Escaping the Claws of Wall Street and Building an Economy on Making Things | OurFuture.org

Escaping the Claws of Wall Street and Building an Economy on Making Things | OurFuture.org

Today, the Campaign for America’s Future is holding a “Building the New Economy” conference. As we build the new economy, it’s important we build one not based on the assets bubbles of the past but on the firm rock of manufacturing.

As AFL-CIO President Richard Trumka argues:

Flawed trade and tax policies and a financial system focused on short-term profits drove good jobs offshore, led to record trade deficits, and left the economy in ruins. With the manufacturing share of gross domestic product withering to 12 percent (from 15.9 percent in 1995) and the financial sector growing to 22 percent, the structure of the U.S. economy looks more like Monaco than Germany. This growth model of asset bubbles, low wages, credit pyramids, toxic assets and unregulated out-of-control global capital has been a recipe for disaster.

There is a reason every other developed and advanced developing nation has a manufacturing strategy. Most governments see manufacturing as key to long-term growth, and they target investment in industries and technology. In contrast, our government abandoned strategy to market forces and left workers and communities hanging without a safety net.

However, if we just regulate Wall Street alone, we will not be able to grow a good economy. We must invest in manufacturing. Scott Paul, executive director of the Alliance for American Manufacturing, puts it this way:

But chalking up the blame to a few bad apples on Wall Street and their risky financial instruments, and responding by simply providing appropriate regulation in the financial services sector, will ultimately be unsatisfying. There are much deeper, structural issues which must be urgently addressed. Otherwise, the absurd positive feedback loop will continue: consumer debt, subsidized Chinese imports, American job loss and factory closures, the growing U.S. current account deficit, burgeoning Chinese currency reserves reinvested in American debt…These will only inflate new bubbles and reinforce our current problems.

We must both re-regulate the financial markets and re-create our manufacturing base to ensure an economy that works for everyone. Otherwise, we will simply borrow and borrow more and inflate asset bubbles that leave us deeper and deeper in financial crisis every time.

Public Sees A Tilted Playing Field

Public Sees A Tilted Playing Field

When Peter Hart Associates asked registered voters recently who they felt was benefiting from the government's economic policies, the resounding answer was that the hundreds of billions poured into the economy have done far more to help those at the top of the economic food chain than those on the bottom.

A paltry 13 percent of those interviewed for the September 2009 survey said that the average Joe and Jill have been "helped a lot or a fair amount" -- compared to 65 percent who think regular folks have gotten little or no assistance from the government. Fully 54 percent of respondents said Wall Street investment companies have been helped - and nearly two-thirds said the large banks have been taken care of.

Jobs & the Economic Recovery: Voters' Survey, Sept. 2009. Hart Research for the Economic Policy Institute.

The voters seem to have gotten it about right.

Read more at: http://www.huffingtonpost.com/2009/10/28/public-sees-a-tilted-play_n_337424.html ...

Dave Johnson: Caught In a Machine that Grinds Us Up

Dave Johnson: Caught In a Machine that Grinds Us Up

In Part I I wrote about a pattern we see over and over again: buying up good companies, shedding and outsourcing the workers, cutting their pay and benefits, outsourcing and cheapening the product or service, fleecing and mistreating the customers, closing the offices and factories and running up debt. If you want to make a few hundred million, here is the game:

1. Find a good company that still respects its workers, paying decent wages and benefits, still respects its customers and produces a quality product or service, still respects and has ties to its community and keeps a plant open, maybe sponsors a little league team, etc. These are all "costs" to cut.


2. Use other people's money: Work with an investment bank to finance the buyout, with the company itself as collateral, and pay the banking fees from the financing.


3. Cut. Cut costs, including the quality of the product or service and customer support operations. Externalize environmental costs onto the community. Wait for the union contract to expire and offer wage cuts and elimination of benefits and refuse to negotiate (where are they going to get other jobs?), fire union organizers, threaten to close the operations and move them overseas, and don't worry about labor laws - they aren't enforced anymore.


4. After breaking the union and cutting costs, close the plant. Outsource production to China.


5. Now the books look better because of reduced costs, so take on new financing and pocket it.


6. Further stoke up the books for a couple of quarters using gimmicks like pushing product into distribution channels to make sales look better than they are, find another buyer and pass what's left to them to repeat the cycle - there are always more costs to cut.


7. Pocket your millions, then go back to step 1 and repeat the process with another company.

This is the buyout game and it is part of the story of what has happened to our economy, our jobs, our communities and our country. It has become a machine, with profits fueled by tax and social incentives. These incentives create a formula that follows the steps described above, with an inevitability to the consequences. Because it CAN be done, of course it IS done. It is a great game for short-term profits for a few. It is justified as "finding efficiencies" and the ideology behind it insists that the profits prove the market demands the behavior.

Machines do not have human concerns, they just do what they are designed to do. Their engines burn the fuel that powers them, their gears turn. ...

FT.com / Comment / Opinion - The free market is not up to the job of creating work

FT.com / Comment / Opinion - The free market is not up to the job of creating work | By Mort Zuckerman | Published: October 18 2009 [... this from a very traditional market capitalist ... 6 years after the evidence started to accumulate ! ed.]
...

Today there is no evidence of job creation. Quite the opposite: unemployment is rising and millions of jobs have disappeared. In place of thrift we have become a nation of debtors, staggering beneath mortgages that exceed the value of our homes, and credit lines that exceed our ability to repay. But the “Great Recession” has also changed the nature of unemployment, making it harder for those out of work to find a job. Only by investing in infrastructure and innovation can we mend the system.

About a third of the 15m jobless have been out of work for at least six months. This is the highest proportion since records began in 1948. Meanwhile, those in jobs find their work week reduced to an average of 33 hours, again the lowest in 60 years. Firms are cutting hours, wages and benefits rather than laying off still more workers. Today all elements of labour income – jobs, hours and wages – are under pressure.

...

The mix of the labour force has also changed. The proportion of over-55s working has risen 8 per cent. They felt forced to keep labouring away because the value of their homes and investments declined. In fact, 63 per cent of workers aged 50 to 61 expect to delay retirement, thus restricting openings for younger workers. During the last two recessions, those in their mid-40s to mid-50s showed employment gains, while younger workers bore the brunt of cutbacks.

Of course this time younger workers have not escaped – a quarter of teenagers, about 1.6m youths, are without work. The unemployment rate for young Americans has exploded to 52 per cent, a post-war high. But even the 45-to-54 age group has seen job losses, with employment down by more than 1.2m. These are people who should be in the prime of their wage-earning years. It will take these older workers longer to find jobs; some will have to settle for considerably less pay.

Another consequence of the prolonged recession is that many more men than women have lost jobs, probably because women are paid less. Women’s share of the workforce may have reached a record 50 per cent last month as a result.

Alas, the prospects for re-employment are diminished by the fact that many jobs may never come back, for example in finance and car manufacturing. This means growth alone will not fully employ America again. If there is any growth in jobs, it will come mostly from healthcare, education, restaurants and hospitality services. Healthcare alone made up all the net jobs created in the last decade. Such service jobs cannot, however, support growth and innovation.

...

