All Entries in the "Economy - Labor" Category

Hidden U.S. Debt Bombs Affecting National Security

America’s fiscal situation may be much worse than the general public even realizes.   Secretary of State Hillary Clinton, has said that the nation’s debt is not only an economic issue, but a national security issue as well.

At nearly $13 trillion, with much of that owned to foreign governments, the national debt is completely unsustainable, however, according to CNNMoney.com, due to budgetary tricks and gimmicks, America’s fiscal situation may be much worse than the general public even realizes.

One of the nation’s biggest expenditures left unaccounted for are the unfunded obligations to Social Security and Medicare.  By 2037, the Social Security trust fund, which has been raided numerous times over the years to pay for other programs, is expected to only be able to cover a portion of the promised benefits.  That could happen to Medicare as early as 2017.

The cost of losses that government-owned mortgage giants Fannie Mae and Freddie Mac are piling up are not accounted for either.  As government-sponsored entities, the federal government is obligated to cover the costs of the companies losses, to a certain point.  The nonpartisan Congressional Budget Office has estimated that those losses could total $370 billion by 2020.

Full Story: Hidden U.S. Debt Bombs Affecting National Security | Economy In Crisis.

Pilots Union Protests United Airlines’ Outsourcing Plan

“Joint venture agreements that allow American jobs to be outsourced in the midst of attempting to recover from the worst economic downturn since the Great Depression cannot be allowed. Now is not the time to make it easier to ship jobs overseas,” Rep. Tim Bishop said.

Roughly 200 unionized pilots representing five different airlines spent their St. Patrick’s Day Wednesday picketing United Airline’s Chicago headquarters because of a joint venture between the company and an Irish airline that would result in the outsourcing of some pilot jobs, according to The Chicago Tribune.

Beginning March 28, United Airlines plans to enter into a limited partnership with Irish airline Aer Lingus. Under the proposed agreement, United would provide marketing, a feed of passengers, and equally split the costs of establishing and maintaining a new route between Washington’s Dulles International Airport and Madrid. Aer Lingus would provide the pilots, planes and many of the staff.

“For the pilots and flight attendants, our concern is that this ‘joint venture’ is just a harbinger of things to come. United Airlines management has clearly demonstrated that they have no qualms about outsourcing our flying,” The Association of Flight Attendants and Airline Pilots Association said in a joint statement.

Full Story: Pilots Union Protests United Airlines’ Outsourcing Plan | Economy In Crisis.

THE GROWING MOVEMENT FOR PUBLICLY-OWNED BANKS

Ellen Brown -

As the states’ credit crisis deepens, four states have initiated bills for state-owned banks, and candidates in seven states have now included that solution in their platforms.

“Hundreds of job-creating projects are still on hold because Michigan businesses and entrepreneurs cannot get bank financing. We can break the credit crunch and beat Wall Street at their own game by keeping our money right here in Michigan and investing it to retool our economy and create jobs.”

–Lansing Mayor Virg Bernero in the Detroit News, May 9, 2010

Struggling with 14% unemployment, Michigan has been particularly hard hit by the nation’s economic downturn. Virg Bernero, mayor of the state’s capitol and a leading Democratic candidate for governor, proposes that the state relieve its economic ills by opening a state-owned bank. He says the bank could protect consumers by making low-interest loans to those most in need, including students and small businesses; and could help community banks by buying mortgages off their books and working with them to fund development projects.

Bernero joins a growing list of candidates proposing this sensible solution to their states’ fiscal ills. Local economies have collapsed because of the Wall Street credit freeze. To reinvigorate local business, Main Street needs a heavy infusion of credit; and publicly-owned banks could fill that need.

Full Story: Web of Debt – THE GROWING MOVEMENT FOR PUBLICLY-OWNED BANKS.

China Drawing High-Tech Research From U.S.

For years, many of China’s best and brightest left for the United States, where high-tech industry was more cutting-edge. But Mark R. Pinto is moving in the opposite direction.

Mr. Pinto is the first chief technology officer of a major American tech company to move to China. The company, Applied Materials, is one of Silicon Valley’s most prominent firms. It supplied equipment used to perfect the first computer chips. Today, it is the world’s biggest supplier of the equipment used to make semiconductors, solar panels and flat-panel displays.

In addition to moving Mr. Pinto and his family to Beijing in January, Applied Materials, whose headquarters are in Santa Clara, Calif., has just built its newest and largest research labs here. Last week, it even held its annual shareholders’ meeting in Xi’an.

Full Story: China Drawing High-Tech Research From U.S. – NYTimes.com.

OPS:  Guess we’ll need more H-1B’s then huh?

A reminder of what $10 an hour looks like

And these are very conservative figures:

please notice that there is nothing in the budget for car insurance, food, or even an emergency fund.

Full Story: A reminder of what $10 an hour looks like – Democratic Underground.

Toyota to hand off pension bill to U.S. – $131 Million

Toyota is leaving a $131-million pension shortfall to the Pension Benefit Guaranty Corp. as it closes the New United Motor Manufacturing Inc. plant in Fremont, Calif., April 1, said Sergio Santos, president of UAW Local 2244.

But the PBGC, a federal corporation charged with protecting pension benefits of 44 million Americans, wants to discuss ways Toyota can reduce the gap.The agency has taken legal action to gain control of the NUMMI pension plan. PBGC spokesman Gary Pastorius said the agency wants to talk to Toyota about alternatives to a takeover, “but it just hasn’t happened yet. We still have questions.”

Full Story: Toyota to hand off pension bill to U.S. | freep.com | Detroit Free Press.

Dodd financial reforms won’t fix banks

Peter Morici -

America’s banks are as vulnerable today as before the credit crisis and reforms offered by Senate Finance Committee Chairman Christopher Dodd won’t fix things.

Prior to the crisis, Americans spent vastly more than they earned, borrowing against overvalued homes through creative mortgages. Banks offered adjustable rate mortgages and other products that unrealistically assumed homeowners could shoulder much bigger monthly payments after five years or refinance homes at higher values. Often incomes and home values were not verified and similar games abounded on credit cards.

Many borrowers knew they faced calamity but cultivated delusions that their paychecks would miraculously increase and housing prices would perpetually rise to finance lifestyles built on fantasies more than facts.

Full Story: Outside View: Dodd financial reforms won’t fix banks – UPI.com.

U.S. Productivity Gains Misleading

While data shows that American productivity has increased exponentially in the past three decades, that is nothing more than a façade given that most of those production gains are driven by offshoring, according to two fair trade advocates.

Writing in The New York Times, Alan Tonelson and Kevin Kearns, members of the U.S. Business and Industry Council, claim that for years the U.S. Labor Department has been leading the American people to believe that the productivity of its workers has been skyrocketing.

The problem is, the Labor Department fails to differentiate between American and foreign workers when calculating productivity.

Full Story: U.S. Productivity Gains Misleading | Economy In Crisis.

Dollar, Paul Krugman

Peter Schiff  -

There is a huge difference between having legitimate buyers of our bonds and just having the Fed monetize the debt. When the Chinese government buys our bonds, it’s the Chinese money supply that grows. But when the Federal Resurvey buys our bonds, it’s our money supply that grows. There is a huge difference.

Video at Link

Full Story: Dollar, Paul Krugman | Economy In Crisis.

That Is Immoral! That Is Wrong!

Sen Bernie Sanders Speaking on the Senate Floor

Part 1

Part 2

More homeowners are opting for ’strategic defaults’

Underwater on their mortgages and angry at banks, more borrowers are choosing to hand over the keys, even if they can afford the payments.

Wynn Bloch has always dutifully paid her bills and socked away money for retirement. But in December she defaulted on the mortgage on her Palm Desert home, even though she could afford the payments.

Bloch paid $385,000 for the two-bedroom in 2006, when prices were still surging. Comparable homes are now selling in the low-$200,000s. At 66, the retired psychologist doubted she’d see her investment rebound in her lifetime. Plus, she said she was duped into an expensive loan.

The way she sees it, big banks that helped fuel the mess all got bailouts while small fry like her are left holding the bag. No more.

Full Story: More homeowners are opting for ’strategic defaults’ – latimes.com.

Jobs Bill Poised To Clear Senate, Head To Obama

Companies that hire unemployed workers get a temporary payroll tax holiday under a bill headed for likely Senate passage Wednesday.

A positive vote would send the legislation to the White House for President Barack Obama’s signature.

It would be the first of several election-year jobs bills promised by Democrats to be enacted into law, though there’s plenty of skepticism that the measure will do much to boost hiring.

Full Story: Jobs Bill Poised To Clear Senate, Head To Obama.

Geithner Warns Unemployment Will Stay High in 2010

U.S. Treasury Secretary Timothy Geithner and other top economic officials in the Obama administration say that, while they expect some improvement this spring, 2010 will probably remain a rough year for Americans looking for work.

In testimony before the House Appropriations Committee on Tuesday, Geithner read a joint statement — which he prepared with Christina Romer, chairwoman of the president’s Council of Economic Advisers, and Peter Orszag, director of the White House’s Office of Management and Budget — warning that the nation’s unemployment rate “is likely to remain elevated for an extended period. The forecast projects that in the fourth quarter of 2011, the unemployment rate will be 8.9%, and that by the fourth quarter of 2012, it will be 7.9%.”

Geithner called the current unemployment rate of 9.7% “unacceptable by any metric.” He testified that it usually takes the creation of more than 100,000 jobs per month to bring the unemployment rate down; the administration foresees job creation averaging 100,000 for the rest of 2010 — but doesn’t expect it to substantially exceed that. In fact, Geithner said, the jobless rate might even rise slightly over the next few months, as unemployed workers attempt to return to the labor force.

Full Story: Geithner Warns Unemployment Will Stay High in 2010 – DailyFinance.

How the Economy was Lost, Doomed by the Myths of Free Trade

Paul Craig Roberts -

The American economy has gone away. It is not coming back until free trade myths are buried six feet under.

America’s 20th century economic success was based on two things. Free trade was not one of them. America’s economic success was based on protectionism, which was ensured by the union victory in the Civil War, and on British indebtedness, which destroyed the British pound as world reserve currency. Following World War II, the U.S. dollar took the role as reserve currency, a privilege that allows the U.S. to pay its international bills in its own currency.

World War II and socialism together ensured that the U.S. economy dominated the world at the mid 20th century. The economies of the rest of the world had been destroyed by war or were stifled by socialism [in terms of the priorities of the capitalist growth model. Editors.]

Full Story: How the Economy was Lost, Doomed by the Myths of Free Trade | Economy In Crisis.

U.S. Close to Ratings-Downgrade Danger Zone

One of the world’s top credit rating agencies warned in a report released Tuesday that the U.S., along with Britain, France, Germany and Spain, could be in jeopardy of losing its triple-A rated creditworthiness.

[moody s investors service ... ] In its quarterly report, Moody’s Investor Service said that the U.S.’s credit rating is not in imminent danger, however, Washington’s margin for error is shrinking. If the U.S. does not begin to better manage its debt problems, its could be facing a credit downgrade in the near future.

France, Spain and Germany are in the same boat as well. But, Britain and the U.S. face the most precarious situations because of debt concerns.

Full Story: U.S. Close to Ratings-Downgrade Danger Zone | Economy In Crisis.

