For most of the past 70 years, the U.S. economy has grown at a steady clip, generating perpetually higher incomes and wealth for American households. But since 2000, the story is starkly different.
The past decade has been the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity that is leading economists and policymakers to rethink the underpinnings of the nation's growth.
It has been, according to a wide range of data, a lost decade for American workers. A decade that began in a moment of triumphalism - there was a current of thought among economists in 1999 that recessions were a thing of the past - has included two of them, bookends for a debt-driven expansion that was neither robust nor sustainable.
There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.
Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 - and the number is sure to have declined further during a difficult 2009. The decade was the first of falling median incomes since figures were first compiled in the 1960s.
And people are seriously considering putting Republicans back in office? What is wrong in America is the corrosive effect of corporate money in the political system. The people have become secondary to the companies that fund the elections. how can they get away with this? The American people are not curious enough to investigate the causes of their decades long slide. Until the average American understands the political system and does even the simplest of research, we will be ruled by the 15 second soundbite and the false news stories of Fox News.
We can not hope for a resurgence of the middle class until we band together and fight for what is right. Unfortunately by the time they wake up it may be too late. We will be nothing more than a former empire drowning in debt and headed for irrelevancy.
I could never explain the crazy profits by Goldman Sachs. You have to ask how, in an environment where the very survival of the firm was in question, could they turn around and have their second most profitable quarter in their history. The answer is simple. It was public funds being used to generate record profits. Does it seem fair that millions are in foreclosure and these crooks are expecting bonuses that will drive that average salary of a Goldman employee to over $500,000.00. It's time to demand our money back. Not only are these people thieves but they are rubbing it in our faces.
We keep hearing how the economy is improving but that the unemployment problem is just getting worse. Taking into account that employment is a lagging indicator it still does not explain completely how the economy is improving for business yet not for the average American. I know from my own multi-national bank that the outsourcing of jobs is continuing at an alarming rate.
Some of the professional jobs that are now leaving are graphic artists, accounting clerks, radiologists, back office financial services, phone center workers and even 401(k) record keepers. What these jobs have in common is a solid middle class salary and benefits. How can American workers compete with workers who earn less than $10,000.00 per year? The answer is they can not unless the playing field is leveled. The best way to level the playing is field is to make it prohibitively expensive to move the job in the first place. How exactly can we do this legally? My answer is The Outsourcing Severance Act of 2009. What would this piece of legislation do? It would set standards for severance pay for any job leaving the country and give the terminated employee a safety net while seeking other employment. The details of my plan would be as follows:
The terminated employee would receive 2 weeks severance pay for every year of service as well as 75% of the difference between the compensation of the new vs. old employee. Using the example of a 10 year employee earning $50,000.00 who is losing their position to someone in Mumbai earning $7,000.00, that employee would be entitled to $19,230.00 severance as well as $32,250.00 pay differential. Also the employee would remain part of the payroll until the total severance owed was paid using his last salary as the barometer. In the case just described the employee would remain on the payroll for over a year and be entitled to all the benefits of employment even though he would be free to work elsewhere. In year two the terminated employee would be entitled to the 25% difference not paid in year one. This would mean that the full savings from outsourcing would be delayed until year three.
Why would I make this severance so generous? The answer is twofold. It would give the terminated employee a chance to be retrained or seek other employment without having to immediately worry about how to make ends meet and it would discourage the so called "titans" of industry from outsourcing the jobs in the first place. Executive bonuses are usually directly tied to the company's bottom line so outsourcing jobs leads to higher pay and bonuses for those at the top and misery for those at the bottom.
Why we must do this is simple. The middle class is being killed. As more and more jobs are outsourced and our population grows there will be greater competition for the jobs that are left. This causes wages to actually drop while all normal expenses are rising. This is a disaster in the making. I have personally known five people in the past two years who have lost their jobs to outsourcing. All five were forced to take lower paying jobs in order to make ends meet. This will be the fate of thousands more if we do not demand a level playing field.
I want to expose the companies that are outsourcing our jobs. I am asking everyone to send company names, numbers outsourced and salary differences if known. Just click Contact Us on the top of this page and send me the details. My plan is to add to the site a reference page which will list the companies that are shipping our jobs overseas. I want to know that my hard earned money is not supporting a company who does not support the American worker.
U.S. foreclosure activity for May ebbed from April's record, but mortgages still failed at a staggering pace as President Barack Obama's rescue programs had not had time to fully take root, RealtyTrac said on Thursday.
Foreclosure filings dipped 6 percent in the month but increased 18 percent from May 2008, marking the third highest month on record.
The reasons for this foreclosure crisis are much more than bad loans to people who could not pay. It is systemic greed by big corporations that are shipping our jobs overseas which in turn is forcing more and more people to compete for the few jobs that remain. This is causing wages to drop and the prices of homes are plummeting as a result.
If these corporations really care about America why don't they stop shipping our jobs overseas and help rebuild the middle class? It is time to outlaw corporate money in politics. Until we do that our slide to a country of haves and have nots will continue with most of us ending up in the have not column.
Job losses slowed dramatically in May, according to the latest government reading on the battered labor market, even as the unemployment rate rose to a 26-year high. But some experts cautioned that the job market remains weak.
Employers cut 345,000 jobs from their payrolls in the month, down from the revised decline of 504,000 jobs in April.
This was the fewest jobs lost in a month since last September, when the bankruptcy of Lehman Brothers caused a crisis in U.S. financial markets and choked off credit for many businesses. Economists surveyed by Briefing.com had forecast a loss of 520,000 jobs in May.
The one thing to remember is that we need to create 150,000 new jobs per month to keep up with demand but that hasn't happened in quite a while. Employment will remain a problem as long as it remains cheaper to ship our jobs overseas. Many people have asked how can we stop this run away train of outsourcing. The only way I can see is a return to the tariffs of old. Those tariffs valued American workers and American manufacturing. When those tariffs were lifted, under the guise of free trade, our standard of living was damaged. It is time to demand free trade be replaced by fair trade. It is time to demand that corporations pay their fair share of taxes and use those taxes to return us to fiscal sanity. It is time to stop mortgaging the next generation and its time to understand that we can not pay to defend the world while bankrupting our country. We need to get our priorities straight or all the defense in the world won't matter.
More homeowners than ever before are falling behind on their mortgage payments and sliding into foreclosure, according to figures released on Thursday, a sign that the country’s housing crisis is spreading through the ranks of previously stable borrowers.
About 5.4 million of the country’s 45 million home loans were delinquent or in some stage of the foreclosure process in the first three months of the year, according to the Mortgage Bankers Association. About 12.07 percent of all mortgages were delinquent or in foreclosure, up from 11.93 percent at the end of 2008.
Temporary halts on foreclosures imposed by lenders and mortgage underwriters have mostly ended, and banks are moving quickly against delinquent homeowners.
Housing specialists said the number of foreclosures would probably keep rising as more people lose their jobs or are forced to trade full-time work for part-time. Nearly six million jobs have been lost since the recession began a year and a half ago, and many economists expect the unemployment rate to rise to 10 percent from its current 8.9 percent.
More defaults by unemployed homeowners could shunt more houses onto an already saturated market, economists said, dragging prices down farther.
This should come as no surprise as the ranks of the unemployed just keep growing. At a time when corporations need to be putting the citizens of this country first they are instead opting for profits over people. I know of many companies that are still outsourcing the jobs they have to India and other far away places. How is our economy ever expected to recover when this trend of outsourcing shows no limits to the number and types of jobs that are being lost?
When will Congress finally side with the American people and demand fair trade policies on not just goods but on services and employment as well. Jobs are a commodity and there should be tariffs on the services provided by workers in other countries. In the end your home is only worth what someone is willing to pay for it and in the current economic climate that doesn't appear to be too much.
By JIM KUHNHENN, Associated Press Writer Jim Kuhnhenn, Associated Press Writer – Wed May 6, 6:18 am ET
WASHINGTON – Banks that want to pay back their federal bailout funds and free themselves from government restrictions on compensation and dividends will have to sever their ties to another financial assistance program.
Financial firms eager to return infusions from the $700 billion Troubled Asset Relief Program will have to demonstrate that they can operate without debt guarantees provided by the Federal Deposit Insurance Corp., a senior government official said Tuesday. The FDIC program allows financial institutions to borrow money at lower costs.
The new requirement will make it harder for some institutions to get out from under government rules attached to the bailouts, another shift in a changing landscape for banks. It also illustrates the government's desire not to have banks abandon the bailout program if they are not financially prepared to do so.
The official spoke on condition of anonymity because the standards have not been made public. The Treasury and the Federal Reserve are expected to issue TARP repayment guidelines on Wednesday, a response to banks that want to get out from under bailout conditions. The change was first reported Tuesday evening by The Wall Street Journal.
