While we’ve been focusing mostly on Europe because of the extraordinary wave of economic disaster sweeping the continent, things are looking bleak elsewhere too, especially in the U.S.
Today’s wrapup focuses mainly on the U.S. but also takes a more general look. And what we discover ain’t pretty.
Federal Reserves tries Operation Twist
Picking a name that sounds like something out of a novel about confidence artists, the Federal reserve is throwing more money at the economy, though it’s doing it in a way that virtually ensures failure.
From Dominic Rushe of The Guardian:
The US Federal Reserve announced a $267bn plan to underpin the US’s fragile recovery Wednesday as chairman Ben Bernanke warned that unemployment was unlikely to improve before the end of the year.
The plan – an extension of a scheme known as Operation Twist – aims to drive down long-term interest rate and encourage borrowing. The announcement came as the latest statement from the Fed painted a gloomier picture of the US economy and said it was prepared to take more action if necessary.
The Fed said that the growth in employment “has slowed in recent months, and the unemployment rate remains elevated,” and that household spending “appears to be rising at a somewhat slower pace than earlier in the year.” The Fed also reiterated its concern that “strains in global financial markets continue to pose significant downside risks” to growth.
That news will be a blow to the Obama administration in the run-up to an election that looks set to be dominated by economic news in general and the unemployment rate in particular.
Read the rest.
More from Ron Scherer of the Christian Science Monitor:
However, the Fed’s actions, termed Operation Twist because it involves the central bank selling short-term US treasuries and buying an equal amount of long-term bonds, disappointed those on Wall Street who had hoped to see more aggressive steps to stimulate the economy.
“I think there was a slight disappointment,” says Fred Dickson, chief investment strategist at D.A. Davidson & Co. in Lake Oswego, Ore. “There was a little bit of anticipation [that] the Fed would hint at the timing of some kind of additional easing or economic stimulus.”
Wall Street was also somewhat disappointed, says Mr. Dickson, to hear the central bank’s forecast for the economy: modest weakening and little pickup in hiring. And, in an indication that the Fed expects the economy to be in slow motion no matter who is elected president in November, the Fed says it will keep short-term interest rates low through the end of 2014.
Read the rest.
Here’s an idea: Rather than throwing money where only the rich can grab it, why not try something that really would serve as an economic stimulus: Fire up the government printing presses and give the money directly to the people along with a demand that they spend it?
Sounds a lot better than leaving it to the rich, who will most likely either sit on it or use it in Europe, where the dollar has the upper hand over the euro, ensuring plenty of bargains.
We propose doling out the dollars to the public with the proviso that they spend it in their own communities, ensuring that there’s some real economic activity rather that notional entries on corporate and bank ledgers.
Or give it to the long-term unemployed
These are folks who’ve exhausted their government benefits and need money simply to live.
And lord knows there are plenty of them to help
From Lucia Mutikani of Reuters:
The number of Americans filing new claims for unemployment benefits was little changed last week, according to government data on Thursday that suggested the labor market was struggling to regain momentum.
Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 387,000, the Labor Department said. The prior week’s figure was revised up to 389,000 from the previously reported 386,000.
Economists polled by Reuters had forecast claims falling to 380,000 last week. The four-week moving average for new claims, considered a better measure of labor market trends, increased 3,500 to 386,250 – the highest level since early December.
The claims data covered the survey week for June’s nonfarm payrolls and the report pointed to little or no improvement on the paltry 69,000 jobs added in May. Claims rose 15,000 between the May and June survey periods.
Read the rest.
And here’s another place to use it
New York City, where the unemployment levels in the African American community are higher than unemployment figures for Greece and Spain.
From Patrick McGeehan of the New York Times:
More than half of all of African-Americans and other non-Hispanic blacks in the city who were old enough to work had no job at all this year, according to an analysis of employment data compiled by the federal Labor Department. And when black New Yorkers lose their jobs, they spend a full year, on average, trying to find new jobs — far longer than New Yorkers of other races.
Nationally, the employment outlook for blacks has begun to brighten: there were about one million more black Americans with jobs in May than there were a year earlier, according to the federal Bureau of Labor Statistics.
But that is not the case in New York City, where the decline in employment since the recession began here, in 2008, has been much steeper for blacks than for white or Hispanic residents, said James Parrott, chief economist for the Fiscal Policy Institute, a liberal research group.
One problem, said David R. Jones, the president and chief executive of the Community Service Society of New York, is that blacks were overrepresented in fields that suffered the most in the downturn, including government agencies, construction and manufacturing.
Read the rest.
G20 warns U.S. may become Greece
Yep, things are looking so bad here at home that the G20 is talking about getting tough, warning that American debt levels are reaching Mediterranean proportions.
From Richard Blackden of the London Telegraph:
America has been given a rare warning from G20 countries not to botch its own deficit-cutting measures amid fears that the world’s biggest economy could fall off a “fiscal cliff” next year.
The warning came at the end of a fraught two-day summit in Mexico dominated by Europe’s debt crisis. While the world’s most powerful economies urged European governments to do more to end their crisis, the rebuke to The White House reflects increasing concern that America’s struggle with its own $15trillion of debt will be the next to hit the world economy.
Efforts by President Barack Obama and Congress to agree on a grand plan to cut the country’s deficit have so far failed.
A series of short-term compromises have left the US facing $1trillion in spending cuts at the start of next year. Federal Reserve chairman Ben Bernanke has warned that the cuts, alongside the expiration of tax cuts first introduced by George W. Bush, leave the US facing a fiscal contraction that could plunge the country back into recession.
The G20 urged the US to “calibrate the pace of its fiscal consolidation by avoiding a sharp fiscal contraction in 2013 while insuring that its public finances are placed on a sustainable long-run path,” according to the communique.
Read the rest.
Now we’d add that the root of the problem is a monetary system is which money is created by laundering it through private banks.
So long as money originates in debt, the cycle will continue, and since debt accrues exponentially, the whole system’s bound to break eventually.
Why not break it now, since the pain will only be incrementally greater when the whole sad edifice collapses, as it must, under its own weight?
Most Americans fear second recession
While we agree that most Americans are right in being afraid of worsening economic conditions, we disagree profoundly with the notion that we’re not already in an ongoing recession that amounts to a depression.
Just because some economic signals have been stronger than at the worst levels of the crash doesn’t mean there’s a recovery as far as most Americans are concerned.
The harsh reality is that Americans who have jobs work longer hours, often for less pay and reduced benefits when compared with say 2006 — and the worst of it is born by the newly hired, who very often have even lower pay and benefits than those who’ve been able to retain their jobs for the same companies.
Meanwhile, working people are unable to get loans while the corporations and the rich can borrow money art historically low interest rates.
What’s happened has been a vast redistribution of wealth.
With that premable, the story from Alicia M. Cohn of The Hill:
A massive majority of likely voters fear America could be slipping into a second economic downturn just four years after the Great Recession, according to a new poll for The Hill.
But people remain split over which of the presidential candidates — Barack Obama or Mitt Romney — are offering the better prescription for economic health.
Amid worrisome jobs numbers and the looming threat of a eurozone crisis, the survey found 75 percent of people were either very or somewhat worried the country is headed toward another recession.
Among those concerned, 46 percent said they were “very” worried Continue reading