Weekly Audit: Will Weak Reforms Bring on Another Crisis?

Senate Banking Committee Chairman Chris Dodd (D-CT) unveiled his latest financial reform proposal on Monday, and the stakes for the new legislation couldn’t be higher. After consumer groups raised a major ruckus, Dodd has dropped one of his most egregious concessions to the bank lobby—cutting enforcement authority from the proposed Consumer Financial Protection Agency (CFPA). That’s good news: Without a major regulatory overhaul, the U.S. economy’s destructive boom and bust cycle will start all over again.

We’ve been down this road before. The Enron fiasco should have served as a wake-up call for policymakers, but instead, the weak federal response to Enron’s major fraud helped pave the way for the current economic slump.

What does Enron have to do with the crisis?

As Megan Carpentier emphasizes for The Washington Independent, one of the key “reforms” Congress enacted in the Enron aftermath was a law requiring every CEO to sign-off on their company’s accounting statements—but it has accomplished almost nothing.

Full Story: The Media Consortium » Weekly Audit: Will Weak Reforms Bring on Another Crisis?.

U.S. Warns EU That A Derivatives Ban Won’t Work

Europe’s threat to ban the sort of financial derivatives trading that some blame for worsening Greece’s debt crisis wouldn’t work, a senior U.S. official told EU lawmakers Tuesday.

German, French and Greek leaders have called on the EU’s executive to crack down on so-called naked credit default swaps, where an investor can profit by taking out insurance on a product he doesn’t own. Their call is a swipe at traders taking bets on a falling euro and a Greek default.

Greece’s prime minister George Papandreou has blamed financial markets for intensifying his country’s debt crisis by hiking borrowing costs. He described the swaps as buying insurance on a neighbor’s house and then burning it down to collect.

Full Story: U.S. Warns EU That A Derivatives Ban Won’t Work.

Junk bonds to set off new crisis?

Payback Time – Avalanche of Maturing Junk Bonds Looms for Markets

When the Mayans envisioned the world coming to an end in 2012 — at least in the Hollywood telling — they didn’t count junk bonds among the perils that would lead to worldwide disaster.

Maybe they should have, because 2012 also is the beginning of a three-year period in which more than $700 billion in risky, high-yield corporate debt begins to come due, an extraordinary surge that some analysts fear could overload the debt markets.

With huge bills about to hit corporations and the federal government around the same time, the worry is that some companies will have trouble getting new loans, spurring defaults and a wave of bankruptcies.

Full Story: Payback Time – Avalanche of Maturing Junk Bonds Looms for Markets – NYTimes.com.

How Can America Restore Its Industrial Self-sufficiency?

The wealth that the U.S. achieved in the early 20th century has been eroded by encouraging other countries to build their industrial base while not taking care to ensure a domestic industrial future in this country.

This has been extensively documented and is evidenced by 30 years of trade deficits and a most recent deficit of $817 billion last year – the U.S. simply does not produce what it needs to sustain itself.

What can we do to correct this?

Coming to terms with reality

U.S. consumers of many products including capital equipment now find that foreign imports or foreign-owned domestic producers provide a better value or quality than domestic counterparts, if they even exist. Without some incentive, current policies are simply failing to stimulate competitive domestic industry.

Full Story: How Can America Restore Its Industrial Self-sufficiency? | Economy In Crisis.

Wallach Says Export Data Shows `Wobbly’ Global Economy

Lori Wallach, president of Global Trade Watch, talks with Bloomberg’s Mark Crumpton and Julie Hyman about the U.S. trade data and policies. The trade gap decreased 6.6 percent to $37.3 billion in January from a revised $39.9 billion in December as Americans imported the fewest barrels of crude oil in a decade, Commerce Department figures showed today in Washington. (Source: Bloomberg)

Sarkozy to Take Tanker Fight to Obama

The U.S. government is not obligated to open contracts to foreign companies, or even to domestic private companies. Our government could easily do what every other nation in the world does by on

The European Aeronautic Defence and Space Company (EADS) had been at odds with American industrial giant Boeing over a lucrative Defense Department contract for nearly five years. The United States military was offering a contract valued at nearly $40 billion to the best available aerial refueling tanker for the next generation of airborne warfare.

In 2008 EADS, and its subsidiary Airbus, won the bidding process and was granted the contract. However, Boeing called for a government audit of the process and upon further investigation it was found that EADS, Airbus, and Northrup Grumman (their American partner) had given improper benefits and kickbacks to several United States Air Force personnel during the bidding.

Even if the EADS-Airbus tanker was a better project, a more capable aircraft, or a cheaper alternative, the fact that their staff muddied the waters with questionable contacts was enough to restart the process. The Government Accountability Office was called in, then Senator Barack Obama went on the record expressing his own disapproval, and the Defense Department was forced to reevaluate all potential bids.

Full Story: Sarkozy to Take Tanker Fight to Obama | Economy In Crisis.

Workers in California Crushed by Toyota

Bob Herbert -

California has been very, very good to Toyota. It is one of the largest markets in the world for the popular Prius hybrid. Nearly 18 percent of all Toyotas sold in the U.S. are sold in California. The state has showered the company with benefits, including large-scale infrastructure improvements for its operations and millions of dollars for worker training. California is one of the key reasons that Toyota is the wealthiest carmaker on the planet.

Toyota is paying the state back with the foulest form of ingratitude.

The company is planning to shut down the assembly plant in Fremont, Calif., that makes Corollas and the Tacoma compact pickup. The plant closure will throw 4,700 experienced, highly skilled and dedicated employees onto the street during the worst job market since the Depression, and it will jeopardize nearly 20,000 other jobs around the state.

It is a cold and irresponsible act on Toyota’s part, a decision that was not necessary from a business standpoint and that completely disregards the wave of human misery it is setting in motion.

Full Story: Op-Ed Columnist – Workers in California Crushed by Toyota – NYTimes.com.

When the US Becomes Greece: Drivel From the Deficit Hawks

Dean Baker -

The headlines about Greece’s financial problems have provided a great backdrop to renewed attacks from the deficit hawks on Social Security and Medicare. Never mind that none of it really makes any sense. Not making sense is virtually a prerequisite for being taken seriously in Washington policy debates. This is the reason that the characters who could not see an $8 trillion housing bubble dominated debate in the years leading up to the crisis, and still do today.

The deficit hawks tell us that Greece today is where the US will be in ten years. Yeah, the US and Greek economies are virtually spitting images. In fact, they are so similar people often get them mixed up in discussions.

If we get serious, we see that the US and Greece have almost nothing in common. Greece has a small economy that is still largely dependent on tourism and agriculture. It also has a horribly corrupt government. The Organization for Economic Co-Operation and Development estimates that more than 30 percent of its GDP consists of gray market activity that escapes taxation. Even if this figure is exaggerated, the size of the underground economy is certainly much larger in Greece than in the United States.

Full Story: t r u t h o u t | When the US Becomes Greece: Drivel From the Deficit Hawks.

U.S., U.K. Move Closer to Losing Rating, Moody’s Says

The U.S. and the U.K. have moved “substantially” closer to losing their AAA credit ratings as the cost of servicing their debt rose, according to Moody’s Investors Service.

The governments of the two economies must balance bringing down their debt burdens without damaging growth by removing fiscal stimulus too quickly, Pierre Cailleteau, managing director of sovereign risk at Moody’s in London, said in a telephone interview.

Under the ratings company’s so-called baseline scenario, the U.S. will spend more on debt service as a percentage of revenue this year than any other top-rated country except the U.K., and will be the biggest spender from 2011 to 2013, Moody’s said today in a report.

Full Story: U.S., U.K. Move Closer to Losing Rating, Moody’s Says (Update1) – Bloomberg.com.

ABC World News Poll on the U.S. Middle Class and Its Concerns

Four in 10 Middle-Class Americans Say They’re Struggling in Tough Economy

Watch “ABC World News With Diane Sawyer” this week for our series “The Comeback: Saving America’s Middle Class”

A big factor: educational attainment. Among middle-class Americans with college degrees, 75 percent say they’re “comfortably” middle class or even moving up; 25 percent are struggling. But among those without a college degree, this poll for “ABC World News With Diane Sawyer” finds that about twice as many, 49 percent, are fighting to hold their place. (Education relates to income, and it’s less well-off people in the middle class who are more likely to be struggling to

Full Story: ABC World News Poll on the U.S. Middle Class and Its Concerns – ABC News.

GM Dealers in Limbo

Over 600 General Motors dealerships scheduled to lose their business with the beleaguered automaker are getting a second lease on life, however, some are not so sure that they want it.

The company announced amid its bankruptcy filing last year that it would be cutting ties with nearly 2,000 dealerships. Refusing to go quietly into the night, those dealership owners, many of whom felt that they were being haphazardly punished because of GM’s mistakes, fought back and won reprieve from Congress.

Lawmakers ordered the automaking giant to enter into arbitration with dealerships that did not want to be forced out of business. Nearly 1,200 dealerships signed up for the process.

Full Story: GM Dealers in Limbo | Economy In Crisis.

Social Security to start cashing Uncle Sam’s IOUs

The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.

It’s time to start cashing them in.

For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.

Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.

Full Story: Social Security to start cashing Uncle Sam’s IOUs – Yahoo! News.

James K. Galbraith – In Defense of Deficits

there are two ways to get the increase in total spending that we call “economic growth.” One way is for government to spend. The other is for banks to lend.

The Simpson-Bowles Commission, just established by the president, will no doubt deliver an attack on Social Security and Medicare dressed up in the sanctimonious rhetoric of deficit reduction. (Back in his salad days, former Senator Alan Simpson was a regular schemer to cut Social Security.) The Obama spending freeze is another symbolic sacrifice to the deficit gods. Most observers believe neither will amount to much, and one can hope that they are right. But what would be the economic consequences if they did? The answer is that a big deficit-reduction program would destroy the economy, or what remains of it, two years into the Great Crisis.

For this reason, the deficit phobia of Wall Street, the press, some economists and practically all politicians is one of the deepest dangers that we face. It’s not just the old and the sick who are threatened; we all are. To cut current deficits without first rebuilding the economic engine of the private credit system is a sure path to stagnation, to a double-dip recession–even to a second Great Depression. To focus obsessively on cutting future deficits is also a path that will obstruct, not assist, what we need to do to re-establish strong growth and high employment.

To put things crudely, there are two ways to get the increase in total spending that we call “economic growth.” One way is for government to spend. The other is for banks to lend. Leaving aside short-term adjustments like increased net exports or financial innovation, that’s basically all there is. Governments and banks are the two entities with the power to create something from nothing. If total spending power is to grow, one or the other of these two great financial motors–public deficits or private loans–has to be in action.

Full Story: In Defense of Deficits.

Pensioners say they are targets of a backlash

Thomas Tevlin had worked some solid jobs — salesman for Pabst Blue Ribbon beer, driver for a uniform company — when he and his wife had twins.

As the main breadwinner for a family of seven, Tevlin knew something had to change. So in 1965 he took a 15 percent pay cut to become a Maplewood firefighter.

“I took the job for the benefits, because if you have that many people to look out for, you need your benefits,” he said. Tevlin augmented his salary by taking a second job as an encyclopedia salesman. It was enough for him and wife Carolyn to forge a lifestyle she jokingly calls that of “lower-middle-class, working-class slobs.”

