Economic Roundup … and the news ain’t good.

I know, I know … the recession is over. But somehow statistical confirmation is outweighed by friends and family who still can’t find jobs, and 9.7% unemployment (new figures come out this week ) is hardly reassuring. I can assure you Wall Street is worried.

Predicting economic direction is tricky business .. especially now. I always hold off on this kind of stuff, especially since its so easy to misread the monthly tea leaves. But based on the following, and what my former colleagues on Wall Street tell me casually, I worry, although I can’t speak for my Mom, the eternal optimist.

Dead End Kids: Unemployment for people aged 16 to 24 is disastrous. Mom and Dad … remember the recession is over. And can I have some gas money?

The unemployment rate for young Americans has exploded to 52.2 percent — a post-World War II high, according to the Labor Dept. — meaning millions of Americans are staring at the likelihood that their lifetime earning potential will be diminished and, combined with the predicted slow economic recovery, their transition into productive members of society could be put on hold for an extended period of time.

And worse, without a clear economic recovery plan aimed at creating entry-level jobs, the odds of many of these young adults — aged 16 to 24, excluding students — getting a job and moving out of their parents’ houses are long. Young workers have been among the hardest hit during the current recession — in which a total of 9.5 million jobs have been lost.

Home Sales Fall … Again: I know, I know … the recession is over. How’s that tax credit working out for you?

First-time buyers accounted for about 30% of sales in July and August, Yun said.

Without an extension of the taxpayer subsidy, the housing market could fall into a “double-dip” downturn, Yun said, which would stall the overall economic recovery.

Durbale Goods Down 2.4%: That’s manufacturing … blue collar jobs.

Durable goods orders are a leading indicator of manufacturing activity, which in turn provides a good measure for overall business health. U.S. stock index futures fell on the report, while government bond prices rose.

“This is a bit of a reality check for people. It means there is more to be done and we are not out of the woods yet,” said Doug Roberts, chief investment strategist at Channel Capital in Shrewsbury, N.J.

Fresh Bank Bailouts: Small banks this time. But not a good sign for an economy that depends on lending, especially the lending power that small banks provide small businesses. It also doesn’t say much for “the recession is over”.

Geithner has trumpeted the end of some emergency financial programs as signs the economy is recovering. The department expects to see tens of billions of dollars in additional repayments to the fund in coming months.

But Doyle said FDIC officials still expect up to 150 bank failures this year. So far, 95 banks have been closed. That’s the most since 1992, during the savings-and-loan crisis.

Large Bank Loan Losses Tripple to $53 billion: Remember the recession is over, it’s just the engine that will drive us out is still pretty sick.

According to an annual report released by the four federal bank-regulatory agencies on Thursday, credit quality deteriorated to record levels this year.

The report said total identified losses of $53.3 billion in 2009 surpassed last year’s total of $2.6 billion, and nearly tripled the previous peak in 2002, when losses totaled $19.1 billion.

“While we expected a year-over-year increase in problem assets, given the weak economic environment, declining (commercial real estate) values, and previously weak underwriting, we were surprised by the magnitude of the increase,” wrote FBR Capital Markets analyst Scott Valentin in a research note to clients Friday.

With new figures coming out this week on jobs and housing, all of this could change. But not likely. If the stimulus was meant to jump start the economy then it has failed. If it was meant to simply grow government azt the expense of the private sector (which is precisely what it was meant to do) … that’s something Americans needed to know.

Good thing we did that stimulus, huh? Update: Video

This chart keeps changing and not for the better.

Some analysis here at Michaels Comments. But what stuns me is not that the stimulus is not working … we warned you in February that shoveling money to Democrat public works projects does not stimulate the private sector where jobs are created. It’s not that the Democrats tried and succeed in panicking the public into thinking unless this porkapalooza passes the economy will get worse (the chat below pretty much blows that idea up). What stuns me is that after all of this these politicians actually expect us to trust them … again. These guys crack me up. Click to enlarge.

Unemployment with stimulus graph

Oh and HotAir has some great video of Christina Romer spinning the numbers.

Visit for Breaking News, World News, and News about the Economy

Ed has some nice analysis of the numbers. As we have been saying for months, the numbers don’t keep going down. At some point they stop. The economy can’t go to zero. Well at least a market economy can’t go to zero. The question becomes one of, not how much less worse will it get and not even when will it turn (which the anchor in the video eventually asks). The real question is how much better, once the slide stops, can we expect the economy to get over the next two to three years. The answer of course is, given the out of control government debt and the ostracizing of the private sector, not much.