By linking the two programs, the government could motivate banks to cut themselves off from the various assistance programs that it put in place to unclog credit and free up lending in the midst of the financial crisis.
The bailout program has been unpopular in Congress and prompted a new round of conditions earlier this year following news reports about lavish spending on perks, retreats and corporate planes.
Initially, the government required banks that wanted to repay early to raise money from the private sector. Then Congress eased that rule but attached greater restrictions on the government funds. Among the rules restricting banks were conditions on employee compensation, bonuses and dividend payouts. Congress also required the Treasury to review previous compensation payments.
The FDIC debt guarantee, meanwhile, has proven to be popular with some banks as a way to increase liquidity and does not impose the same restrictions as TARP. So far, banks have issued more than $330 billion under the program, which the FDIC launched in October to help financial institutions finance themselves and make loans.
"It throws a hurdle as far as the banks repaying TARP," Scott Talbott, a senior lobbyist for the Financial Services Roundtable, a bank industry group, said of the new condition.
Banks have become increasingly wary of the bailout funds, chafing at the restrictions and worried that acceptance of the money somehow tagged them as troubled institutions. As a result, a handful of banks have returned a small amount of money and bigger institutions have indicated a desire to repay.
Banking industry consultant Bert Ely said requiring banks to first show an ability to operate without the FDIC guarantees does complicate their payback of TARP money. But he said it also demonstrates a change in the Federal Reserve's and the Treasury's approach to TARP.
"A couple of weeks ago it was, 'Oh, we don't know if want to let you repay,'" he said. "There's been a reversal of position here as far as I'm concerned. It will be interesting to see how fast banks move in that direction."
The Federal Reserve and the Treasury are expected to announce the new payback standards just ahead of Thursday's planned release of the results of "stress tests" on the country's top 19 financial institution.
The tests gauged the ability of the banks to weather an even deeper economic crisis than the country currently faces. Several of the 19 banks will be asked to seek additional capital.
Those banks will have six months to raise money from private investors, sell off assets or tap what remains of the $700 billion TARP.
The Senate on Thursday rejected an effort to stave off home foreclosures by a vote of 51 to 45. It was an overwhelming defeat, with the bill's backers falling 15 votes short -- a quarter of the Democratic caucus -- of the 60 needed to cut off debate and move to a final vote.
The death of the bankruptcy reform measure -- which would have allowed a small number of homeowners who met strict conditions to renegotiate mortgages under bankruptcy protection -- is a major tactical win for the banking industry. But allowing the foreclosure crisis to continue unabated may end up being a failed strategy for the financial sector.
It wasn't easy for Majority Whip Dick Durbin (D-Ill.), who led the effort on behalf of homeowners, to wrangle the 45 votes.
Sen. Evan Bayh (D-Ind.), who had been on the fence for weeks, gave Durbin his support and nudged him on the way out of the chamber, alerting him of the anti-bank position he'd just taken.
Sen. Mark Warner of Virginia, a conservative Democrat, also cast a courageous vote in favor of the measure. He gave Durbin a hard slap on the arm on the way out.
Sen. Barbara Boxer (D-Calif.), a strong backer of the bill, spent a good deal of time trying to persuade his colleague Jim Webb (D-Va.).
As she got close to convincing him, she called in Durbin. "Hey Durbs," she could be heard saying, "help me with Jim."
Durbin and Webb spoke for several minutes and Webb cast an aye vote.
Sen. Claire McCaskill (D-Mo.), meanwhile, spent much of the vote checking the tally. Toward the end of the vote, she cast her lot with homeowners. Sen. Ted Kaufman, a Democrat from Delaware, a state nearly wholly-owned by the financial industry, voted his conscience, opposing the banks. He is not running for reelection. "I'm liberated from fundraising," said Kaufman afterwords.
His Delaware colleague, Democrat Tom Carper, voted with the banks.
The Chamber of Commerce has deemed the vote a crucial one that will be heavily counted in its annual scorecard, and those who voted yes will pay a financial price from the Chamber and the banking industry.
Other Democrats stuck with the banks against the homeowners. Sen. Robert Byrd (D-W.Va.) was wheeled into the chamber and pointed his finger in the air, signaling a yes vote, then dramatically swung it down, as if taunting the backers of the bill.
Sens. Jon Tester (Mont.), Mary Landrieu (La.) and Ben Nelson (Neb.) all voted with the banks, as they told the Huffington Post they would. Sen. Blanche Lincoln (D-Ark.) voted no, as did the new Democratic Sen. Arlen Specter of Pennsylvania.
Sen. Michael Bennett (D-Colo.), Sen. Tim Johnson (D-S.D.) and Max Baucus (D-Mont.) voted no as well.
Earlier this week, Durbin concluded that banks that "frankly own the place."
How much did the Senate go for?
The banking and real estate industry has funneled roughly $2,000,000 into Landrieu's campaign coffers over her 12-year career, according to data from the Center for Responsive Politics. The financial sector is Nelson's biggest backer; he's taken $1.4 million from banks and real estate interests and another $1.2 million from insurance firms. Tester has fielded roughly half a million in his two years in office. Lincoln has taken $1.3 million from banking and real estate interests.
Carper has raked in more than $1.5 million. Baucus, chair of the finance committee, has been on the receiving end of $3.5 million over his career. Specter has hauled in more than $4.5 million and Johnson has gotten some $2.5 million.
Across the United States, the measure is estimated to have been able to prevent 1.69 million foreclosures and preserve $300 billion in home equity.
Durbin is deeply unhappy with his Democratic colleagues that sided with the banks. "Frankly, I can't match what the bankers are doing in terms of lobbying," he said. Asked by the Huffington Post how bank influence could ever be reduced, he said, "When the voters speak, some elected officials listen. So I hope that, if we fail on mortgage foreclosure and we fail on credit card reform, I hope that people in this country will stand up and say to Congress, 'You've got the wrong friends.'"
After the vote, Durbin said he was surprised to lose so many Democrats. "I had hoped for a better vote. I mean, really, to lose 11 Democrats was disappointing, but, you know, I guess I've gained some ground since the issue last came up. Maybe if the mortgage foreclosures go up dramatically and I call it again next year I can pass it," Durbin told the Huffington Post. (In April 2008, a similar bill received 36 votes.)
Reminded of his comment earlier in the day that if the bill failed, he hoped the American people would respond, he didn't back down even though so many in his own party strayed. "I hope they get the message," he said of his wayward colleagues. "Maybe they have an answer to this problem, but I have seen it."
Carper, however, the no vote from Delaware, said the issue was finished in the Senate. "My guess is we're not going to see it again," he said.
Earlier this week, Durbin took to the Senate floor to tell his colleagues that the upcoming vote was a test.
"Who's going to win this debate? The mortgage bankers and the American Bankers Association or the consumers across this country?" he asked.
We now have the answer. "We led the way on this and we are clearly responsible for defeating this for the third time in the last year," David Kittle, chairman of the Mortgage Bankers Association, told our friends at the American News Project in this must-watch video:
The pace of sales of existing homes in the United States fell 3.0 percent in March to a much lower-than-expected annual rate of 4.57 million units, the National Association of Realtors said on Thursday.
Economists polled by Reuters had forecast home resales to slip to a 4.70 million-unit pace from a revised 4.71 million for February, which was initially reported as 4.72 million.
The inventory of existing homes for sale fell to 3.74 million from the 3.80 million overstock reported for February. The median national home price rose 4.2 percent to $175,200 from February, boosted by seasonal factors. However, prices fell 12.4 percent compared to the same period a year ago.
At the height of the U.S. housing boom, when building materials were in short supply, American construction companies used millions of pounds of Chinese-made drywall because it was abundant and cheap.
Now that decision is haunting hundreds of homeowners and apartment dwellers who are concerned that the wallboard gives off fumes that can corrode copper pipes, blacken jewelry and silverware, and possibly sicken people.
Shipping records reviewed by The Associated Press indicate that imports of potentially tainted Chinese building materials exceeded 500 million pounds during a four-year period of soaring home prices. The drywall may have been used in more than 100,000 homes, according to some estimates, including houses rebuilt after Hurricane Katrina.
"This is a traumatic problem of extraordinary proportions," said U.S. Rep. Robert Wexler, a Florida Democrat who introduced a bill in the House calling for a temporary ban on the Chinese-made imports until more is known about their chemical makeup. Similar legislation has been proposed in the Senate.
The drywall apparently causes a chemical reaction that gives off a rotten-egg stench, which grows worse with heat and humidity.
Researchers do not know yet what causes the reaction, but possible culprits include fumigants sprayed on the drywall and material inside it. The Chinese drywall is also made with a coal byproduct called fly ash that is less refined than the form used by U.S. drywall makers.