Full Story: Pensioners say they are targets of a backlash | – NJ.com.

Comment on DU from DJ13: First they came for the pensions, and I said nothing. Then they came for Social Security, and………

The World’s First Co-operative Brewpub

Austin has a reputation for fitness: great weather, great hike and bike trails and a zillion healthy food options. But Austin’s rep as a party spot is even larger. Steve Earle famously said he couldn’t live in the city because “the weather was too good, the girls were too pretty and the dope was too cheap.” Now some young entrepreneurs are launching a new option for partying with your thinking cap on. They are building a brewery and restaurant with a totally alternative business model.

Full Story: The World’s First Co-operative Brewpub | Cobweb | Boise Weekly.

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 Disemboweling of America

Pat Buchanan –

Though Bush 41 and Bush 43 often disagreed, one issue did unite them both with Bill Clinton: protectionism.

Globalists all, they rejected any federal measure to protect America's industrial base, economic independence or the wages of U.S. workers.

Together they rammed through NAFTA, brought America under the World Trade Organization, abolished tariffs and granted Chinese-made goods unrestricted access to the immense U.S. market.

Charles McMillion of MBG Information Services has compiled, in 44 pages of charts and graphs, the results of two decades of this Bush-Clinton experiment in globalization. His compilation might be titled, “Indices of the Industrial Decline and Fall of the United States.”

From 2000 to 2009, industrial production declined here for the first time since the 1930s. Gross domestic product also fell, and we actually lost jobs.

In traded goods alone, we ran up $6.2 trillion in deficits — $3.8 trillion of that in manufactured goods.

Full Story: The Disemboweling of America – Yahoo! News.

OPS:  Well, he’s a racist and corporatist on some subjects -and correct about one or two issues. This is one where he is correct.

More Layoffs in America: No Letup in Attack on Jobs

A rash of new layoff announcements and government reports on job losses give the lie to the claims of the Obama administration and the media that the employment situation is “stabilizing.” Last Friday, the administration hailed the Labor Department’s report that US payrolls shrank by “only” 36,000 jobs in February and the official jobless rate remained at 9.7 percent as proof that its policies are working and the economy is recovering.

In fact, the so-called “recovery” is limited to the big banks and major corporations, which are profiting from trillions of dollars in taxpayer bailouts, virtually unlimited and cheap credit, and the use of mass unemployment to drive down wages and increase the exploitation of the working class. An unprecedented assault on the living standards of the vast majority of the American people is being carried out under the direction of the Obama administration, creating a social crisis without parallel since the Great Depression.

On Tuesday, the Labor Department reported that the official unemployment rate in January rose in 30 states. Sixteen states had jobless rates higher than the national average of 9.7 percent, including Michigan (14.3 percent), Nevada (13 percent), Rhode Island (12.7 percent), South Carolina (12.6 percent) and California (12.5 percent).

Unemployment in California, Florida, Georgia, North Carolina, South Carolina and Washington DC rose to the highest levels since records began in 1976.

A separate Labor Department report showed that mass layoffs (50 or more positions) increased nationally in January to 1,761, leading to at least 182,261 workers losing their jobs.

Full Story: More Layoffs in America: No Letup in Attack on Jobs.

Robert Reich: The Sham Recovery

So what happens when the stimulus is over and the Fed begins to tighten again? Where will demand come from to get Main Street back, create jobs, raise middle class wages?

Are we finally in a recovery? Who’s “we,” kemosabe?  Big global companies, Wall Street, and high-income Americans who hold their savings in financial instruments are clearly doing better. As to the rest of us – small businesses along Main Streets, and middle and lower-income Americans – forget it.

Business cheerleaders naturally want to emphasize the positive. They assume the economy runs on optimism and that if average consumers think the economy is getting better, they’ll empty their wallets more readily and – presto! – the economy will get better. The cheerleaders fail to understand that regardless of how people feel, they won’t spend if they don’t have the money.

The US economy grew at a 5.9 percent annual rate in the fourth quarter of 2009. That sounds good until you realize GDP figures are badly distorted by structural changes in the economy. For example, part of the increase is due to rising health care costs. When WellPoint ratchets up premiums, that enlarges the GDP. But you’d have to be out of your mind to consider this evidence of a recovery.

Full Story: Robert Reich (The Sham Recovery).

United States of Foreclosures:

How ‘Bankquakes’ Shake People from Their Homes -

Danny Schechter -

The financial crisis started as a housing bubble with the financial industry convinced that home values never fall. How wrong they were even as they leveraged and securitized their investments to create a global crisis.

Now, brace yourself because not only is it not over, but in some respects it’s just begun. There will be more foreclosures this year than last and as a result more suffering for American families.

Ed Harrison who monitors this industry for a website called Credit Write Downs sees a “second wave coming”–like a new tsunami in a industry that All of Obama’s horses and all of Obama’s Men have not been able to do anything about. The idea of challenging fraud and deception with a debt relief plan goes a bit too far for these self-styled centrists. Writes Harrison:

Full Story: United States of Foreclosures: How ‘Bankquakes’ Shake People from Their Homes | CommonDreams.org.

Ending the Hidden Agenda Behind Tax Cuts

Something as simple as a metaphor can mean the difference between shared prosperity and widespread suffering.

It’s time to tell the truth about tax cuts. This phrase dominates political discourse and is coughed out every time a conservative public figure opens his mouth. It is treated like the basis of sound reasoning, yet no one points out what should be obvious – that “tax relief” and “tax cuts” are just code words for destroying the capacity of government to serve the public.

We’ve heard over and over again that the source of society’s problems is the government. The solution that follows is to “trim the fat”, “cut out the waste”, “shrink the government”, and provide “relief” to millions of citizens who suffer the burden of exploitation by Washington elites. This story flies in the face of the facts, yet it makes sense to a significant portion of the U.S. population. How can this be?

The answer has to do with how we make sense of things in the world. Our experiences shape what seems legitimate by reinforcing (or undermining) our ideas about the way things work. So, for example, a progressive politician may speak honestly and forcefully about the positive role of government in our lives. But this will fall on deaf ears if our typical experience is at odds with such claims. This observation demonstrates a key element of what George Lakoff and I have dubbed the Cognitive Criterion for Public Support:

Full Story: Ending the Hidden Agenda Behind Tax Cuts | Cognitive Policy Works.

Price of Lockheed’s F-35 fighter soars by 50%

Cost/plane seen over 50 pct higher than nine years ago

• * Cost growth comes despite efforts to reform program
• * Air Force to formally notify Congress, begin review (Adds ‘too big to fail’ in 3rd paragraph, Lockheed and GAO comments)

WASHINGTON, March 11 (Reuters) – The average cost of Lockheed Martin Corp’s (LMT.N) F-35 Joint Strike Fighter, the Pentagon’s costliest arms purchase yet, will soar more than 50 percent above what was projected when its development began nine years ago, the Pentagon’s top arms buyer told Congress.

The U.S. Air Force is set to formally notify Congress that the program has crashed through a key cost-containment threshold that will force a thorough review, Ashton Carter, undersecretary of defense for acquisition, said on Thursday.

But the net impact of such a notification may be minimal since the program is widely said by U.S. officials to be too big to fail. Washington has no other way to replace aging warplanes like Lockheed’s F-16 and the program is a linchpin of fighter modernization for several U.S. allies.

Full Story: UPDATE 2-Price of Lockheed’s F-35 fighter soars | Reuters.

Obama’s ambitious export plan may rekindle free-trade battle

President Obama unveiled plans Thursday to double U.S. exports over the next five years in hopes of spurring job growth, an ambitious goal that may rekindle the battle over free-trade policy.

The president acknowledged the formidable barriers to his goal: doubts in Congress over new free-trade agreements, misaligned currencies that make Chinese products cheaper on global markets, and continued weakness in global demand, all problems that could dwarf efforts to promote U.S. products and services abroad.

But, Obama said in a speech, “in a time when millions of Americans are out of work, boosting our exports is a short-term imperative.”

Full Story: Obama’s ambitious export plan may rekindle free-trade battle – washingtonpost.com.

OPS:  He’s doing nothing but re inflating bubbles – might as we re inflate the Free-trade bubble too

New round of foreclosures threatens housing market

The housing market is facing swelling ranks of homeowners who are seriously delinquent but have yet to lose their homes, and this is threatening a new wave of foreclosures that could hit just as the real estate market has begun to stabilize.

About 5 million to 7 million properties are potentially eligible for foreclosure but have not yet been repossessed and put up for sale. Some economists project it could take nearly three years before all these homes have been put on the market and purchased by new owners. And the number of pending foreclosures could grow much bigger over the coming year as more distressed borrowers become delinquent and then, if they can’t obtain mortgage relief, wade through the foreclosure process, which often takes more than a year to complete.

As these foreclosed properties add to the supply of homes for sale, they could undercut housing prices, which have increased modestly through December, according to the most recent figures in the S&P/Case-Shiller home prices index. That rise partly reflected a slowdown in the flow of foreclosed homes onto the market.

Full Story: New round of foreclosures threatens housing market – washingtonpost.com.

The wealthiest nation in the world? Wrong!

We are living in a new world in which America is just trying to survive.

I am so weary of hearing this same old, worn out phrase “we are the wealthiest nation in the world.” On what planet do the people who utter that non-factual statement live? While that was once a fact, we need to accept reality; those days are over, we are living in a new world in which America is just trying to survive. The once largest creditor nation in the world has become the largest debtor nation. And we have only ourselves to blame.

If you measure nations by the largest total gross national product, the United States still comes out on top. But when the measurement is done based on the largest per capita gross national product, the U.S. ranks 4th (IMF) or 6th (World Bank). That is clear proof that we are not the wealthiest nation in the world; but that is not the worst of it.

It should be understood that “gross” national product does not reflect the actual wealth of a nation, just as gross income is not indicative of an individual's actual financial condition.

Full Story: OpEdNews – Article: The wealthiest nation in the world? Wrong!.

House Members Working to Repeal NAFTA

Legislation introduced in the House that would compel the president to withdraw from the North American Free Trade Agreement within six months is causing some consternation among Canadian officials who are worried that it may be a sign of a coming wave of protectionism ahead of the 2010 midterm elections.

“We are closely following this bill, of course,” Canadian International Trade Minister Peter Van Loan said, according to The Vancouver Sun. “Our evaluation is that this is certainly inconsistent with the direction that the Barack Obama administration has chosen.”

The effort, led by Democratic Rep. Gene Taylor of Mississippi, would require providing Canada and Mexico with a six-month notification of America’s intent to drop out of the trade pact. After that, the U.S. would be free to leave the tri-lateral agreement.

Full Story: House Members Working to Repeal NAFTA | Economy In Crisis.

Health Care Reform Could Reshape Tax System

The latest health care proposal, according to Kaiser Health News, could impose Medicare taxes on something other than just earned income while at the same time raising the nominal Medicare payroll tax rate for the richest of Americans.

Just one week away from the White House’s self-imposed deadline for the House to pass the Senate’s version of health care reform, President Obama has taken the show on the road to drum up support for the plan. One group he could have a difficult time convincing is the wealthiest of Americans who could see a hefty tax increase if the plan is passed.