The official rate does not include 1m people who once worked in residential construction, where three-quarters of jobs have been lost. These people did not show up on the employment rolls when they were working, and do not show up on the unemployment rolls now they are out of work – but they are still (illegally) in the country. Nor does it include approximately 2m people who have entered the labour force since the recession began and are still without jobs. If it were not for short-time working, the same work could probably be done in the normal work week with 3.5m fewer staff, which would drive the unemployment rate up another 2.5 percentage points.

No wonder job anxiety has soared. Soaring unemployment numbers have undermined the confidence that we might be nearing the bottom of the recession. The outlook is bleak. If there is a recovery, firms will fill additional work loads by adding hours to the truncated work weeks.

...

Only massive programmes are equal to the challenge of restoring stable growth to our economy. One such programme would be to establish a National Infrastructure Bank, advocated by prominent Democrat Felix Rohatyn, to which the government would assign the $65bn (£40bn, €45bn) annually allocated to support infrastructure construction nationally. The bank would have the capacity to borrow, with federal guarantees, an additional $200bn. This programme would ensure a rational rather than a political investment in infrastructure, and provide long-term infrastructure development on a major scale with a maximum multiplier effect on the economy.

A second programme would be a 100 per cent tax credit for increases in research and development by American businesses. In this way we could stimulate and incentivise the capacity for innovation and technical creativity and thus produce another Schumpeterian period of growth for America. There is no time to lose.

The writer is editor in chief of US News & World Report and chairman and co-founder of Boston Properties

Government Tax Receipts Down 20 Percent Year over Year: Wall Street Banks Earning Billions. The Unsustainable Economic Course.

Government Tax Receipts Down 20 Percent Year over Year: Wall Street Banks Earning Billions. The Unsustainable Economic Course.

The Congressional Budget Office puts out a long term analysis examining the economic health of the United States each year. ...
...
Either we increase taxes or cut spending. I’m not pushing one or the other but this is a basic math problem here.
Let us take a look at the projections as put out by the CBO:

Notice that quick spike in “Other Federal Noninterst Spending” which shows the current bailout programs and fiscal stimulus. Largest spike in government spending on the chart so this should tell you the magnitude of the current recession. It is also the case that revenues are falling rapidly and that trend has not reversed. Spending is up and tax collections are down. You can tell that after 2012, the entitlement programs are going to grow at an exponential rate. We really aren’t dealing with these issues currently. At the moment all measures are focused on that blip on the chart in attempting to stabilize the economy.

I agree that the economy needs stabilization. But bailing out the banking industry with $12 trillion in explicit back stops was not the way. The FDIC has a reserve fund that is at zero and it backs up over $9 trillion in deposits. Is it smart to give this industry the right to $12 trillion in taxpayer money when clearly the CBO shows other important expenditures? Probably covering the savings of depositors is fine but this is a minor issues. Did we need to convert Goldman Sachs and Morgan Stanley into banks with easy access to the Federal Reserve? The bailouts focused on toxic debt like residential mortgages and the coming $3 trillion in commercial real estate problems.

From the chart above, it is also clear that the CBO expects income to shoot back up rather quickly and once again regain a steady course for the next 5 decades. Clearly these are rough estimates. Let us look at the latest balance sheet report from the U.S. Treasury:

In other words, we are spending a gigantic sum more than we are bringing in. Now this isn’t something new for us. We have been doing this for years. Yet the magnitude of the current spending is enormous. If we really want to get a sense of the actual revenues and spending let us look at the U.S. Treasury monthly report:

This is where the big recovery talk is lost on many. Last year in 2008, September was a horrible month for us. The entire year was troubling but September was a tipping point. With that said, the government managed to pull in $272 billion from U.S. taxpayers.

Now with the supposed recovery and all the bailouts, how did the government do in September of 2009? The government pulled in $218 billion or a year over year decrease of approximately 20 percent. This is enormous. Yet when we are hearing about all these record banking profits clearly the money isn’t going back to the government even though taxpayers bailed out these institutions. This is a major recession and the balance sheet of the government reflects this. ....

Along With Layoffs, Recession’s Cost Can Be Seen in Pay Cuts - NYTimes.com

Along With Layoffs, Recession’s Cost Can Be Seen in Pay Cuts - NYTimes.com
...

The demotion, the loss of command, the cut in pay to less than his wife, Tracy, makes as a fourth-grade teacher, have diminished Mr. Lawlor, 34, in his own eyes. He still thinks he will return to being the family’s principal breadwinner, although as the months pass he worries more. “I don’t want to be a 50-year-old pilot earning $40,000 a year,” he said, adding that his wife does not want to be married to a pilot with so little earning power.

In recent decades, layoffs were the standard procedure for shrinking labor costs. Reducing the wages of those who remained on the job was considered demoralizing and risky: the best workers would jump to another employer. But now pay cuts, sometimes the result of downgrades in rank or shortened workweeks, are occurring more frequently than at any time since the Great Depression.

State workers in Georgia are taking home smaller paychecks. So are the tens of thousands of employees in California’s public university system. The steel company Nucor and the technology giant Hewlett-Packard have embraced the practice. So have several airlines and many small businesses.

The Bureau of Labor Statistics does not track pay cuts, but it suggests they are reflected in the steep decline of another statistic: total weekly pay for production workers, pilots among them, representing 80 percent of the work force. That index had fallen for 10 consecutive months before rising in July and August, an unprecedented string over the 44 years the bureau has calculated weekly pay, capturing the large number of people out of work, those working fewer hours and those whose wages have been cut. The old record was a two-month decline, during the 1981-1982 recession.

“What this means,” said Thomas J. Nardone, an assistant commissioner at the bureau, “is that the amount of money people are paid has taken a big hit; not just those who have lost their jobs, but those who are still employed.” ....

CounterPunch: Tells the Facts, Names the Names

All the Populism Money Can Buy ... By ALEXANDER COCKBURN

... Left and liberal commentators have talked yearningly about a new populist fever raging in the American body politic, prompted by the spectacle of bailouts for bankers but foreclosures and the dole for everyone else. I can’t say there’s much sign of populism in any energetic form. ...

...

... Over the weekend, the liberal opinion makers at the New York Times – Bob Herbert and Frank Rich – chewed out Goldman Sachs. Growled Herbert:

“Even as tens of millions of working Americans are struggling to hang onto their jobs and keep a roof over their families’ heads, the wise guys on Wall Street are licking their fat-cat chops over yet another round of obscene multibillion-dollar bonuses – this time thanks to the bailout billions that were sent their way by Uncle Sam, with very little in the way of strings attached.”

The Obama administration promptly rushed to cover its left flank by announcing it’s planning to impose cuts in executive pay at seven companies with substantial bailout funds. The U.S. senate’s parlor populist, Bernie Sanders, dutifully proclaimed that the Obama administration deserve praise for “taking an important step forward in trying to control the obscene compensation packages of the top executives on Wall Street.”

Note the meek qualifier, “trying.” The truth of the matter is that the Obama team has managed the tricky shot of giving more bailout money to the banks than the cumulative dispensations of all previous U.S. governments, while at the same time NOT giving any significant debt relief to ruined homeowners, a huge slice of whom is poor, black and Hispanic. Obama is not seeking to reform the financial system, and it would be beyond miraculous if he did, since the contrivers of the present mess – Lawrence Summers, et al – were given a welcoming clap on the back by the new president, as he stepped into the White House and told them to get on with the job. This amazing bailout for the existing corrupt system – as if Lenin had used the October revolution to restore the Romanovs – has been engineered without significant opposition from organized labor or the left-ßliberal end of Obama’s own party.

