to fund corporate bonds, stocks and mortgage-backed securities. Thus, the reflating of high-risk financial assets has resumed, thanks to the Fed’s crisis-engendering monetary policy and extraordinary rescue operations.

Here’s an excerpt from the Wall Street Journal:

“A new quarterly survey of lending by the Federal Reserve found that hedge funds and private-equity funds are getting better terms from lenders and that big banks have loosened lending standards generally in recent months. The survey, called the Senior Credit Officer Opinion Survey, focuses on wholesale credit markets, which the Fed said functioned better over the past quarter.” (“Survey shows credit flows more freely”, Sudeep Reddy, Wall Street Journal)

In contrast, bank lending and consumer loans continue to shrink at a rate of nearly 5 per cent per year. According to economist John Makin, there was a “sharp drop in credit growth, to a negative 9.7 per cent annual rate over the three months ending in May.” Bottom line; the real economy is being strangled while unregulated shadow banks are re-leveraging their portfolios and skimming profits. Here’s more from the WSJ:

Full Story: Mike Whitney: Shadow Banking Makes a Comeback.

America, There Is a Better Way: It’s Called Germany

What anemic America can learn from Europe’s export-happy engine and largest social democracy.

Nearly two years after the financial crisis brought the U.S. economy to its knees, more than 20 million Americans are either unemployed or underemployed and Congress can barely extend jobless benefits. Republicans propose the same old nostrums–tax cuts–while President Barack Obama burnishes his deficit hawk credentials. Nearly everyone in power appears content to return to the status quo, circa 2007, with a few tweaks in place.

Even worse, alternatives to U.S.-style capitalism — and its attendant inequality, poverty and instability — are harder than ever to glimpse, as the sovereign debt crisis across the Atlantic distracts U.S media and politicians, once again, from the impressive achievements of European social democracies. That’s a shame, because if we can’t imagine a better world, our political and economic status quo appears inevitable and uncontestable, much to the benefit of those in power.

Thankfully, we have Thomas Geoghegan’s new book Were You Born on the Wrong Continent?: How the European Model Can Help You Get a Life (The New Press, 2010) to remind us that things like tax cuts for the wealthy, a healthcare system controlled by corporations and privatized retirement schemes are not inevitable.

Full Story: America, There Is a Better Way: It’s Called Germany | Vision | AlterNet.

We’re In A One-and-a-half Dip Recession

Robert Reich:

We’re not in a double-dip recession yet. We’re in a one and a half dip recession.

Consumer confidence is down. Retail sales are down. Home sales are down. Permits for single-family starts are down. The average work week is down. The only things not down are inventories – unsold stuff is piling up in warehouses and inventories of unsold homes are rising – and defaults on loans.

The 1.5 dip recession should be causing alarm bells to ring all over official Washington. It should cause deficit hawks to stop squawking about future debt, blue-dog Democrats to stop acting like Republicans, and mainstream Democrats to get some backbone.

The 1.5 dip recession should cause the President to demand a large-scale national jobs program including a new WPA that gets millions of Americans back to work even if government has to pay their wages directly. Included would be zero-interest loans to strapped states and locales, so they didn’t have to cut vital services and raise taxes. They could repay when the economy picked up and revenues came in. The national jobs program would also include a one-year payroll tax holiday on the first $20,000 of income.

Full Story: Robert Reich (We’re In A One-and-a-half Dip Recession).

Thom goes after Tea Party activist for destroying the middle class

Thom Hartmann Show

Big Banks Punish You For Having GOOD Credit

As credit card holders play it safe, issuers increase non-penalty service fees

After the recession forced credit card companies to purge their rosters of the riskiest loans, the industry is facing a new problem: customers who are too good.

Card issuers have long found their bread and butter in penalty fees and high interest rates paid by consumers who carry a balance. But that business model has been upended by the legions of consumers who were overwhelmed by debt when the recession hit, forcing the industry to write off billions of dollars in loans. In addition, new federal laws limit how much card companies can charge risky customers.

Now, frugal-minded consumers are charging less on their credit cards, paying down their balances and steering clear of penalty fees — steps that are financially responsible but have the industry scrambling to find new ways to make money.

Full Story: As credit card holders play it safe, issuers increase non-penalty service fees.

OPS: Another reason to: Move Your Money

Right Wing Economist Laffer Bashes Greenspan For Calling For End Of Bush Tax Cuts

Last week, former Federal Reserve chairman Alan Greenspan called for allowing the Bush tax cuts he championed in 2001 to fully expire, as scheduled, at the end of the year. His reversal dealt a blow to Republicans who are calling for an unpaid-for permanent extension of the cuts for the rich, even falsely claiming that they increase government revenues.

Unsurprisingly, Greenspan’s comments have irked some right-wing pundits. The strongly discredited economist and former member of President Reagan’s Economic Policy Advisory Board Arthur Laffer criticized Greenspan on the Fox Business network, questioning his patriotism and accusing him of practicing “bad economics.” Media Matters has the transcript:

HOST: Hey, Alan Greenspan says let [all the Bush tax cuts] expire. The former Fed Chairman. Let ‘em all expire.

LAFFER: Good for him. I mean there he goes. Well, I guess he’s out of power. He’s a little old. I don’t think he has any kids. Heck, what does he care? You know, I have six kids. I have eleven grandchildren. You know, I really care about the future of this country and I really don’t want to be taxed into poverty. I really don’t think it’s smart in this day and age, with this type of unemployment, to tax people who work more and to pay people who don’t work more. That just is silly. It’s bad economics.

Watch it

Full Story: Think Progress » Right Wing Economist Laffer Bashes Greenspan For Calling For End Of Bush Tax Cuts.

Republicans Turn Their Backs on Small Businesses

Senate Democrats’ Plan to Aid Small Businesses Hits G.O.P. Resistance

Perhaps the last best hope of Democrats to pass legislation aimed at creating jobs before the November elections seemed to be crumbling in the Senate on Wednesday as Republicans signaled that they would block a bill to expand government lending programs and grant an array of tax breaks to small businesses.

Wrangling over the small-business measure began in earnest after Senate Democrats, breaking a two-month partisan logjam, finally succeeded in winning an extension of unemployment insurance. The vote was 59 to 39, with two Republicans joining Democrats in support of the extended benefits, which are retroactive to June 1. One Democrat, Senator Ben Nelson of Nebraska, voted against it.

Shortly after the vote, the majority leader, Senator Harry Reid, turned to the small-business bill, one of the few items left on the Senate’s dwindling agenda before the August recess. Indeed, it had been on the floor intermittently over the last several weeks, only to be pulled to make way for other legislation including the extension of unemployment insurance.

Full Story: Senate Democrats’ Plan to Aid Small Businesses Hits G.O.P. Resistance – NYTimes.com.

Bernanke To Congress: The Economy Needs You To Keep Spending

Federal Reserve Chairman Ben Bernanke reiterated Wednesday his belief that Congress should continue to prop up the sputtering economy, casting aside concerns that the federal budget deficit should trump the economy’s need for additional stimulus.

In other words, Congress should spend now and worry about deficits later.

“At the current moment the large deficits, as unattractive as they are, are important for supporting economic activity,” the nation’s central banker told a Senate panel, citing “weak” private spending and a “great deal of excess capacity.”

Bernanke added that he’d be “reluctant to withdraw that support too precipitously in the near term.” His comments strongly echoed remarks he made in June.

The debate over budget deficits versus stimulus spending has gripped the nation’s capital as the economy, though technically in recovery, continues to exhibit negative trends. For one, the national unemployment rate is essentially unchanged from June 2009. At 9.5 percent, it’s fluctuated in the intervening year, rising to 10.1 percent in October before dropping back down last month. About half of the nation’s unemployed workers have been jobless for at least six months.

Full Story: Bernanke To Congress: The Economy Needs You To Keep Spending.

The Scariest Unemployment Graph I’ve Seen Yet

The median duration of unemployment is higher today than any time in the last 50 years. That’s an understatement. It is more than twice as high today than any time in the last 50 years.

OK, you’re saying, but what does this mean? Does it mean we must increase the duration of unemployment benefits to protect this new class of unemployed, or does it mean we need to stop subsidizing joblessness? Does it mean we need to expand federal retraining programs, or does it mean federal retraining programs aren’t working? Does it mean we need more stimulus, more state aid, more infrastructure projects, more public works … or does it mean it’s time to stop everything, stand back and let business be business?

You’re going to find smart people make a case for all six of the above public policy directions. (I tend to side with the first of each coupling.) It’s hard to know for sure how to design public policy for historically unique crises precisely because they are historical orphans, without precedent to show us the right way from the wrong.

Full Story: The Scariest Unemployment Graph I’ve Seen Yet – Business – The Atlantic.