The latest health care proposal, according to Kaiser Health News, could for the first time impose Medicare taxes on something other than just earned income while at the same time raising the nominal Medicare payroll tax rate for the richest of Americans.

Historically, employees have been taxed at a 1.45 percent rate for Medicare benefits, regardless of income. The Obama plan, however, would increase the nominal rate for those earning over $200,000 per year from 1.45 percent to 2.35 percent.

Full Story: Health Care Reform Could Reshape Tax System | Economy In Crisis.

Robert Rubin: Why Won’t He Go Away?

Chief Architect of the Financial Crash Is Still Treated as a Credible Economic Expert. Robert Rubin put in place all the pieces that set up the economy for the disaster that we are now living through. Why can’t he get off the stage?

As Treasury Secretary, Robert Rubin put in place all the pieces that set up the economy for the disaster that we are now living through. He pushed legislation that weakened regulation of the financial sector; he cheered on a stock bubble that eventually grew to $10 trillion and he established an over-valued dollar as a matter of official policy.

He then left to take a top job at Citigroup where he was able to enjoy the fruits of his labor. He earned well over $100 million in the decade after he left the Clinton administration. In the fall of 2008, when Citigroup was saved from bankruptcy with a taxpayer bailout, Rubin quietly slipped out the back door (with his money), resigning from his position at Citigroup.

It may not seem just that someone like Rubin would be allowed to live out his life in luxury after the policies that he promoted and personally profited from led to so much suffering for so many people. But that is the way things work in the United States these days. However, what is even more infuriating is that he doesn’t seem to have any intention of going away. He is still pontificating on the economy and desperately trying to rewrite history to exonerate himself.

Full Story: t r u t h o u t | Robert Rubin: Why Won’t He Go Away?.

The dangers of deficit reduction

Joseph E. Stiglitz:  -

A wave of fiscal austerity is rushing over Europe and America. The magnitude of budget deficits — like the magnitude of the downturn — has taken many by surprise. But despite protests by yesterday’s proponents of deregulation, who would like the government to remain passive, most economists believe that government spending has made a difference, helping to avert another Great Depression.

Most economists also agree that it is a mistake to look at only one side of a balance sheet (whether for the public or private sector). One has to look not only at what a country or firm owes, but also at its assets. This should help answer those financial-sector hawks who are raising alarms about government spending. After all, even deficit hawks acknowledge that we should be focusing not on today’s deficit, but on the long-term national debt. Spending, especially on investments in education, technology and infrastructure, can actually lead to lower long-term deficits.

Faster growth and returns on public investment yield higher tax revenues, and a 5 to 6 percent return is more than enough to offset temporary increases in the national debt. A social cost-benefit analysis (taking into account impacts other than on the budget) makes such expenditures, even when debt-financed, even more attractive.

Full Story: Joseph E. Stiglitz: The dangers of deficit reduction.

Senate-passed health care bill would cut deficit

Congressional budget referees say Senate legislation that’s now the foundation for President Barack Obama’s health care plan would cut the federal deficit by $118 billion over 10 years.

Full Story: Senate-passed health care bill would cut deficit.

Business regulation – EU hits back at Geithner on regulation

Hedge fund rules ‘in line’ with G20 push on transparency

Top European Union officials hit back on Thursday at criticism from Tim Geithner, US Treasury secretary, who has accused Brussels of pushing ahead with rules to regulate managers of hedge funds and other alternative investment funds that could be protectionist.

A spokesman for Michel Barnier, the new EU internal market commissioner who is responsible for financial services regulation and to whom Mr Geithner addressed his concerns, said that the EU decision to act on hedge funds was in line with a G20 decision to reinforce transparency in the financial system.

Full Story: FT.com / Brussels / Business regulation – EU hits back at Geithner on regulation.

Inside Alan Greenspan’s nightmare

Mark Weisbrot

News that wages are rising in China is greeted with dread by those who share Greenspan’s unwarranted fear of rising inflation

Alan Greenspan had a dream, or rather a nightmare. Greenspan seems to have woken up in a cold sweat one morning in fear that the period of “disinflationary pressures” that had kept inflation low since the 1990s was about to end. This was 2007, when he published his autobiographical economic treatise, The Age of Turbulence. Despite his well-known love for economic data, and poring over the latest reports from every statistical agency, he did not realise that he was sitting on a housing bubble of epic proportions. Not seeing the bubble (he also missed the prior stock market bubble that accumulated and burst on his watch, causing the 2001 downturn), he could not know that it would soon collapse and cause a very ugly recession, in which inflation would be irrelevant.

This by itself should be enough to question the wisdom of central bankers, since the evidence for both of these world-historic asset bubbles was blindingly obvious once they had reached a certain size. But Greenspan’s nightmare is scary for other reasons, some of which will become increasingly relevant as the world economy recovers.

As Greenspan details in his book, the reason for his nightmare is that the world was depleting its stock of hundreds of millions of unemployed people, including those of the former Soviet Union and also in rural China. In other words, “too many” of them had become employed, and this was allowing for wages of factory workers in China to rise. So long as China had a huge mass of unemployed, wages were held in check, and – according to Greenspan – competition from low-wage production there held down wages in the rest of the world, including even rich countries like the United States. All good! Until the nightmare started.

Full Story: Inside Alan Greenspan’s nightmare | Mark Weisbrot | Comment is free | guardian.co.uk.

Max Keiser Report №24:

This time Max Keiser and co-host Stacy Herbert look at the scandals behind psychic scams, money heaven and credit default swap bans. Keiser talks to Business Insider’s Joe Wiesenthal about derivatives, hedge funds, the economy and day trading politicians.

12 Industries That Will Be Adding Jobs Very Soon

Are we nearing a rebound in hiring? If the anecdotal evidence is any indication, we certainly are. According to Manpower’s quarterly Employment Outlook Survey, hiring in almost every sector is about to get better.

The staffing company’s assessment, which surveys employers in thirteen industries, found that twelve of the thirteen have net positive employment outlooks for the second quarter of this year. Even in the lone sector with a net negative outlook — government — 10 percent of employers said they expected to hire more people next quarter.

Here’s Manpower:

Of the more than 18,000 employers surveyed across the nation, 16% anticipate an increase in staff levels during Quarter 2 2010, while 8% expect a decrease in payrolls, resulting in a Net Employment Outlook of +8%. When seasonally adjusted, the Net Employment Outlook becomes +5%…

Full Story: 12 Industries That Will Be Adding Jobs Very Soon (PHOTOS).

GMAC Bailout Could Cost Taxpayers $6.3 Billion, Says Watchdog

The Treasury Department sank billions into auto finance giant GMAC Inc. without an exit strategy or proof the company was viable – a decision that could cost taxpayers $6.3 billion, a new watchdog report says.

The government said the $17.2 billion bailout was a necessary step to save troubled automakers General Motors and Chrysler. GMAC provides critical financing to auto dealers, who borrow to finance their fleets until the cars can be sold to consumers.

Yet GMAC faced far fewer conditions than the bailed-out automakers, the report says. When the automakers were rescued, they were forced into bankruptcy. Shareholders lost their investments, creditors took a hit and executives were forced to detail plans for making the companies viable.

Full Story: GMAC Bailout Could Cost Taxpayers $6.3 Billion, Says Watchdog.

OPS: New Rule – The Sr Management and Board of Directors of any Corporations that requires a government bailout receives an automatic 10 year jail sentence (no parole, no pardons)

Unemployment insurance continuing claims spike

The number of Americans filing continuing claims for unemployment insurance spiked last week, the Labor Department said Thursday, as sluggish hiring continues to drag on the labor market’s recovery.

The number of people filing continuing claims jumped to 4,558,000 in the week ended Feb. 27, the most recent data available. That was up 37,000 from the preceding week’s upwardly revised 4,521,000 claims.

Economists were expecting continuing claims to remain unchanged at 4,500,000.

Full Story: Unemployment insurance continuing claims spike – Mar. 11, 2010.

Time for the U.S. to Join the Value-Added Tax Bandwagon

The value-added tax allows nations to build revenue through taxation, and thus guarantees their financial stability, but it builds revenue on foreigners as well as domestic residents. In the U.S. we tax our own citizens and then ask foreign countries to loan us the difference.

The value-added tax, or VAT, is the most widespread and successful taxation scheme in use around the world today. More than 140 nations utilize the value-added tax system as a means of building government revenue.

Unfortunately, the VAT also acts as a means of unofficially blockading imported goods. The value-added tax is plugged on to every good and service inside the economy. In so doing it makes domestic alternatives more fiscally or economically responsible as consumer items.

Every time a nation joins the World Trade Organization, or signs into a new free trade agreement, it almost always replaces the now illegal “import tariffs” with a completely legal national consumption tax – almost always in the form of a VAT. The new national consumption tax acts just like a tariff, but it does so within the legal confines of the WTO and other international accords.

Full Story: Time for the U.S. to Join the Value-Added Tax Bandwagon | Economy In Crisis.

China’s Exports Surge 46%

Since 2005, Americans have spent $1.1 trillion on Chinese products; Chinese consumers have bought just $272 billion worth of goods over that same time.

For the third consecutive month, China’s exports rose, suggesting demand may be picking up in the U.S. and Europe, and leading some to believe that China may soon face increasing pressure to let its currency appreciate against the dollar.

China’s February exports rose nearly 46 percent compared with the same period last year, to $94.5 billion, beating most expectations, officials announced Wednesday. China’s export figures last month are all the more impressive given the fact that many businesses shut down for a week for the nation’s Lunar New Year.

Overall for the month, China held a $7.6 billion trade surplus with the rest of the world, much of which was driven by the Asian nation’s trade surplus with the U.S.

The better than expected export report, however, could cause other nation’s to demand that China allows its currency, the yuan, which has been pegged to the dollar for 18 months, to appreciate to appropriate levels.

Full Story: China’s Exports Surge 46% | Economy In Crisis.

You’re still keeping your money in a big bank? What the hell is WRONG with you?

Excuse me, but can I have a word with the 70% of Americans who continuing keeping their money in big banks, like Bank of America, CitiBank, Wells Fargo and such? Come closer. A little closer. I want to be able to give you a well-earned dope-slap while I ask;

WHAT THE HELL’s THE MATTER WITH YOU? ARE YOU STUPID!?

Jesus H. Christ, what’s it going to take before you people stop doing business with the enemy? You’re like abused spouses who are slapped around and slapped around again and again by your big bank and keep crawling back for more. If this behavior didn’t hurt the rest of us I’d be delighted to just let you get the shit beat out of you until your big bank bleeds you white. That would be Darwinism at it’s most effective.

But, thanks to the fact that 90% of America’s household savings are deposited in these big banks means that your self-destructive banking habits are fueling the very financial services juggernauts that have repeatedly devastating the lives, homes, families and savings of average working Americans. And not just once, but time and time and time again.

Are you listening goddamnit!

Full Story: You’re still keeping your money in a big bank? What the hell is WRONG with you? | The Smirking Chimp.