Of course, people curse the bankers and their political flunkeys as they watch their 10Ks atomize, their homes go, and their jobs disappear to China. They smolder as they watch the parade of Murdoch’s demagogues on Fox, flirting and toying with the theme of Obama’s assassination. ...

Krugman Says China Is Devaluing Its Currency, ‘Stealing’ Jobs - Bloomberg.com

Krugman Says China Is Devaluing Its Currency, ‘Stealing’ Jobs - Bloomberg.com

...

By pursuing a weak-currency policy, China is siphoning demand away from other nations including poor countries, Krugman wrote in an article titled “The Chinese Disconnect” in the New York Times.

“In normal times, I’d be among the first to reject claims that China is stealing other peoples’ jobs, but right now it’s the simple truth,” the Princeton University professor said.

U.S. officials have been “extremely cautious” about confronting China on the issue, an approach that “makes little sense,” he said.

...

The U.S. economy would benefit if China began selling its “dollar hoard,” which Krugman says is currently worth about $2.1 trillion, because it would make American exports more competitive.

“With the world economy still in a precarious state, beggar-thy-neighbor policies by major players can’t be tolerated,” Krugman said. “Something must be done about China’s currency.” ...

Harold Meyerson - Where are the free-market champions? Not on Wall Street. - washingtonpost.com

Harold Meyerson - Where are the free-market champions? Not on Wall Street. - washingtonpost.com

As everybody knows, the two biggest battles on Capitol Hill -- reforming health care and regulating Wall Street -- have unleashed massive campaigns from the enemies of free markets.

The Obama administration and congressional liberals, right? Guess again.

It's health insurers and big banks that are fighting against having their products displayed on open markets, where buyers might be able to find better (and more comprehensible) deals, or are resisting reforms that would open those markets to more competition. Neither the health-care industry nor Wall Street banking is a notably competitive sector these days. Indeed, both are becoming less competitive. And they want to keep things that way.

In more than 30 states, five or fewer health insurance companies control three-quarters of the market (in Alabama, one company controls 90 percent). And mergers among health insurers are at an all-time high this year, the Wall Street Journal reported Tuesday. Worse yet, more and more businesses are declining to offer health insurance to employees (60 percent offered benefits this year, down from 69 percent in 2000 and 63 percent last year, according to an annual Kaiser Family Foundation study). Increasingly, individuals will have to shop for insurance in markets that are steadily less competitive. ...

... Over the past two weeks, one major poll after another has shown that the public supports the public option by a wide margin. Does that mean that three out of five Americans, Barack Obama and most congressional Democrats are really closet socialists? Probably not. It means that they support consumer choice, informed shopping and genuine competition in the health-care sector. The leading opponent of which is our health insurance industry, which does just fine without them.

A similar dynamic characterizes congressional efforts to regulate Wall Street. Last week the House Financial Services Committee took up the question of regulating derivatives. It crafted a bill that would enable the five banks with 95 percent of all U.S.-bank derivative holdings (J.P. Morgan Chase, Goldman Sachs, Bank of America, Morgan Stanley and Citigroup) to keep much of their business off the exchange the Obama administration proposed establishing so that investors buying derivatives could compare the prices and risks of the offerings and regulators could know when these deals threatened to topple the economy (as they did last year). By keeping these products off an exchange, the banks can (and do) collect considerable fees every time they sell such offerings -- fees that would decline if deals closed on a competitive exchange.

These fees contribute heftily to the mammoth quarterly profits that Goldman and J.P. Morgan announced this month. It's not as if banks are profiting from deals that are jump-starting the real economy, after all. They're not raking in dough from funding the next Google or Apple: A report from the National Venture Capital Association and PricewaterhouseCoopers forecast venture capital investments this year at $15 billion to $20 billion, down from $30 billion in each of the past two years.

So whence their profits? Partly, they're a consequence of the increasing concentration of finance. The profitable big banks -- chiefly, J.P. Morgan and Goldman -- "are able to charge more for all kinds of services because companies need banks and investment banks now, and there are fewer strong ones to help them," Douglas Elliott of the Brookings Institution recently told the New York Times. David Viniar, Goldman's chief financial officer, recently admitted as much. ...

Can The Economy Recover?������� : Information Clearing House - ICH

Can The Economy Recover? :Information Clearing House - ICH: " By Paul Craig Roberts

July 15, 2009 'Information Clearing House' -- -There is no economy left to recover. The US manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical “New Economy.”

The “New Economy” was based on services. Its artificial life was fed by the Federal Reserve’s artificially low interest rates, which produced a real estate bubble, and by “free market” financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.

The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans’ wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.

The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.

And now suddenly Americans can’t borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America’s consumer economy, approximately 70% of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities. ...

marmar's Journal - Salon: That sound you hear is the social fabric about to snap (Real unemployment almost 20 %)

marmar's Journal - Salon: That sound you hear is the social fabric about to snap (Real unemployment almost 20 %)

Oct. 19, 2009 | According to official statistics, the unemployment rate in the United States is now 9.8 percent. But those statistics understate the severity of the jobs crisis. The official statistics do not include the 875,000 Americans who have given up looking for work, even though they want jobs. When these "marginally attached" workers and part-time workers are added to the officially unemployed, the result, according to another, broader governement measure of unemployment known as "U-6," is shocking. The United States has an unemployment rate of 17 percent.

...

2009 US economy: largest transfer of wealth to financial/political elite in global history

2009 US economy: largest transfer of wealth to financial/political elite in global history

Political “leadership” of the two oligarchy parties spin their economic policy as being for the public benefit. Professional economists increasingly cast economic policy in unprecedented harsh criticism, even calling for public demonstrations against what they claim as gross violations of financial law. Let’s consider current facts of high importance:

• Transfer of somewhere over $3 trillion with a total potential of $23.7 trillion to banks and financial institutions for the socialization of their gambling losses on illegal sub-prime mortgages and credit default swaps. We know the sub-prime lending was illegal because the FBI concluded 80% of all sub-prime fraud originated from the lenders.
• A so-called bailout designed to give money to the banksters without accountability of where the money is going. This is according to testimony of Elizabeth Warren, Harvard law professor appointed to oversee the bailout for Congress, with video explanation below. The bankster-bailout was chosen rather than simply protecting depositors and reorganizing the banks under standard bankruptcy procedure. The two oligarchy political parties denied Congressional hearings for the bankster-bailout, which should have considered cost-benefit analysis for public banks rather than private banks. An important fact that would have come out of the hearings is that the total market capitalization of all the major US banks was less than $300 billion; meaning that the government could have outright bought all of them for less than a tenth of the amount given away. Think about that.
• A 2009 record payout to bank employees, including lucrative bonuses, on pace for $140 billion.
• Depression-level unemployment, with the government’s “official figures” understating true unemployment by half.
• 100,000 laid-off teachers with class sizes expanding to over 40 students per class, and over a million homeless US students. ...