Tax Cuts For Rich Don’t Work

See the facts on Tax Cuts Here: http://tinyurl.com/2az2fs7

The Senators Who Gave Us 15 Million Unemployed Want to Deny Them Benefits

Dean Baker:

It is amazing how people in Washington are so forgiving — of each other. We have close to 15 million people unemployed and more than 8 million people under-employed because the folks managing our economy were incompetent.

In spite of the efforts of economists and policy types to portray the cause of the economic collapse as being complicated, it wasn’t. It was really really simple. Prior to the downturn the economy was being driven by an $8 trillion housing bubble. This led to a boom in residential construction. (A separate bubble in commercial real estate led to a boom in non-residential construction.) The equity generated by the housing bubble also led to a surge in consumption, with the saving rate falling to almost zero at the peak of the bubble.

It was inevitable that the bubble burst. Bubbles do that. They lead to an over-supply and eventually we run out of suckers willing or able to pay bubble-inflated prices for houses. The collapse caused the economy to lose $1.2 trillion in annual demand from the private sector. Annual construction spending fell back by close to $600 billion and consumption fell by roughly the same amount as a result of the loss of housing wealth.

Full Story: Dean Baker: The Senators Who Gave Us 15 Million Unemployed Want to Deny Them Benefits.

The Business Case Against Overseas Tax Havens

Kate’s Café and AAA Appliance probably pay a higher percentage of their income in taxes than profitable Fortune 500 companies.

In the U.S., thanks in part to overseas tax havens, we have one tax system for multinational companies and wealthy individuals –and another for small businesses and ordinary taxpayers.

Tax havens enable the rich and U.S. multinationals to move income and assets between global subsidiaries and dodge taxes. Responsible businesses and individual taxpayers are left to pay for U.S. infrastructure, defense, education and all the public investments that contribute to a healthy business climate and economy.

How does this work? A U.S. company creates a subsidiary in a secretive low tax haven such as the Luxemburg, Bermuda or the Republic of Mauritius. In the Grand Cayman Islands, one building called Ugland House, houses over 19,000 of these corporate subsidiaries.

Full Story: The Business Case Against Overseas Tax Havens | CommonDreams.org.

Pre-Recession Unemployment Rates May Not be Reached for a Decade

As recent calls for additional stimulus and the extension of unemployment benefits meet with stiff opposition, Congress appears to have underestimated the profound effect of the current recession on the labor market. A new report from the Center for Economic and Policy Research (CEPR) shows that with a job growth path comparable to the last recovery, the economy will not recover all of the jobs lost in the recession until March 2014. Assuming the trend rate of growth in the labor force, the unemployment rate will not fall back to the pre-recession level until April 2021.

“The economy desperately needs action on job creation,” says John Schmitt, a senior economist at CEPR and a co-author of the report. “At current and projected job creation rates, we will still be suffering from the effects of the downturn well into the next presidential term.”

The study, “The Urgent Need for Job Creation,” compares various job growth scenarios with the job loss seen in the recession and projects when the lost jobs will be regained and when the unemployment rate will return to pre-recession levels in each case.

Full Story: Pre-Recession Unemployment Rates May Not be Reached for a Decade | Press Releases.

Senate advances unemployment extension bill – On Politics: Covering the US Congress, Governors, and the 2010 Election

Millions of out-of-work Americans would continue to receive unemployment benefits through November under legislation that cleared a major procedural hurdle in the Senate today after months of debate.

Democrats captured the 60 votes required to overcome GOP opposition only after swearing in a new Democratic senator from West Virginia, Carte Goodwin, who will temporarily fill the seat left vacant by the June 28 death of Robert Byrd.

The legislation, which was supported by President Obama, will extend benefits for those who have already used their standard 26 weeks of unemployment. The measure now faces a final vote in the Senate and must also clear the House of Representatives.

Full Story: Senate advances unemployment extension bill – On Politics: Covering the US Congress, Governors, and the 2010 Election – USATODAY.com.

Gulf oil disaster could destroy over 100,000 jobs

The impact of the Gulf of Mexico oil spill was thrown into sharp relief Tuesday, as US data showed rising unemployment in Louisiana and experts warned the disaster could cost up to 100,000 jobs.

The US Department of Labor said Louisiana — among the US states worst hit by the spill — was one of only five states across the country to see a rise in unemployment last month, with the jobless rate up 0.2 points to seven percent.

While the bayou state’s unemployment rate remains well below the national average of 9.5 percent, the data comes amid warnings that a worst-case scenario would see 100,000 jobs lost across the Gulf Coast.

Full Story: Gulf oil disaster could destroy over 100,000 jobs | Raw Story.

‘We Must Start Building Things in America Again’

Lawmakers on Monday approved legislation designed to reinvigorate the nation’s shriveling manufacturing base.

Remarkably, at a time of such sharp partisanship in a contentious election year in which House control appears up for grabs, House members passed the Strengthening Employment Clusters To Organize Regional Success (SECTORS) Act unanimously on a voice vote.

Called part of Democrats’ national manufacturing strategy, the bill would support industry partnerships to develop and implement plans to train workers and help them advance in high-demand and emerging industries. A summary of the bill can be found here.

Sen. Sherrod Brown (D-Ohio) says that he has co-authored a Senate version of the SECTORS Act with Sen. Olympia Snowe (R-Maine).

Full Story: On The Hill: ‘We Must Start Building Things in America Again’.

Wealth And Inequality In America

15 Mind-Blowing Facts About Wealth And Inequality In America…..

The gap between the top 0.01% and everyone else hasn’t been this bad since the Roaring Twenties

The rich are getting richer and the poor are getting poorer. Cliché, sure, but it’s also more true than at any time since the Gilded Age.

While politicians gloat about our “recovery,” our poor are getting poorer, our average wages are still falling behind inflation, and social mobility is at an all-time low.

But, yes, if you’re in that top 1%, life in America is grand.

Full Story: Wealth And Inequality In America.

Austerity drive will hand billions to private sector

Outsourcing firms are preparing for bonanza of contracts to provide everything from binmen to back office bureaucrats

A government efficiency drive aimed at slashing spending in town halls and boosting productivity in the health service is likely to deliver billions of pounds of new business for private companies, the Guardian has learned.

Outsourcing firms are preparing for a bonanza of local authority contracts to provide everything from bin men to back office bureaucrats and have reported a doubling in the number of deals on offer this year. Private health companies are also expecting to earn billions of pounds from the planned overhaul of the NHS in which GPs would take over responsibility for spending £70bn.

Executives at Capita, the UK’s largest outsourcing firm, said the number of opportunities for local authority contracts has already doubled this year and they see the healthcare market as “vast and potentially lucrative”.

Full Story: Austerity drive will hand billions to private sector | Politics | The Guardian.

Greenspan backs end to Bush tax cuts

Congress should let all of former president George W. Bush’s 2001 and 2003 tax cuts expire to cut the long-term budget deficit, former Federal Reserve chairman Alan Greenspan has said.

Mr Greenspan’s support helped persuade Congress to pass the tax cuts in 2001 and his comments thrust him into a heated political battle over whether to extend them beyond the end of 2010. “They should follow the law and let them lapse,” Mr Greenspan said in an interview.

“The problem is, unless we start to come to grips with this long-term [budget] outlook, we are going to have major problems. I think we misunderstand the momentum of this deficit going forward.”

The Bush cuts lowered income tax rates; created a new 10 per cent tax bracket; raised tax credits for children; and lowered taxes on dividends and capital gains. A “sunset” provision means that all the cuts will expire at the end of this year unless Congress extends them.

Full Story: FT.com / US / Economy & Fed – Greenspan backs end to Bush tax cuts.

Sen. Franken’s Speech On The Economy, Unemployment, And The Budget

On Wednesday night, Sen. Franken delivered a sweeping floor speech on the state of our economy, the importance of unemployment insurance, and the problem of the deficit.

Mike Malloy – Taxes: Debunking Republican Lies (Bill Maher Bonus)

This is a nice one. Listen to Mike talking about the real state of taxes & personal income numbers in the U.S., plus an excellent rant by Bill Maher, about the beautiful teabaggers.

Financial Reform: Banks Already Looking To Profit From New Rules

Big banks facing big drops in revenue are looking to Main Street to make up the difference.

Checking accounts, bank statements, even popping into your local bank branch could carry a hefty cost as the nation’s mega-banks scramble to offset expected damage from the sweeping financial overhaul. The uncertain future has overshadowed otherwise strong second-quarter earnings at JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp.

All three companies beat expectations this week with profitable results. Yet their stocks tumbled, helping send the wider market sharply lower Friday.

The reason: Investors are worried about banks’ future earning power after Thursday’s passage of the most dramatic rewriting of banking rules since the Great Depression. Adding to the pessimism are falling trading profits – which all three banks mentioned in the their earnings reports – and weak U.S. loan demand.

