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Posts Tagged ‘Recession’

Unmitigated Disaster: Unemployment Rises in 27 States in February 2010

Friday, March 26th, 2010

A Picture from the Winter of 1933 in NYC During the Great Depression

The unemployment crisis in the United States continued unabated in February 2010, as new statistics compiled by the Department of Labor show that unemployment rose in over half of the states in America last month:

March 26 (Bloomberg) — Unemployment increased in 27 U.S. states in February and dropped in seven, a sign the labor market needs to pick up across more regions to spur consumer spending and sustain the economic recovery.

Mississippi showed the biggest jump in joblessness with a 0.4 percentage point rise to 11.4 percent, according to figures issued today by the Labor Department in Washington. Nationally, unemployment held at 9.7 percent in February for a second month and employers cut fewer jobs than anticipated, figures from the Labor Department showed on March 5.

Today’s report indicates broad-based hiring is yet to develop following the loss of 8.4 million jobs since the recession began in December 2007. Florida, Nevada, Georgia, and North Carolina set record levels of joblessness last month.

“Until we see improvement in employment in a fair number of U.S. states, it’s not going to do a heck of a lot for the recovery,” said Jennifer Lee, senior economist at BMO Capital Markets in Toronto. “The worst seems to be over, but there’s a huge amount of work to be done to create jobs. It’s going to be a long, winding road.”

Payrolls dropped in 27 states, led by Virginia. The state’s loss of 32,600 jobs last month, the largest in records going back to 1983, was also the biggest decline among states. California, Michigan, Pennsylvania, Maryland and Texas also reported large decreases in employment, the report said.

These results, over a year into the Obama Administration’s reign and its vaunted Stimulus plan, provide yet another piece of evidence that the Obama economic program is failing to turn this country’s economy around.   After all, the Obama Administration did predict that the passage of its Stimulus legislation would result in a steady decline in unemployment from the Summer of 2009 onward – a prediction that is proven false by every unemployment release since then.  Indeed, the newly announced Obama initiative to order banks to reduce or waive monthly mortgage payments due from the unemployed will only exasperate the ongoing unemployment crisis, creating another incentive for the individual to become or remain unemployed so as to qualify for the new federal mortgage payment reduction/waiver program.

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February 2010: Largest Monthly Budget Deficit in American History

Wednesday, March 10th, 2010

President Barack Obama's government has run up the largest budget deficit in American history in February of 2010

As shown in a little-noticed release from the Treasury Department today, the Obama Administration has run up the largest budget deficit in American history in February of 2010, a whopping total of $220.9 Billion in just one month.   February 2010’s unprecedented total is more than most year-long budget deficits in American history,  including 2007’s year-long total of $161 Billion. AP reports in this historic monthly deficit:

WASHINGTON (AP) — The government ran up the largest monthly deficit in history in February, keeping the flood of red ink on track to top last year’s record for the full year.

The Treasury Department said Wednesday that the February deficit totaled $220.9 billion, 14 percent higher than the previous record set in February of last year.

The deficit through the first five months of this budget year totals $651.6 billion, 10.5 percent higher than a year ago.

The Obama administration is projecting that the deficit for the 2010 budget year will hit an all-time high of $1.56 trillion, surpassing last year’s $1.4 trillion total. The administration is forecasting that the deficit will remain above $1 trillion in 2011, giving the country thrree straight years of $1 trillion-plus deficits.

The government’s monthly budget report showed the record $220.9 billion deficit for February reflected outlays of $328.4 billion and revenues of $107.5 billion. The February receipts marked the first time that revenues are up compared with the same month a year ago since April 2008. Revenues had fallen for 21 straight months as the recession cut into both individual and corporate income tax payments.

As President Obama and Congressional Democrats continue with their primary focus on passing Obamacare, considering the attendant increased government spending included therein, February 2010 may not have the record for largest monthly deficit in American history for very long.

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Unemployment Surges, Reaches All-Time High in 5 States in January 2010

Wednesday, March 10th, 2010

Unemployment Rose in 30 States in January 2010

Despite the claims of various politicians in Washington, D.C. that the recession is over and a recovery is well underway, unemployment continues to surge throughout the United States, as shown in the release of detailed information today by the Labor Department regarding the January 2010 jobs situation.    While 30 states reported an increase in the unemployment rate, five states reached all-time highs in unemployment rates:

Unemployment rose in most states in January—even breaking records in several states, according to government data released Wednesday.

Joblessness in five states—California (12.5 percent), South Carolina (12.6 percent) , Florida (11.9 percent), Georgia (10.4 percent) and North Carolina (11.1 percent)—hit a record high. The District of Columbia, at 12.0 percent, also reached a record high.

In all, 30 states and the District of Columbia saw their rates increase in January over the previous month. Nine states reported a decrease and 11 states had no change in their unemployment, according to the Labor Department.

One disquieting, and unreported, detail of the extended January 2010 report is that all of the above numbers are “adjusted” figures and actual unemployment is actually higher. Overall, the American job market appears to be “frozen”:

“It shows that the labor market is virtually frozen,” said Nick Colas, chief market strategist at the ConvergEx Group. Although the data is from January, he said that “there has not been any dramatic change in these past six weeks.”

Many economists and other observers have pointed to the uncertainty caused by the push to fundamentally alter the health care delivery system by the Obama Administration and Democrats in Congress as a potential cause of this “frozen” labor market. Business owners and operators, both small and large businesses, are less likely to hire new employees while facing potential higher costs in the near term from a possible employer mandate and associated tax on employers who do not provide health coverage to employees.

