Archive for August, 2009

21
Aug
09

bernanke couldn’t predict the crises, but…

Bernanke says US economy on cusp of recovery

By Jeannine Aversa, AP Economics Writer

Federal Reserve Chairman Ben Bernanke declared Friday that the U.S. economy is on the verge of a long-awaited recovery after enduring a brutal recession and the worst financial crisis since the Great Depression.

Economic activity in both the U.S. and around the world appears to be “leveling out,” and “the prospects for a return to growth in the near term appear good,” Bernanke said in a speech at an annual Fed conference in Jackson Hole, Wyo.

The upbeat assessment was consistent with the Fed’s observations earlier this month. The central bank has taken small steps toward pulling back some emergency programs to revive the economy.

Still, Bernanke stressed Friday that despite much progress in stabilizing financial markets and trying to bust through credit clogs, consumers and businesses are still having trouble getting loans. The situation is not back to normal, he said.

READ THE REST

21
Aug
09

China reduces holdings in US debt

China reduced its holdings of US government debt by the largest margin in nearly nine years in June, according to data from the US Treasury.

China holds more US government debt than any other country and cut its holdings of US securities by more that 3% in June, said the BBC’s Chris Hogg.

Japan and the UK – second and third largest holders of US debt – increased their holdings over the same period.

China’s holding of US debt is about 7% higher than at the turn of the year.

Inflation fear

In recent months the US government’s budget deficit has widened thanks in part to the Obama administration’s costly stimulus plan.

Our correspondent in Shanghai says that China is worried about this, and fears the stimulus efforts will fuel inflation in the US, reducing the value of the dollar.

This would then erode the value of the debt China holds in the US currency.

In June, China cut its holdings of US securities by about $25bn, a fall of 3.1%.

READ THE REST

20
Aug
09

State, local government jobs up despite recession

CHICAGO (Reuters) – While businesses across the United States slash jobs, state and local governments have actually increased employment slightly since the economic recession began in December 2007, according to a report released on Thursday.

“As is the typical pattern in recessions, overall state and local government employment continued to grow after the start of the recession, although there has been a small decline since the August 2008 peak,” said Donald J. Boyd, author of the report by the Rockefeller Institute of Government, in a statement.

Total employment in state and local government rose in 30 states, fell in 16 and was unchanged in four during the last year, the report found.

READ THE REST

20
Aug
09

Judge Napolitano on Government vs. Private Enterprise

17
Aug
09

The recovery isn’t here yet

The talking heads believe that the economy is recovering. Stocks are up, but does that mean the general economic picture is better?

The stock market has risen by 50% this yearThat doesn’t mean we’ve hit the bottom, but that is only one of many factors. The question that must be asked is “what has changed that would lead to a recovery?”

“Data provided by credit reporting agency TransUnion shows the ratio of mortgage holders who are 60 days or more behind on their payments increased for the 10th straight quarter, to 5.81 percent nationwide for the three months ended June 30.”

The situation for homeowners hasn’t improved

“Regulators on Friday shut down Colonial BancGroup Inc., a big lender in real estate development that marked the biggest U.S. bank failure this year, and a small bank in Pennsylvania.”

Banks are still failing

“The American economy lost 467,000 more jobs in June, and the unemployment rate edged up to 9.5 percent in a sobering indication that the longest recession since the 1930s had yet to release its hold.”

Jobs are still being lost

There has been no significant improvement of economic conditions. Every government interference in the marketplace, even if it appears to help in the short-term, creates distortions that can only be maintained temporarily. Eventually the distortion must be wiped away by a correction that reallocates the resources away from politically directed ends into market directed ends. This takes time. The larger the distortion the bigger and more painful the correction.

The recovery will come once business has restructured away from politically motivated directions, back to satisfying the needs of consumers. Any further interference by Washington DC only lengthens the duration of the current correction.

13
Aug
09

Obama and the Post Office

by Llewellyn H. Rockwell, Jr.

Writing in The State and Revolution in 1917, Vladimir Lenin summed up the economic aim of socialism as follows: “To organize the whole economy on the lines of the postal service….”

Incredible, isn’t it? After centuries of treatises and miles of paper and tubs of ink, this is the great historical turning point: government employees carrying sacks of paper mail from house to house, and operating at an economic loss.

It’s fascinating how it all comes down to the post office, again and again in the history of public policy. And so it is in our time, with Obama’s admission/gaffe/slip concerning the post office and its analogy to what he wants to do with health care.

Here is a transcript of his spontaneous talk at a high school. A student raised a question about the government’s provision of health services and its impact on private services.

“How can a private company compete against the government? My answer is that if the private insurance companies are providing a good bargain, and if the public option has to be self-sustaining, meaning that taxpayers aren’t subsidizing it, but it has to run on charging premiums and providing good services, and a good network of doctors, just like private insurers do, then I think private insurers should be able to compete.

“They do it all the time. If you think about it, UPS and Fed-Ex are doing just fine. It’s the Post Office that’s always having problems…. there is nothing inevitable about this somehow destroying the private marketplace. As long as it is not set up where the government is being subsidized by the taxpayers so that even if they are providing a good deal, we keep having to pony up more and more money.”

READ THE REST

12
Aug
09

Court throws out FOIA Lawsuit against the Federal Reserve