Full Story: Financial Reform: Banks Already Looking To Profit From New Rules.

AVERTING AMERICA’S “LONG DEPRESSION”

Jim Hightower:

The most moronic oxymoron I’ve ever heard is the one being cheerfully bandied about by economists as they tell us that the Great Recession of 2008-2009 is over, exulting that we’re presently experiencing a “jobless recovery.”

I don’t see how their minds can put those two words together without having their heads explode! Excuse me, Einsteins, but there’s no such thing. You can spin your data ’til the cows come home, but an economy that has nearly 20 percent of the workforce either unemployed or underemployed, that has no plan for replacing the 8 million jobs we lost in the last two years, that is now proceeding with mass layoffs of such essential workers as teachers and firefighters, and that is willing to accept poverty pay as the new American normal is not by any stretch of the imagination a recovery.

Au contraire, buckaroos, the reality we face is the darkening shadow of what economist Paul Krugman is frankly calling a “Long Depression.” As happened in a similar decline in the 1870s, those at the top will prosper and take an even larger share of the wealth we all produce, while the majority see declining income and rising poverty.

Audio and Transcript at link

Full Story: Jim Hightower | AVERTING AMERICA’S “LONG DEPRESSION”.

Avoiding the Coming Wave of Economic Collapse

Nearly all manufactured goods now coming from overseas. The labor force is being quietly redeployed into lower-paying service, retail, hospitality, assembly, or distribution jobs that are transient, do not support communities, careers, or provide benefits.

America is sailing into dangerous economic waters, chiefly due to our massive debts and inability to manufacture competitively. The months ahead could determine the success or failure of the nation’s economic course; will we right the ship- or sink into the history books as another former superpower.

Vanishing Industrial Base

Opportunities to produce goods in America have all but vanished; nearly all manufactured goods now coming from overseas. The labor force is being quietly redeployed into lower-paying service, retail, hospitality, assembly, or distribution jobs that are transient, do not support communities, careers, or provide benefits.

Even vaunted finance, high-tech, medical, and academia jobs are being pressured by the surfeit of talented college graduates who are dumping their elected disciplines to “follow the money” into these few remaining propitious fields.

Full Story: Avoiding the Coming Wave of Economic Collapse | Economy In Crisis.

The Economic Crunch We’re in: Corporations Want Fewer Workers, But They Still Need Everyone to Be Consumers

Some Hard Truths about America

By Robert Parry:

A hard truth about the U.S. economy is that corporations don’t need as many of us as workers but still need us as consumers. That dilemma helps explain why unemployment is stuck near 10 percent and why the economic recovery is stumbling toward a double dip.

The Washington Post reported Thursday that nonfinancial companies are sitting on $1.8 trillion – about one-fourth more than at the start of the recession – but won’t add personnel in part because they’re waiting for consumer demand to pick up, which isn’t happening because many Americans don’t have jobs or are afraid of losing theirs.

Yet, even if that vicious cycle could be broken, there’s another reason for the lack of hiring: companies have found they can make do with a lot fewer American workers. The recession has been a way to cull payrolls – and to discover that many jobs don’t have to be filled again, either because of new technologies or because the jobs have been shifted overseas.

Both these trends predated the recession but the rapid shedding of jobs since the Wall Street financial crash in 2008 – some eight million jobs lost – has spotlighted this structural change. Further, corporate determination to remain “lean” has turned the worker-surplus issue from a personal crisis for many American families into a systemic one for the country’s economy.

Full Story: Consortiumnews.com.

At Long Last, Pentagon Spending on the Chopping Block: The Impact of the Sustainable Defense Task Force

For the first time in years, there’s serious discussion about the size of our military budget.

The current economic crisis, coupled with concerns about spiraling deficits and our staggering national debt, is, at long last, bringing military spending to the forefront of the budget debate. Not since the end of the Cold War and the discussion of a “peace dividend” has the Pentagon budget—generally considered sacrosanct—received such scrutiny.

In January 2010, President Obama’s formed the National Commission on Fiscal Responsibility and Reform to advise the administration on options for addressing the U.S. national debt. In response, Congressman Barney Frank (D-MA) convened a bi-partisan panel of national security experts to generate a series of recommendations on how to cut the defense budget while preserving U.S. national security. The Sustainable Defense Task Force released its report, “Debt, Deficits and Defense: A Way Forward,” on June 11, in Washington, D.C.

The Task Force report does not include any recommendations related to the cost of the wars in Iraq and Afghanistan. It looks only at the Pentagon’s annual “base” budget. The report’s combined recommendations would cut $960 billion over ten years, an average annual reduction of roughly 17 percent below current spending levels.

Full Story: At Long Last, Pentagon Spending on the Chopping Block: The Impact of the Sustainable Defense Task Force.

The Highlights Of The Financial Reform Bill

The financial bill cleared the Senate by a vote of 60 to 39, and is to be signed into law by President Obama next week.

Among its other provisions, the 2,300-page piece of legislation creates a consumer protection office housed within the Fed, it establishes a registered derivatives exchange that will shed light on an otherwise opaque market, and it expands regulators’ authority to limit risk-taking and break up ailing financial firms and institutions that threaten the economy. But that’s not all.

The bill contains a plethora of regulatory repairs. For those of us who don’t have time to read the entire 2,300-page document, here’s the Associated Press has put together some of the main highlights from the new-born bill.

Full Story: The Highlights Of The Financial Reform Bill (PHOTOS).

Congress Passes Financial Reform

There was more than enough in the financial reform bill — now on its way to President Obama — to merit broad support. Yet, for Thursday’s final Senate vote on the bill, 60 to 39, just three Republicans joined 57 Democrats to support reform. In the House, only three Republicans voted for the bill when it passed that chamber in June, 237 to 192.

Republican opponents would have you believe that lack of bipartisanship was evidence of the bill’s unworthiness, but the margin of victory was really about partisan politics and not the bill’s content. That made the vote an even greater victory for Mr. Obama, who has had to fight for every inch of progress against entrenched Republicans (who have been willing to deny unemployment benefits to millions of Americans rather than cooperate with Democrats on anything).

As was the case with last year’s economic stimulus and this year’s health care overhaul, Republican opposition to the bill was primarily an attempt to drag down Mr. Obama by killing any legislative accomplishment.

Full Story: Editorial – Congress Passes Financial Reform – NYTimes.com.

Redo That Voodoo

Paul Krugman:

Republicans are feeling good about the midterms — so good that they’ve started saying what they really think. This week the party’s Senate leadership stopped pretending that it cares about deficits, stating explicitly that while we can’t afford to aid the unemployed or prevent mass layoffs of schoolteachers, cost is literally no object when it comes to tax cuts for the affluent.

And that’s one reason — there are others — why you should fear the consequences if the G.O.P. actually does as well in November as it hopes.

For a while, leading Republicans posed as stern foes of federal red ink. Two weeks ago, in the official G.O.P. response to President Obama’s weekly radio address, Senator Saxby Chambliss devoted his entire time to the evils of government debt, “one of the most dangerous threats confronting America today.” He went on, “At some point we have to say ‘enough is enough.’ ”

Full Story: Op-Ed Columnist – Redo That Voodoo – NYTimes.com.

Greenspan Calls for Congress to Let All Bush Tax Cuts Expire

Former Federal Reserve Chairman Alan Greenspan, whose backing of George W. Bush’s 2001 tax cuts helped persuade Congress to pass them, said lawmakers should allow the reductions to expire at the end of this year.

“They should follow the law and let them lapse,” Greenspan said in an interview on Bloomberg Television’s “Conversations with Judy Woodruff,” citing a need for the tax revenue to reduce the federal budget deficit.

The former U.S. central bank chairman also said the economy is in “a temporary slump” and would emerge with a “sluggish” 3 percent growth rate in the second half of the year. He said banks’ lending will remain constrained because financial markets are pressing them to maintain higher capital levels and predicted the Wall Street regulatory measure the Senate passed yesterday will reduce credit available for low- income consumers.

Full Story: Greenspan Calls for Congress to Let All Bush Tax Cuts Expire – BusinessWeek.

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Here’s another story on subject – it’s a TWOFER:

Greenspan Calls For Full Expiration Of The Bush Tax Cuts That He Helped Enact

With the legislative calendar starting to dwindle, lawmakers are paying more and more attention to the scheduled expiration of the Bush tax cuts at the end of the year. Republicans across the board are advocating for the extension of all the cuts, and have explicitly said that extending the cuts for the richest 2 percent of Americans (which would cost $678 billion) does not have to be paid for.

President Obama has called for letting the cuts for the very richest expire, allowing the rates to reset to where they were under the Clinton administration. In an interview with Bloomberg News’ Judy Woodruff, former Federal Reserve Chairman Alan Greenspan went a step further, calling for all of the tax cuts to expire, essentially sending the tax code back to 2001:

WOODRUFF: On those tax cuts, they are due to expire at the end of this year. Should they be extended? What should Congress do?