Dozens of homeowners in the Southeast have sued builders, suppliers and manufacturers, claiming the very walls around them are emitting smelly sulfur compounds that are poisoning their families and rendering their homes uninhabitable.
"It's like your hopes and dreams are just gone," said Mary Ann Schultheis, who has suffered burning eyes, sinus headaches, and a general heaviness in her chest since moving into her brand-new, 4,000-square foot house in this tidy South Florida suburb a few years ago.
She has few options. Her builder is in bankruptcy, the government is not helping and her lender will not give her a break.
"I'm just going to cry," she said. "We don't know what we're going to do."
How do we tell our largest creditor that they must have standards without them calling in our debt? How many more examples of dangerous products from China do we need before we say enough is enough?
Our dependence on China is destroying us in many ways. When will it end?
Wanted by Tent City Homeless: AIG Senior Employees
From the brilliant Thom Hartmann who should have listeners all over this great land:
AIG's taxpayer-bailout was not because of it's insurance division, but its investment division, which came up with the idea of selling credit-default swaps - financial instruments premised on the idea that home values would never decline.
According to Time Magazine coming Monday....
The CDS market exploded over the past decade to more than $45 trillion in mid-2007, according to the International Swaps and Derivatives Association. This is roughly twice the size of the U.S. stock market (which is valued at about $22 trillion and falling) and far exceeds the $7.1 trillion mortgage market and $4.4 trillion U.S. treasuries market, notes Harvey Miller, senior partner at Weil, Gotshal & Manges. "It could be another - I hate to use the expression - nail in the coffin," said Miller, when referring to how this troubled CDS market could impact the country's credit crisis.
That said, what have we learned from the AIG debacle? AIG's downfall was hastened by its inability to honor $40 billion in credit default swaps (CDS), after taking advantage of a CDS market that went "from zero" in 2005 to a peak of $62 trillion. So maybe the place to begin is by figuring out which regulator should watch CDS.
No less a culprit of the economic crisis than former SEC Chairman Christopher Cox acknowledged as much when testifying before Congress:
The $58 trillion national market in credit default swaps - double the amount outstanding in 2006 - is regulated by no one. Neither the SEC nor any regulator has authority over the CDS market, even to require minimal disclosure to the market ..As the Congress considers fundamental reform of the financial system, I urge you to provide in statute the authority to regulate these products to enhance investor protection and ensure the operation of fair and orderly markets.
Shouldn't the taxpayers of America who are now investors in AIG, be demanding not only that senior AIG employees voluntarily give up their bonuses but also shouldn't also the people who perpetrated this economic nightmare that has caused "main street" America to lose their jobs, their 401Ks to fall, the values of their houses to plummet and the very fabric of this nation to unravel - be hunted down and prosecuted?
As unemployment rises and people lose their homes in a worsening economy - there are reports of tent cities (Bushvilles) popping up across America.
The AIG senior employees should not only give up their bonuses willingly with apologies to the American public - or perhaps they should personally deliver their bonus' to the new Bushvilles of today where in Sacramento alone the official count of homeless people is 1,226 people. The homeless are spilling out to the tent city because the housing shelters are full. One of the shelters is turning away more than 200 women and children a day.
In other news former VP Dick Cheney emerged from his den to give an interview to CNN's John King to slam President Obama and his team.
CHENEY: "I worry a lot that they're using the current set of economic difficulties to try to justify a massive expansion in the government, and much more authority for the government over the private sector, I don't think that's good. I don't think that's going to solve the problem."
And this exchange...
KING: Since taking office, President Obama has done these things to change the policies you helped put in place. He has announced he will close the Guantanamo Bay detention facility. He has announced he will close CIA black sites around the world, where they interrogate terror suspects. Says he will make CIA interrogators abide by the Army Field Manual, defined waterboarding as torture and ban it, suspend trials for terrorists by military commission, and now eliminate the label of enemy combatants. I'd like to just simply ask you, yes or no, by taking those steps, do you believe the president of the United States has made Americans less safe?
CHENEY: I do. I think those programs were absolutely essential to the success we enjoyed of being able to collect the intelligence that let us defeat all further attempts to launch attacks against the United States since 9/11. I think that's a great success story. It was done legally. It was done in accordance with our constitutional practices and principles. President Obama campaigned against it all across the country. And now he is making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack.
This from the Bush/Cheney administration that….
Blundered into Iraq, a war of choice, in the greatest military disaster ever - 5 Million Iraq War Casualties, 1 Million Killed, 4 Million Refugees plus 5 million orphans.
Presided over raising the national debt by more than $4 trillion - the biggest increase under any president in U.S history. The national debt now stands at more than $9.849 trillion. - a 72 percent increase.
Delivered to us a dangerous recession that threatens to turn into the next Great Republican Depression with over 3.8 million homes in foreclosure (from 2007 - Jan. 2009), and the loss of over 4 million jobs and counting.
Stood by while 47 million individuals lacked health insurance coverage of any kind plus 25 million Americans who can't afford to cover the gap between what their insurance covers and their medical bills demand.
Watched as millions of good factory jobs disappeared, 2.7 million since 2001 alone, largely from corporations moving operations offshore in a race for the cheapest labor costs. This doesn't include the 1.7 million private sector jobs over the past three years and 750,000 high tech jobs in 2002-03. The University of California at Berkeley estimates that 14 million jobs are vulnerable to moving overseas in the next few years.
Perhaps Vice President Dick Cheney should join the senior AIG employees in tent city for a glimpse of post Bush/Cheney world. Conditions are a bit primitive, with no water supply or proper sanitation so they should be careful when they visit. Tammy Day, a homeless woman and resident, who cooks potatoes on an open campfire can help them out with lunch. While they are there they could say hello to former car salesman Corvin and his wife Tena, some the newest residents of the tent city. Could they offer advice to Tena who says "I have a 35-year-old son, and he doesn't know. I call him, about once a month and on holidays, to let him know that I'm well and healthy. He would love me anyway, but I don't want to worry him." Many of those living in the tent city are pinning their hopes on President Obama's new stimulus package which is aimed at rescuing the economy and creating jobs. The one that Cheney just dissed claiming it's an "expansion of Government."
Call your members of Congress today and demand investigations into the Bush/Cheney era tasked with discovering and revealing past wrongdoings. Then there will be hope of resolving the conflict that many American's feel. Only then can we move forward to develop an economy that serves main street America and abolish the Bush/Cheney meme that we were just here to serve the economy. They had it backwards.
Have you just lost your job? Chances are even if you can find a new position the wages that will be offered to you could be much less than your current salary.
With "no end in sight" for U.S. job losses amid a recession that could stretch into 2010, American workers will soon have to contend with another blow to their confidence: stagnant, or even falling wages.
Job seekers -- already coping with the highest unemployment rate in a quarter century, their savings mugged by a plunging stock market -- can also expect lower pay once they land a new job, labor market experts say, because the current downturn shows no signs of turning around anytime soon.
How much more could wages drop? Adjusted for inflation real wages have been stagnant since the Reagan administration. What could be done on one salary in the 1970's now takes at least two. The redistribution of wealth that started with Reagan has continued unabated with the end result the greatest financial disaster we have experienced since the Depression. Am I the only one that can see the start parallels to that time? It was the robber barons of the 1920's and the excessive greed that pushed us to the brink then and its the modern day robber barons of Wall Street that have pushed us there today. Just like in those times, those that have caused this disaster have walked away millionaires. Am I the only one who wants to see many of these fools marched off to a maximum security prison?
I'm as mad as hell and its time we raise our voices and demand an end to the politics as usual. Its time to rid our political system of the big money donations that have corrupted the system and caused the lawmakers to turn a blind eye to the rampant greed and corruption that plaques the political system.
I think President Obama truly does stand for change but will we stand with him as he is assaulted at every turn by these big money interests. They have no desire to change a system that has provided them with obscene wealth and power and will fight dirty to keep this corrupt system in place. It's time we show them that we will fight back.
It is nice to see some honesty from the White House. Will he be able to deliver on all his promises? That is highly doubtful but he is moving in the right direction. Without real and drastic action, the American Middle Class will no longer exist. President Obama is smart enough to realize that our middle class is the reason for our great success as a nation. As I have said and will continue to say a strong and vibrant middle class is necessary for a strong and vibrant democracy.
Some Republican Governors May Refuse Stimulus Funds
Once again its politics over the people. I say you don't want the funds then fine. Tell the people in each of your states that their financial future is not important but your political future is.
A handful of Republican governors are considering turning down some money from the federal stimulus package, a move opponents say puts conservative ideology ahead of the needs of constituents struggling with record foreclosures and soaring unemployment.