Obama: “Not one dime” more in taxes … Update -Video

… if you make less than $250,000; or was it $208,000? Either way, President Obama assured Americans making less than the aforementioned figures would not pay “one more dime” in taxes. So why won’t Obama administration officials back up the boss?

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Cash for clunkers breaks down

I’ve been meaning to write a post about this program for the last month or so. The way I figured it, those who took advantage of the program may be able easily end up with a used 2003 Cadillac Escalade that gets 13 miles to the gallon.

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Symptom of the Disease: Federal government paying for local cops

Fiscal responsibility is dead. Well, it probably died years ago but can we bring it back? The city of Akron, Ohio – along with other cities in the state – will be able to hire and pay 23 police officers for three years thanks to federal stimulus dollars. Of course, the string is the city must guarantee to pick up the tab for an additional year.

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Analysis: Distribution of stimulus funds to states

On Sunday, Fox News reporter John Lott actually did some analysis on the distribution of federal stimulus funds to all 50 states and found states hit hardest by the recession have received the least amount of stimulus cash. It’s not a sexy story since it includes scatter plots and trend lines, but it’s worth a review.

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Goldman Sachs to US: Recession? What Recession?

Or as Terry Keenan puts it, “”What’s bad for America is good for Goldman.” I read this yesterday and I thought it was well worth bringing your attention to it. Terry Keenan, a host on Fox Business has a facinating article on how Goldman Sachs, one of the few investment bankers to not only survive the financial meltdown but thrive … and it is doing it on our backs. Make that out grandchildren backs.

The entire premise of the column is simple. When the government creates a program, like the stimulus or TARP for instance … it has to finance that debt with government securities. The more the Dems spend … the more they need to finance.

But someone has to be the middle man here. Someone has to find a market for these securities … and that someone is none other than  Goldman Sachs, the firm with more ties to the TARP program and the Obama administration than, well anyone. (Goldman alum include former NY Fed Chair Steven Friedman, when Tim Geithner was President, former Treasury Secretary Hank Paulson ,and Robert Rubin.)

Goldman gets the most attention for its deft handling of its own account, but a big chunk of its trading pie also involves the selling and trading of US government debt — federal, state and local. Indeed, as one of the biggest primary dealers of US Treasuries, Goldman Sachs has a huge vested interest in the United States digging a deeper and deeper hole.

These days, trading Uncle Sam’s IOUs is big business. It’s also one of the few growth markets on Wall Street. The IPO business, private equity and mergers and acquisitions have yet to recover from the credit crash.

By Goldman’s own estimates, the US will borrow a record $3.25 trillion in the current fiscal year — almost four times as much as in 2008.

With its biggest competitors in this market (Lehman Brothers and Bear Stearns) out of business, Goldman is a major toll collector on Washington’s red-ink railroad. Whitney labels it a “debt tsunami” that will lift Goldman’s fortunes going forward.

As Terry puts so simply and suscintlt  “In fact, to turn a famous phrase on its head, what’s bad for America is good for Goldman Sachs.” Read it all. It’s short.

Obama’s Slight Of Hand ….

… or pay no attention to the man behind the curtain, or which shell is the marble under, or … well you name the game.

I have been ranting for weeks now about the young President’s ability to convince people that he never said what he said (“Most of the jobs created will be in the private sector”, January ’09) … or has accomplished what he says he says (“The stimulus is working” July 09). It’s common in politics I have found. Understandable. Every President wants to put his best foot forward, even when the economy is crumbling around him. It’s worked well for him up to this point but time may finally have run out.

The questions you have to ask yourself, especially if you are one of the many who voted for Obama, is if the Obama administration tackled the economic recovery by misreading the problem, advocating for a solution that hasn’t born fruit, spending trillions of future debt in the process, and then trying to tell you the results are great when you can see with your own eyes they’re not, do you really trust the same group of people to get health care reform right by not just reforming or adjusting, but completely seizing the industry and dumping it into a government-run expansion of Medicare? Do you really trust them to create a new casino-like cap and tax and tax scam cleverly disguised as an energy bill?

At some point, shouldn’t we as Americans tell the President that he has to show to us he has some ability to comprehend the economy before letting him commandeer it?