GREENSPAN: I should say they should follow the law and let them lapse.

WOODRUFF: Meaning what happens?

GREENSPAN: Taxes go up. The problem is, unless we start to come to grips with this long-term outlook, we are going to have major problems. I think we misunderstand the momentum of this deficit going forward.

Full Story: http://thinkprogress.org/2010/07/16/greenspan-bush-expire/

GOP: No more help for jobless, but rich must keep tax cuts

Republicans almost unanimously oppose spending $33.9 billion for extended unemployment benefits for some 2.5 million people who’ve lost them, because they say it would increase federal budget deficits.

At the same time, they’re pushing a permanent extension of Bush administration tax cuts, especially for the wealthy, which could increase federal budget deficits by trillions of dollars over the next 10 years.

How do they justify this?

“Tax policy is dynamic. If you have the right kind of tax reform, it helps generate a more dynamic economy,” said Sen. Mike Crapo, R-Idaho, a member of the Senate Finance Committee, which writes tax law. While that may be true, even the Bush Treasury Department concluded that its tax cuts increase budget deficits.

Full Story: GOP: No more help for jobless, but rich must keep tax cuts – Politics AP – MiamiHerald.com.

22 Statistics That Prove The Middle Class Is Being Systematically Wiped Out Of Existence In America

The 22 statistics that you are about to read prove beyond a shadow of a doubt that the middle class is being systematically wiped out of existence in America.

The rich are getting richer and the poor are getting poorer at a staggering rate. Once upon a time, the United States had the largest and most prosperous middle class in the history of the world, but now that is changing at a blinding pace.

See proof of the Middle Class extermination –>

So why are we witnessing such fundamental changes? Well, the globalism and “free trade” that our politicians and business leaders insisted would be so good for us have had some rather nasty side effects. It turns out that they didn’t tell us that the “global economy” would mean that middle class American workers would eventually have to directly compete for jobs with people on the other side of the world where there is no minimum wage and very few regulations. The big global corporations have greatly benefited by exploiting third world labor pools over the last several decades, but middle class American workers have increasingly found things to be very tough.

Full Story: 22 Statistics That Prove The Middle Class Is Being Systematically Wiped Out Of Existence In America.

The Root Of Economic Fragility And Political Anger

Robert Reich – -

Americans are keeping their jobs or finding new ones only by accepting lower wages.

Missing from almost all discussion of America’s dizzying rate of unemployment is the brute fact that hourly wages of people with jobs have been dropping, adjusted for inflation. Average weekly earnings rose a bit this spring only because the typical worker put in more hours, but June’s decline in average hours pushed weekly paychecks down at an annualized rate of 4.5 percent.

In other words, Americans are keeping their jobs or finding new ones only by accepting lower wages.

Meanwhile, a much smaller group of Americans’ earnings are back in the stratosphere: Wall Street traders and executives, hedge-fund and private-equity fund managers, and top corporate executives. As hiring has picked up on the Street, fat salaries are reappearing. Richard Stein, president of Global Sage, an executive search firm, tells the New York Times corporate clients have offered compensation packages of more than $1 million annually to a dozen candidates in just the last few weeks.

We’re back to the same ominous trend as before the Great Recession: a larger and larger share of total income going to the very top while the vast middle class continues to lose ground.

Full Story: The Root Of Economic Fragility And Political Anger | TPMCafe.

Unemployed Woman Applies To Over 1,000 Jobs: ‘Interviews Are Like Seeking Unicorns’

When Laurie-Ellen Shumaker, 59, was laid off from her job as a lawyer for a shopping center in January of 2009, she assumed she would be hired again in no time. In addition to her impressive resume, which includes a degree from a top-tier law school and 23 years of legal experience, she has always been actively recruited for positions.

But in the past year-and-a-half, Shumaker says she has applied to over a thousand jobs — everything from secretary to file clerk to daycare worker — and she has yet to be called for an interview.

“It’s frightening,” she told HuffPost. “Interviews are like seeking unicorns. I’ve even gotten a status update on two different jobs saying I’m the best qualified, but then I never hear anything after that. It’s hard not to rake through one’s brain trying to figure out why. Is it my age or my gender holding me back?”

Full Story: Frustrated Unemployed Woman: ‘Interviews Are Like Seeking Unicorns’.

The Feckless Fed

Paul Krugman

Back in 2002, a professor turned Federal Reserve official by the name of Ben Bernanke gave a widely quoted speech titled “Deflation: Making Sure ‘It’ Doesn’t Happen Here.” Like other economists, myself included, Mr. Bernanke was deeply disturbed by Japan’s stubborn, seemingly incurable deflation, which in turn was “associated with years of painfully slow growth, rising joblessness, and apparently intractable financial problems.” This sort of thing wasn’t supposed to happen to an advanced nation with sophisticated policy makers. Could something similar happen to the United States?

Not to worry, said Mr. Bernanke: the Fed had the tools required to head off an American version of the Japan syndrome, and it would use them if necessary.

Today, Mr. Bernanke is the Fed’s chairman — and his 2002 speech reads like famous last words. We aren’t literally suffering deflation (yet). But inflation is far below the Fed’s preferred rate of 1.7 to 2 percent, and trending steadily lower; it’s a good bet that by some measures we’ll be seeing deflation by sometime next year. Meanwhile, we already have painfully slow growth, very high joblessness, and intractable financial problems. And what is the Fed’s response? It’s debating — with ponderous slowness — whether maybe, possibly, it should consider trying to do something about the situation, one of these days.

Full Story: Op-Ed Columnist – The Feckless Fed – NYTimes.com.

Paul Volcker: ‘People Are Nervous.. And They Should Be’

Paul Volcker Pushes for Reform, and Regrets His Past Silence

JUST before the Fourth of July weekend, Paul A. Volcker packed his fishing gear and set off for his annual outing to the Canadian wilds to cast for Atlantic salmon.

He left behind a group of legislators in Washington still trying to nail down a controversial attempt to overhaul the nation’s financial regulations in the wake of the country’s most serious economic crisis since the Great Depression.

A well-regarded lion of the regulatory world, Mr. Volcker had endorsed the legislation before he went fishing, but unenthusiastically. If he were a teacher, and not a senior White House adviser and the towering former chairman of the Federal Reserve, he says, he would have given the new rules just an ordinary B — not even a B-plus.

Full Story: Paul Volcker Pushes for Reform, and Regrets His Past Silence – NYTimes.com.

End Of The Cheap ‘Made-In-China’ Era Sends Companies Scrambling For Options

Factory workers demanding better wages and working conditions are hastening the eventual end of an era of cheap costs that helped make southern coastal China the world’s factory floor.

A series of strikes over the past two months have been a rude wakeup call for the many foreign companies that depend on China’s low costs to compete overseas, from makers of Christmas trees to manufacturers of gadgets like the iPad.

Where once low-tech factories and scant wages were welcomed in a China eager to escape isolation and poverty, workers are now demanding a bigger share of the profits. The government, meanwhile, is pushing foreign companies to make investments in areas it believes will create greater wealth for China, like high technology.

Full Story: End Of The Cheap ‘Made-In-China’ Era Sends Companies Scrambling For Options.

Len Hart: Let Them Eat the “Higher Pie”

The U.S. right wing consistently mistakes bigger slices of a smaller pie for growth!

In fact, wealth is the product of labor. Therefore, real growth creates larger pies, larger slices. Real growth is, by definition, egalitarian or not at all! America’s ruling elite amounts to just one percent of the total population and they own more than the rest of us combined. When I am charitable, I suspect that their perspective is myopic in the extreme. More realistically, I suspect that they just don’t care.

Since 1900 the U.S. has ‘experimented’ with ‘robber baron economics’, ‘supply-side economics’, ‘trickle down theory’ and assorted ‘stimuli’ that also put the fat cats and so-called ‘investor’ class at the top of the pecking order with often tragic results –the Panic of the late 1800s, Hoover’s Great Depression, Ike’s ‘Recession’, Reagan’s ‘Tent City’ Depression of over 2 years! Anyone not seeing the pattern is just not paying attention.

My thoughts along these lines are inspired by the following article by my good friend, Communications expert, Doug Drenkow.

Full Story: The Existentialist Cowboy: Let Them Eat the “Higher Pie”.

Arizona Payday Lenders Leave State After Voters, Legislature Let High-Interest Loans Expire

Another payday lending company’s decision to leave the state shows the expiration of a law that allowed high-interest loans is working, Arizona Attorney General Terry Goddard said.

Advance America Cash Advance Centers Inc. announced plans this week to close all 47 of its locations in Arizona, along with 75 locations in several other states.