Though none has outright rejected the money available for education, health care and infrastructure, the governors of Texas, Mississippi, Louisiana, Alaska, South Carolina and Idaho have all questioned whether the $787 billion bill signed into law this week will even help the economy.
"My concern is there's going to be commitments attached to it that are a mile long," said Texas Gov. Rick Perry, who considered rejecting some of the money but decided Wednesday to accept it. "We need the freedom to pick and choose. And we need the freedom to say 'No thanks.'"
U.S. Rep. James Clyburn, D-S.C., the No. 3 House Democrat, said the governors — some of whom are said to be eyeing White House bids in 2012 — are putting their own interests first.
Since Haley Barbour is so against these funds I suggest that he return half of all federal dollars he receives since his state gets back two dollars for every dollar paid. Mississippi is the welfare queen of the south and he has the nerve to open his fat mouth?
As for Alaska we all know that Sarah Palin will throw her hat in the ring in 2012 since she thinks there are enough knuckle draggers to overlook the fact that she is truly a mental lightweight. Lets see how she handles the finances for Alaska now that the price of oil has collapsed. I would bet it won't be pretty.
Now lets look at South Carolina where the unemployment rate is over 9%. Governor Sanford doesn't want the funds but he should go to an unemployment office and tell those on the last weeks of their benefits that their survival doesn't measure up to his bid for the Presidency.
These people make me sick and they should sicken every one of you as well.
For a long time college educated people felt that the rush to outsource jobs did not effect them. They felt secure that the accounting and operational jobs simply had to stay within the United States. With the invention of the internet and the ease at which you can communicate worldwide that assumption has been turned on its head.
Middle Class jobs in accounting, operations, graphic design and customer service are leaving this country in alarming numbers. Once again the multi-national corporations (please do not call them American companies) are searching for the lowest labor costs. English speaking, highly educated people can be found in India, the Philippines and other nations. The middle class jobs in manufacturing do not even require the ability to speak English which makes the entire world a possibility for factory relocation. If we can't stop this flood of jobs leaving our shores how can we ever recover our current financial disaster? Our standard of living is falling and there seems to be nothing to stop this slide to the bottom.
Are protectionist policies the answer? In short I would say that some form of protectionism is needed or soon we will see lines around the block for an available opening at McDonald's. We were told that free trade was the answer. What they didn't tell us was that free trade was not necessarily fair trade. How is it that what limited goods we produce here are taxed in the form of tariffs in other countries yet those same countries send goods to the United States without such tariffs? How can we possibly compete with countries that pay their workers dollars a day with no benefits? In short the answer is we can't under the current situation.
These same companies shipping our jobs overseas are also using every available loophole to avoid paying taxes to the United States. Why these companies are even allowed to operate within the United States is beyond me and why Americans continue to patronize them is an even bigger mystery.
The Middle Class is dying and nothing is being done to stop it.
If there was ever a more blatant kick to the groin of the American public it would be the obstructionist ways of the Republican Party. Suddenly the Jobs-Stimulus package is too expensive and there is this great concern for the debt being left to the next generation.
Where were these same assholes as the national debt was being doubled under George W. Bush? Where were they when our biggest unnecessary spending program - The Iraq War - started draining our Treasury? Why did they vote for non stimulative tax cuts for the very rich that sent us from a surplus to a deficit? Why are they yet again demanding that tax cuts be a large part of the current stimulus bill when all facts show that they did nothing to avoid our current mess? These people sicken me. They are playing ppolitics with your life. They are betting on failure.
They are betting that the economy will worsen and that the public will blame President Obama setting the stage for their resurgence. Ask yourself if this sounds like we are all in this together. The American middle class is being destroyed before our eyes and they are not only not helping to stop it, they are hoping that it happens.
As their hero Rush Limbaugh stated when talking about President Obama, "I hope he fails". If President Obama fails then we all fail. There policies got us where we are today but they want more of the same. They want even more redistribution of whatever wealth is left to their rich benefactors at the expense of the middle class and poor. They want us all to fail. I heard it with my own ears. It is time for us to band together and take this country back from the special interests that have brought us to our economic knees. Its time to thin the herd of those that would grant themselves million dollar plus bonuses while laying off workers. Its time to vote out lawmakers who are hoping for failure.
These people make me sick and they should sicken you too. Don't sit back and do nothing. You could be the next one on the unemployment line being marched out the door past the man in the corner whose bonus came as a result of your firing.
When will people realize that they stand for nothing. President Obama in a show of bipartisan cooperation included broad tax cuts in this legislation. The prblem is that for these people the tax cuts are never enough. Ask yourselves how the tax cuts for the rich have worked out for us? Every day thousands are losing their jobs with no end in sight. Our country is headed towards another Great Depression and all they can do is stand in the way. The reasons are simple. They are hoping that the package will fail. This is purely politics and the good of the American people does not play into the equation.
New home sales fall by 37.8% from 2007 levels to lowest level on record
Sales of new homes fell by 37.8 percent from 2007 sales. Total sales in 2008 were 482,000 compared to 776,000 (the total sold in 2007), according to Mission Residential. The median new home price dropped by 9.3 on a a year-over-year basis.
These numbers may actually be skewed higher because the monthly sales data does not reflect cancellations, which means sales are probably lower and actual inventories higher. Because of these adjustments the actual supply on the market jumped to 12.9 months in December. Don't expect home builder stocks to recover any time soon.
Richard Moody, Chief Economist for Mission Residential says "new home prices will remain under steady downward pressure, and new residential construction may bottom later this year but will remain weak through 2010." Low-priced foreclosures are adding to the market stresses that home builders face. "To the extent that low mortgage rates and sales incentives, such as buyer's tax credits, do facilitate sales, those sales are increasingly titled towards existing homes," Moody added.
There is some good news. Builders do appear to have a handle on building starts. Now that starts of new homes have dropped well below the sales rate, the front end of the pipeline is under control. But, completions of new homes intended for sale are still running well ahead of sales. So the breaks are not fully in place yet. Until builders can turn the tide and shorten inventory supply we won't see a turnaround in the building industry.
Just yesterday lay offs totaling over 70,000 were announced by companies from a broad range of industries. What will happen now to those displaced and what is the short and long term damage to our economy?
In the short term the loss of those jobs means financial hardship for the families that are losing a paycheck. and a double whammy to the local, state and federal governments. Now the government must start paying out unemployment insurance and lose the payroll tax deductions associated with those jobs. You have to wonder how an economy that is shedding so many jobs will ever be able to recover from a hole that seems to just get deeper by the day. The last time jobs were being shed at this rate was in the early 1980's and back then the prospects for future job growth were still intact.
Since that time we have lost our manufacturing base, our Unions have been decimated and our gap between rich and poor has grown exponentially. White collar jobs are now disappearing at an alarming rate, being replaced by cheap but educated labor in countries such as India and the Philippines. Even our service sector jobs when possible are being outsourced to these foreign lands. Are we seeing the final death knell for the American Middle Class? I would say the answer is yes unless we act forcefully and soon. We must reverse this trend to the lowest common denominator and fight to restore our middle class. Without a vibrant middle class we will become just another country where the rich control everything and the poor are jut lucky to get by. The problem is how can we restore this nation to its former glory?
One way is to pass the Employee Free Choice Act. We must give the American worker all tools necessary to fight for a living wage. We must demand that public funds are never given to companies that outsource our jobs. We must encourage small company creation with tax incentives and tax those companies heavily that ship our jobs overseas. We must change the corporate culture that the future stops at the next quarterly earnings report.
How about charging tariffs for labor performed out of the country for customers that live in the country? How about having fair trade and using tariffs to offset the cost of lower labor abroad? There are common sense steps we can take to level the playing field.
Events this week show us that these companies could care less about us but that their executives are still enriching themselves at taxpayer expense. Can someone tell me why the handouts to Merrill Lynch and Citigroup have not been called in?
It is time for drastic action by the American workforce or soon we will all be fighting over those jobs that supposedly Americans will not do.
RealtyTrac, an online marketplace for foreclosure properties, found that a total of 3.2 million foreclosure filings - default notices, auction sale notices and bank repossessions - were reported on 2.3 million American properties during the year. Foreclosures actually rose in December despite the much publicized efforts to suspend foreclosures during the holidays.
"State legislation that slowed down the onset of new foreclosure activity clearly had an effect on fourth-quarter numbers over all, but that effect appears to have worn off by December," said James J. Saccacio, chief executive officer of RealtyTrac, in a press release. "The big jump in December foreclosure activity was somewhat surprising given the moratoria enacted by both Freddie Mac and Fannie Mae, along with programs from some of the major lenders and loan servicers aimed at delaying foreclosure actions against distressed homeowners."
