Last Call

It's rough to see the area you grew up in clobbered by unemployment.

The jobless rate in Hickory-Lenoir-Morganton jumped to 15.7 percent, a 9.3 percentage point increase in the area located about 60 miles northwest of Charlotte. About one-third of all jobs in Hickory are at manufacturing plants, said Scott Millar, director of the Catawba County Economic Development Corp., which recruits new businesses.

"I think part of the issue we're dealing with is pure math as the nation changes into a services oriented economy," Millar said.

The local layoffs accelerated at furniture makers and textile producers that have been shifting work to low-cost overseas producers for a decade, and at auto suppliers battered by slumping car sales. Even the fiber-optic cable manufacturers that once seemed to be the region's hope are suffering from a lack of orders. Corning Cable Systems in February said it would eliminate about 200 jobs as it shut an optical assembly plant in Hickory.

You pretty much figure the U-6 total for the area is well above 20% and approaching 25%, which would be Depression-era numbers. A nearly 10% jump in just plain reported unemployment in 12 months is devastating, but this part of NC has arguably the last broad-based manufacturing plants in the country. Many different types of plants made it a solid town to grow up in during the 70's and 80's. In the 90's, when the cable manufacturing plants and the dot-com boom came, the area really took off. We got a minor league baseball team, a new science and arts center and a new library, made some national headlines as a new center of manufacturing in the Clinton years.

Then the textile plants closed, the GE generator plant moved to Mexico, the cable plants got hurt badly when the dot-com bubble crashed and with the housing markets and the auto markets dead and gone, the last holdovers of auto parts makers and furniture plants are dying too. I lived there as recently as three years ago. Boom times even then as new housing developments, lots of work, low unemployment, international companies like Corning Cable and Getrag Gears and all the furniture plants were filling those shiny new homes across America that people couldn't afford with furniture they couldn't afford either. Those places needed IT work done, and I was good at it. Now? Unemployment has nearly tripled in one year. I guess in hindsight when the small business I worked for got bought out and I was laid off, I was lucky. I got a head start here in the Cincy area.

Hickory is going to be a very, very different place another 12 months from now. I wouldn't be surprised if the U-3 rate hit 20% before the end of the year, meaning the U-6 would be pushing 30%. Unemployment on that scale will lead to mass emigration out to other areas of the country, it's simply unsustainable. People will just move away and look for work elsewhere. That will almost certainly lead to another wave of rising unemployment as commercial and service jobs are cut to meet the new lower demand across the board. Lower property tax revenues, fewer services, abandoned property all over the place.

It's ripe for a ghost town scenario. Things will be a lot worse soon. Of course, it's a lot worse everywhere.

And it'll be a long, long time before things get better.

Global No Confidence Vote: Banksters Rule!

Two stories today highlight the fact that while Obama is doing a pretty good job running the country, he's still letting the banksters run the damn country and will continue to do so. First, we see the reason the Dow was up 150+ points today: anticipation of tomorrow's announced rules changes in mark-to-market accounting.

It's unclear exactly what changes the FASB plans to make on Thursday, but none is expected to be radical enough to have an immediate impact on stocks. Still, most investment experts say bank stocks should be avoided until the full impact can be weighed.

Advocates of mark-to-market rules say they provide a clearer picture of troubled assets' value because they are priced according to their present worth in the marketplace. The alternative, known as mark-to-model, allows banks to price the assets at a model determined by the institution and at times not easily in view of the investing public.

That's fancy MBA talk for "We're lying and we made this too complex for you peons to figure out on purpose, so take our word for it."

With the rise of derivatives used to package now-distressed mortgages, mark-to-market opponents say the rules need to be changed because there is no fair market value for the bad assets. The current bid offer in the marketplace is at a level that would wipe out some banks if they had to sell at those prices, some analysts say.

So, the banksters want a mulligan. They want their assets to be what their models predict, and not what they are actually selling for right now in the marketplace. If they have to sell at these near worthless prices (and they have to sell at these worthless prices because the toxic assets really are nearly worthless) they they go under.

This is what I mean by America's major banks are insolvent. They are holding pieces of paper that are worth 20 cents on the dollar when the banksters say they are worth 100. But we can't call the banks out on them because they will collapse the entire global financial system if they are forced to go under.

Which means Obama's boys are letting the banksters lie about what these assets are worth. And how are these banks Too Big To Fail? Why, the Gramm-Leach-Bliley Act, which allowed these huge megabanks to form into ravenous cancers on our economy. So what's Obama's response to this regulatory nightmare?

Why, hiring the guys who created it in the first place! Larry Summers, Robert Rubin, Tim Geithner, and now we learn the nominee for Geithner's second-in-command is the guy who did the legwork on the GLB Act:

Tim Geithner’s new nominee for number two at the Treasury Department, Neal Wolin, played a key role in drafting legislation in the late 1990s deregulating the banking system, a former Treasury Department official confirms to us.

The law that Wolin helped draft has been blamed by some critics, many of them Democrats, for easing up regulatory pressure on huge financial institutions, tangentially helping create today’s mess — and his role drafting it could come under questioning at his upcoming confirmation hearings.