  The Financial Crisis Changed Nothing

Principles Before Heroes

Robert Reich -

y taking steps to prevent the financial crisis of 2008 from turning into a broader financial meltdown, President Obama prevented another Great Depression. For that, we should be thankful. Yet ironically, a larger-scale economic crisis might have summoned the political will to reverse the long-term trend of increasing concentration of wealth and power, as it did in 1933. Now, with the immediate crisis contained, political support for major reform has slackened. Consequently, we find ourselves almost as far from meeting the progressive ideals of equal opportunity and robust democracy as we were before the crisis began.

If anything, the Great Recession has accelerated the trend toward greater concentration. Under its pressure, more firms have discovered how easily they can increase profits by shrinking their payrolls and laying off their workers, and how cheaply jobs can be done using computers and advanced software or using the Internet to outsource jobs to foreign workers who have become nearly as productive as Americans, but charge far less. This means many more Americans are facing the Hobson’s choice of joblessness or lower wages. At the other end of the income ladder, top corporate and Wall Street executives and traders with reputed “talent” and connections–those charged with discovering more ways to increase profits–are commanding ever higher salaries and bonuses.

Meanwhile, the political power that comes with wealth has shown no sign of abating. The Great Recession notwithstanding, Wall Street’s generous campaign donations, its ubiquitous lobbyists, and its numerous revolving doors into the Treasury and other economic posts have all but assured the Street that financial “reform” will not drastically cut into its profits or the take-home pay of its denizens. Big Pharma and Big Insurance, likewise, are running victory laps around the deal they struck on health care, which virtually guarantees them big payouts in future years. And although marginal tax rates on the very wealthy are slated to rise, they will barely nick incomes that are rising even faster.

Full Story: Robert Reich for Democracy: A Journal of Ideas.

Whose Bank? Public Investment, Not Private Debt

While bank bailouts fatten Wall Street, states continue to battle the credit crisis. In the search for innovative solutions, some political candidates are proposing that states generate their own credit by setting up their own banks.

State budgets for 2010 face the largest shortfalls on record, totaling $194 billion or 28 percent of state budgets; and 2011 is expected to be worse. Unemployment has already officially hit 10 percent, and many economists expect it to rise higher. Continued high unemployment will keep state income tax receipts at low levels and increase demand for Medicaid and other essential services states provide. The existing alternatives are spending cuts or tax increases, but both will just serve to make the downturn deeper. When states cut spending, they lay off employees, cancel contracts with vendors, eliminate or lower payments to businesses and nonprofit organizations that provide direct services, and cut benefit payments to individuals. The result is a reduction in overall demand. Tax increases also remove demand, by reducing the amount of money people have to spend.

Amanda Paulson, writing in The Christian Science Monitor, quotes Arturo Pérez, fiscal analyst with the National Conference of State Legislatures, which released its survey of state budget situations in December: “Unless you’re North Dakota, you’re probably a state that has had some degree of difficulty or crisis involving finances. It’s the worst situation states have faced in decades, perhaps going as far back as the Great Depression in some states.”

Full Story: Whose Bank? Public Investment, Not Private Debt by Ellen Brown — YES! Magazine.

Structural Weakness of the US Dollar. The Dollar Rally will not last

Every important factor we see is working against the dollar and we believe that trend is irreversible. That means the present dollar rally probably cannot endure and it could well be the time to short the USDX.

Most observers discuss Europe’s problems and the plight of the euro, pound, and the Danish and Swedish koronas. They believe these European currencies will plunge lower versus the dollar and that the dollar will maintain, even after a dollar rally from 74 to 81 on the USDX. As we have said before the euro was unnatural creation born of a desire to usher in a world currency. As we shall see in the future the euro will fail. In spite of that the dollar is certainly no bargain, because next year America will be totally bankrupt. As a result of the terrible conditions among currencies, gold makes great gains. Last year and so far this year gold is up 10% to 24% against many major currencies. This kind of action of course proves again that gold is the world’s strongest currency. We might add here that we believe that it is only a matter of time before the LBMA, or Comex, or the ETFs, GLDs and SLVs are enveloped in scandal. As so often has happened in history fiat currencies have collapsed. Thus, it will happen again. Those of you not in gold and silver related assets will lose most of what you have worked for your entire lives.

The collapse of currencies and nations won’t happen overnight, because their demise has been planned, and a subtle collapse is in process. Our guess is that next year is when the collapse will finally take place followed by one of the greatest deflationary depressions of all time. During the last 2-1/2 years all the toxic investments have been and will continue to be transferred from the Illuminist banks, brokerage houses, insurance companies and transnational conglomerates to the public. The Federal Reserve is the repository for this junk, which includes Treasuries and Agencies. That means the public foots the bill. Every government and bank in the world will be affected. This magical game of 3-card-Monte will never work and the Illuminists know it won’t work. That is why they have war on demand to distract the public and to escape punishment for the devastating thing they have brought upon mankind. What we are facing is as bad if not worse than the collapse of the Lombard system in Venice in 1348, the year of the plague and the collapse of the Hanseanic League in the 1600s, the creation of the Medici’s. For starters we already have 19 bankrupt or near bankrupt major countries and many others that will be pulled into the vortex of financial and economic calamity. In each country we see the Illuminists doing their evil work, legends in their own minds, in a system that they know cannot survive. They are waiting for orders to pull the plug in each and every country. These masters of the universe all know that prosperity cannot be created by printing money and issuing credit indefinitely. They know full well that such a system cannot survive.

Full Story: Structural Weakness of the US Dollar. The Dollar Rally will not last.

Unemployment Rises In 30 States In January

Unemployment rose in 30 states in January, the Labor Department said Wednesday, evidence that jobs remain scarce in most regions of the country.

The data is somewhat better than December, when 43 states reported higher unemployment rates, but worse than November, when rates fell in most states.

Still, five states reported record-high joblessness in January: California, at 12.5 percent; South Carolina, 12.6 percent; Florida, 11.9 percent; North Carolina, 11.1 percent; and Georgia, 10.4 percent.

Full Story: Unemployment Rises In 30 States In January.

Obama Foreclosure-Prevention Plan Lagging, New Data Shows (EXCLUSIVE)

Only about a third of the homeowners who have successfully completed the trial period of the Obama administration’s mortgage modification program have been offered permanent relief, according to new federal data obtained by the Huffington Post.

The conversion rate — about 33 percent — is woefully short of what the Treasury Department had forecast. Treasury thought the rate would be “ranging up to 75 percent,” Herbert M. Allison Jr., assistant secretary for financial stability, told the Congressional Oversight Panel in October.

The other two-thirds of homeowners who have gone through the trial program and made the necessary payments remain in limbo. Some of those homeowners — more than 350,000 of them — will ultimately lose out on the kind of relief the administration has repeatedly promised: averting foreclosure through lower monthly payments.

Full Story: Obama Foreclosure-Prevention Plan Lagging, New Data Shows (EXCLUSIVE).

“Today is a Big Day in America” Real Unemployment Rate Over 21%

“Today is a big day in America. Only 36,000 people lost their jobs today, which is really good,” Senate Majority Leader Harry Reid gleefully proclaims on the Senate floor.

Harry Reid is not really happy with the loss of 36,000 jobs. He is just happy if the American people are silly enough to accept this as really good news.

Come on folks. Is it really good news to keep losing tens of thousands of jobs each month (the number is likely higher than whatever they are telling us).

Full Story: OpEdNews – Article: “Today is a Big Day in America” Real Unemployment Rate Over 21%.

America’s Outsourcing Epidemic

Outsourcing is a huge problem for the United States economy. Allowing companies to shift jobs across national boundaries in a search for cheaper labor, and wider profit margins, has been at the vanguard of economic reform for more than a decade. Unfortunately, the U.S. has yet to take a tough stance on companies that move jobs overseas, and it has never officially discouraged the practice as many other nations have.

According to AmericanEconomicAlert.org, not only is the U.S. not taking a stance against outsourcers, in some cases we are actually encouraging them. Alan Tonelson believes that President Obama’s decision to put the chairperson of an outsourcing giant on a bipartisan debt/deficit commission is a clear signal that we are not nearly tough enough on companies that take jobs away from the U.S.

Tonelson, a Research Fellow at the USBIC and former Associate Editor of Foreign Policy, has long been a proponent of discouraging outsourcing. During the presidential campaign, then Senator Barack Obama talked about putting penalties on outsourcing and doing all it could to bring jobs back. Now, after having been smothered by the health care debate, the administration has taken no steps to stop the job losses.

Full Story: America’s Outsourcing Epidemic | Economy In Crisis.

U.S. Productivity Gains Misleading

While data shows that American productivity has increased exponentially in the past three decades, that is nothing more than a façade given that most of those production gains are driven by offshoring, according to two fair trade advocates.

Writing in The New York Times, Alan Tonelson and Kevin Kearns, members of the U.S. Business and Industry Council, claim that for years the U.S. Labor Department has been leading the American people to believe that the productivity of its workers has been skyrocketing.

The problem is, the Labor Department fails to differentiate between American and foreign workers when calculating productivity.

Full Story: U.S. Productivity Gains Misleading | Economy In Crisis.

Bank Of America Overdraft Fees Dropped: Bank Will End Fees By Summer 2010

Bank of America customers will soon be unable to spend more than they have in the accounts linked to their debit cards. It’s a step that may become a common move ahead of new regulations limiting overdraft fees.

Rules set by the Federal Reserve that will ban banks from charging such fees, without first getting permission from the customer, are set to take effect July 1.

But Bank of America is going a step further than the regulations require. It will simply no longer allow debit card purchases to go through if there isn’t enough money in the account.

Full Story: Bank Of America Overdraft Fees Dropped: Bank Will End Fees By Summer 2010.

Shorting America Rocks

! – Matt Taibbi -

Lower credit risk means a lower price for protection. Zero implies zero risk. The higher the basis points, the higher the implied risk. When U.S. credit default swaps were first introduced, the price of protection was around two basis points. According to Bloomberg, the price for five-year protection was around 38 basis points (per annum) on Friday. But the price in the over-the-counter market — where this stuff actually trades — was almost double or around 75 basis points.

Since most traders in U.S. credit default swaps don’t think the U.S. will default any time soon, why are they trading U.S. credit default swaps? They are speculating on price movements the way a day trader buys and sells stocks to speculate on stock price movements.

via Janet Tavakoli: Washington Must Ban U.S. Credit Derivatives as Traders Demand Gold.

Another Janet Tavakoli piece, this one about the market for CDS on the United States.

Full Story: Shorting America Rocks! – Matt Taibbi – Taibblog – True/Slant.

Senate Drops Funding For Summer Jobs Program And Enhanced Subsidies For Poor Families With Children

Just a week after Senate Republican Jim Bunning’s infamous obstruction of an unemployment benefits extension, the GOP is taking another stand that pits deficit reduction against aid to the poor and jobless.

On Tuesday, Senate Republicans — along with some Democrats — defeated a measure to provide $1.3 billion for summer jobs for young people this year and a $1.3 billion extension of enhanced subsidies for poor families with children.

Sen. Patty Murray (D-Wash.), who introduced the amendment along with Sen. John Kerry (D-Mass.), pleaded with her colleagues not to object.

Full Story: Senate Drops Funding For Summer Jobs Program And Enhanced Subsidies For Poor Families With Children.

U.S. millionaire ranks up 16 percent last year: study

The number of U.S. households with a net worth of at least $1 million jumped 16 percent last year after dipping sharply during the financial crisis, an industry consulting group said on Tuesday.