The states with the highest foreclosure rates: Nevada, Florida, Arizona, California, Colorado, Michigan, Ohio, Georgia, Illinois and New Jersey. More than 7 percent of Nevada housing units received at least one foreclosure notice in 2008.
The cities with the highest foreclosure rates: Stockton, Calif.; Las Vegas/Paradise, Nev.; Riverside/San Bernardino, Calif.; Bakersfield, Calif.; Phoenix/Mesa, Ariz.; Fort Lauderdale, Fla.; Orlando, Fla.; Miami, Fla.; Sacramento, Calif.; and Detroit/Livonia/Dearborn, Mich. Nearly 9.5 percent of houses in Stockton received a foreclosure filing last year.
Where is the bottom in this economic nightmare? Tonight George W. Bush will give his last address to the American people and the American people will heave a collective sigh of relief. In five days the Bush years will be over but the mess he left behind will linger for generations.
The Bush Presidency is like a case of crabs. Just when you think they are gone there is another one sucking the blood out of you.
In order to placate the Republicans whose bankrupt economic policies got us to where we are now, the Obama stimulus plan is 40% tax cuts. Sure many families could use the $500.00 or whatever will be given but it does nothing to build our infrastructure and nothing to stimulate job growth.
The legislation Mr. Obama's team is developing with Congressional Democrats will devote about 40 percent of the cost to tax cuts, including his centerpiece campaign promise to provide credits up to $500 for most workers, costing roughly $150 billion. The package will also include more than $100 billion in tax incentives for businesses to create jobs and invest in equipment or factories.
The overall package, of $675 billion to $775 billion, is taking shape as Mr. Obama arrived in Washington and planned to begin trying to build support in Congress and among the broader public for his approach to stimulating the economy.
This idea will have us back in the same spot very shortly. It is an expensive stop gap in what should be a comprehensive plan to fundamentally change the economy. The problem in the United States is that there are not enough skilled high paying jobs. Even white collar jobs such as accounting are being outsourced to places like India. We have destroyed our manufacturing base. Those jobs do not look like they are coming back. America became the consumer society spurred on by high credit lines. That house of cards has tumbled and this rescue plan does NOTHING to rebuild the house. Where are the incentives to bring manufacturing back to this country? Where are the tariffs on imported goods so that we turn free trade into fair trade? Where are the higher tax rates for those making millions? Where is the elimination of corporate tax loopholes which allow most multi national corporations to avoid most taxes? Unfortunately this just seems like more of the same with a more eloquent salesman.
The economic ruin being left by the Bush Administration has caused a surge in the usage of the nations Food Stamp Program which aids the poor.
Food stamps, the main U.S. antihunger program which helps the needy buy food, set a record in September as more than 31.5 million Americans used the program -- up 17 percent from a year ago, according to government data.
The number of people using food stamps in September surpassed the previous peak of 29.85 million seen in November 2005 when victims of hurricanes Katrina, Rita and Wilma received emergency benefits, said Jean Daniel of the USDA's Food and Nutrition Service.
September's tally -- the latest month available -- was also boosted by hurricane and flood aid, Daniel said on Wednesday.
But anti-hunger groups said the economic downturn is the main reason behind the higher figures.
"It's a disturbing trend," said Ellen Vollinger, legal director with the Food Research and Action Center. She said she expects more people will turn to food stamps as unemployment figures rise and the economy remains weak.
One in 10 Americans were participating in the food stamp program as of September, said Dottie Rosenbaum, analyst with Center on Budget and Policy Priorities, a think tank.
That's approaching the all-time high of 10.5 percent of the population that used the program in 1994, and is similar to levels seen in the early 1980s, she said.
States that have seen a drop in job numbers and increase in home foreclosures such as Florida and Nevada also have seen a marked increase in food stamp use, Rosenbaum said.
Food banks are struggling to meet increased requests for food, said Maura Daly of Feeding America, a network of food banks.
"The tough economic time that our nation is facing is having a tremendous impact on the level of food assistance needed across the country," Daly said.
On average, people who used food stamps received $100 per month in benefits in September. That increased slightly in October to account for higher food prices, but hunger groups said the benefits still don't go far enough at a time of high food prices and home heating costs.
Last month, the USDA said 36.2 million Americans or 11 percent of households struggle to get enough food to eat, and one-third of them had to sometimes skip or cut back on meals.
Hunger groups want Congress and the new administration to increase food stamp benefits as part of an economic stimulus package they hope will come in early 2009.
The benefits go directly to people who spend it at local grocery stores, supporting businesses and jobs, said Vollinger of the Food Research and Action Center.
"They (the benefits) don't sit in a pocket," she said, pointing to USDA estimates that $5 in food stamp spending generates $9 in economic activity.
I never thought I would see the day that the heavy reliance on the Food Stamp Program would be part of an economic stimulus package. Do you still think we are the richest nation on earth?
President-Elect Obama is walking into a disaster of historic proportions. This is what happens when you have an incompetent fool in the White House. Thankfully the adults will be in charge on January 20, 2009 but will the damage be so drastic that it will be impossible to fix? What is needed is a modern day New Deal which would rebuild our crumbling infrastructure and keep people employed.
The number of homeowners ensnared in the foreclosure crisis grew by more than 70 percent in the third quarter of this year compared with the same period in 2007, according to data released Thursday.
Nationwide, nearly 766,000 homes received at least one foreclosure-related notice from July through September, up 71 percent from a year earlier, said foreclosure listing service RealtyTrac Inc.
By the end of the year, RealtyTrac expects more than a million bank-owned properties to have piled up on the market, representing around a third of all properties for sale in the U.S.
That's bad news for anyone who lives nearby and wants to sell their home. While foreclosure sales are booming in many areas, those properties are commanding deep discounts and pulling down neighboring property values. "It has a pretty significant impact in terms of pricing," said Rick Sharga, RealtyTrac's vice president for marketing.
RealtyTrac monitors default notices, auction sale notices and bank repossessions. More than 250,000 properties were repossessed by lenders nationwide in the third quarter, 81,000 of which were taken back last month.
Six states — California, Florida, Arizona, Ohio, Michigan and Nevada — accounted for more than 60 percent of all foreclosure activity in the quarter, with California alone making up more than a quarter of all U.S. foreclosure filings.
Detroit and Atlanta were the only cities outside California, Florida, Nevada and Arizona to make RealtyTrac's list of the 20 hardest-hit metropolitan areas.
The combination of sinking home values, tighter mortgage lending criteria and an economy that many economists think has already slipped into recession has left hundreds of thousands of homeowners with few options. Many can't find buyers or owe more than their home is worth and can't refinance into an affordable loan, with the global credit crisis making loans far less available.
For those who can qualify for a loan, or have cash to invest, there are bargains to be had, especially in ravaged markets like Nevada and California. Last month, foreclosure resales accounted for more than half of existing home sales in California last month, as home sales jumped 65 percent from a year ago, while the statewide median home price fell 34 percent to $283,000, according to MDA DataQuick.
RealtyTrac, however, reported foreclosure filings in September were actually down 12 percent from August. But much of that decline was the result of new state laws that delay the foreclosure process. In California, for example, lenders are now required to contact borrowers at least 30 days before filing a default notice. A similar law in North Carolina gives borrowers an extra 45 days.
Still, that's not likely to be enough to save homeowners who owe more on their mortgages than their homes are worth. Nearly 12 million of the 52 million Americans with a mortgage — that's 23 percent of them — are in that position, according to Moody's Economy.com.
It remains to be seen how much the government's intervention will stem the housing crisis. Earlier this month, the Federal Housing Administration launched a program that aims to prevent foreclosures by allowing homeowners to swap their mortgages for more affordable loans, but only if their lender agrees to take a loss on the initial loan. The bill is projected to help about 400,000 households.
Meanwhile, the Federal Deposit Insurance Corp., which took over Pasadena, Calif.-based IndyMac Bank over the summer, has been aggressively modifying troubled home loans since August in an effort to stave off foreclosures. Congressional Democrats are calling for that approach to be expanded as the Treasury Department buys billions in troubled mortgage debt as part of a $700 billion financial industry bailout.
Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.
Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks’ balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.
The Treasury plan, still preliminary, resembles one announced on Wednesday in Britain. Under that plan, the British government would offer banks like the Royal Bank of Scotland, Barclays and HSBC Holdings up to $87 billion to shore up their capital in exchange for preference shares. It also would provide a guarantee of about $430 billion to help banks refinance debt.
The American recapitalization plan, officials say, has emerged as one of the most favored new options being discussed in Washington and on Wall Street. The appeal is that it would directly address the worries that banks have about lending to one another and to other customers.