The Spartanburg, S.C., company made millions “off of a business model that preyed on vulnerable borrowers,” Goddard said in a news release Friday.

Full Story: Arizona Payday Lenders Leave State After Voters, Legislature Let High-Interest Loans Expire.

Wells Fargo Ends Free Checking Before New Bank Rules

Wells Fargo & Co., the U.S. bank with the largest branch network, eliminated free checking accounts for new customers as firms prepare for stricter consumer- protection measures.

New basic checking accounts carry a $5 monthly fee as of July 1, said Julia Tunis Bernard, a spokeswoman for the San Francisco-based bank. Wells Fargo also established minimum deposit requirements for waiving the fee, she said.

“We’re no longer offering free checking as a new product or new account,” Bernard said in an interview yesterday. In addition to evaluating best practices, the lender considers “industry trends and changes in the economic and regulatory environment,” she said.

Full Story: Wells Fargo Ends Free Checking Before New Bank Rules – Bloomberg.

Is the IMF about Ready to Muscle U.S. Taxpayers?

I smell a rat.

The IMF has long been a bought, and paid for, muscle arm of the U.S. government and the banking elite.

The play goes like this. Banks loan money to third world countries that have no chance in hell of paying the money back. The IMF comes in with “austerity” programs that include heavy new tax burdens on the working class. The revenue from the new taxes will, of course, go to payoff the banking elite. It’s a sick game, but the elite seem to get their jollies by pulling this scam in country after country.

It appears the elite appear to want to up the ante. It appears they are getting set to turn the guns inward and go after the hard earned money of Americans.

WaPo reports:

Full Story: EconomicPolicyJournal.com: Is the IMF about Ready to Muscle U.S. Taxpayers?.

Are Low Taxes Exacerbating the Recession?

by David Sirota  :

the Reagan zeitgeist created the illusion that taxes stunt economic growth, the numbers prove that higher marginal tax rates generate more resources for the job-creating,………

As the planet’s economy keeps stumbling, the phrase “worst recession since the Great Depression” has become the new “global war on terror” — a term whose overuse has rendered it both meaningless and acronym-worthy. And just like that previously ubiquitous phrase, references to the WRSTGD are almost always followed by flimsy and contradictory explanations.

Republicans who ran up massive deficits say the recession comes from overspending. Democrats who gutted the job market with free trade policies nonetheless insist it’s all George W. Bush’s fault. Meanwhile, pundits who cheered both sides now offer non-sequiturs, blaming excessive partisanship for our problems.

But as history (and Freakonomics) teaches, such oversimplified memes tend to obscure the counterintuitive notions that often hold the most profound truths. And in the case of the WRSTGD, the most important of these is the idea that we are in economic dire straits because tax rates are too low.

Full Story: Are Low Taxes Exacerbating the Recession? by David Sirota on Creators.com – A Syndicate Of Talent.

Wealthy Reap Rewards While Those Who Work Lose

Times are tough for workers in the U.S. where a recession has a stranglehold on much of the economy, but life is perfectly rosy for those at the top.

The riches of the wealthiest North Americans grew by double digits in 2009, primarily from interest their money earned when it was invested in the stock market and elsewhere, according to a report by the Boston Consulting Group.

Millionaires in the U.S. and Canada saw their wealth increase 15 percent in 2009, to a total of 4.6 trillion dollars, the report found.

Worldwide, 11 million – or less than 1 percent of all households – were millionaires in 2009. They owned about 38 percent of the world’s wealth or 111 trillion dollars, up from about 36 percent in 2008, according to Boston Consulting Group.

Full Story: Wealthy Reap Rewards While Those Who Work Lose | CommonDreams.org.

Need A Job? Try Canada, Where Hiring Is Booming And Home Prices Are Rising

Stubbornly high unemployment rates got you down? Not sold on the economic recovery? Look no further than America’s polite neighbor to the north, where jobs numbers are surging and home prices have been rising steadily for nearly a year.

Last month, Canada, a nation with roughly one tenth of our population, created about 10,000 more new jobs than America.

Yes, Canada’s economic recovery is outpacing our own. In terms of sheer job creation, June saw Canada create jobs at a pace that was five times the rate predicted by economists, Bloomberg News reports. Canada added 93,200 jobs in June, while U.S. private employers added just 83,000.

Full Story: Need A Job? Try Canada, Where Hiring Is Booming And Home Prices Are Rising.

The Vanishing American Consumer and the Coming Trade War

Robert Reich:

It’s clear American consumers can’t get the economy going on their own. They can’t restart the jobs machine. They’ve run out of money and credit.

President Obama has vowed to double U.S. exports within the next five years. That’s because exports are critical for rebooting the American economy. It’s clear American consumers can’t get the economy going on their own. They can’t restart the jobs machine. They’ve run out of money and credit.

It’s not just that one out of four Americans is unemployed or underemployed (working part-time, overqualified, or at a lower wage than before). More significantly, the Great Recession burst the housing bubble that had let American consumers turn their homes into ATMs. Now the cash machines are closed.

So the administration figures foreign consumers will have to fill the gap.

Problem is, most other economies also relied on American consumers. Remember the trade gap? Americans used to be the world’s biggest and most reliable customers — sucking in high-tech gadgets assembled in China, car parts from Japan, shirts and shoes from Southeast Asia, and precision instruments from Germany.

Full Story: Robert Reich: The Vanishing American Consumer and the Coming Trade War.

Walking Away From Million-Dollar Mortgages

No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.

The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

Full Story: Walking Away From Million-Dollar Mortgages – NYTimes.com.

Pity the Poor C.E.O.’s

Job creation has been disappointing, but first-quarter corporate profits were up 44 percent from a year earlier. Consumers are nervous, but the Dow, which was below 8,000 on the day President Obama was inaugurated, is now over 10,000. In a rational universe, American business would be very happy with Mr. Obama.

But no. All the buzz lately is that the Obama administration is “antibusiness.” And there are widespread claims that fears about taxes, regulation and budget deficits are holding down business spending and blocking economic recovery.

How much truth is there to these claims? None. Business spending is indeed low, but no lower than one would have expected given widespread overcapacity and weak consumer spending. Business leaders are feeling unloved, but giving them a group hug won’t cure what ails the economy

Full Story: Op-Ed Columnist – Pity the Poor C.E.O.’s – NYTimes.com.

Average Japanese CEO Earns One-Sixth As Much As American CEOs

Last year, Sen. Chuck Grassley (R-IA) responded to news that AIG executives — who were bailed out with tens of billions of dollars from American taxpayers — were due to receive $165 million in bonuses by saying that they should “follow the Japanese example and come before the American people and take that deep bow and say I’m sorry and then either do one of two things: resign or go commit suicide.”

While committing ritual suicide is a rather extreme “example” to be learned from Japanese society, a more appropriate lesson is how the Japanese structure their pay incentives for corporate executives. Last week, Japanese securities regulators began “requiring Japanese companies to disclose pay for executives making more than 100 million yen ($1.1 million).” BusinessWeek reports that the disclosures reveal that the average compensation of a Japanese CEO is less than one-sixth that of their American counterpart and 16 times more than the average Japanese worker:

Japan is the land of the bargain-basement CEO. On June 30 securities regulators began requiring Japanese companies to disclose pay for executives making more than 100 million yen ($1.1 million). While the headlines went to the top earners—foreigners Carlos Ghosn of Nissan Motor (NSANY) and Sony’s (SNE) Howard Stringer—the big surprise was how few Japanese business leaders take home super-size paychecks.

Full Story: Think Progress » Average Japanese CEO Earns One-Sixth As Much As American CEOs.

The US Treasury and the Federal Reserve are Manipulating the Gold Market

Recently we were again witness to three gold market takedowns. The first was engineered just prior to and into gold and silver options expiration. Then prior to the ETF GLD gold option expiry and the last manipulative attack commenced just prior to the dreadful unemployment housing and inventory statistics. This sort of action began in 1988 with the signing of the Executive Order by President Ronald Reagan entitled the President’s Working Group on Financial Markets,” ostensibly created to neutralize events such as the October 1987 collapse of the US stock market. Needless to say, that was not the real intention of the creation of such an order. As it has turned out the Treasury and the N.Y. Fed manipulates markets 24/7 worldwide, and they have a particular interest in the suppression of gold and silver prices; they being the antitheist of the US dollar. It should be noted that there were several times that the US Treasury and the privately owned Fed manipulated gold and silver prior to August 1988. We have found in 50 plus years of tracing this manipulative activity by the US government that it happens over and over again. There is no doubt in our minds that a great deal of what is done by government in gold and silver is done by the commercials, who privy to inside information go along for the ride. In the options operation prices are driven down for Comex options as well as GLD options, so that they expire out of the money and as well the perpetrators can cover some of their short positions. This is not difficult to execute, because other traders see what is going on and they get involved as well making the tasks easier.