Households with a net worth of $1 million or more, excluding their primary residence, totaled 7.8 million in 2009, up from 6.7 million in 2008, according to Spectrem Group.

The number of millionaire households shrank by 27 percent in 2008, it said.

The current total is still well below the record 9.2 million millionaire households reported in 2007, Spectrem said.

Last year’s spike came as U.S. stock markets rallied. The S&P 500 Index rose 28 percent, and the largest wealth management firms reported strong earnings as their clients’ accounts recovered from the 2008 meltdown.

Full Story: U.S. millionaire ranks up 16 percent last year: study | Reuters.

Green Jobs Are ‘Greatest Market Opportunity Of Our Generation,’ Senator Says

Flanked by forced-out former green jobs czar Van Jones, Sen. Kirsten Gillibrand (D-N.Y.) said Monday that creating new jobs in green industries presents the “greatest market opportunity of our generation.”

Comparing the call to create “green jobs” to former President John F. Kennedy’s call for landing a man on the Moon, Gillibrand said at a forum that the nation needs to act in order to inspire the next generation of scientists.

“Green jobs” are those in industries that promote environmental protection and energy independence, like energy efficiency, renewable energy and smart energy. With millions of Americans unemployed and global warming threatening the globe, the burgeoning field of green technology could be the nation’s next great job creation vehicle.

Full Story: Green Jobs Are ‘Greatest Market Opportunity Of Our Generation,’ Senator Says.

Unemployment Insurance Extension Faces Test Vote In Senate

Legislation extending unemployment insurance for the long-term jobless faces a key test vote in the Senate, its momentum helped by about 60 popular tax breaks for individuals and businesses that expired at the end of last year.

The measure also prevents doctors from absorbing a crippling cut in Medicare payments, extends health insurance subsidies for the unemployed and gives cash-starved states help with Medicaid, the federal-state program providing health care to the poor and disabled.

The unemployment insurance alone – to provide weekly unemployment checks averaging above $300 to people whose core 26-week benefit package has run out – will cost $66 billion through December. In some states people are eligible to receive benefits for up to 99 weeks.

Full Story: Unemployment Insurance Extension Faces Test Vote In Senate.

Way Too Big to Save

Listening to US officials, talking to legal experts, and waiting for an intense Senate debate on financial reform to begin, you can easily form the impression that “too big to fail” adequately describes our most serious future systemic banking problems. It does not.

In September 2008, the large banks and quasi-banks at the heart of our financial system faced failure — and they were saved in the most immediate sense through actions taken by the Federal Reserve, but TARP (passed by Congress and run Treasury) also played a significant supporting role.

The Bush administration threw a small fiscal stimulus into the mix in early 2008, hoping to stave off recession; the Obama administration committed a much larger package at the start of 2009, aiming to prevent anything like a Second Great Depression. This fiscal policy response was in direct reaction to problems caused by the overextension and near failure of the financial system

Full Story: Simon Johnson: Way Too Big to Save.

Washington’s Job Fraud

Former Senator Ernest F. Hollings -

Washington engages in the grandest fraud on jobs. An important part of the job fraud is to make the people feel like the loss of jobs is due to the recession, not off-shoring.

Washington engages in the grandest fraud on jobs. The people are led to believe that tax cuts stimulate growth and jobs and that borrowing and spending money stimulates jobs.

I’ll never forget as Chairman of the Budget Committee briefing Ronald Reagan with Alan Greenspan in the Blair House just before Reagan was sworn in as president. The economy was not good, and I can hear Reagan exclaiming now: “I promised to balance the budget in a year, and there’s no way to do it.” I explained it would take three years, and I would be glad to help in a bi-partisan effort to try to bring it in balance. The rest is history. President Reagan launched the policy of “growth” to stimulate the economy by cutting taxes, giving the United States its first trillion dollar debt in his first term, with another trillion dollar growth in debt in his second term. President George W. Bush, bragged that he was a Reaganite, stimulated the economy by cutting taxes, which increased the national debt $5 trillion. Instead of growth, the economy lost 673,000 private jobs in eight years under President George W. Bush.

Full Story: Washington’s Job Fraud | Economy In Crisis.

Move Your Money, But Don’t Forget About Credit Unions

Banking behemoths don’t deserve your business. But your local credit union could be the right financial fit.

Horrific news surrounding the too-big-to-fail banks continues to march onward into absurdity. A rapacious Bank of America forecloses on a house that’s already paid for. Goldman Sachs hides Greece’s hundreds of billions in debt until the entire country is a toxic asset to the global economy. Henry Paulson baldly admits that his tenure as Goldman Sachs’ CEO helped him rob American taxpayers of trillions. Media, political and financial hypocrites hilariously continue to insist that homeowners shouldn’t walk away from underwater mortgages as banks walk away with cash stuffed in their high-end underwear. The frustrated public would laugh, but it’d have to pull the financial gun out of its mouth first.

Full Story: Move Your Money, But Don’t Forget About Credit Unions | Economy | AlterNet.

Wall Street Journal Lies About Teen Unemployment

I want to start today by pointing to a post by Jonathan Chait at The New Republic. Chait attempts to refute the suggestion the Wall Street Journal put forth in an editorial claiming that the minimum wage increase was to blame for rising youth unemployment numbers. The chart to the left appeared in the Journal to augment the editorial board’s argument.

Chait draws on analysis from University of Michigan political scientist Brendan Nyhan explaining that the unemployment increase in ALL age demographics undoes the Journal’s argument. The Journal can’t seem to distinguish between correlation and causation, Nyhan writes.

Full Story: Wall Street Journal Lies About Teen Unemployment | Future Majority.

Newsom orders layoffs for 15,000 S.F. workers but plans to hire back most on part-time basis

Action is part of ongoing effort to trim city’s $522-million budget deficit

San Francisco Mayor Gavin Newsom cut the workweek for 15,000 full-time city employees to 37.5 hours Friday as a cost-cutting measure.

The mayor’s office also clarified that approximately 15,000 of the city’s 26,000 workers were to start receiving layoff notices Friday and over the weekend, and not 20,000 as it said earlier.

Newsom said the plan will save the city $50 million from its general fund, and $100 million from the entire city budget.

The city has an estimated budget deficit of $522 million for the coming fiscal year.

“This is a very defensible thing, in a very difficult time,” Newsom insisted.

Newsom said the layoff notices are a “technical” measure, and that the “overwhelming majority” of the noticed workers will be rehired immediately, should they so choose, but at a part-time status, working a half-hour less each day. That would amount to an approximately 6.25-percent pay cut, he said.

Full Story: Pleasanton Weekly : Newsom orders layoffs for 15,000 S.F. workers but plans to hire back most on part-time basis.

Blame it on the bubble

| Dean Baker -

The financial crisis is just a sideshow – the real reason for the economic downturn is the rise and demise of the housing bubble

Politicians and the media continue to refer to the economic downturn as being the result of a financial crisis. This is wrong. We have 15 million people out of work because the housing bubble that drove the economy since the last recession finally burst. The financial crisis may have been good entertainment for those who like to see huge banks collapse, but it was a sidebar. The real story was the rise and demise of the housing bubble.

Those who claim that the real problem was the financial system and its faulty regulation can be disproved with a single word: Spain.

Spain is noteworthy because it now has an unemployment rate of more than 19%, the highest rate in any of the wealthy countries. Spain did not have a financial crisis. In fact, its well-regulated financial system is often held up as model for the United States.

Full Story: Blame it on the bubble | Dean Baker | Comment is free | guardian.co.uk.

Pennsylvania helps jobless residents pay their mortgages

The jobless may not be getting much help from President Obama’s loan modification program, but those in Pennsylvania have another place to turn.

The Pennsylvania Housing Finance Agency offers the jobless and those suffering financial hardship loans of up to $60,000 for as long as three years to cover their monthly payments or take care of their arrears. Created in 1983, the program boasts an 80% success rate in preventing foreclosures.

“If you allow people some time to find a job, they can keep their home, which saves their family, their neighborhood and their communities,” said Brian Hudson, the agency’s executive director.

Full Story: Pennsylvania helps jobless residents pay their mortgages – Yahoo! Finance.

Corker And Alexander Place Hold On Aviation Funding Bill To Prevent FedEx Drivers From Unionizing

Last year, the House of Representatives passed a bill reauthorizing the Federal Aviation Administration and devoting $70 billion to airport infrastructure through 2012. The bill also changed an inequity in labor law which has allowed FedEx to operate under the Railway Labor Act (RLA), while other shipping companies like UPS are governed by the National Labor Relations Act (NLRA).

The RLA poses larger barriers to organizing than the NLRA, which has enabled FedEx to prevent its drivers from collectively bargaining. So the company has invested a lot of time and effort into blocking the change, including characterizing it as a “bailout” for UPS.

And FedEx has an ally in Sen. Bob Corker (R-TN), who is preventing the FAA reauthorization from moving in the Senate, until he receives assurance that the change in labor law won’t occur:

Full Story: Think Progress » Corker And Alexander Place Hold On Aviation Funding Bill To Prevent FedEx Drivers From Unionizing.

Short-Sale Program Will Pay Homeowners to Sell at a Loss

In an effort to end the foreclosure crisis, the Obama administration has been trying to keep defaulting owners in their homes. Now it will take a new approach: paying some of them to leave.

This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.

More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped only a small slice of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.

Full Story: Short-Sale Program Will Pay Homeowners to Sell at a Loss – NYTimes.com.

Green Jobs here?…or China?

Thom Hartmann -

Our “green” stimulus here in the US is creating jobs in Denmark and China.

A group of Democratic senators is concerned that the Obama administration’s efforts to promote economic stimulus, aimed at financing renewable energy, is creating jobs in foreign countries.

The four senators, led by Chuck Schumer of New York, wrote to Treasury Secretary Timothy Geithner on Tuesday to request a moratorium on the Recovery Act program. They asked that the moratorium remain in place until they can pass legislation mandating stimulus aid flow only to projects which preserve and create U.S. jobs.

Here’s what’s happening that nobody wants to talk about: Huge solar and wind projects are being funded with stimulus dollars in Texas, Oregon, and other states. That would seem like a good thing – and is creating jobs installing the solar panels and wind turbines.

Full Story: Green Jobs here?…or China? | Economy In Crisis.

Game Changers to Alter the Economy

In Saving Capitalism Dr. Choate outlines six “game changing” proposals to meet the challenge presented by global competition and get America back on its feet.

Economist and best-selling author Pat Choate has crusaded for fiscal responsibility and long-term management in government for many years. He campaigned as the 1996 Reform Party vice-presidential candidate on a platform of responsible spending, balanced international commerce, and government encouragement for domestic employment. He has written several books and news articles on the topic, and his most recent work Saving Capitalism: Keeping America Strong may be his best to date.

In Saving Capitalism Dr. Choate outlines six “game changing” proposals to meet the challenge presented by global competition and get America back on its feet. The first is to impose strict federal supervision of financial markets, refurbishing the regulatory framework destroyed during each presidency from Reagan to George W. Bush.

The second is to replace most income and corporate taxes with a consumption based value-added tax. This would be in line with the practices of every other country on earth and allow the U.S. to raise enough revenue to fund itself and pay down its debt.

Full Story: Game Changers to Alter the Economy | Economy In Crisis.