This is what eight years of pigs at the trough have broughtus. They will now use our tax dollars to buy banks so that they will finally do what they are in business to do. We are truly at a crossroads in this country and the future is not looking very good. Unless we understand exactly how this happened we are doomed to repeat it. I would like to see many of the Wall St. executives marched off to jail or sued for their large pay packages. We ar at the cusp of a major financial disaster that could have repercussions for a generation and we were brought here by greed. Lets make greed very costly to those who brought us to this point.
Pessimism about a protracted economic downturn washed over the financial markets Thursday, sending stocks plunging and further tightening the credit markets. Reports on declining factory orders and a seven-year high in jobless claims stoked fears that the government's financial rescue plan won't ward off a recession, and the Dow Jones industrials skidded nearly 350 points.
Investors appeared to be settling in for a prolonged economic winter. The main concern is that the $700 billion bailout plan won't be enough to stimulate growth, and economic reports delivered Thursday show that the U.S. continues to struggle.
The government said the number of people seeking unemployment benefits rose last week and that demand at the nation's factories has fallen by the largest amount in nearly two years. The market is interpreting the Commerce Department report on factories as a sign that tight credit conditions are hitting manufacturers.
"The economy is what's driving this weakness," said Subodh Kumar, global investment strategist at Toronto-based Subodh Kumar & Associates. "I think now what's going on is a focus on the economic weakness in a whole bunch of areas."
He also said, "the next couple of days are going to be pretty intense politically" as Wall Street girds for another vote on the financial bailout plan. The bill that passed the Senate late Wednesday will be sent to the House as soon as Friday. The latest version of the bill adds $100 billion in tax breaks for businesses and the middle class and raises the limit on federal deposit insurance to $250,000 from $100,000.
Supporters are hoping the sweetened bill will be more palatable to some of the 133 House Republicans who rejected the measure in a vote Monday that took Wall Street, and many on Capitol Hill, by surprise.
Those in favor of the plan to let the government buy billions of dollars in bad mortgage debt and other now-soured assets say it will help unclog the world's credit markets. Banks are fearful of making loans, even to each other, because of worries they won't be repaid. That, in turn, is weighing on the economy, making borrowing more difficult and expensive for businesses and consumers alike.
The credit markets showed some increased strain Thursday. The yield on the 3-month T-bill, the safest type of investment, fell to 0.70 percent from 0.79 percent late Wednesday. The historically low yields indicate investors are willing to accept the smallest of returns to safeguard their money.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.64 percent from 3.74 percent late Wednesday.
The stock market is a leading economic indicator of sorts, because investors tend to buy and sell based on where they believe the economy will be six months or more in the future. Thursday's big drop points to a market increasingly resigned to further economic instability whether or not the bailout plan becomes law.
"There are a lot of people who think regardless of a bailout, there's still this economic data and the horror stories out there," said Todd Salamone, director of trading at Schaeffer's Investment Research. "Certainly, there's a negative psychology."
Investors might get another grim reading about the economy on Friday when the Labor Department releases its September jobs report, one of the most closely watched indicators. The report is expected to show a loss of 100,000 jobs, according to a median estimate from economists. That would be the ninth straight month that the economy has lost jobs.
The Dow fell 348.22, or 3.22 percent, to 10,482.85. The blue chips plunged nearly 778 points Monday, logged a partial rebound Tuesday and finished modestly lower Wednesday; still the Dow has had triple-digit swings every day this week, having fallen more than 200 during Wednesday's trading.
Broader stock indicators also fell sharply Thursday. The Standard & Poor's 500 index fell 46.78, or 4.03 percent, to 1,114.28, and the Nasdaq composite index fell 92.68, or 4.48 percent, to 1,976.72.
Light, sweet crude fell $4.56 to settle at $93.97 a barrel on the New York Mercantile Exchange. Gold and other commodities also declined during the session.
Billionaire investor Warren Buffett said the U.S. has been hit with an "economic Pearl Harbor," and the government must respond quickly. "That sounds melodramatic, but I've never used that phrase before. And this really is one," Buffett said in an appearance on the "The Charlie Rose Show" on PBS stations.
The Labor Department reported Thursday that initial claims for unemployment benefits rose by 1,000 last week to a seasonally adjusted 497,000, above expectations for a 475,000 increase. That's the highest seen since the immediate aftermath of the Sept. 11, 2001, terrorist attacks, and unnerved investors worried about not only about strains in the financial market but also the effect on the broader economy.
Beyond employment, the government reported that orders for manufactured goods fell by 4 percent in August from July. Economists had expected a 2.5 percent decline. It is the biggest drop since a 4.8 percent decline in October 2006.
The dollar was higher against other major currencies, particularly the euro, even after the European Central Bank left interest rates unchanged. Higher interest rates in Europe generally make the euro more attractive to investors than the dollar.
The ECB left its key interest rate unchanged amid concerns over inflation but explored the option of lowering the rate as the financial crisis increasingly affects the continent. The central bank is also weighing a bailout of the region's financial system, similar to what U.S. lawmakers are considering.
That raised the question of whether policymakers globally might be less focused on fighting inflation, and instead trying to come up with short-term solutions to stimulate the economy.
"At some point, you have to face the realities that we have some serious problems and there aren't going to be any quick fixes," said Ryan Larson, head of equity trading at Voyageur Asset Management. "Even if bailouts pass, the fact remains that it might get credit flowing again but won't solve the broader issues out there."
The Russell 2000 index of smaller companies fell 33.92, or 5.05 percent, to 637.67.
Declining issues led advancers by a 3 to 1 margin on the New York Stock Exchange, where consolidated volume came to 6.16 billion shares, up from 5.59 billion on Wednesday.
Overseas, Japan's Nikkei stock average fell 1.88 percent. Britain's FTSE 100 fell 1.80 percent, Germany's DAX index fell 2.51 percent, and France's CAC-40 lost 2.25 percent.
Today's defeat of the Wall St. Bailout happened for many reasons but the main one is that this bill is very unpopular and its an election year. House Republicans need something to bring back home to their districts to avoid a complete rout in November. They think they have found their talking point.
I was also against the bill for many reasons but I also know that without some sort of plan the economy could spiral out of control. Bad debt has infected nearly every sector of the financial markets. Remember they were told these mortgage backed securities were safe investments with many having an A rating. Today's record point drop in the stock market showed that we are dangerously close to the tipping point. Banks have stopped lending to each other and each day another large institution fails. We are in the most serious financial meltdown since the depression. Wall St. executives are the robber barons of our time and another great depression could be looming. What can lawmakers do now? First and foremost any rescue plan should include taxpayer ownership of the companies that require a bailout. There needs to be some upside for the taxpayers after the investment firms have cleared their books of these bad assets. There must be a limit to executive compensation in all forms. There must be a tax on all investment transactions to pay for this huge bailout. We must also lower our corporate tax but cut out all loopholes. Corporate tax receipts as a percentage of our GDP are at a historic low. What good is a 35% tax rate when only small business is paying that? We must outlaw lobbying, it is legalized bribery and we should amend the Constitution to stop this incredibly destructive practice.
Today over 1 trillion of value was lost. The Dow is now lower than when President George W. Bush took office. We have all effectively lost 8 years of retirement savings and in twenty years the number of elderly who will live in poverty will grow unless a drastic market rebound occurs. The elimination of pensions for defined contribution plans made most people stock holders. This was a deliberate move by Wall St. for expanded profits. Now most Americans invest in stocks and its this fact that has made some institutions too big to fail. This problem is now worldwide and it threatens to wreak financial havoc throughout the world.
Our country is in danger of becoming a third world nation. We no longer are a manufacturing giant, in fact we hardly manufacture anything here. We are the world's largest debtor nation and our levels of poverty are getting close to third world status. Our population is less educated and the quality of our jobs is on a steady decline.
This is the result of deregulation and the idea that industry can police itself. John McCain recently said that deregulation has helped grow the economy. My 401(k) statements show that to be untrue.
Congressional leaders and the White House agreed Sunday to a $700 billion rescue of the ailing financial industry after lawmakers insisted on sharing spending controls with the Bush administration. The biggest U.S. bailout in history won the tentative support of both presidential candidates and goes to the House for a vote Monday.
The plan, bollixed up for days by election-year politics, would give the administration broad power to use taxpayers' money to purchase billions upon billions of home mortgage-related assets held by cash-starved financial firms.
President Bush called the vote a difficult one for lawmakers but said he is confident Congress will pass it. "Without this rescue plan, the costs to the American economy could be disastrous," Bush said in a written statement released by the White House.
Flexing its political muscle, Congress insisted on a stronger hand in controlling the money than the White House had wanted. Lawmakers had to navigate between angry voters with little regard for Wall Street and administration officials who warned that inaction would cause the economy to seize up and spiral into recession.
A deal in hand, Capitol Hill leaders scrambled to sell it to colleagues in both parties and acknowledged they were not certain it would pass. "Now we have to get the votes," said Sen. Harry Reid, D-Nev., the majority leader.