This spring Andrew Maguire went public with a scam being pulled by JPMorgan Chase in the rigging of silver futures on the LBMA, an exchange similar to Comex in London. This caper was explained to the CFTC, Commodity Futures Trading Commission, months ahead of it occurring and they chose to do nothing about it. Making matters worse, when confronted with the evidence in public hearings, the CFTC didn’t want to hear about it. Maguire broke the story to others who confronted the CFTC who received lip service. The CFTC was forced to conduct a civil investigation and the Justice Department as well is conducting a criminal investigation, which we believe will go nowhere. Realizing that the CFTC, Justice, Morgan and the government are working together against the public in this matter, we are told by our sources that class action suits are being prepared and that the first one should be filed soon. It is a sad day for Americans when justice has to be forced from a corrupt government. In the end we will win but it will be a painful process.

We have found it interesting that the IMF prohibits members from tying their currencies to gold. All of you out there who believe the IMF’s, SDRs, Special Drawing Rights, will be gold backed are mistaken. This historical operating position was further proven when on August 15, 1971 the US closed the gold window. This was the advice Mr. Nixon received from Paul Volcker, who was an early member of the Trilateral Commission and is an Illuminist. Volcker has also been a leader against the US using gold in its monetary policy. Since 8/15/71 there has been an official war against gold by the elitists behind the curtain. It was that seminal event that essentially changed the future of America and the world. At that time US debt was just short of $500 billion. Today short-term debt is $14 trillion and long-term debt is $105 trillion. The engineer of the failure of the US banking system and the failure of the dollar and the rejection of it is at the feet of Mr. Volcker. What he has done to America at the behest of his Illuminist masters is reprehensible. That was eventually followed by the elimination of Glass Steagall and the looting and the collapse of our financial system. This is the result of the corruption of our system.

Full Story: The US Treasury and the Federal Reserve are Manipulating the Gold Market.

CBO says climate bill would cut deficit by $19B

Cap-and-trade plan of selling carbon credits is stalled in Senate

Congressional budget experts say a climate and energy bill now stalled in the Senate would reduce the federal deficit by about $19 billion over the next decade.

The report by the nonpartisan Congressional Budget Office was the second positive analysis of the bill by a government agency in a month, but is likely to carry more weight than a similar report issued by the Environmental Protection Agency. The CBO is the entity responsible for providing Congress with nonpartisan analyses of economic and budget issues, and lawmakers rely on it for guidance.

The CBO report was immediately hailed by the bill’s sponsors, who are struggling to move the climate measure through a divided Congress. Lawmakers have quietly begun considering a more modest approach that would target the electricity sector, in case the more sweeping measure fails.

Full Story: CBO says climate bill would cut deficit by $19B – Politics – Capitol Hill – msnbc.com.

The Arrogant David Brooks Tells Readers That Stimulus Will Risk National Insolvency

David Brooks has decided to jump into the debate over stimulus with both feet. In a column in which he warns against arrogance he tells readers that additional stimulus would: “risk national insolvency on the basis of a model.”

Mr. Brooks doesn’t tell readers how he has determined that further stimulus carries this risk. He doesn’t explain how raising the country’s debt to GDP ratio by 4-8 percentage points over the next few few years would jeopardize the creditworthiness of the U.S. government. This is certainly a rather strong assertion, given that even with this additional indebtedness, the debt to GDP ratio in the United States would still be far lower than it had been at prior points in its history.

Even after a decade of accumulating debt at a rapid pace, the U.S. would still face a lower debt burden than countries like Italy do today. Italy is currently able to borrow in financial markets at very low interest rates. Projections for 2020 show that the debt burden of the United States would still be less than half of the current debt burden of Japan, which still pays less than 2.0 percent interest on its long-term debt.

Full Story: The Arrogant David Brooks Tells Readers That Stimulus Will Risk National Insolvency | Beat the Press.

Republicans committed to sabotaging recovery, kill the economy

Conservatives Vote to Torpedo Our Economy

Congress is now home for the July 4 holiday without extending unemployment benefits. The argument of those conservatives who filibustered the legislation is that it is more important to rein in federal deficits than it is to maintain the meager incomes of the unemployed so that they can remain part of America’s great consumer base and help employed Americans keep their own jobs.

Yet today’s new data from the Bureau of Labor Statistics shows that private-sector hiring continues at a tepid pace. Over the past three months, the economy has added an average of 119,000 private-sector jobs each month. At this pace, it will take the economy 66.4 months, or 5.5 years, to re-create all jobs lost (assuming 7.9 million deficit).

Why are these opponents of extended unemployment benefits willing to risk a double-dip recession? One reason is politics. Conservatives think if President Barack Obama is for something then they must be against it. While stopping aid to the unemployed may indeed end up helping conservatives rally their base in November, this does not seem to be the “easy” vote-getting strategy for independent voters who will be key to ultimate electoral success.

Full Story: Economic Mismanagement.

The More CEOs Make, The Worse They Treat Workers, Says A New Study

CEO pay has been blasted for increasing risk to the economy, being out of proportion to ordinary wages and being unrelated to actual company performance. And, according to a new study, a high salary may actually make your company’s CEO meaner. (Hat tip to Harvard Business Review)

In the study’s white paper, “When Executives Rake in Millions: Meanness in Organizations,” professors from Harvard, Rice and the University of Utah argue that rising income inequality between executives and ordinary workers results in “power asymmetries in the workplace such that top executives come to view lower level workers as dispensable objects not worthy of human dignity.”

To test this claim, the authors examined employee data from Kinder, Lydenberg, Domini & Co. Comparing employee complaint information against compensation figures, the authors found that the higher a firm’s executive pay, the higher its overall “meanness” score. (Firms were given points if they have been fined for mistreating employees and they had points taken away if they have programs that benefit employees such profit-sharing agreements.)

Full Story: The More CEOs Make, The Worse They Treat Workers, Says A New Study.

10 Surprisingly Recession-Proof Industries

It’s always tricky to call an industry “recession-proof” but, though it may sound surprising, there are a handful of industries that are actually growing during the downturn.

But as we wait patiently for things to improve, consumption patterns look a little different. Spending is down on funerals and education,, but is rising on non-necessities like gum, tattoos and– pet pampering? Perhaps mounting frustrations and anxieties about the economy have shown a new side of human nature.

Check out some of the most surprising industries that are not only surviving, but thriving during the current economic lull.

Full Story: 10 Surprisingly Recession-Proof Industries (PHOTOS).

Average Homeowner In Obama Foreclosure Program Deeply Underwater, Drawing Calls From GOP To Cut Off Help

The average beneficiary of the Obama administration’s flagship homeowner-assistance program owes their mortgage lender more than $1.50 for every dollar their home is worth, which means they fall into the stratum of homeowners most likely to simply walk away from their mortgages, recent government data show.

This little-noticed statistic was disclosed in a June 24 report by the Government Accountability Office. Citing government data collected through mid-April, the report found that even homeowners who receive lower monthly payments through the administration’s Home Affordable Modification Program are still struggling “under water,” meaning they owe more on their mortgages than their homes are worth.

A recent study by Federal Reserve economists shows that underwater homeowners are, not surprisingly, much more likely to default on their mortgages. Moreover, borrowers who are deeply underwater — like those in HAMP, who average negative 50 percent home equity — are far more likely to default willingly; that is, to give up on trying to overcome their growing mountains of debt, and just stop paying at all.

Full Story: Average Homeowner In Obama Foreclosure Program Deeply Underwater, Drawing Calls From GOP To Cut Off Help.

Dow Repeats Great Depression Pattern:

The Dow Jones Industrial Average is repeating a pattern that appeared just before markets fell during the Great Depression, Daryl Guppy, CEO at Guppytraders.com, told CNBC Monday.

“Those who don’t remember history are doomed to repeat it…there was a head and shoulders pattern that developed before the Depression in 1929, then with the recovery in 1930 we had another head and shoulders pattern that preceded a fall in the market, and in the current Dow situation we see an exact repeat of that environment,” Guppy said.

The Dow retreated 457.33 points, or 4.5 percent last week, to close at 9,686 Friday. Guppy said a Dow fall below 9,800 confirmed the head and shoulders pattern.

Full Story: Dow Repeats Great Depression Pattern: Charts – CNBC.

The Scariest Financial Chart of the United States Bar None

INVENTORY / Units For Sale vs. Delinquent Mortgages ‐‐ Arguably the key gauge of our economy, this chart shows high distress among the owners of real estate with the “X” factor of decisive importance. X =delinquent units + for‐sale units. Look at the massive gap between “X” and “Z” ‐‐ where Z = monthly unit sales. Delinquent mortgage loans are equal to SIXTEEN TIMES average monthly sales. The gap frightens all sentient beings and makes a fool of any person who predicts future prices.