OpEdNews - Article: US Joins Ranks of Failed States

OpEdNews - Article: US Joins Ranks of Failed States

The US has every characteristic of a failed state.

The US government's current operating budget is dependent on foreign financing and money creation.

Too politically weak to be able to advance its interests through diplomacy, the US relies on terrorism and military aggression. See here and here.

Costs are out of control, and priorities are skewed in the interest of rich organized interest groups at the expense of the vast majority of citizens. For example, war at all cost, which enriches the armaments industry, the officer corps and the financial firms that handle the war's financing, takes precedence over the needs of American citizens. There is no money to provide the uninsured with health care, but Pentagon officials have told the Defense Appropriations Subcommittee in the House that every gallon of gasoline delivered to US troops in Afghanistan costs American taxpayers $400.

...

Republicans and Democrats on the take from the private insurance companies maintain that the US cannot afford to provide Americans with health care and that cuts must be made even in Social Security and Medicare. So how can the US afford bankrupting wars, much less totally pointless wars that serve no American interest?

The enormous scale of foreign borrowing and money creation necessary to finance Washington's wars are sending the dollar to historic lows. The dollar has even experienced large declines relative to currencies of third world countries such as Botswana and Brazil. The decline in the dollar's value reduces the purchasing power of Americans' already declining incomes.

Despite the lowest level of housing starts in 64 years, the US housing market is flooded with unsold homes, and financial institutions have a huge and rising inventory of foreclosed homes not yet on the market.

Industrial production has collapsed to the level of 1999, wiping out a decade of growth in industrial output.

The enormous bank reserves created by the Federal Reserve are not finding their way into the economy. Instead, the banks are hoarding the reserves as insurance against the fraudulent derivatives that they purchased from the gangster Wall Street investment banks.

The regulatory agencies have been corrupted by private interests. Frontline reports that Alan Greenspan, Robert Rubin, and Larry Summers blocked Brooksley Born, the head of the Commodity Futures Trading Commission from regulating derivatives. President Obama rewarded Larry Summers for his idiocy by appointing him Director of the National Economic Council. What this means is that profits for Wall Street will continue to be leeched from the diminishing blood supply of the American economy. ...

...

... Washington is controlled by interest groups that enrich themselves at the expense of the American people.

The one percent that comprise the super rich are laughing as they say, “let them eat cake.” ...

Michael Moore: Do You Want Airline Pilots to Be Working Two Jobs? | Crooks and Liars

Michael Moore: Do You Want Airline Pilots to Be Working Two Jobs? | Crooks and Liars

Michael Moore's pointing out something no one in the media seems to want to discuss: How little money the people who are flying commercial planes are getting paid. As he says, these are not the people you want working a second job:

He then showed me his pay stub. He took home $405 this week. My life was completely and totally in his hands for the past hour and he's paid less than the kid who delivers my pizza.

I told the guys that I have a whole section in my new movie about how pilots are treated (using pilots as only one example of how people's wages have been slashed and the middle class decimated). In the movie I interview a pilot for a major airline who made $17,000 last year. For four months he was eligible -- and received -- food stamps. Another pilot in the film has a second job as a dog walker.

"I have a second job!," the two pilots said in unison. One is a substitute teacher. The other works in a coffee shop. You know, maybe it's just me, but the two occupations whose workers shouldn't be humpin' a second job are brain surgeons and airline pilots. Call me crazy.

I told them about how Capt. "Sully" Sullenberger (the pilot who safely landed the jet in the Hudson River) had testified in Congress that no pilot he knows wants any of their children to become a pilot. Pilots, he said, are completely demoralized. He spoke of how his pay has been cut 40% and his own pension eliminated. Most of the TV news didn't cover his remarks and the congressmen quickly forgot them. They just wanted him to play the role of "HERO," but he was on a more important mission. He's in my movie. ...

The Lost Generation - BusinessWeek

The Lost Generation - BusinessWeek

Bright, eager—and unwanted. While unemployment is ravaging just about every part of the global workforce, the most enduring harm is being done to young people who can't grab onto the first rung of the career ladder.
...
For people just starting their careers, the damage may be deep and long-lasting, potentially creating a kind of "lost generation." Studies suggest that an extended period of youthful joblessness can significantly depress lifetime income as people get stuck in jobs that are beneath their capabilities, or come to be seen by employers as damaged goods.

Equally important, employers are likely to suffer from the scarring of a generation. The freshness and vitality young people bring to the workplace is missing. Tomorrow's would-be star employees are on the sidelines, deprived of experience and losing motivation. In Japan, which has been down this road since the early 1990s, workers who started their careers a decade or more ago and are now in their 30s account for 6 in 10 reported cases of depression, stress, and work-related mental disabilities, according to the Japan Productivity Center for Socio-Economic Development.
...
Only 46% of people aged 16-24 had jobs in September, the lowest since the government began counting in 1948. The crisis is even hitting recent college graduates. "I've applied for a whole lot of restaurant jobs, but even those, nobody calls me back," says Dan Schmitz, 25, a University of Wisconsin graduate with a bachelor's degree in English who lives in Brooklyn, N.Y. "Every morning I wake up thinking today's going to be the day I get a job. I've not had a job for months, and it's getting really frustrating." ...

Henry Blodget: The Scariest Jobs Chart Ever

Henry Blodget: The Scariest Jobs Chart Ever
...
In 1948, U.S. consumers were not still saddled with the massive debts that are stifling consumption today. And consumers still represent 70%+ of spending.

The other interesting point with respect to the 1948 "V" is that we have now gone as many months from the peak as it took employment to recover in full in the 1948 recession. And we're still losing jobs.

Most importantly, regardless of what the jobs recovery eventually looks like, it hasn't started yet. The economy is still losing 250,000+ jobs a month. The average workweek, which should be the first indicator to turn up, also fell in August to match its record low. This would not seem to be consistent with a sustained, v-shaped recovery.

Mike Whitney: Dead Man Walking

Mike Whitney: Dead Man Walking
...

From the UK Telegraph:

"Both bank credit and the M3 money supply in the United States have been contracting at rates comparable to the onset of the Great Depression since early summer, raising fears of a double-dip recession in 2010 and a slide into debt-deflation...

“Similar concerns have been raised by David Rosenberg, chief strategist at Gluskin Sheff, who said that over the four weeks up to August 24, bank credit shrank at an ‘epic’ 9pc annual pace, the M2 money supply shrank at 12.2pc and M1 shrank at 6.5pc.

"’For the first time in the post-Second World War era, we have deflation in credit, wages and rents and, from our lens, this is a toxic brew,’he said. (Ambrose Evans-Pritchard, "US credit shrinks at Great Depression rate prompting fears of double-dip recession", UK Telegraph)

...