House Speaker Nancy Pelosi has famously claimed, with no discernible substantive basis other than a far left wing think tank report, that passing Obamacare through Congress will “almost immediately” result in a gain of 400,000 jobs in America, with 4 million jobs to be created overall by Obamacare. Even Obama-worshipper and Washington Post writer Charles Lane admits Pelosi’s claim is ludicrous, especially considering the main cost-cutting mechanism, the so-called “cadillac tax”, has been removed until 2018 at earliest, hence postponing any job creation gains from lower health care costs well beyond “almost immediately”:

Here’s my problem, though: For Pelosi’s scenario to pan out, health-care reform must actually produce substantial cost savings. And that is more doubtful now that President Obama has offered a version that postpones the strongest cost-containment provision in the Senate bill — the “Cadillac tax” on high-value insurance plans — until 2018. That’s like postponing it this long. The president did this largely to appease organized labor and their allies in the House Democratic caucus — led by Speaker Nancy Pelosi.

Such claims by Speaker Pelosi are especially odd in light of her statement yesterday that its uncertain what is actually in the bill as she advised reporters that “we have to pass the bill so that you can find out what is in it.” Regardless, considering the uncertainty and outright hostility being generated amongst business owners about the Democratic health care reform efforts, it is much more likely that hundreds of thousands of jobs will be created in America if the partisan effort to comprehensively reform health care is officially shelved by President Obama. Providing this certainty to business owners of the future near term cost of hiring an employee, and not increasing such costs and federal regulatory liability as Obamacare would, could be the single greatest thing Washington, D.C. could do to help the American unemployed find a new job.

Indeed, average Americans overwhelmingly agree with this proposition, as recent CNN polling shows 73% want Obama and the Dems to either stop or start over instead of passing the present comprehensive plan and yesterday’s AP polling shows 68% want Obama and the Dems to continue to work with the GOP to make a deal instead of pushing through the present comprehensive plan without GOP support. A full 57% of Americans believe that Obamacare will hurt the economy – just 25% think it will help. It appears to us that the intuition of the American people and the great center of America have correctly determined that the giant new federal bureaucracy and new federal taxes associated with Obamacare would be a drag, if not an anchor, on the efforts of businesses to rebuild their workforces and the economy as a whole to recover.

Perhaps President Obama, Congressional Democratic leaders and the GOP leadership will all decide that the needs of the American people, regarding jobs and the economy, are more important that scoring political points (and “historical” ones for liberals) over health care reform and immediately shelve the present plan and pass centrist health care reform that would both help some uninsured, reduce costs and provide confidence to business owners so that hiring can begin again.

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Paulson vs. Congress live on Capital Hill on Bailout – History in the Making

Tuesday, September 23rd, 2008

Paulson and Bernake testifying today in Congress

Paulson and Bernake testifying today in Congress

Today Treasury Secretary Henry Paulson and others are testifying on Capitol Hill regarding the Bush Administration’s request for authority from Congress to borrow up to $700 Billion Dollars for up to two years to purchase mortgage related assets, almost exclusively of the subprime variety. Both Paulson and Federal Reserve Chairman Ben Bernake urged immediate Congressional action to forestall and reverse the deepening credit crunch across America and the world and potentially avoid a deep recession. Paulson faces a tough sell as US likely voters oppose the bailout 44%-25% and centrist, politically independent voters oppose the bailout 47%-18%. Sensing some popular resistance, DC politicians are aggressively confronting Paulson’s plan.

While packaged and sold to U.S. and international financial institutions as relatively safe and adequately secured investments over the last few years, shares in some bundled subprime mortgage instruments are presently nearly impossible to value. The subprime mortgages are not producing cash flow as predicted because the borrowers cannot make the payments and foreclosures have been rising steadily since 2006. The viral effect of a continued collapse in value of the subprime securities purchased by financial institutions on markets throughout the world may be staunched by the bailout.

Both Democrats and Republicans are pushing for minor alterations of the Administration’s proposal to add oversight and limit executive pay for financial companies that participate in the bailout. Democrats are further battling the Administration directly by attempting to limit the lending authority to a one-year period, reduce the cap on lending to $150 Billion dollars and tack on proposals for a $50 Billion Dollar stimulus package. The risk of the bailout being delayed beyond this week based on partisan wrangling over the legislation is having a dampening effect on the stock market, with the Dow Jones Industrial Average losing over 500 points this week so far, dipping below 11,000.

Nothing less than the survival of the United States as the financial center of the world and the dollar as the world’s currency is at stake this week. No amount of hyperbole can overstate the risks facing the world economic system from the spread of complex financial instruments secured by bundled subprime mortgages on U.S. homes. Indeed, last week the Dow Jones was several hundred trades away from a free fall to 8300 according to insiders at large trading houses. Every American, whether a Democrat, Republican, another party or an independent centrist should read the text of the Administration’s plan, the various changes and additions offered and scrutinize the actions taken in the next few days which will rewrite American financial history.

The risk of inaction by the Democratic Congress is to anger centrist, independent voters who may turn on the Democrats if no bailout is passed and the markets free fall after Congress adjourns. Obama could also suffer if Democrats are perceived as stopping the bailout. The risk of action by the Democratic Congress is two-fold: if the bailout fails, Democrats will be blamed along with Bush and the GOP. If the bailout succeeds and the markets rally strongly before the election, the Presidential election may tip to John McCain. History will be written this week, and the political and economic pressure on Congress, the Administration and the Presidential candidates could not be higher.

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