No Recovery in Sight

via: nytimes

How do you put together a consumer economy that works when the consumers are out of work?

One of the great stories you’ll be hearing over the next couple of years will be about the large number of Americans who were forced out of work in this recession and remained unable to find gainful employment after the recession ended. We’re basically in denial about this.

There are now more than five unemployed workers for every job opening in the United States. The ranks of the poor are growing, welfare rolls are rising and young American men on a broad front are falling into an abyss of joblessness.

Some months ago, the Obama administration and various mainstream economists forecast a peak unemployment rate of roughly 8 percent this year. It has already reached 9.4 percent, and most analysts now expect it to hit 10 percent or higher. Economists are currently spreading the word that the recession may end sometime this year, but the unemployment rate will continue to climb. That’s not a recovery. That’s mumbo jumbo.

Why this rampant joblessness is not viewed as a crisis and approached with the sense of urgency and commitment that a crisis warrants, is beyond me. The Obama administration has committed a great deal of money to keep the economy from collapsing entirely, but that is not enough to cope with the scope of the jobless crisis.

There were roughly seven million people officially counted as unemployed in November 2007, a month before the recession began. Now there are about 14 million. If you add to these unemployed individuals those who are working part time but would like to work full time, and those who want jobs but have become discouraged and stopped looking, you get an underutilization rate that is truly alarming.

“By May 2009,” according to the Center for Labor Market Studies at Northeastern University in Boston, “the total number of underutilized workers had increased dramatically from 15.63 million to 29.37 million — a rise of 13.7 million, or 88 percent. Nearly 30 million working-age individuals were underutilized in May 2009, the largest number in our nation’s history. The overall labor underutilization rate in May 2009 had risen to 18.2 percent, its highest value in 26 years.”

If it were true that the recession is approaching its end and that these startlingly high numbers were about to begin a steady and substantial decline, there would be much less reason for alarm. But while there is evidence the recession is easing, hardly anyone believes a big-time employment turnaround is in the offing.

Three-quarters of the workers let go over the past year were permanently displaced, as opposed to temporarily laid off. They won’t be going back to their jobs when economic conditions improve. And many of those who were permanently displaced were in fields like construction and manufacturing in which the odds of finding work, even after a recovery takes hold, are not good.

Another startling aspect of this economic downturn is the toll it has taken on men, especially young men. Men accounted for nearly 80 percent of the loss in employment in this recession. As the labor market center reported, “The unemployment rate for males in April 2009 was 10 percent, versus only 7.2 percent for women, the largest absolute and relative gender gap in unemployment rates in the post-World War II period.”

Workers under 30 have sustained nearly half the net job losses since November 2007.

This is not a recipe for a strong economic recovery once the recession officially ends, or for a healthy society. Young males, especially, are being clobbered at an age when, typically, they would be thinking about getting married, setting up new households and starting families. Moreover, work habits and experience developed in one’s 20s often establish the foundation for decades of employment and earnings.

We’ve seen what happens when you rely on debt and inflated assets to keep the economy afloat. The economy can’t be re-established on a sound basis without aggressive efforts to put people back to work in jobs with decent wages.

We also need to consider the suffering that is being endured by these high levels of joblessness, including the profound negative effect on the families of the unemployed. Lawrence Mishel, president of the Economic Policy Institute, warned about the consequences for children. “What does it mean,” he asked, “when kids are under stress because there is no money in the household, or people have to move more, or are combining households, or lose their health insurance? I believe this is going to leave a permanent scar on a generation of kids.”

The first step in dealing with a crisis is to recognize that it exists. This is not a problem that will evaporate when the gross domestic product finally begins to creep into positive territory.

The Republican Response by Gov. Bobby Jindal

Following is a transcript of Gov. Bobby Jindal’s remarks on behalf of the Republican Party on Tuesday night, responding to President Obama’s address, as recorded by CQ Transcriptions:

JINDAL: Good evening, and happy Mardi Gras. I’m Bobby Jindal, governor of Louisiana.

Tonight, we’ve witnessed a great moment in the history of our republic. In the very chamber where Congress once voted to abolish slavery, our first African-American president stepped forward to address the state of our union.

With his speech tonight, the president completed a redemptive journey that took our nation from Independence Hall to Gettysburg to the lunch counter and now finally the Oval Office.

Regardless of party, all Americans are moved by the president’s personal story, the son of an American mother and a Kenyan father who grew up to become leader of the free world.

 

Like the president’s father, my own parents came to this country from a distant land. When they arrived in Baton Rouge, my mother was already four-and-a-half-months pregnant. I was what folks in the insurance industry now call a pre-existing condition.

JINDAL: To find work, my dad picked up the yellow pages and started calling local businesses. Even after landing a job, he still couldn’t afford to pay for my delivery, so he worked out an installment plan with the doctor. Fortunately for me, he never missed a payment.

As I grew up, my mom and dad taught me the values that attracted them to this country, and they instilled in me an immigrant’s wonder at the greatness of America.