“Underscoring consumers’ austere attitudes, 77 per cent of respondents said they have cut back on spending during the past year, 59 percent said they have made a bigger effort to pay off debts and 48 percent have put more money aside as savings." (Bloomberg News)

Savings are up and spending is down. The economy is headed into a long-term funk; the "new normal". The Fed's sleight-of-hand programs and Obama's stimulus elixir haven't changed the prevailing downward trend. If anything, they have made matters worse. Consider this from Janet Tavakoli, author of "Dear Mr. Buffett" in an interview with Max Keiser:

"Regarding the outlook, my analysis is grim. I am not a doomsayer, I follow the cash, and so far, I’ve been correct, and the government has been wrong. Here’s the situation. We are at greater risk of a total meltdown due to a deflationary collapse than we were in 2007. After the greatest Ponzi scheme in the history of the capital markets, we’ve seen history’s greatest fiscal and monetary expansion, but it hasn’t worked. Debt levels of consumers and business exceed the capacity to repay." (Janet Tavakoli On The Edge With Max Keiser)

The Fed has done nothing to restructure the financial system so the same problems which killed Lehman and thrust the global economy into a tailspin, persist today. When the stimulus runs out and the Fed ends its $1.25 trillion purchase of (Fannie and Freddie) mortgage-backed securities and $300 billion in US Treasuries, interest rates will rise, housing prices will tumble, and the economy will nosedive. Bernanke will be forced back to the printing presses, the only hope for reversing the deflationary spiral. This will trigger the next crisis, a run on the dollar. ...

: Information Clearing House - ICH

: Information Clearing House - ICH

October 06, 2009 "Information Clearing House" --- If Karl Marx and V. I. Lenin were alive today, they would be leading contenders for the Nobel Prize in economics.

Marx predicted the growing misery of working people, and Lenin foresaw the subordination of the production of goods to financial capital’s accumulation of profits based on the purchase and sale of paper instruments. Their predictions are far superior to the “risk models” for which the Nobel Prize has been given and are closer to the money than the predictions of Federal Reserve chairmen, US Treasury secretaries, and Nobel economists, such as Paul Krugman, who believe that more credit and more debt are the solution to the economic crisis.

In this first decade of the 21st century there has been no increase in the real incomes of working Americans. There has been a sharp decline in their wealth. In the 21st century Americans have suffered two major stock market crashes and the destruction of their real estate wealth.

Some studies have concluded that the real incomes of Americans, except for the financial oligarchy of the super rich, are less today than in the 1980s and even the 1970s. I have not examined these studies of family income to determine whether they are biased by the rise in divorce and percentage of single parent households. However, for the last decade it is clear that real take-home pay has declined.

The main cause of this decline is the offshoring of US high value-added jobs. Both manufacturing jobs and professional services, such as software engineering and information technology work, have been relocated in countries with large and cheap labor forces.
...
The immiseration of working people has not resulted from worsening crises of over-production of goods and services, but from financial capital’s power to force the relocation of production for domestic markets to foreign shores. Wall Street’s pressures, including pressures from takeovers, forced American manufacturing firms to “increase shareholders’ earnings.” This was done by substituting cheap foreign labor for American labor.

Corporations offshored or outsourced abroad their manufacturing output, thus divorcing American incomes from the production of the goods that they consume. The next step in the process took advantage of the high speed Internet to move professional service jobs, such as engineering, abroad. The third step was to replace the remains of the domestic work force with foreigners brought in at one-third the salary on H-1B, L-1, and other work visas.

This process by which financial capital destroyed the job prospects of Americans was covered up by “free market” economists, who received grants from offshoring firms in exchange for propaganda that Americans would benefit from a “New Economy” based on financial services, and by shills in the education business, who justified work visas for foreigners on the basis of the lie that America produces a shortage of engineers and scientists.
...
On October 2 statistician John Williams of shadowstats.com reported that the Bureau of Labor Statistics has announced a preliminary estimate of its annual benchmark revision of 2009 employment. The BLS has found that employment in 2009 has been overstated by about one million jobs. John Williams believes the overstatement is two million jobs. He reports that “the birth-death model currently adds [an illusory] net gain of about 900,00 jobs per year to payroll employment reporting.”

The non-farm payroll number is always the headline report. However, Williams believes that the household survey of unemployment is statistically sounder than the payroll survey. The BLS has never been able to reconcile the difference in the numbers in the two employment surveys. Last Friday, the headline payroll number of lost jobs was 263,000 for the month of September. However the household survey number was 785,000 lost jobs in the month of September.

The headline unemployment rate of 9.8% is a bare bones measure that greatly understates unemployment. Government reporting agencies know this and report another unemployment number, known as U-6. This measure of US unemployment stands at 17% in September 2009.

When the long-term discouraged workers are added back into the total unemployed, the unemployment rate in September 2009 stands at 21.4%.
...

Economics focus: Damage assessment | The Economist

Economics focus: Damage assessment | The Economist
...

Unfortunately, the outlook for America’s potential growth rate was darkening long before the financial crisis hit. The IT-induced productivity revolution, which sent potential output soaring at the end of the 1990s, has waned. More important, America’s labour supply is growing more slowly as the population ages, the share of women working has levelled off and that of students who work has fallen. Since 1991 the labour supply has risen at an average annual pace of 1.1%. Over the next decade the Congressional Budget Office expects a 0.6% annual increase.

According to Robert Gordon, a productivity guru at Northwestern University, America’s trend rate of growth in 2008 was only 2.5%, the lowest rate in its history, and well below the 3-3.5% that many took for granted a few years ago. Without factoring in the financial crisis, Mr Gordon expects potential growth to fall to 2.35% over the coming years.

...

A special report on the world economy: : The long climb | The Economist

A special report on the world economy: : The long climb | The Economist
...
Shock has given way to relief.

The persistence of debt

But the relief is likely to be short-lived. Just over a year ago, the day Lehman Brothers filed for bankruptcy, the world economy fell off a precipice. When you are falling, you do not look up. Only when you hit bottom can you stop and contemplate the cliff you must now climb.

This special report will argue that although a “new normal” for the world economy is now in sight, it will be different from the old normal in a number of ways. Demand in rich countries will remain weak and emerging economies will not be able to compensate. The report will explain why many governments will have to keep their stimulus packages going for longer than expected, or face entrenched unemployment that will permanently lower their economic potential. Public debt will rise so that private debt can fall. The banks, the report will show, will remain cautious about lending again, which will slow up the recovery but also make companies more careful about their investment; and the securitisation markets that became so fashionable during the boom will recede, though not disappear altogether.

A persistent shortfall in demand will weigh on supply. By the time this crisis is over, as many as 25m people may have lost their jobs in the 30 rich countries that belong to the Organisation for Economic Co-operation and Development (OECD). The danger is that several million may never regain them. The mobilisation of capital will be fitful as the financial system copes with past mistakes and impending regulation. The travails of finance, in turn, may prevent the recovering economy from backing and exploiting innovations.

Like Japan’s bubble years, the years that led to the global financial crisis have left a heavy legacy of debt on the balance-sheets of banks and households, especially in Britain and America. It is this legacy that allows past losses to depress future gains. Fisher, again, put it best: “I fancy that over-confidence seldom does any great harm except when, as, and if, it beguiles its victims into debt.” There is no better example of that than American consumers. ...

Recession Is Over; Depression Has Just Begun -- Seeking Alpha

Recession Is Over; Depression Has Just Begun -- Seeking Alpha
...
As a result, I have been on a quest to find data which disproves my original thesis – signs that the green shoots that everyone keeps talking about (and a term I had banned from my site) are part of a sustainable economic recovery. Unfortunately, I have concluded that they are not. This post will discuss why we are in a depression, not a recession and what this means about likely future economic and investing paths. ...
...