It’s a magnificently well crafted and critically thought column by Duane Paterson

With unemployment ready to hit 10%, with the investment community reeling, and with businesses unsure of the direction the Federal government is headed in regard to taxation and regulation … not even a second stimulus (unless of course its market based) can guarantee anything more than a slowing or stopping of the economic decline.

Mr Paterson thinks time may have run out on the President’s slight of hand. I am not so sure, but it should have, of that I am certain.

The President’s agenda is not so much to rescue this economy or even make sure your neighbor has a job (unless of course he or she works for the government or is in one of the chosen unions). He will continue to try to make you think prosperity is just around the corner because this young President has bigger plans than the current state of the economy. He is looking for a fundamental change in American economics. One that is not centered around the individual and individual achievement but rather centered around the state, regulated by the state in every fashion from pay to purchase.

You can earn what you want but not too much. Drive what you want … but not too big. Work the way you want, as long as its one of our 21st century jobs. Live where you want, as long as its green. It’s a brave new world. Utopia!

This new American economy, Summers hopes, will be “more export-oriented” and “less consumption-oriented”; “more environmentally oriented” and “less energy-production-oriented”; “more bio- and software- and civil-engineering-oriented and less financial-engineering-oriented”; and, finally, “more middle-class-oriented” and “less oriented to income growth that is disproportionate towards a very small share of the population”. Unlike many other economists, Summers does not believe that lower growth is the inevitable price of this economic paradigm shift.

I agree exports should be a bigger priority. It’s been neglected for years. But when I read that our chief economic architect wants Americans to change their consumption habits, while the folks in Washington show no sign of changing theirs, or propose a redistribution of wealth that will somehow magically make the middle class wealthier (it won’t), I am frightened.

There seems to be less concern in the White House these days for the private sector “middle class”, the folks who lost and continue to lose their jobs, then there is for its socioeconomic re-engineering agenda. Call us collateral damage. The ends justify the means. Thus the constant slight of hand. If he can only keep it up … just a little longer.

When Joe Biden speaks… Update: Obama says stimulus doing fine

well, perhaps, he should have an official White House teleprompter of his own.

Remember Vice President Biden’s comments earlier this year about the swine flu?  He said, and, I suspect very honestly, that he would not let his family travel by plane given the prospect that they might catch the flu.  Within moments, the White House explained that the Vice President really didn’t mean what he said.  Air travel was safe, wash your hands, cover your mouth when you cough, etc.

Well, I discovered another Joe Biden moment recently, buried within an article in The Boston Globe.

More and more people are questioning the Stimulus package passed by Congress in February as it doesn’t seem to be stimulating anything.  And, remember, according to the administration’s position in February, the Stimulus had to be passed quickly, or else…

So, in response to the criticism, the Vice President (again, I suspect, very honestly) explained last weekend that one reason for the Stimulus’ apparent lack of “stimulation” was that “the White House might have misread the depth of the recession”.  So, taking a page from the Nancy Pelosi Damage Control Book, we quickly heard this from the White House:

Clarifying Biden’s statement, Obama said in an interview this week [from Russia, no less] that during the stimulus debate, the administration had incomplete information of how bad the recession was. (emphasis supplied)

Two things come to mind.  Why is it that the Vice President never really means what he says until the White House “clarifies” what he meant when he said whatever it was he said?  And, why did we have to hurry to pass this Stimulus legislation, Mr. President, when, by your own admission, you had incomplete information?

I doubt we’ll see anyone in the media ask either question.

Update (Jim): Here’s the video:


Update 2 (Jim): Remember when he told us he had to rush out the stimulus package? Remember when he said it would save or create THREE million jobs over two years? Remember? Hmmmmm? Do ya? Well, he’s got just haulin’ to do. From Bloomberg (Emphasis mine):

In asking for public patience, Obama said the recovery act “wasn’t designed to restore the economy to full health on its own, but to provide the boost necessary to stop the free fall.”

Spur Demand

Enacted in February, the bill “was designed to spur demand and get people spending again and cushion those who had borne the brunt of the crisis,” the president said.

Obama said the measure “was not designed to work in four months — it was designed to work over two years.”

Ok … just to refresh your memory … before its flushed down the memory hole that is. The relevant portion begins at 2:00


Vote Democrat: It could have been worse

Too much really. As Glenn Reynolds points out at Instapundit, “With a slogan like that, how could they lose?” Indeed. Read more