The Foreign Value Added Tax: Making Our Exports Uncompetitive

Unknown to most Americans, the United States is losing the ability to compete in global trade because of the little known foreign Value-Added Tax (VAT).

Foreign governments use this tax against United States producers as a means to prevent the importation and consumption of U.S. goods, while providing incentives for their countries to export their goods to the U.S. The foreign VAT was a subsidy created after World War II to speed up beneficial other countries' recovery. However, it is still used today by 149 countries to exploit this advantageous position against American trade. We have not used it domestically to off set theirs as a benefit to ourselves.

The foreign VAT gives the companies of other nations and their exports the upper-hand by providing incentives in the form of rebates equal to the indirect tax on the exported product. For example, the VAT rate is 19 percent in Germany; therefore the Germans receive a 19 percent rebate from their government on each product exported to the U.S. This acts as a subsidy for a product while encouraging the exportation of products to the U.S. However, the VAT imposes a punishment on U.S. exports by placing a VAT equivalent to the Value Added Tax rate of the importing country. This means all U.S. exports that enter into Germany are taxed 19 percent on top of another 19 percent for the transportation fees of the goods into the country. The VAT destroys American industries’ ability to promote exports, while encouragi

Full Story: The Foreign Value Added Tax: Making Our Exports Uncompetitive | Economy In Crisis.

Finance Superstars Talk About the Massive Fraud in Our Economic System

“Make Markets Be Markets” conference of financial reform all-stars offers an alternative to Washington’s disastrous oversight of the economy.

Last Wednesday, I attended a conference initiated by the Roosevelt Institute on the financial mess, called Make Markets Be Markets. The conference’s speakers included people with experience on Wall Street, the banking industry, government and academia; Nobel Prize-winning economist Joe Stiglitz, Elizabeth Warren, and other luminaries who have offered an alternative and reformist narrative to our recent financial crisis.  At two and half hours, it was relatively short, giving each speaker the opportunity to make their points and providing a sharp focus. One underlying theme of the event was fraud, the great elephant in the room, that neither the press or our government officials acknowledge, though it is a fundamental element to the financial crisis and its solutions.

Joe Stiglitz started the conference and stated how reducing transparency and hiding information was an essential element to the crisis. Stiglitz concluded, “Innovation was regulator and tax arbitrage.” Wall Street and the banks deliberately added opacity and complexity to confuse clients and consumers. Elizabeth Warren pointed out, “complexity made a lot of profits,” for example, she showed how the average credit card contract in 1980 was one page, today it is thirty.

Full Story: Finance Superstars Talk About the Massive Fraud in Our Economic System | Economy | AlterNet.

Men May Have It Bad, But Unemployment Statistics Obscure the Hit Taken By Single Moms

Break down today’s unemployment stats, and it looks like women are faring much better than men in the great recession. That is, unless they’re single and raising kids.

Much has been made of the fact that, when examined through the prism of gender, the Great Recession appears to have affected the employment of men far more than that of women. And, taken as a whole, that’s true. According to figures released on Friday by the Bureau of Labor Statistics, the unemployment rate for men (age 20 and over) stands at 10 percent, while 7.9 percent of women rank among the unemployed. (When the recession began in December 2007, the unemployment rate among men and women was the same: 4.4 percent.)

But spend some time rummaging among the unemployment statistics, and you’ll find a significant group of women struggling mightily against a brutal economic tide: single women with children. They, the breadwinners of their families, are more than twice as likely to be unemployed than married women who have a spouse present. While this has been true for the last ten years (PDF), its effects are amplified in the current economic crisis.

The Bureau of Labor Statistics, in a report released on Friday, showed the unemployment rate for married women at 6.1 percent, while that of single women “who maintain families,” in the parlance of the BLS, reached a whopping 11.6 percent — 68 percent higher than when the recession began. Add to that the fact that women, as a whole, earn only 77 cents for every dollar a man brings home, and you find many single women whose situation has gone from difficult to dire.

Full Story: Men May Have It Bad, But Unemployment Statistics Obscure the Hit Taken By Single Moms | Economy | AlterNet.

An Irish Mirror for the Financial Crisis

Paul Krugman -

Everyone has a theory about the financial crisis. These theories range from the absurd to the plausible — from claims that liberal Democrats somehow forced banks to lend to the undeserving poor (even though Republicans controlled Congress) to the belief that exotic financial instruments fostered confusion and fraud. But what do we really know?

Well, in a way the sheer scale of the crisis — the way it affected much, though not all, of the world — is helpful, for research if nothing else. We can look at countries that avoided the worst, like Canada, and ask what they did right — such as limiting leverage, protecting consumers and, above all, avoiding getting caught up in an ideology that denies any need for regulation. We can also look at countries whose financial institutions and policies seemed very different from those in the United States, yet which cracked up just as badly, and try to discern common causes.

So let’s talk about Ireland.

Full Story: Op-Ed Columnist – An Irish Mirror for the Financial Crisis – NYTimes.com.

OPS: “But what do we really know?”  What we know for sure is that nothing has changed.  What we know for sure is that Obama, and his gang of the Clinton and Bush retreads that created the collapse, have simply re-inflated the same bubble.  What we know for sure is that they have set us up for a second, and deeper, collapse.  And we know for sure that THEY will get rich from it.

DeLay: People are unemployed because they want to be

Former House Majority Leader Tom DeLay says that Sen. Jim Bunning was “brave” for blocking an extension in unemployment benefits.

DeLay subscribes to the notion that people only try to find jobs when their benefits run out.

“There is an argument to be made that these extensions, the unemployment benefits, keep people from going and finding jobs,” he told CNN’s Candy Crowley Sunday.

“In fact there are some studies that have been done that show people stay on unemployment compensation and they don’t look for a job until two or three weeks before they know the benefits are going to run out,” he argued.

“People are unemployed because they want to be? ” asked Crowley.

Full Story: DeLay: People are unemployed because they want to be | Raw Story.

Conservatives Caused Huge Deficits, Blame Obama

Headline at Drudge Report: Obama policies projected to add $9.7 trillion to debt by 2020… points to this story, National debt to be higher than White House forecast, CBO says,

President Obama’s proposed budget would add more than $9.7 trillion to the national debt over the next decade, congressional budget analysts said Friday. Proposed tax cuts for the middle class account for nearly a third of that shortfall.

So here is the deal. This Drudge headline, saying Obama’s spending “adds to the deficit” is a trick. Here is how it works. Suppose you take over a company that is losing $100 million a year, and your jobs is to turn it around. So perhaps the second year the company only loses $70 million, $30 million the third year, and breaks even in year four. You saved the company. But in those years the company “lost” another $100 million. Should you be fired?

President Obama took office as President of a country with a $1.4 trillion deficit – thanks to the failure of conservative policies. Their tax cuts, wars, military buildups, corruption and incompetence drove the borrowing WAY up, and then their deregulation, corruption and incompetence destroyed the economy, driving the borrowing up into the stratosphere.

Full Story: Conservatives Caused Huge Deficits, Blame Obama | OurFuture.org.

Economist Lewis Black Tells It Like It Is

ADULT CONTENT WARNING: If you’re not familiar with Lewis Black, I’d turn back if I were you.

Lewis Black is funny. Dangerously funny. That he has such a large audience and still packs plenty of politics in his shtick gives one hope for the fate of our sorry species. So I figured it’s time I learned something from him.

What I’ve learned is that since a million more of you pricks out there watch him than will ever read my stuff, I’m done with all the painstaking research and putting in links to original sources so you can see that I’m not making it all up. I don’t have time any more. We’re killing people in more countries than I can count and YOU want me to be fair and balanced and plus show you where all this shit comes from. Well, I’m sorry…if you don’t believe me, LOOK THIS SHIT UP FOR YOURSELF!!

Here’s a perfectly good example.

Full Story: Economist Lewis Black Tells It Like It Is | The Smirking Chimp.

Reconciliation: Republican v Democratic

The Republican use reconciliation cost the American Taxpayer 2 TRILLION dollars during the Bush years alone.

Consider three bills — two of them passed under budget reconciliation, the third heading for budget reconciliation. Each had an effect on the fiscal health of the nation, calculated by the Congressional Budget Office. The first two, the tax cuts pushed by President George W. Bush, blew a hole in the budget. The third, the Senate’s health reform bill? As you can see from the CBO projection, that’s a different story.

These numbers are expressed in billions of FY2010 dollars.

Figure 1, in billions of FY2010 dollars.

The first bar is the impact on the unified budget balance of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001. The second is the impact on the budget balance of the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) of 2003. The third bar is the CBO estimated impact on the deficit of the Patient Protection and Affordable Care Act proposed in the Senate on November 19, for 2010-2019.

Full Story: Econbrowser: What Are These Three Numbers?.

Not till they’ve nothing left to lose?

Those calling for financial reform aren’t being upfront about its costs, making it impossible to achieve.

This was again evident at the Roosevelt Institute’s otherwise very good conference at Time Warner Center yesterday.

First the good. The purpose of the gathering was to galvanize support for deeper reforms than lawmakers have proposed. Roosevelt’s Chief Economist Rob Johnson and his murderer’s row of thinkers — including Simon Johnson, Elizabeth Warren, Frank Partnoy, Rick Carnell, Josh Rosner and others — presented a very good white paper outlining how best to clean up the financial system. Other attendees were George Soros, Brooksley Born, Jim Chanos, Joe Stiglitz. Even Eliot Spitzer showed up.

When it comes to reform, they all argued, nibbling around the edges ain’t gonna cut it.

Banks need more capital, Fannie and Freddie need to be wound down, banks’ risky activities must be corralled, tax incentives that encourage borrowing must be done away with. Most importantly, perhaps, we need to end the cycle by which the financial system lends too much and too easily only to be bailed out by a compliant Fed when things go wrong.

Full Story: Not till they’ve nothing left to lose? | Analysis & Opinion | Reuters.

US public ‘will pay Obama’s $90bn bank levy’

President Barack Obama’s $90bn (£59.5bn) bank levy will largely be paid for by customers and investors and not the institutions themselves, the US’s leading spending watchdog has found.

In a report on the White House’s plan to impose a 0.15pc fee on liabilities of banks with more than $50bn in assets in order to recoup money lost through the $700bn Troubled Assets Relief Programme, the Congressional Budget Office (CBO) said the impact on banks would be “small”.

“The cost of the proposed fee would ultimately be borne to varying degrees by an institution’s customers, employees and investors, but the precise incidence among those groups is uncertain,” said the CBO in a letter to Senator Charles Grassley, a leading member of the Senate finance committee.

Full Story: US public ‘will pay Obama’s $90bn bank levy’ – Telegraph.

FDIC Closes Four Banks: Bank Of Illionois, Sun American, Waterfield, Centennial Bank

Regulators on Friday shuttered banks in Florida, Illinois, Maryland and Utah, boosting to 26 the number of bank failures in the U.S. so far this year following the 140 brought down in 2009 by mounting loan defaults and the recession.

The Federal Deposit Insurance Corp. took over Sun American Bank, based in Boca Raton, Fla., with $535.7 million in assets and $443.5 million in deposits. Also seized were Bank of Illinois of Normal, Ill., with $211.7 million in assets and $198.5 million in deposits; Waterfield Bank in Germantown, Md., with $155.6 million in assets and $156.4 million in deposits; and Centennial Bank in Ogden, Utah, with $215.2 million in assets and $205.1 million in deposits.