Deep recession rooted in structural issues

Back in my very first post in March of 2008, I said that the U.S. was already in a recession, the only question being how deep and how long – a question I answered in the next post saying “we are definitely in recession. And according to Gary Shilling, this recession is going to be a big one. Worse than 2001, 1990-91 or the double dip recession of 1980-82.” This has certainly turned out to be true. The issue was and still is overconsumption i.e. levels of consumption supported only by increase in debt levels and not by future earnings. This is the core of our problem – debt.

I see the debt problem as an outgrowth of pro-growth, anti-recession macroeconomic policy which developed as a reaction to the trauma of the lost decade in the U.S. and the U.K.. This was a period of low growth, high inflation and poor market returns, in which the U.K. became the sick man of Europe and labor strife brought that economy to its knees. It is a period that saw the resignation of an American President and the humiliation of the Iran Hostage Crisis.

In essence, after the inflationary outcome that many saw as an outgrowth of the Samuelson-Keynesianism of the 1960s and 1970s, the Reagan-Thatcher era of the 1990s ushered in a more ‘free-market’ orientation in macroeconomic policy. The key issue was government intervention. Policy makers following Samuelson (more so than Keynes himself) have stressed the positive effect of government intervention, pointing to the Great Depression as animus, and the New Deal, and World War II as proof. Other economists (notably Milton Friedman, and later Robert Lucas) have stressed the primacy of markets, pointing to the end of Bretton Woods, the Nixon Shock and stagflation as counterfactuals. They point to the Great Moderation and secular bull market of 1982-2000 as proof. This is a divisive and extremely political issue, in which the two sides have been labelled Freshwater and Saltwater economists (see my post “Freshwater versus saltwater circa 1988”).

However, just as the policy of the 1950s to the 1970s was not really Keynesian (read Keynes’ General Theory as Richard Posner did and you will see why), the 1980s-2000 was not really an era of true ‘free markets.’ I call it deregulation as crony capitalism. What this has meant in practice is that the well-connected, particularly in the financial services industry, have won out over the middle classes (a view I take up in “A populist interpretation of the latest boom-bust cycle”). In fact, hourly earnings peaked over 35 years ago in the United States when adjusting for inflation.

Remember, the 1970s was a difficult period in which the U.K. and the U.S. saw jobs vanish in key industrial sectors. To stop the rot and effectively mask the lack of income growth by average workers, a new engine of growth had to be found. Enter the financial sector. The financialization of the American and British economies began in the 1980s, greatly increasing the size and impact of the financial sector (see Kevin Phillips’ book “Bad Money”). The result was an enormous increase in debt, especially in the financial sector.

This debt problem was made manifest repeatedly during financial crises of the era. Not all of these crises were American – most were abroad and merely facilitated by an increase in credit, liquidity, and international capital movement. In March 2008, I wrote in my third post on the US economy in 2008: ...

Eventually, the debt burdens became too large and resulted in the housing meltdown and the concomitant collapse of the financial sector, a looming problem that our policymakers should have seen. This is why my blog is named Credit Writedowns. But, make no mistake, the housing and writedown problems are only symptoms. The real problem is the debt – specifically an overly indebted private sector (note the phrase ‘private sector’ as I will return to this topic).

This is a depression, not a recession

...

The toxic assets are still impaired and banks are still under-capitalized. But the increased asset value and the end of huge writedowns has underpinned the banks and led to a rise in the broader market in a feedback loop that has been far greater than I could have imagined at this stage in the economic cycle.
...
The more robust the recovery, the quicker the prop ends and the sooner we get a second leg down.

So to recap:

1. A depression was borne out of high levels of private sector debt, the unsustainability of which became apparent after a financial crisis.
2. The effects of this depression have been lessened by economic stimulus and government support.
3. Government intervention led to a reduction in asset price declines, which led to stock market increases, which led to asset price stabilization and more stock market increases and eventually to asset price increases. This has led to a false sense that green shoots are leading to a sustainable recovery.
4. In reality, the problems of high debt levels in the private sector and an undercapitalized financial system are still lurking, waiting for the government to withdraw its economic support to become realized
5. Because large scale government deficit spending is politically impossible, expect a second economic dip within three to four years at the latest.

Why is government spending necessary?

The government plays a crucial role here because of the huge private sector indebtedness. In the U.S. and the U.K., the public sector is not nearly as indebted. So while, the private sector rebuilds its savings and reduces debt, the public sector must pick up the slack. Why do I say must? It’s because of an accounting identity which comes from the financial sector balances model. Marshall Auerback says it best in a recent post:

...

If the private sector is a net saver, the public sector must, I repeat must, run a deficit. That’s the law of double entry book-keeping. The only other way to prevent the government from running a deficit when the private sector is net saving is to run huge current account surpluses by exporting your way out of recession – what Germany and Japan tried in the 1990s and in this decade. But, of course, the G20 and the IMF are all talking about global re-balancing. This cult of zero imbalances is something Marshall first brought forward back in April. And it ignores the accounting identity inherent in the financial sector balances model. I highlighted this model in my post, “Minsky: Turning neoclassical economics on its head.” However, I must admit to having a preternatural disaffection for large deficits and big government which is what Koo and Minsky advise respectively – a recent cartoon shows why. It is this knee-jerk aversion to what is viewed as fiscal profligacy which is at the core of the cult of zero imbalances. ....

Bob Farrell, 10 Rules to Follow for this Stock Market :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

Bob Farrell, 10 Rules to Follow for this Stock Market :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

1) Markets tend to return to the mean over time.

2) Excesses in one direction will lead to an opposite excess in the other direction.

3) There are no new eras — excesses are never permanent.

4) Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways.

5) The public buys the most at the top and the least at the bottom.

6) Fear and greed are stronger than long-term resolve.

7) Markets are strongest when they are broad and weakest when they narrow to a handful of blue chip names.

8) Bear markets have three stages — sharp down — reflexive rebound —a drawn-out fundamental downtrend.

9) When all the experts and forecasts agree – something else is going to happen.

10) Bull markets are more fun than bear markets

Editorial - Wanted - Leadership on Jobs - NYTimes.com

Editorial - Wanted - Leadership on Jobs - NYTimes.com
...
Congress must enact emergency unemployment benefits without delay. Equally important, the Obama administration must flesh out its commitment to ensure that economic recovery does not leave middle-class and low-income families behind.

September was the 21st straight month of job loss — the longest unbroken stretch of losses since record-keeping began in 1939 — bringing to 7.2 million the number of positions that have been axed since December 2007. And that understates the damage. During the recession, the economy has failed to create another 2.7 million jobs that were needed simply to employ new workers — like high school and college graduates, immigrants and stay-at-home parents who want to go back to work.

The unemployment rate for September — 9.8 percent — also understates the damage. It would have been higher but for the fact that 571,000 people dropped out of the work force last month — in general, it’s assumed, because they’ve despaired of finding work. If they had kept looking, they would have been counted as unemployed.