As I — as a child, I remember going to the grocery store with my dad. Growing up in India, he had seen extreme poverty. As we walked through the aisles, looking at the endless variety on the shelves, he would tell me, “Bobby, Americans can do anything.”

I still believe that to this day: Americans can do anything. When we pull together, there’s no challenge we can’t overcome.

As the president made clear this evening, we’re now in a time of challenge. Many of you listening tonight have lost jobs; others have seen your college and your retirement savings dwindle. Many of you are worried about losing your health care and your homes. You’re looking to your elected leaders in Washington for solutions.

Republicans are ready to work with the new president to provide these solutions. Here in my state of Louisiana, we don’t care what party you belong to if you have good ideas to make life better for our people. We need more of that attitude from both Democrats and Republicans in our nation’s capital.

All of us want our economy to recover and our nation to prosper. So where we agree, Republicans must be the president’s strongest partners. And where we disagree, Republicans have a responsibility to be candid and offer better ideas for a path forward.

Today in Washington, some are promising that government will rescue us from the economic storms raging all around us. Those of us who lived through Hurricane Katrina, we have our doubts.

Let me tell you a story. During Katrina, I visited Sheriff Harry Lee, a Democrat and a good friend of mine. When I walk into his makeshift office, I had never seen him so angry. He was literally yelling into the phone. “Well, I’m the sheriff, and if you don’t like it, you can come and arrest me.” I asked him, “Sheriff, what’s got you so mad?” He told me that he put out a call for volunteers to come with their boats to rescue people who were trapped on their rooftops by the floodwaters. The boats were all lined up and ready to go. And then some bureaucrat showed up and told him they couldn’t go out in the water unless they had proof of insurance and registration.

And I told him, “Sheriff, that’s ridiculous.” Before I knew it, he was yelling in the phone. “Congressman Jindal’s here, and he says you can come and arrest him, too.” Well, Harry just told those boaters ignore the bureaucrats and go start rescuing people.

There’s a lesson in this experience: The strength of America is not found in our government. It is found in the compassionate hearts and the enterprising spirit of our citizens. Continue reading . . .

Sam Zell’s empire, underwater in a big way

(New York Times) It was, for a brief shining moment, the real estate deal of the century. In 2007, Sam Zell, the billionaire Chicago investor, sold a portfolio of 573 properties Continue reading . . .

Environmental Issues Slide in Poll of Public’s Concerns

A new poll suggests that Americans, preoccupied with the economy, are less worried about rising global temperatures than they were a year ago but remain concerned with solving the nation’s energy problems.

Dot Earth: Obama Urgent on Warming, Public Cool

The findings are somewhat at odds with <a title="More articles about Barack Obama." href="http://topics.nytimes.com/top/reference/timestopics/people/o/barack_obama/index.html?inline=nyt-perGraphic President Obama, who has put a high priority on staving off global warming and vowed Tuesday in his Inaugural Address to “roll back the specter of a warming planet.”

In the poll, released Thursday by the nonpartisan Pew Research Center, global warming came in last among 20 voter concerns; it trailed issues like addressing moral decline and decreasing the influence of lobbyists. Only 30 percent of the voters deemed global warming to be “a top priority,” compared with 35 percent in 2008.

“Protecting the environment,” which had surged in the rankings from 2006 to 2008, dropped even more precipitously in the poll: only 41 percent of voters called it a top priority, compared with 56 percent last year.

In contrast, dealing with the nation’s energy problems ranked sixth in the poll — just behind education and social security — with 60 percent of voters endorsing it as a top priority.

The declining interest in global warming and other environmental issues might be unsurprising at a time when Americans face far more imminent threats to their jobs and homes. “Strengthening the nation’s economy” was the top-ranked concern of voters in the Pew poll. A relatively cool year and a harsh winter in North America and Europe have not helped, inspiring some commentators and a small cluster of scientists to make skeptical remarks about “global cooling.” Continue reading . . .

Doggone It, Just Get the Puppy Already

The Labradoodle, left, and the Portugese Water Dog: Both cute, both not likely to be found in shelters. (Photos: Mary Godleski/Associated Press, Susan Farley for The New York Times)

“If you want a friend in Washington, get a dog,” Harry Truman once said famously. He made it sound so easy.

In fact, President-elect Barack Obama’s search for a new family puppy is now breeding some ill will among dog lovers.

It is not exactly like taking heat for his position on the Gaza conflict, but Mr. Obama is sparking criticism from those who spend time thinking about these things for his family’s drawn-out search, their “naivete” and their “conflicting public statements” on exactly what kind of pooch the family is looking for.

“I’m frustrated with the Obamas. Just get a dog already,” said Daisy Okas, a spokesperson for the American Kennel Club, who said she has heard from many angry dog owners in recent days over how the Obama’s have been handling what has become, to them at least, a politically charged issue.