First-Citizens Bank & Trust Co., based in Raleigh, N.C., agreed to assume the assets and deposits of Sun American Bank and to share losses with the FDIC on $433 million of the failed bank's loans and other assets. It was First-Citizens' fourth acquisition of assets of a failed bank since last July; the others were First Regional Bank of Los Angeles, Venture Bank of Lacey, Wash., and Temecula Valley Bank of Temecula, Calif.

Full Story: FDIC Closes Four Banks: Bank Of Illionois, Sun American, Waterfield, Centennial Bank.

Jobs Report Exposes Plight Of Long-Term Unemployed

Friday’s jobs report showed some glimmers of a recovery but if you’re among the 8.8 million Americans still unemployed after nearly four months, you may have been left scratching your head.

“Whether you say the jobs market is improving or getting worse, there are people who will say you’re crazy,” said Lakshman Achuthan, managing director of Economic Cycle Research Institute. “That’s because there are two Americas, and they’re both right.”

Of the 8.8 million who have been unemployed for more than 3-1/2 months, there are 3.5 million more now than there were at this point last year. And for this group, the job market is looking grimmer by the day. According to the Labor Department, a stunning 58.9% of jobless Americans have now been unemployed for more than 15 weeks — an all-time high.

Full Story: Jobs: Short-term hope, long-term despair – Mar. 6, 2010.

Double-Dip Recession Directly Ahead

If history teaches us anything, it’s that when even ONE major government defaults on its debts, economic chaos follows. The crisis unfolds in four quick steps:

FIRST, since a sovereign debt default would inevitably cause ALL bonds to crash, investors stampede for the bond market exits, dumping as much as they can as fast as they can.

SECOND, as the bond market reels, interest rates skyrocket and credit tightens. The rates on 30-year fixed-rate mortgages, auto loans and other long-term debts soar. Rates tied to short-term money markets — on credit cards and variable mortgages — follow.

THIRD, consumers — whose spending represents fully 70% of the economy — snap their pocketbooks shut.

FOURTH, corporate earnings and stock prices crater. As the economy hits the skids, unemployment soars.

Full Story: OpEdNews – Article: Double-Dip Recession Directly Ahead.

U.S. Needs Industrial Policy

The U.S. has not had a coordinated national industrial policy in decades, and each new Congress simply puts the issue on the back burner.

The United States is currently absorbed in the highly partisan debate over health care reform. The president seems unwilling to pick a firm side in the discussion, but Republicans and Democrats have drawn lines in the sand. As we spend more and more effort on a health care issue, which is almost completely cut and dry at this point in terms of both fiscal and moral responsibility, we lose time and energy that should be spent on other issues.

[Woman working on an airplane motor at North American Aviation] One of the key issues that the Congress and the White House absolutely must address before a possible 2012 ouster is America’s manufacturing and industrial downfall.

The U.S. has not had a coordinated national industrial policy in decades, and each new Congress simply puts the issue on the back burner. They look only at the good and ignore the bad. For example, America is the world’s largest economy, it is one of the largest exporters, and its citizens are able to consume one-quarter of all the resources used on this planet in any given day.

Full Story: U.S. Needs Industrial Policy | Economy In Crisis.

Uncontrolled Lending to Consumers Spawned the Financial Crisis

“the broad claim that the financial crisis has nothing to do with fraud or consumer protection dissolves in the face of the facts: the crisis can be attributed to failures of consumer protection, including those that enabled lenders to make the loans Zywicki decries.”

Posted: 05 Mar 2010 The Baseline Scenario

This guest post was contributed by Norman I. Silber, a Professor of Law at Hofstra Law School, and Jeff Sovern , a Professor of Law at St. John’s University. They were principal drafters of a statement signed by more than eighty-five professors who teach in fields related to banking and consumer law, supporting H. 3126, which would create an independent Consumer Financial Protection Agency. Some of the research on which this essay is based is drawn from an article by Professor Sovern.

Did under-regulated lending to consumers play a big part in destabilizing the financial system? Many knowledgeable people say yes, but Professor Todd Zywicki disagrees. (“Complex Loans Didn’t Cause the Financial Crisis,” Wall Street Journal, February 19, 2010). He claims that the present troubles resulted from the “rational behavior of borrowers and lenders responding to misaligned incentives, not fraud or borrower stupidity.”

Professor Zywicki’s argument enjoys, at least, the modest virtue of technical accuracy, because many objectionable misleading sales practices and agreements that lenders used were, and continue to be, unfortunately, quite legal. Lending practices may have been regularly misleading and confusing and reckless-but fraudulent? Well, no, usually not unlawful by the remarkably low standards of the day. But that in itself is an argument for saying consumer protection laws failed.

Full Story: Uncontrolled Lending to Consumers Spawned the Financial Crisis « Wake-up Call.

A.I.G., Greece, and Who’s Next?

NY Times: Stop Secret Derivatives Trading Before It Kills Again

As Greece has tottered on the brink of fiscal chaos, threatening to drag much of Europe down with it, Wall Street’s role in the fiasco has drawn well-deserved scorn.

First came the news that Greece had entered into derivatives transactions with Goldman Sachs and other banks to hide its public debt. Then came reports that some of those same banks and various hedge funds were using credit default swaps — the type of derivative that kneecapped the American International Group — to bet on the likelihood of a Greek default and using derivatives to wager on a drop in the euro.

European leaders have called for an inquiry into the Greek crisis. Ben Bernanke, the Federal Reserve chairman, has told Congress that the Fed is “looking into” Wall Street’s deals with Greece, and the Justice Department is investigating the euro bets. That is better than turning a blind eye, but it is not nearly enough.

Full Story: Editorial – A.I.G., Greece, and Who’s Next? – NYTimes.com.

AARP: Unemployment For Older Americans Surged 331 Percent Over Past Decade

Unemployment for Americans 55 and older surged 331 percent over the past decade, according to a new analysis by the AARP Public Policy Institute.

“The data clearly shows that older workers have faced a devastating rise in unemployment, with far-reaching implications not only for their employment status but also for their health and retirement security,” said AARP spokeswoman Mary Liz Burns. Burns added that unemployment puts a particularly tough squeeze on middle-aged folks — who often have to provide for kids moving back home after college and elderly parents.

According to AARP, from January 2000 through December 2009, the total number of unemployed individuals 55 and older rose from 490,000 to 2,114,000. The number of unemployed 65 and up rose from 143,000 to 479,000. And the average duration of unemployment for people 55 and up increased 85.6 percent from 18.7 weeks to 34.7 weeks. For people older than 64, the duration went up almost a third, from 24.8 weeks to 32.9 weeks.

Full Story: AARP: Unemployment For Older Americans Surged 331 Percent Over Past Decade.

Wall Street Vet Involved In 1998 Long-Term Capital Management Bailout Says Nothing Has Changed

Ten years before this latest crisis, the U.S. government engineered the bailout of a financial firm that had borrowed billions of dollars to make big bets on exotic securities. The firm was a hedge fund called Long-Term Capital Management.

James G. Rickards, as the firm’s top lawyer, negotiated the terms of the $3.6 billion deal, organized by the Federal Reserve Bank of New York, that forced other Wall Street firms to bail out LTCM. And now, in an interview with a brokerage newsletter, he says the federal government has failed to apply any of the lessons learned from that epic 1998 bailout — a failure that led to the current crisis and could lead to more.

Rickards also says that megabanks should be broken up, all derivatives should be traded via a clearinghouse, Fannie Mae and Freddie Mac should be liquidated, and more financial regulation is needed.

Full Story: Wall Street Vet Involved In 1998 Long-Term Capital Management Bailout Says Nothing Has Changed.

OPS: Obama simply re-inflated the Bubble . THIS is why we are headed for another crash.

Benefits of the Value Added Tax

The VAT rewards exports while largely blocking imports. This guarantees domestic demand for domestically produced goods, thereby ensuring that the taxpaying citizens are gainfully employed

The United States still faces a major obstacle in international trade which most people simply know nothing about. This obstacle is the Value Added Tax (VAT) and it costs this economy hundreds of millions of dollars in extra fees every year. Making matters worse is the fact that over nearly 150 nations around the world use a VAT system to protect their economy while the United States remains idle.

The simple fact is that governments need money to operate, and they generate this revenue in many ways. In the United States our government operates only on funds generated through income and property taxation. The sales tax – a form of consumption tax – is marginal in the grand scheme. Most other countries put much more emphasis on consumption taxes like the VAT.

The VAT rewards exports while largely blocking imports. This guarantees domestic demand for domestically produced goods, thereby ensuring that the taxpaying citizens are gainfully employed.

Full Story: Benefits of the Value Added Tax | Economy In Crisis.

Deficit Fear Mongering

Wall Street Took Your House and Your Retirement, Now They’re After Your Social Security.  Wall Street tycoon Pete Peterson wants to bring IMF-style economic insanity to the U.S. The scary part? He might get away with it.

IMF-Style Austerity Measures Come to America: What “Fiscal Responsibility” Means to You.

In addition to mandatory private health insurance premiums, we may soon be hit with a “mandatory savings” tax and other belt-tightening measures urged by the president’s new budget task force. These radical austerity measures are not only unnecessary, but will actually make matters worse. The push for “fiscal responsibility” is based on bad economics.

When billionaires pledge a billion dollars to educate people to the evils of something, it is always good to peer closely at what they are up to. Hedge fund magnate Peter G. Peterson was formerly chairman of the Council on Foreign Relations and head of the New York Federal Reserve. He is now senior chairman of Blackstone Group, which is in charge of dispersing government funds in the controversial AIG bailout, widely criticized as a government giveaway to banks. Peterson is also founder of the Peter Peterson Foundation, which has adopted the cause of imposing “fiscal responsibility” on Congress. He hired David M. Walker, former head of the Government Accounting Office, to spearhead a massive campaign to reduce the runaway federal debt, which the Peterson/Walker team blames on reckless government and consumer spending. The Foundation funded the movie “I.O.USA.” to amass popular support for their cause, which largely revolves around dismantling Social Security and Medicare benefits as a way to cut costs and return to “fiscal responsibility.”

Full Story: t r u t h o u t | Deficit Fear Mongering.

Individual health insurance: Health insurance premiums for indivisuals skyrocket in Illinois

Illinois consumers to pay up to 60% more, data show

Consumers in Illinois who lose their jobs and have no other option but to buy their own health insurance will get socked this year with premium increases of up to 60 percent, according to state records.

That group of consumers has been growing, as the recession has created more uninsured Americans looking for ways to protect themselves and their families.Now, Illinois consumers will get a glimpse into just how wide-ranging rate increases among individual health plans can be. The data, obtained by the Tribune, also provide a window into the overall trend of premium increases at large and small employers.

For the state’s more than half-million consumers in individual health plans, base rates will go up from 8.5 percent to more than 60 percent, according to state data. Base rates do not take into consideration health status, gender, age, place of residence and length of a policy — all factors that could raise premiums further.

Full Story: Individual health insurance: Health insurance premiums for indivisuals skyrocket in Illinois – chicagotribune.com.