The combination of a rising unemployment rate and a quickening pace of labor-force dropouts is especially worrisome. In September, the employment rate for all workers — defined as the share of the population with a job — fell to 58.8 percent, its lowest level in more than 25 years. For adult men, who have been particularly hard hit by job loss in this recession, the employment rate fell to 67 percent, its lowest level since the government began keeping track in 1948. Before this recession, that rate had never dropped below 70.5 percent.

A shrinking labor force represents a tremendous waste of talent and potential, a loss of value that will not be entirely retrievable. Widespread joblessness among men is particularly devastating for the economy and many families, because men tend to earn more than women and to have jobs offering health insurance.

To make matters worse, unemployment among men and women is proving relentless. Of the 15.1 million people who are now officially counted as unemployed, over a third have been out of work for 27 weeks or longer, the highest percentage of long-term unemployment on record. By the end of the year, benefits will expire for more than one million unemployed workers. The House has passed a bare-bones extension of benefits; the Senate has a better bill, covering more long-term unemployed workers, and should pass it first thing this week.

The real work, however, lies ahead. Economic recovery will not automatically replace the jobs that have been lost so far in this recession. Nor will higher levels of learning and skill — necessary as they are — magically create jobs, especially in the numbers that are needed. ...

U.S. Unemployment Now Lasts Longer Than Benefits: Chart of Day - Bloomberg.com

U.S. Unemployment Now Lasts Longer Than Benefits: Chart of Day - Bloomberg.com

Oct. 2 (Bloomberg) -- For the first time, the average amount of time it takes fired employees to find a new job exceeds the length of their standard unemployment benefits.

The CHART OF THE DAY shows the average duration of unemployment is now 26.2 weeks, longer than the 26 weeks of state benefits normally provided to workers who lose their jobs. It’s the first time that has occurred since the Bureau of Labor Statistics began keeping records in 1948. ...

Op-Ed Columnist - Mission Not Accomplished - NYTimes.com

Op-Ed Columnist - Mission Not Accomplished - NYTimes.com

...

But while not having another depression is a good thing, all indications are that unless the government does much more than is currently planned to help the economy recover, the job market — a market in which there are currently six times as many people seeking work as there are jobs on offer — will remain terrible for years to come.

Indeed, the administration’s own economic projection — a projection that takes into account the extra jobs the administration says its policies will create — is that the unemployment rate, which was below 5 percent just two years ago, will average 9.8 percent in 2010, 8.6 percent in 2011, and 7.7 percent in 2012.

This should not be considered an acceptable outlook. For one thing, it implies an enormous amount of suffering over the next few years. Moreover, unemployment that remains that high, that long, will cast long shadows over America’s future.

Anyone who thinks that we’re doing enough to create jobs should read a new report from John Irons of the Economic Policy Institute, which describes the “scarring” that’s likely to result from sustained high unemployment. Among other things, Mr. Irons points out that sustained unemployment on the scale now being predicted would lead to a huge rise in child poverty — and that there’s overwhelming evidence that children who grow up in poverty are alarmingly likely to lead blighted lives.

These human costs should be our main concern, but the dollars and cents implications are also dire. Projections by the Congressional Budget Office, for example, imply that over the period from 2010 to 2013 — that is, not counting the losses we’ve already suffered — the “output gap,” the difference between the amount the economy could have produced and the amount it actually produces, will be more than $2 trillion. That’s trillions of dollars of productive potential going to waste.

Wait. It gets worse. A new report from the International Monetary Fund shows that the kind of recession we’ve had, a recession caused by a financial crisis, often leads to long-term damage to a country’s growth prospects. “The path of output tends to be depressed substantially and persistently following banking crises.”

The same report, however, suggests that this isn’t inevitable: “We find that a stronger short-term fiscal policy response” — by which they mean a temporary increase in government spending — “is significantly associated with smaller medium-term output losses.”

So we should be doing much more than we are to promote economic recovery, not just because it would reduce our current pain, but also because it would improve our long-run prospects.

But can we afford to do more — to provide more aid to beleaguered state governments and the unemployed, to spend more on infrastructure, to provide tax credits to employers who create jobs? Yes, we can.

The conventional wisdom is that trying to help the economy now produces short-term gain at the expense of long-term pain. But as I’ve just pointed out, from the point of view of the nation as a whole that’s not at all how it works. The slump is doing long-term damage to our economy and society, and mitigating that slump will lead to a better future. ...

Conservative conference attendees erupt in cheers when the U.S. is eliminated as Olympics site.

Think Progress � Conservative conference attendees erupt in cheers when the U.S. is eliminated as Olympics site.

Conservatives are currently gathered in Virginia for the American for Prosperity’s Defending the American Dream Summit, which features speakers such as radio host Hugh Hewitt and former House Speaker Newt Gingrich. Today when the IOC announced that the United States was eliminated from the running to host the 2016 Olympics, a room of conference attendees immediately laughed and applauded. Watch it: ...

[PATRIOTIC AMERICANS !]

U.S. Job Losses May Be Even Larger, Model Breaks Down (Update1) - Bloomberg.com

U.S. Job Losses May Be Even Larger, Model Breaks Down (Update1) - Bloomberg.com

Oct. 2 (Bloomberg) -- The U.S. economic slump earlier this year was so severe it short-circuited the government’s model for calculating payrolls, raising the risk that today’s jobs report may be too optimistic.

About 824,000 more jobs may be subtracted from the payroll count for the 12 months through last March when the figures are officially revised early next year, a Labor Department report showed today. The revision would be the biggest since at least 1991.

The bulk of the miss occurred in the calculations for the first quarter of this year, the Labor Department said. The economy shrank at a 6.4 percent annual pace in the first three months of 2009, the worst performance since 1982.

The figures raise the possibility that the government’s calculations continue to miss the mark.

“We are probably still underestimating job losses,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “There could be another 30,000 to 40,000” that the data isn’t picking up, he said. ...

Daily Kos: Job Losses Far More than Expected. U6 Hits 17%

Daily Kos: Job Losses Far More than Expected. U6 Hits 17%
...

The once-all-but-ignored alternative measure of unemployment and underemployed – U6 – rose from 16.8% to 17%. That figure includes jobless Americans who have become discouraged and those working part-time but desire full-time jobs, a total of 26.5 million. Without the government’s economic stimulus, which was fiercely opposed by Republicans, the situation would be far worse. But the latest figures give more credibility to those economists and other observers who have long questioned whether the stimulus as currently constituted can sustain a recovery.

In another much-watched statistic showing weakness in the labor market, the average workweek for production and nonsupervisory workers fell back to 33 hours, a record low.

The number of long-term unemployed - workers who have gone jobless for 27 weeks or more rose - by 450,000 to 5.4 million. In September, 35.6 percent of unemployed persons had been jobless for 27 weeks or more.

The official unemployment rate for whites was 9.0 percent for September, for blacks 15.4 percent, for Hispanics 12.7 percent, and for Asians 7.4 percent. The rate for women of all races was 7.8 percent, for men 10.3%. Count in the discouraged and the underemployed, and those breakdowns are far worse, too.

Most economists and other expert observers believe that the quarter just ended and the quarter that we have just begun will show growth, perhaps in the 3% to 4% range. In the past that’s usually meant a rise in hiring. But in recovery periods following the previous two recessions, there’s been a disconnect: an extremely weak labor market. Those recessions were comparatively mild. What we’ve seen since December 2007 is the weakest employment market since the Great Depression. And it’s not likely to go away without additional stimulus no matter what the deficit hawks in both parties have to say. ...