The Scariest Financial Chart of the United States Bar None « HousingStory.net.

The Truth About Markets USA

Max Keiser:

Part1

The Truth About Markets USA 06.26.2010 part-2

The Truth About Markets USA 06.26.2010 part-3

Stop the Liquidation of Our Companies

A country that produces nothing produces no wealth.

The companies within a country are that country’s wealth producers. We allow our companies to be snatched up by foreign competitors on the open stock market. Over 16,000 of our best wealth producing companies have been auctioned off and the U.S. has no authoritative government agency prohibiting the Great American Sell-off.

Of course there is the Committee on Foreign Investment in the United States (CFIUS), but it merely serves as a rubber stamp with no actual authority. While CFIUS was created as an interagency committee to oversee national security implications of foreign investments into the U.S. economy, it has only stopped one acquisition since its creation.

We are selling out and no longer own or control our own country and must now live on imports while incurring massive debts that can only be repaid through the sale of our wealth producing companies and assets. Very soon we will not even be able to protect or support ourselves.

Full Story: Stop the Liquidation of Our Companies | Economy In Crisis.

Myths of Austerity

Paul Krugman:

When I was young and naïve, I believed that important people took positions based on careful consideration of the options. Now I know better. Much of what Serious People believe rests on prejudices, not analysis. And these prejudices are subject to fads and fashions.

Which brings me to the subject of today’s column. For the last few months, I and others have watched, with amazement and horror, the emergence of a consensus in policy circles in favor of immediate fiscal austerity. That is, somehow it has become conventional wisdom that now is the time to slash spending, despite the fact that the world’s major economies remain deeply depressed.

This conventional wisdom isn’t based on either evidence or careful analysis. Instead, it rests on what we might charitably call sheer speculation, and less charitably call figments of the policy elite’s imagination — specifically, on belief in what I’ve come to think of as the invisible bond vigilante and the confidence fairy.

Full Story: Op-Ed Columnist – Myths of Austerity – NYTimes.com.

Payback Time – Budget in the Red, Illinois Has Stopped Paying Bills

Even by the standards of this deficit-ridden state, Illinois’s comptroller, Daniel W. Hynes, faces an ugly balance sheet. Precisely how ugly becomes clear when he beckons you into his office to examine his daily briefing memo.

He picks the papers off his desk and points to a figure in red: $5.01 billion.

“This is what the state owes right now to schools, rehabilitation centers, child care, the state university — and it’s getting worse every single day,” he says in his downtown office.

Mr. Hynes shakes his head. “This is not some esoteric budget issue; we are not paying bills for absolutely essential services,” he says. “That is obscene.”

Full Story: Payback Time – Budget in the Red, Illinois Has Stopped Paying Bills – NYTimes.com.

Slouching Toward a Double Dip or a Lousy Recovery at Best

Robert Reich:

The economy is still in the gravitational pull of the Great Recession and all the booster rockets for getting us beyond it are failing. The odds of a double dip are increasing.

In June the nation added fewer jobs than necessary merely to keep up with population growth (private hiring rose by 83,000 after adding only 33,000 jobs in May). The typical workweek declined. Average earnings dropped. Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year.

So what are we doing about it? Less than nothing. The states are running an anti-stimulus program (raising taxes, cutting services, laying off teachers, firefighters, police and other employees) that’s now bigger than the federal stimulus program. That federal stimulus is 75 percent gone anyway. And the House and Senate refuse to pass another one. (The Senate left Washington for the July 4th weekend without even extending unemployment benefits for millions of jobless Americans now running out.)

Full Story: Robert Reich (Slouching Toward a Double Dip or a Lousy Recovery at Best).

What Else You Should Know About Walmart

It’s not just the low wages or the near-scientific union busting. It’s the preference for poverty, the business model built on turnover, the manipulative PR. Is this really the best way to bring jobs and food to the south and west sides?

Nelson Lichtenstein, a crusading labor historian at the University of California at Santa Barbara, has written books on the history of unionism and the automobile industry, but over the last few years he’s spent much of his time thinking about Walmart. To research his 2009 book on the corporation, The Retail Revolution, which is newly out in paperback, he combed through scores of articles from Discount Store News, thousands of pages of legal filings and memoirs produced by Walmart employees, and piles of transcripts of in-house management videos recorded by a production company Walmart fired in 2006. Lichtenstein even bought ten shares of Walmart stock so he could attend a stockholders’ meeting. From his efforts came an excellent treatise that details the company’s well-oiled distribution system, its generally shabby treatment of its workers, its rabid anti-unionism, and its evangelistic corporate culture (instead of a board of directors, the company once had a board of “servant leaders”).

As Walmart has grown into one of the largest corporations in history—it’s currently number one on the Fortune 500 list of top earners in the world—its business and labor practices have come under intense scrutiny. Defenders note that the company’s management efficiencies have resulted in lower prices for consumers along with huge profits for shareholders. But critics like Lichtenstein say there are enormous social and economic costs to doing business Walmart’s way, arguing that the company’s industry-defining practices have depressed wages for American workers and hastened the flight of manufacturing jobs overseas.

Full Story: What Else You Should Know About Walmart | Feature | Chicago Reader.

U.S. Experiencing Worst Episode of Prolonged Unemployment Since Great Depression

Adjusting for demographic factors, current labor market downturn steeper than ’82-’83 recession.

Washington, D.C. – As the nation contends with a long and sustained labor market recession, a new study from the Center for Economic and Policy Research demonstrates that the current unemployment rate is higher than the conventional measure shows.

“An unemployment rate that has hovered above 9 percent for several months is striking, but the jobs picture is even worse than it looks,” said report author and CEPR Economist David Rosnick.

The study, “The Adult Recession: Age-Adjusted Unemployment at Post-War Highs,” adjusts the current unemployment rate to account for demographic differences and finds that the unemployment rate has not fallen below 10.8 percent in the last 12 months. During the worst episode of the recession of the 1980s — the second half of 1982 and the first half of 1983 — unemployment passed 10 percent for 7 months.

Full Story: U.S. Experiencing Worst Episode of Prolonged Unemployment Since Great Depression | CommonDreams.org.

The CEPR Deficit Calculator

There is considerable concern that the debt burden that United States will face by the end of the next decade will place serious strains on the government and the economy. It is not clear how high the debt can go before it begins to hamper economic growth or raise questions about the creditworthiness of the U.S. government. As is shown on the calculator below, the debt burden has been much higher for the United States in the past and is currently far higher for many countries than it is projected to be in the baseline scenario for the United States in 2020.

This calculator allows users to see how various policies will affect the debt burden in 2020. These options have appeared in public debates (or should) and would have a substantial impact on the deficit. The calculator allows users to select whatever target they consider appropriate given the various reference points shown.

Full Story: The CEPR Deficit Calculator.

John McCain’s Former Economist: We Need To Spend On Jobs Or Face Another Recession

Mark Zandi: Congress Should Quit Its Deficit Dithering Unless It Wants Another Recession

Mark Zandi, chief economist with Moody’s Economy.com and a former adviser to Sen. John McCain (R-Ariz.), said Friday that Congress needs to hurry up and reauthorize expired jobless aid or risk derailing the nascent economic recovery.

“The odds that the economy will slip back into the recession are still well below even,” Zandi said during a conference call with reporters. “But if Congress is unable to provide this help, those odds will rise and become uncomfortably high.”

Extended unemployment benefits for the long-term unemployed lapsed at the beginning of June as a domestic aid bill containing the benefits stalled in the Senate. Since then, nearly 1.7 million people who’ve been out of work for longer than six months have missed benefit checks they would have received had they been laid off closer to the beginning of the recession. President Obama’s stimulus bill and subsequent acts of Congress had given the unemployed up to 99 weeks of benefits in some states.

Full Story: Mark Zandi: Congress Should Quit Its Deficit Dithering Unless It Wants Another Recession.

Economy lags as job growth remains weak

The economic expansion is sputtering.

Private employers added only 83,000 jobs in June, the government said Friday, too few to keep up with growth in the working-age population. The unemployment rate fell to 9.5 percent from 9.7 percent, but only because hundreds of thousands of Americans dropped out of the labor force entirely.

Combined with other recent data, the numbers depict a sluggish economy in which nearly 15 million people are out of work and job growth is mediocre. There is little evidence that a dip back into recession has begun. But the chances of a strong, self-sustaining expansion that can significantly improve the job market — which seemed a real possibility during the spring — are now slim.

“It’s entirely possible that this is as low as unemployment will get for quite a while,” said Nariman Behravesh, chief economist at the forecasting firm IHS Global Insight.

Full Story: Economy lags as job growth remains weak.