The final legislation was released Sunday evening. House Republicans and Democrats met privately to review it and decide how they would vote. "This isn't about a bailout of Wall Street, it's a buy-in, so that we can turn our economy around," said House Speaker Nancy Pelosi, D-Calif.
The largest government intervention in financial markets since the Great Depression casts Washington's long shadow over Wall Street. The government would take over huge amounts of devalued assets from beleaguered financial companies in hopes of unlocking frozen credit.
"I don't know of anyone here who wants the center of the economic universe to be Washington," said a top negotiator, Sen. Chris Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee. But, he added, "The center of gravity is here temporarily. ... God forbid it's here any longer than it takes to get credit moving again."
The plan would let Congress block half the money and force the president to jump through some hoops before using it all. The government could get at $250 billion immediately, $100 billion more if the president certified it was necessary, and the last $350 billion with a separate certification _ and subject to a congressional resolution of disapproval.
Still, the resolution could be vetoed by the president, meaning it would take extra-large congressional majorities to stop it.
Lawmakers who struck a post-midnight deal on the plan with Treasury Secretary Henry Paulson predicted final congressional action might not come until Wednesday.
The proposal is designed to end a vicious downward spiral that has battered all levels of the economy. Hundreds of billions of dollars in investments based on mortgages have soured and cramped banks' willingness to lend.
"This is the bottom line: If we do not do this, the trauma, the chaos and the disruption to everyday Americans' lives will be overwhelming, and that's a price we can't afford to risk paying," Sen. Judd Gregg, the chief Senate Republican in the talks, told The Associated Press. "I do think we'll be able to pass it, and it will be a bipartisan vote."
A breakthrough came when Democrats agreed to incorporate a GOP demand _ letting the government insure some bad home loans rather than buy them. That would limit the amount of federal money used in the rescue.
Another important bargain, vital to attracting support from centrist Democrats, would require that the government, after five years, submit a plan to Congress on how to recoup any losses from the companies that got help.
"This is something that all of us will swallow hard and go forward with," said Republican presidential nominee John McCain. "The option of doing nothing is simply not an acceptable option."
His Democratic rival Barack Obama sought credit for taxpayer safeguards added to the initial proposal from the Bush administration. "I was pushing very hard and involved in shaping those provisions," he said.
Later, at a rally in Detroit, Obama said, "it looks like we will pass that plan very soon."
House Republicans said they were reviewing the plan.
As late as Sunday afternoon, Republicans regarded the deal as "a proposal that is promising in principle, but that is still not final," said Antonia Ferrier, a spokeswoman for Missouri Rep. Roy Blunt, the top House GOP negotiator.
Executives whose companies benefit from the rescue could not get "golden parachutes" and would see their pay packages limited. Firms that got the most help through the program _ $300 million or more _ would face steep taxes on any compensation for their top people over $500,000.
The government would receive stock warrants in return for the bailout relief, giving taxpayers a chance to share in financial companies' future profits.
To help struggling homeowners, the plan would require the government to try renegotiating the bad mortgages it acquires with the aim of lowering borrowers' monthly payments so they can keep their homes.
But Democrats surrendered other cherished goals: letting judges rewrite bankrupt homeowners' mortgages and steering any profits gained toward an affordable housing fund.
It was Obama who first signaled Democrats were willing to give up some of their favorite proposals. He told reporters Wednesday that the bankruptcy measure was a priority, but that it "probably something that we shouldn't try to do in this piece of legislation."
"It's not a bill that any one of us would have written. It's a much better bill than we got. It's not as good as it should be," said Democratic Rep. Barney Frank of Massachusetts, the House Financial Services Committee chairman. He predicted it would pass, though not by a large majority.
Frank negotiated much of the compromise in a marathon series of up-and-down meetings and phone calls with Paulson, Dodd, D-Conn., and key Republicans including Gregg and Blunt.
Pelosi shepherded the discussions at key points, and cut a central deal Saturday night _ on companies paying back taxpayers for any losses _ that gave momentum to the final accord.
An extraordinary week of talks unfolded after Paulson and Ben Bernanke, the Federal Reserve chairman, went to Congress 10 days ago with ominous warnings about a full-blown economic meltdown if lawmakers did not act quickly to infuse huge amounts of government money into a financial sector buckling under the weight of toxic debt.
The negotiations were shaped by the political pressures of an intense campaign season in which voters' economic concerns figure prominently. They brought McCain and Obama to Washington for a White House meeting that yielded more discord and behind-the-scenes theatrics than progress, but increased the pressure on both sides to strike a bargain.
Lawmakers in both parties who are facing re-election are loath to embrace a costly plan proposed by a deeply unpopular president that would benefit perhaps the most publicly detested of all: companies that got rich off bad bets that have caused economic pain for ordinary people.
But many of them say the plan is vital to ensure their constituents don't pay for Wall Street's mistakes, in the form of unaffordable credit and major hits to investments they count on, like their pensions.
Some proponents even said taxpayers could come out as financial winners.
Gregg, R-N.H., said: "I don't think we're going to lose money, myself. We may _ it's possible _ but I doubt it in the long run."
Hurricanes Ike and Gustav and weak economy push jobless claims to 7-year high
CHRISTOPHER S. RUGABER AP News
Sep 25, 2008 09:23 EST
New claims for unemployment benefits jumped last week to their highest level in seven years due to the impact of a slowing economy and Hurricanes Ike and Gustav, the Labor Department reported Thursday.
The department said new requests for jobless benefits for the week ending Sept. 20 increased by 32,000 to a seasonally-adjusted 493,000, much higher than analysts' expectations of 445,000.
Wall Street was more focused on Washington, though, where lawmakers and the administration appeared to be moving closer to a $700 billion bailout package for the financial system. Stocks rose, with the Dow up more than 200 points in early trading.
The two hurricanes added about 50,000 new claims in Louisiana and Texas, the department said. The four-week moving average, which smooths out fluctuations, rose to 462,500. That's the highest it has been since Nov. 3, 2001.
The level of new claims was the highest since shortly after the 9/11 attacks, when it reached 517,000.
David Resler, chief economist at Nomura Securities, said Thursday's figure is the second-highest since July 1992. Claims have topped 500,000 only a handful of times in the past twenty years, he said, and were consistently above that level during the 1991 recession.
Even excluding the effects of the hurricanes, jobless claims remain at elevated levels. Weekly claims have now topped 400,000 for ten straight weeks, a level economists consider a sign of recession. A year ago, claims stood at 309,000.
The report "reflects a marked deterioration in the job market," Resler wrote in a note to clients. "That deterioration may well accelerate as the distress in the financial markets deepens and the effect of credit impairment spreads to other sectors."
The number of people continuing to draw jobless benefits last week was 3.54 million, up 63,000 from the previous week and nearly a five-year high. The four-week average of continuing claims was 3.49 million.
Other economic indicators Thursday were also negative. The Commerce Department said that orders for big-ticket manufactured goods fell by 4.5 percent in August, far more than the 1.6 percent decline economists expected.
And new home sales fell by 11.5 percent in August, the Commerce Department said in a separate report, to a seasonally adjusted annual rate of 460,000, the lowest level in more than 17 years.
Hurricane Gustav first had an impact on jobless claims for the week ending Sept. 13. The department said Thursday that Louisiana reported an increase in claims of 18,409 during that week, mostly due to Gustav.
The financial crisis, falling home prices and slowing consumer spending continue to apply the brakes to the U.S. economy. The unemployment rate jumped unexpectedly to 6.1 percent in August, the highest level in five years.
Last week, drug maker Schering-Plough Corp. said it plans to cut 1,000 sales jobs to reduce costs, part of a 10 percent reduction in staff announced in April. Also, the nation's largest chicken producer, Pilgrim's Pride Corp., announced it would reduce 100 jobs besides the 600 job losses it previously announced.
There can be no bailout of Wall Street without ownership by the citizens of the United States of the companies requiring bailouts. Why should our hard earned money be used to prop up entities whose greed and shoddy business practices got us into this mess?
It is inevitable that the taxpayers will be called upon in order to stem the tide of damages being inflicted worldwide. What is also obvious is that the financial condition of this country is dire. We are the worlds largest debtor nation and our levels of consumer debt are at record levels. The Conservative mantra that deficits don't matter is ridiculous as is indicated in the constant decline of the U.S. dollar. We must get our financial house in order. How can we even consider tax cuts with a deficit expected to top one trillion dollars in the next fiscal year?
Will the United States have an Argentina like meltdown that will plunge a vast percentage of our population into poverty overnight? I believe that remains a possibility.
Please call your elected representatives and tell them a no strings bailout is unacceptable.
