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Think job losses won't get worse? Think again

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BeatleBoot Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 07:45 AM
Original message
Think job losses won't get worse? Think again
http://www.msnbc.msn.com/id/29551848 /

<snip>


Coming on top of trillions of dollars in lost home values and trillions more in stock market losses, the collapse of the job market is now fueling a downward economic spiral. With less spending power and fearful of further job losses, consumers have sharply cut spending that had made up some 70 percent of Gross Domestic Product.

The contraction appears to be accelerating. The latest government figures show GDP falling at an annual rate of 6.2 percent in the last three months of 2008. Some economists now believe that if the pace of jobs losses continues they currently average more than 600,000 a month the economic contraction could be more severe in the first quarter of this year.

Earlier this week, Federal Reserve Chairman Ben Bernanke told Congress that the economic data "show little sign of improvement" and that "labor market conditions may have worsened further in recent weeks."

The Obama administration is counting on a package of measure to get the economy moving again and employers back in a hiring mood. The list includes an almost $800 billion package of spending and tax cuts; a $70 billion bailout program for the nation's troubled banks; and a $75 billion effort to head off an estimated nine million home foreclosures.

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joeybee12 Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 07:50 AM
Response to Original message
1. I read this yesterday...scary and probably accurate...n/t
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HughBeaumont Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 08:00 AM
Response to Original message
2. Stay classy, Corporate America.
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KharmaTrain Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 08:00 AM
Response to Original message
3. As Long As Credit Remains Frozen...
The problem with the stimulus bill is that it has little effect on the corporate world...except for bail-outs. Its focus on local and state funded projects will put people to work and help in fixing both the overall economy and much needed infrastructure, but it won't put people back to work in offices and factories....the only thing that does that is a credible banking system that serves the customer, not the other way around.

The long spending spree on the credit card is over. The collapse of the banking system has made it impossible for companies to borrow money to help them meet payrolls and shortfalls and this has excellerated the job losses. As long as people can't borrow, new businesses won't be able to get rolling and existing ones will either have to draw on their own cash reserves to keep going (if they have such a luxuary) or cut to the bone. It's a nasty cycle.

IMHO, the government may have to step in with a loan program of its own. If the banks can't get the credit flowing, then the government must. And it's money well spent as those that create private sector jobs create new taxes that will bring a far greater return than throwing it at a defense contractor to kill or to bankers to pay for their drunken gambling spree.
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FreakinDJ Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 08:48 AM
Response to Reply #3
4. Problem is it didn't focus on Infustructure enough
Infustructure spending would have been in the Economy by Summer.
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KharmaTrain Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:03 AM
Response to Reply #4
5. That's A Long-Term Fix...
Most of the infrastructure projects aren't "shovel ready" (remember how the GOOP made a big bitch about that)...they include a lot of projects that will take years to do. This is a good thing as it will generate jobs and create booms in the areas affected, but the question is how to create jobs in a private sector that is stuck in financial paralysis. Nationalization of the banks...using the Swedish model is a start, but for those looking for a quicker fix...the markets to start to rise, jobs to return, there needs to be some kind of private stimlus as well.

I'm in agreement with Dr. Krugman that the first stimulus didn't go far enough and that Geitner has been timid in reigning in the Wall Street bullies, but I also see the need down the road for additional stimulus programs...both public and private once we see how the situation unfolds.

Cheers...
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FreakinDJ Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:13 AM
Response to Reply #5
8. "Shovel Ready" projects have Wages in Pockets in 6 months
Labor spends 100% of their wages to survive

That translates to an effect on the economy (spending) in 6 months that continues for years. With the added benifit of improved infustructure helps drive the economy

They should have focused more on Infustructure and less on Healthcare in the Stimulus Bill
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KharmaTrain Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:20 AM
Response to Reply #8
9. Many Can't Wait 6 Months...
Again...I'm very much in favor of all the projects proposed and the jobs they will create. I'm also encouraged that unions will be at the forefront of many of these ventures and hopefully can become the working man's hero again.

However, for many, 6 months is a lifetime...they need relief now. Some are small businesses that can't get loans to meet payroll or expand and create new jobs. There are people one paycheck away from losing a home or hope...6 months is an eternity...especially for the many who've been out of work for months and years. The private sector needs a boost to provide the jobs that government can't create.

Reforming healthcare will go a long way to reducing the costs for many small and medium-sized businesses. Taking that burden off the backs of employers in a single-payer system would benefit all with lower costs and free up capital for job creation or better wages.

Again...we'll need several stimulus packages over the next year or longer. Bill Mahrer joked about it last night calling these installment payments to tamper down how much this mess will eventually cost us all.
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FreakinDJ Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:30 AM
Response to Reply #9
11. We need to "phase in" Banking Regulations - JOB 1
The jitters on Wall St. I believe are caused by the uncertainty of how the Obama Administration will deal with Banks that by regulations just 10 years ago would have been shut down and the CEO thrown in jail.