EmploymentJobLossesRecessions.jpg (JPEG Image, 1138x739 pixels) - Scaled (82%)

EmploymentJobLossesRecessions.jpg (JPEG Image, 1138x739 pixels) - Scaled (82%)

Robert Reich's Blog: The Truth About Jobs That No One Wants To Tell You

Robert Reich's Blog: The Truth About Jobs That No One Wants To Tell You
...
In other words, ten percent unemployment really means twenty percent underemployment or anxious employment. All of which translates directly into late payments on mortgages, credit cards, auto and student loans, and loss of health insurance. It also means sleeplessness for tens of millions of Americans. And, of course, fewer purchases (more on this in a moment).

Unemployment of this magnitude and duration also translates into ugly politics, because fear and anxiety are fertile grounds for demagogues weilding the politics of resentment against immigrants, blacks, the poor, government leaders, business leaders, Jews, and other easy targets. It's already started. Next year is a mid-term election. Be prepared for worse.

So why is unemployment and underemployment so high, and why is it likely to remain high for some time? Because, as noted, people who are worried about their jobs or have no jobs, and who are also trying to get out from under a pile of debt, are not going do a lot of shopping. And businesses that don’t have customers aren’t going do a lot of new investing. And foreign nations also suffering high unemployment aren’t going to buy a lot of our goods and services.

And without customers, companies won't hire. They'll cut payrolls instead.

Which brings us to the obvious question: Who’s going to buy the stuff we make or the services we provide, and therefore bring jobs back? There’s only one buyer left: The government. ....

Congress' H-1b program is displacing daughter of Programmers Guild president out of the job market

Congress' H-1b program is displacing daughter of Programmers Guild president out of the job market

For years the Programmers Guild has been calling for some basic reforms to the H-1b program. Now the harm of the H-1b program is hitting home.

In May 2009, Kim's daughter Stephanie graduated from the University of Southern California (USC) with dual STEM degrees. (U.S. News ranks USC Engineering school 7th in the nation.) Stephanie completed both degrees in only four years and worked at summer internships. She has incurred student loans approaching six figures. Her resume is here - and Stephanie is willing to speak with reporters.

• M.S. Civil Engineering, Structural Engineering
• B.S. Civil Engineering, Building Science (Architectural Engineering)
• National Honor Societies: Chi Epsilon, Tau Beta Pi, Mortar Board (Webmaster), Phi Kappa Phi
• GPA: 3.840

In spite of a diligent search for work through the summer, she - along with many of her USC classmates - is unable to find a job. This is a typical response:

...

Yet, even in this worst job market in 25 years, in October 2009 Congress will flood in another 65,000 H-1b workers. In 99% of these jobs Congress did not even require that employers first try to fill these jobs with American workers.

Currently, these 65,000 jobs are unfilled. In the past, USCIS and U.S. Department of Labor (DOL) have refused to disclose these job openings - effectively reserving U.S. jobs for foreign workers:

...

Yet, even in this worst job market in 25 years, in October 2009 Congress will flood in another 65,000 H-1b workers. In 99% of these jobs Congress did not even require that employers first try to fill these jobs with American workers.

Currently, these 65,000 jobs are unfilled. In the past, USCIS and U.S. Department of Labor (DOL) have refused to disclose these job openings - effectively reserving U.S. jobs for foreign workers:

• July 2006: Letter to DOL requesting FY 2007 LCA DB
• July 2006: DOL Response: "REQUEST DENIED"

Consistently, DOL has not posted the FY 2009 Labor Condition Application (LCA) records on the DOL website: They will wait until after the jobs have been filled by temporary foreign workers - because Congress does not require that the records be disclosed prior to the jobs being filled.

Complete H-1b LCA records for prior years are on this DOL webpage. (The FY 2008 file is the source of the Excel extract in the following link.)

FACT: Stephanie is qualified to fill many of these jobs that DOL is reserving the H-1b workers.

An Excel file containing the Civil Engineering and Architectural categories of approved LCAs for FY2008 is zipped here. The jobs that pay $40,000 or less (or $20/hour or less) are highlighted in pink. ...
...

FACT: Underpaid H-1b workers are flooding into the Sacramento Region

A zipped Excel of the 1466 FY2008 LCAs for all occupations for the Sacramento Region is here. Of these, DOL only denied 4 of them. Approvals include LCAs that suggest below market wages if not H-1b fraud - such as sponsoring several H-1b workers from a residential address:

• A $2000/month "BUSSINESS MANAGER" (sic) for www.uppal-insurance.com in Citrus Heights

• 500 "NURSES" earning $8.00/hour by "The Firm Group & Associates" in Sacramento - which Google does not find a website for.

• Three $26,000/year "DATABASE ADMINISTRATOR" for www.key-soft.com/index.html - this one firm filed dozens of LCAs for Sacramento in FY 2008..

There are dozens more just in the Sacramento region, and thousands nationwide - comprising a substantial percentage of H-1b usage. In the Sacramento region it appears that most of the sponsors are third-party bodyshops rather than principal employers of the workers.

How do bodyshops that operate out of residences the have a critical need for foreign workers? Are these the employers that Congress fears will "relocate out of the U.S." if U.S. worker protections are added to the H-1b program? These bodyshops are not filling a shortage - instead they market their resumes and services in direct competition with the U.S. workers in this Congressional District. In some cases they receive favored treatment on contracts because they are "minority owned." On what basis does Congress give racial hiring preference to recent non-citizen immigrants over native-born citizens? ...

...

FACT: H-1b is not the only problem

Congress did not stop at the H-1b program. They also devised the L-1 visa program, which allows employers to transfer workers from overseas to work in the U.S., while still paying them their foreign wages. This has created a huge incentive for companies like Intel to set up shop in India and China, hire their graduates, then rotate those workers into the U.S. to fill the jobs with cheaper labor.

According to this image from www.cis.org Congress admitted 1.3 million foreign workers into the U.S. in FY 2008. I suspect that, in spite of the hardship Americans are having finding work, Congress will admit over on million foreign workers into the U.S. in FY 2009 - only 9000 within the "extraordinary ability" category. (Note that Stephanie forced to compete for entry-level jobs against 70,000 OPT foreign graduates): ...

...

FACT: The H-1b is harming thousands of U.S. workers

Hundreds of U.S. tech workers have detailed their personal experiences in the "H-1b Harm Report" at www.HireAmericansFirst.org. Most of these workers are willing to speak with the media. For example:

Exult My husband lost his computer programming job when his company imported cheaper programmers from India.

Lucent Technologies I was displaced from my contract position in August 2001 while the
H-1B guest workers were retained.

PG&E (San Francisco) My company was actively hiring Indian contractors through Tata and Infosys at the time I was let go.

Cognizant The company is phasing out American consultants, and later this year, American employees of that company.

MMO and SnapOn Replaced by H-1B. Spouse replaced by guest worker too.

General Electric Healthcare I am now retired from GE Healtcare, Milwaukee. I was forced into retirement at age 60, and eventually replaced by H-1B workers. Several American engineers have been replaced at GE by H-1B and green card workers.
....