The latest flashpoint was an interview Sunday in which Mr. Obama told ABC’s George Stephanopoulos that the incoming first family had narrowed its final choice down to a Labradoodle and a Portuguese water dog. This seemed to conflict with the president-elect’s earlier statement that they hoped to rescue a dog from a shelter since, as many dog owners have pointed out in recent days, Labradoodles and especially Portuguese water dogs rarely are seen in shelters, especially puppies. A puppy is what Mr. Obama publicly promised his daughters on Election night, although he revised this to a “medium-size dog” in his interview with Mr. Stephanopoulos Sunday.

Neither breed has been available for adoption in Washington, D.C., shelters in recent days. Only about 900 Labradoodles were rescued in the United States all of last year, said N. Beth Line, director of the International Doodle Owners’ group.

“Very rare,” said Mary Harkins, the national rescue chair of the Portuguese Water Dog Club of America, when asked how often she has seen Portuguese water dogs turn up in shelters.

While Portuguese water dogs are periodically listed on the animal adoption Web site Petfinder.com, “they are almost never purebreds,” said Ms. Harkins.

Certainly, the Obamas could buy a dog directly from a breeder, despite their stated preference for adoption — a plan that has been lauded by animal rescue groups. But an added complication is that Labradoodles are not reliably hypoallergenic, which could be another problem given the much-publicized allergic sensitivities of first-daughter-in-waiting, Malia Obama. Continue reading . . .

Rescue of Banks Hints at Nationalization

["Hints" at Nationalization? You've got to be kidding me . . .]

Last fall, as Federal Reserve and Treasury Department officials rode to the rescue of one financial institution after another, they took great pains to avoid doing anything that smacked of nationalizing banks.

They may no longer have that luxury. With two of the nation’s largest banks buckling under yet another round of huge losses, the incoming administration of Barack Obama and the Federal Reserve are suddenly dealing with banks that are “too big to fail” and yet unable to function as the sinking economy erodes their capital.

Particularly in the case of Citigroup, the losses have become so large that they make it almost mathematically impossible for the government to inject enough capital without taking a majority stake or at least squeezing out existing shareholders.

And the new ground rules laid down by Mr. Obama’s top economic advisers for the second half of the ” target=”_blank”>$700 billion bailout fund, as explained in a letter submitted to Congress on Thursday, call for the government to play an increasing role in the major activities of the banks, from the dividends they pay to shareholders to the amount they can pay executives.

“We are down a path that this country has not seen since Andrew Jackson shut down the Second National Bank of the United States,” said Gerard Cassidy, a banking analyst at RBC Capital Markets. “We are going to go back to a time when the government controlled the banking system.”

The approximately $120 billion aid package on Thursday for Bank of America — including injections of capital and absorbed losses — as well as a $300 billion package in November for Citigroup both represented displays of financial gymnastics aimed at providing capital without appearing to take commanding equity stakes.Continue reading . . .

Bailouts Encourage More Ponzi Schemes

A column in the New York Times reveals an additional reason to reject bailouts. Simply stated, they encourage more risky schemes since taxpayers face perverse incentives to take risks in order to get some of the “free” money being wasted by government:

Almost a century after Charles Ponzi, people continue to fall victim to Ponzi schemes like the one attributed to Mr. Madoff. A recent Google search revealed more than 100 such schemes being investigated all over the world. …Social Security, which involves the younger generation paying some of the retirement benefits of the older generation, is a perfectly legal Ponzi scheme. …what happens when the music stops and people find themselves playing the last round of the Ponzi game? The federal government may choose to spend billions to bail out the last-round players to protect overall financial stability. The Ponzi participants will get a piece of the bailout, but will still have a net loss. The problem is that taxpayers have to foot the bailout bill, and they may have even greater net losses than the people who initially signed up for the Ponzi game. If taxpayers stand to lose more money than Ponzi players, it is suddenly rational to play the game. That’s because only by getting a piece of the bailout will Ponzi participants protect themselves from the larger losses faced by taxpayers. …bailouts only serve to reinforce behavior that can lead to even riskier Ponzi schemes. So, though many of us recognize deals that are too good to be true, bailouts will encourage us to take part in such deals. The $700 billion federal bailout may eventually lead to Ponzi schemes large enough to make Mr. Madoff’s reported $50 billion swindle pale in comparison.

Bleeding Heart Tightwads

This holiday season is a time to examine who’s been naughty and who’s been nice, but I’m unhappy with my findings. The problem is this: We liberals are personally stingy.

Liberals show tremendous compassion in pushing for generous government spending to help the neediest people at home and abroad. Yetwhen it comes to individual contributions to charitable causes, liberals are cheapskates.

Arthur Brooks, the author of a book on donors to charity, “Who Really Cares,” cites data that households headed by conservatives give 30 percent more to charity than households headed by liberals. A study by Google found an even greater disproportion: average annual contributions reported by conservatives were almost double those of liberals.

Other research has reached similar conclusions. The “generosity index” from the Catalogue for Philanthropy typically finds that red states are the most likely to give to nonprofits, while Northeastern states are least likely to do so. Continue reading . . .

[I don't know why the researchers are shocked to learn that conservatives and Republicans are far more personally charitable than liberal Democrats. That's been known and discussed for a long time].