Wow we were literally days away from a worldwide depression the likes of which we may have never experienced. Ask yourself one really big question and that is who fought for this deregulation. Both parties fought for this to some degree but the lions share of the blame goes to the Republicans who believe industry can police itself. How does that philosophy seem now? If the people of this country elect John McCain who voted for every deregulation law ever put in front of him then they deserve the economic collapse that will surely come with that decision.
From David M. Herszenhorn of the Washington Post:
It was a room full of people who rarely hold their tongues. But as the Fed chairman, Ben S. Bernanke, laid out the potentially devastating ramifications of the financial crisis before congressional leaders on Thursday night, there was a stunned silence at first.
Mr. Bernanke and Treasury Secretary Henry M. Paulson Jr. had made an urgent and unusual evening visit to Capitol Hill, and they were gathered around a conference table in the offices of House Speaker Nancy Pelosi.
"When you listened to him describe it you gulped," said Senator Charles E. Schumer, Democrat of New York.
As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program "Good Morning America," the congressional leaders were told "that we're literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally."
Mr. Schumer added, "History was sort of hanging over it, like this was a moment."
When Mr. Schumer described the meeting as "somber," Mr. Dodd cut in. "Somber doesn't begin to justify the words," he said. "We have never heard language like this."
"What you heard last evening," he added, "is one of those rare moments, certainly rare in my experience here, is Democrats and Republicans deciding we need to work together quickly."
Although Mr. Schumer, Mr. Dodd and other participants declined to repeat precisely what they were told by Mr. Bernanke and Mr. Paulson, they said the two men described the financial system as effectively bound in a knot that was being pulled tighter and tighter by the day.
"You have the credit lines in America, which are the lifeblood of the economy, frozen." Mr. Schumer said. "That hasn't happened before. It's a brave new world. You are in uncharted territory, but the one thing you do know is you can't leave them frozen or the economy will just head south at a rapid rate."
As he spoke, Mr. Schumer swooped his hand, to make the gesture of a plummeting bird. "You know we'd be lucky ..." he said as his voice trailed off. "Well, I'll leave it at that."
As officials at the Treasury Department raced on Friday to draft legislative language for an ambitious plan for the government to buy billions of dollars of illiquid debt from ailing American financial institutions, legislators on Capitol Hill said they planned to work through the weekend reviewing the proposal and making efforts to bring a package of measures to the floor of the House and Senate by the end of next week.
Lawmakers in both parties described the meeting in Ms. Pelosi's office on Thursday night with Mr. Paulson and Mr. Bernanke as collaborative, and that they were prepared to put politics aside to address the needs of the American people.
While Democrats initially said after the meeting that they planned to use the administration's proposal of a huge rescue effort to win support for an economic stimulus package, they pulled back slightly on Friday morning, saying that their top priority was to help put together the bailout package and stabilize the economy.
But it was clear they continued to examine ways to make clear that the government was stepping up not just to help the major financial firms but also to protect the interests of American taxpayers and families by safeguarding their pensions and college savings, and by preventing any further drying up of consumer credit.
In addition to potential stimulus measures, which could include an extension of unemployment benefits and spending on public infrastructure projects, Democrats said they intended to consider measures to help stem home foreclosures and stabilize real estate values.
Among the potential steps Congress can take include approving legislation to allow bankruptcy judges to modify the terms of primary mortgages - authority that the bankruptcy laws do not currently allow and that the banking industry has strenuously opposed.
But the Democrats said it was too soon to discuss such details, and that they were awaiting a draft of the proposal from the Treasury Department.
"We have got to deal with the foreclosure issue," Mr. Dodd said. "You have got to stop that hemorrhaging..If you don't, the problem doesn't go away. Ben Bernanke has said it over and over again. Hank Paulson recognizes it. This problem began with bad lending practices. Those are his words, not mine, and so this plan must address that or I'll be back here in front of a bank of microphones at some point explaining the next failure."
Even before the drafting of the plan was complete, the Bush administration and the Fed began efforts to sell the idea of a huge rescue to potentially skeptical rank-and-file members of Congress. Mr. Paulson and Mr. Bernanke held a conference call with House Republicans to explain their thinking.
Senator Richard C. Shelby of Alabama, the senior Republican on the Senate banking committee, said in a television interview that cost to the government of purchasing bad debt could run to $1 trillion - a potential warning sign since Mr. Shelby is a longtime skeptic of government intervention in the private market.
Until Mr. Shelby was interviewed on Friday morning, officials on Capitol Hill had been careful not to discuss specific figures, though the rescue envisioned by the Treasury Department clearly entails a government appropriation of hundreds of billions of dollars.
Stocks plummeted Wednesday, with the Dow industrials falling 449 points in its second worst session of the year, as the government's emergency rescue of AIG amplified fears about the stability of financial markets.
The Dow Jones industrial average (INDU) lost 449 points, or 4% and fell to the lowest level since November 2005. The Standard & Poor's 500 (SPX) index lost 4.7% and fell to its lowest point since April 2005. The Nasdaq composite (COMP) lost 4.9% and ended at its lowest point since August 2006.
Now watch MSNBC's Chris Matthews take apart a Republican asshole. It says all I want to say and more.
This is the result of greed furthered by a lack of regulation. The Republican mantra was let industry police itself. If you think that philosophy works then keep voting for these clowns. It happened in the 1980's with the Savings and Loan crisis which nearly culminated with a censure against John McCain for helping Charles Keating bankrupt his institution at a cost of 2 billion to the U.S. taxpayers.
If you don't learn from history you are bound to repeat it. How many times can we repeat these same mistakes.
In one of the most dramatic days in Wall Street's history, Merrill Lynch agreed to sell itself to Bank of America for roughly $50 billion to avert a deepening financial crisis, while another prominent securities firm, Lehman Brothers, hurtled toward liquidation after it failed to find a buyer.
The humbling moves, which reshape the landscape of American finance, mark the latest chapter in a tumultuous year in which once-proud financial institutions have been brought to their knees as a result of hundreds of billions of dollars in losses because of bad mortgage finance and real estate investments.
But even as the fates of Lehman and Merrill hung in the balance Sunday night, another crisis loomed as the insurance giant American International Group appeared to teeter. A.I.G. sought a $40 billion lifeline from the Federal Reserve, without which the company may have only days to survive.
The stunning series of events culminated a weekend of frantic around-the-clock negotiations, as Wall Street bankers huddled in meetings at the behest of Bush administration officials to try to avoid a downward spiral in the markets stemming from a crisis of confidence.
"My goodness. I've been in the business 35 years, and these are the most extraordinary events I've ever seen," said Peter G. Peterson, co-founder of the private equity firm the Blackstone Group, who was head of Lehman in the 1970s and a secretary of commerce in the Nixon administration.
It remains to be seen whether the sale of Merrill, which was worth more than $100 billion during the last year, and the controlled demise of Lehman will be enough to finally turn the tide in the yearlong financial crisis that has crippled Wall Street and threatened the broader economy.
We all need to ask ourselves how we got here. It was the systematic deregulation of an industry that controls our nations finances. Ask yourself who was to benefit from these weaker regulations? Does anyone still think that industry can police itself? The Republicans systematically rolled back depression era regulations which were put in place to avoid a repeat of the Great Depression. Who helped to roll back these regulations?
The general co-chairman of John McCain's presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today's economic turmoil.
"A regulatory structure set up for banks in the 1930s needed to change because the nature of business had changed," the Illinois senator running for president said in a New York economic speech. "But by the time [it] was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework."
Gramm's role in the swift and dramatic recent restructuring of the nation's investment houses and practices didn't stop there.
A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS's new investment banking arm.
Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and Treasury Department about banking and mortgage issues in 2005 and 2006.
During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages.
For his work, Gramm and two other lobbyists collected $750,000 in fees from UBS's American subsidiary. In the past year, UBS has written down more then $18 billion in exposure to subprime loans and other risky securities and is considering cutting as many as 8,000 jobs.
Gramm did not respond to an e-mail, and was unavailable for comment, according to a UBS spokesman. The bank has no official position on the subprime crisis, the spokesman said, but is a member of the Financial Services Roundtable and other industry groups that are actively lobbying Congress on the issue.
Now, some housing experts and economists see Gramm's thinking in the recent housing proposal from McCain, the Republican Party's presumed presidential nominee. Gramm is often a surrogate for the Arizona senator, particularly in meetings focused on the economy. And McCain has hinted he'd consider the former Texas senator for Treasury secretary in a McCain administration.
If America votes for more of this crap then they deserve what will come. We have gone from surpluses to record setting deficits. We have seen the value of our homes collapse and the greatest increase in consumer indebtedness in our history. Our middle class is nearly gone and yet this election remains close. What more will it take for us to wake up and say ENOUGH?