Banks are struggling to adjust the Debt to Asset ratio since they can no longer count "Mortgage Backed Securities and Credit Default Swaps" as assets resulting in $54 Trillion Dollars of Unsecured Debt.

Secondly for the Long Term Viability of America's Economy (where have I heard that before) we need to reform Healthcare.

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KharmaTrain Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:41 AM
Response to Reply #11
16. Wall Street Needs Shock Therapy
I agree...the market is reacting to uncertainty...knowing a day of reckoning is still to come and fighting it every step of the way. The fat cats and Rant Santellis became emboldened that they were infallible...that only THEY knew how to create wealth and drive the economy. Well, we've seen where they've driven us.

I don't think anyone really knows how deep a hole this greedfest goes. Geitner's been timid is confronting what he will need to if this economy is to "bottom out"...and that's asserting controls over those markets and reinstituting regulations that should have prevented this collapse. Damn right the markets will react negatively...like a child being given medicine, but it's gotta be done...the banks will need to be nationalized and stockholders will have to take their lumps. The longer it takes to do this, the longer it will take for the debt bomb that is ruining our economy to be tamed.

Once we get to that point, then looking at rebuilding our commercial and industrial infrastructure can begin...with matter such as healthcare and incentive and stimulus can be addressed.

Cheers...
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FreakinDJ Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:54 AM
Response to Reply #16
17. Give Wall St "Tax Therapy"
RATpubliCON "Deregulation Fans" also reduced Tax burdens on Wall St CEOs, Stock Transaction Fees, even companies moving ALL Manufacturing operations to China. The door needs to be SLAM SHUT and LOCKED TIGHT against these "Reverse Economic" incentives.

But I do think we will see slight improvement by summer when the shovel ready projects begin paying out wages. All for NOT unless we clean up Banking and Healthcare.

Banks will need time to adjust their spread sheet. The current "Credit Crisis" demonstratews this. Regulations will need to be carefully timed to allow that
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KharmaTrain Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 10:10 AM
Response to Reply #17
18. Don't Forget Vulture Capitalism
That's starting to be a thriving industry again. I saw this happen during the dot com bust...the same people who made money with the obscene financing that created the bubble then ended up canibalizing the same companies they created on the way down. I'm already reading about former bankers and big rollers looking at short selling homes and buying out failed companies for pennies on the dollar...then come with hands held open for their "government bailout". I hope the administration is wise to this game.

Cleaning up the banks is a priority...recrate an RTC or a "dirty bank" to isolate the worst toxic assets, get them off the books and get the banking system functioning...and then, as you say, reinstitute regulations along the way to ensure there's a balance between recovery and stability. There's no easy answers or fixes here...and we're in unchartered waters. No one knows the answer and what we think is important now can change quickly.

I think we'll see a big decission ahead as a choice will have to be made to either bail out another failed Wall Street titan or cover the growing shortfall with the FDIC. How will the markets react when the little guy gets the bail out? Stay tuned.

Cheers...
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kentuck Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:09 AM
Response to Original message
6. Nobody expects the job loss numbers to immediately stop...
In fact, they went up this month from last month. So long as the unemployment numbers continue to go up, we are getting urselves into a deeper and deeper hole. If they were to drop 25% next month, I would feel a little better that the worst was over? These numbers are very important.
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tonysam Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:38 AM
Response to Reply #6
14. The Problem is the Cycle Never Seems to End.
The people who are still employed are scared to spend any money, and the lack of demand creates even more unemployment.

The problem is structural. Stimulus packages are great for the short term, but what is needed is a total reversal of 30 years of economic policy.

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Liberal_in_LA Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:13 AM
Response to Original message
7. Scary
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EmilyAnne Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:25 AM
Response to Original message
10. Who would think that? John "Fundamentals of the Economy are Strong" McCain, maybe.
Everyone else seems to be expecting much worse. And very soon.
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tonysam Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:35 AM
Response to Original message
12. Our Elected Officials Don't Have
a goddamned clue, and Obama is surrounding himself with neoliberal types who are pathetic and still cling to ideas which don't work.

Where I live, in Washoe County, Nevada, the unemployment rate is 11 percent, and in today's paper, there was an interview with a job seeker who applied for an apartment maintenance job. He discovered the prospective employer had over 1,000 applications in a day.

Since our officials in both political parties are on the take by the same elites who put us in this mess, they have no political will to change our disastrous journey to third worldom.
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SammyWinstonJack Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:39 AM
Response to Reply #12
15. Pretty much correct.
Since our officials in both political parties are on the take by the same elites who put us in this mess, they have no political will to change our disastrous journey to third worldom.
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L0oniX Donating Member (1000+ posts) Send PM | Profile | Ignore Sat Mar-07-09 09:37 AM
Response to Original message
13. The out sourcing of jobs has to stop.
You want to create jobs, then stop letting these companies send our jobs to slave labor countries. Tax the hell out of companies that send jobs over seas. Give a tax break to all those companies who "have" kept jobs here. Damn the WTO ...they aren't giving us any jobs. Remember Seattle protests? They were and are right!
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