Americans ramp up bankruptcy filings in 2010: study

It’s tough out there — no jobs, home values plummeting — and Americans are reacting by heading to bankruptcy court.

Bankruptcy filings surged 14% during the first half of 2010, according to the American Bankruptcy Institute. Filings totaled 770,117 through June, compared to 675,351 during the same period last year.

“Years of rising consumer debt and low savings rates, combined with the housing and unemployment crisis, are causing bankruptcy levels not seen since the 2005,” said Samuel Gerdano, executive director of the institute, in a press release.

In 2005 Congress amended the Bankruptcy Code, making it harder for Americans to file and sparking a rush to file by October of 2005, when the amendments kicked in. In 2005, bankruptcy filings totaled more than 2 million.

Full Story: Americans ramp up bankruptcy filings in 2010: study – Jul. 2, 2010.

UN report calls for world to ditch dollar, migrate to new global currency

A new United Nations report released on Tuesday calls for abandoning the U.S. dollar as the main global reserve currency, saying it has been unable to safeguard value.

But several European officials attending a high-level meeting of the U.N. Economic and Social Council countered by saying that the market, not politicians, would determine what currencies countries would keep on hand for reserves.

“The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency,” the U.N. World Economic and Social Survey 2010 said.

The report says that developing countries have been hit by the U.S. dollar’s loss of value in recent years.

Full Story: UN report calls for world to ditch dollar, migrate to new global currency | Raw Story.

Expired Unemployment Benefits Causing Panic, Desperation: ‘I’m Drowning Fast’

Debra Rousey of Gainesville, Georgia, says that she received an unemployment check of $194 last week, half the usual amount she receives, along with a letter announcing that this check would be her last. She is now in a complete panic over what to do next.

“I’m desperate and devastated,” she told HuffPost. “I didn’t get any warning. I was barely making ends meet on $330 a week, trying to diaper my grandchild and put food on the table for the four people I support. What do I do now? How am I going to make rent next month? I keep thinking, ‘If I end up in a cardboard box, can I find one big enough for everybody, or do I have to send my son to live with someone else?’”

Since Rousey, 45, was laid off from her job as a branch manager for Suntrust bank in November, she says she has been “frantically looking” for a job — everything from entry-level marketing positions to a fry cook job at McDonalds — but hasn’t had an interview in months. As of tomorrow, she will be one of nearly 1.7 million people whose unemployment benefits have prematurely expired while Congress sits on legislation that would renew those benefits.

Full Story: Expired Unemployment Benefits Causing Panic, Desperation: ‘I’m Drowning Fast’.

CBO says debt will reach 62 percent of GDP by year’s end

The national debt will reach 62 percent of gross domestic product (GDP) by the end of this year, the nonpartisan Congressional Budget Office (CBO) said Wednesday.

The budget office said the debt will reach its highest percentage of GDP since the end of World War II. The jump is driven by lower tax revenues and higher federal spending in the recent recession.

And while the national debt would stabilize at 67 percent of GDP over the next decade if current law were maintained, extending tax cuts enacted during the administration of President George W. Bush and keeping growth in appropriations in line with inflation would mean that the debt would reach almost 90 percent of GDP by 2020.

Full Story: CBO says debt will reach 62 percent of GDP by year’s end – The Hill’s Blog Briefing Room.

US lawmaker: Oil spill costs may run trillions of dollars

The cost of helping the US Gulf Coast rebound from the ruinous Gulf of Mexico oil spill could run into the trillions of dollars, a US lawmaker said Thursday after a briefing from top government officials.

“It will take billions of dollars — even trillions,” Democratic Representative Sheila Jackson Lee told reporters, citing “a presentation by the president’s team on the BP oil spill” early in the day.

“We will have an ongoing and unending commitment to fixing this disaster,” the Texas lawmaker said at a press conference with other representatives calling for blocking an Afghan war spending bill.

Full Story: US lawmaker: Oil spill costs may run trillions of dollars – Yahoo! News.

“Deficit Terrorism” and Economic Warfare

Ellen Brown:

All the Perks are going to Wall Street, while Main Street slips into Debt Slavery

Wall Street banks have been saved from bankruptcy by governments that are now going bankrupt themselves; but the banks are not returning the favor. Instead, they are engaged in a class war, insisting that the squeezed middle class be even further squeezed to balance over-stressed government budgets. All the perks are going to Wall Street, while Main Street slips into debt slavery. Wall Street needs to be made to pay its fair share, but how?

The financial reform bill agreed to on June 25 may have carved out some protections for consumers, but for Goldman Sachs and the derivatives lobby, the bill was a clear win, leaving the Wall Street gambling business intact. In a June 25 Newsweek article titled “Financial Reform Makes Biggest Banks Stronger,” Michael Hirsh wrote that the bill “effectively anoints the existing banking elite. The bill makes it likely that they will be the future giants of banking as well.”

The federal government and Federal Reserve have advanced literally trillions of dollars to save the big Wall Street players, to the point where the government’s own credit rating is in jeopardy; but Wall Street has not had to pay for the cleanup. Instead, the states and the citizens have been left to pick up the tab. On June 17, Time featured an article by David von Drehle titled “Inside the Dire Financial State of the States,” reporting that most states are now facing persistent budget shortfalls of a sort not seen since the 1930s. Unlike the Wall Street banks, which can borrow at the phenomenally low fed funds rate of .2% and plow that money back into speculation, states don’t have ready access to credit lines. They have to borrow through bond issues, and many states are so close to bankruptcy that their municipal bond ratings are collapsing. Worse, states are not legally allowed to default. Unlike the federal government, which can go into debt indefinitely, states must balance their budgets; and they cannot issue their own currencies. That puts them in the same position as Greece and other debt-strapped European Union countries, which are forbidden under EU rules either to issue their own currencies or to borrow from their own central banks. 

Full Story: “Deficit Terrorism” and Economic Warfare.

Today’s Unemployment Crisis by the Numbers

Report from Alon Cohen and Andrew Jakabovics examines current state-based foreclosure mediation programs and offers proposals for how to bring them to scale.

Our nation today is mired in one of the worst labor markets since the Great Depression. There are currently nearly 15 million Americans unemployed, with the unemployment rate hovering at or just under 10 percent for nearly a year. At the end of May, nearly half of those unemployed (46 percent) have been out of work and actively seeking a job for at least six months, a post-World War II record high. Currently, there are nearly five workers actively searching for work for every job available, compared to just one and a half job searchers per job opening before the Great Recession began.

Worse still, the labor market problems we see right now will be with us for some time. The massive employment hole left by the Great Recession will take years to fill. If we added 218,000 private-sector jobs each month from now on—the highest monthly payroll increase seen so far this year in the private sector—it would still take almost five years to fill the hole. That’s why ensuring that unemployment insurance reaches the unemployed remains a critical component of any serious effort to help stem the harmful effects of this recession and to help the American economy recover.

Unemployment insurance is the primary mechanism to provide financial assistance to workers who are unemployed through no fault of their own. Yet in early June, Congress allowed unemployment benefits to expire for 1.2 million workers over the course of the month and has repeatedly been unable to pass legislation to fix this problem. This has serious implications for the unemployed, as well as every one of us who still has a job. Allowing benefits to the long-term unemployed to expire threatens our nascent economic recovery. Economists across the board agree that unemployment benefits are one of the most important counter-cyclical economic policies we have.

Full Story: Today’s Unemployment Crisis by the Numbers.

Caterpillar Building New Facility in Brazil, Not the U.S.

Caterpillar, the world’s largest manufacturer of construction and mining equipment announced on Tuesday that it planned to build a new manufacturing facility, but not in America.

The Peoria, Illinois-based company said it will open up a facility in Brazil that will produce backhoe loaders and small wheel loaders. The move will allow the company to expand its footprint in Latin America, according to a statement.

“The strategic decision to expand our operations in Brazil will position Caterpillar to meet customer demand, particularly considering the strong economic recovery that has taken place across the region in the last year,” said Luiz Carlos Calil, Caterpillar Brazil president, in a news release.

Full Story: Caterpillar Building New Facility in Brazil, Not the U.S. | Economy In Crisis.

Free Trade Decimating Textile Industry

Much like any other labor intensive sector of the economy, America’s textile industry has been decimated by free trade agreements, globalization and outsourcing. However, things could get much worse if the Obama administration’s proposed Trans-Pacific Partnership is implemented, according to the National Council of Textile Organizations.

The NCTO argues that providing Vietnam with duty-free access into the American market would wreak havoc on the domestic textile industry.

“NCTO is strongly opposed to the inclusion of Vietnam in the TPP agreement because it would mean the loss of tens of thousands of U.S. textile export jobs in this country,” Cass Johnson, President of the NCTO said in a press release.

Full Story: Free Trade Decimating Textile Industry | Economy In Crisis.