Our reporter, Ryan Derousseau, came across Wolin’s role in researching our big profile of Wolin at WhoRunsGov.com. Stuart Eizenstat, a deputy Treasury secretary under Bill Clinton, confirmed that as Treasury’s general counsel at the time, Wolin “provided the technical and legal drafting” for the Gramm-Leach-Bliley Act.

As Ryan writes, the Act hasn’t been directly blamed for today’s meltdown. But it did pave the way for the birth of huge financial companies like Citigroup that were deemed “too big to fail” when their mortgage bets went belly-up and the credit market evaporated. The government, of course, had to bail out these institutions with billions in taxpayer dollars.

Wolin — who was picked after several other candidates passed on the slot — did the legal work under then-Treasury Secretary Larry Summers, who is now Obama’s head of the National Economic Council. The difference here is that Summers’ post, unlike Wolin’s, is a non-confirmable one, so he hasn’t been pressed publicly on Gramm-Leach-Bliley. The question now is whether Wolin will come under sharp questioning over his role in creating it.

Failing upwards is apparently not just a prerequisite to be in the Bush administration, but one for the Obama administration too. We're already seeing the influence of the deregulators on the banksters and in a major way: virtually no accountability and despite all of Obama's tough talk, the reality is the banksters will continue to get free trillions until we inflate our way into a banana republic. These are the same guys that pitched the notions that the Depression-era protections on Too Big To Fail were antiquated nonsense, and that housing values would go up forever. Now they're calling the shots on Obama's economic policy. Why should we expect anything different?

At least the Republicans are somewhat more honest about their plan to eradicate the American middle class. Obama either doesn't realize what's going on, or has been talked into it by the same guys that sold it to Clinton on the way out the door.

Either way, it rewards failure with trillions...our trillions.

The foxes aren't in charge of just the henhouse. The foxes own chicken and egg distribution, production, sales, marketing, and logistics, every step of the way. That money they're giving away to themselves isn't backed up by gold, it's backed up by Helicopter Ben's printing press.

We're in for a hell of a ride down the tracks. One way. Your standard of living will go with it.

Be prepared.

On The Wrong Side Again

A new Quinnipiac University poll shows a staggering majority of Americans -- eighty-one percent -- favor limiting the pay of executives whose companies take bailout money. Some other pretty amazing results:

Only 10 percent of American voters say executives who received bonuses from companies helped by the government should keep the bonuses. Other choices are:

• 22 percent want the government to ask the executives to voluntarily give the money back;
• 30 percent want the government to cut off funding until the bonuses are repaid;
• 16 percent say tax the bonuses at 90 percent;
• 2 percent say sue the executives to get the money back;
• 13 percent say launch criminal investigations to get the money back.

Nice. And there's this on Obama's budget:

American voters approve 58 - 31 percent of the job President Barack Obama is doing, compared to 59 - 25 percent in a March 4 Quinnipiac University poll. Support is strongest, 69 - 26 percent, among voters 18 to 29 years old and declines with age. Voters approve 55 - 37 percent of the way President Obama is handling the economy and approve 56 - 25 percent of the way he is handling foreign policy.

Voters disapprove 59 - 30 percent of the job Republicans in Congress are doing and disapprove 49 - 40 percent of the job Democrats in Congress are doing.

Obama is trying to do too much, too soon, 35 percent of voters say, but 59 percent say the issues need swift action. Even voters over 65 say 46 - 44 percent that swift action is needed.

Voters say 47 - 28 percent, with 21 percent undecided, that Obama's call for higher taxes on those making more than $250,000 a year is good for the economy. Voters in that higher income bracket disagree 41 - 29 percent, with 27 percent undecided.

By a 50 - 43 percent margin, voters oppose the plan to spend $1 trillion to buy up bad loans from banks, but voters split 37 - 35 percent, with 28 percent undecided, in their approval of the job Treasury Secretary Timothy Geithner is doing.

So he's not doing too much, they support his budget, and the only thing the voters don't like is the Geithner Plan.

Also, they think Republicans are on the wrong side of America yet again.

The Fools Of April

So, the eagerly anticipated House Republican budget was released today, and as expected it's completely insane bordering on disastrous as Steve Benen reports:

To be sure, the roll-out for the alternative budget has been a rather humiliating fiasco, as evidenced by the Republican decision to unveil a budget with no numbers in it. And we won't really be able to scrutinize the proposal until the caucus decides to release some, you know, data.

Today, however, Ryan sketches out at least some additional thoughts about the GOP vision.

Our plan halts the borrow-and-spend philosophy that brought about today's economic problems, and puts a stop to heaping ever-growing debt on future generations -- and it does so by controlling spending, not by raising taxes.

In reality, the "borrow-and-spend philosophy" did not create the crisis, so Ryan's prescription is automatically based on a misdiagnosis. But even if we put that aside, the alternative budget reflects a political party that embraced a breathtakingly radical worldview.

In a nutshell, Ryan proposes a massive tax cut, totaling, by some estimates, around $4 trillion -- on top of the Bush/Cheney cuts, which would remain place. The Republicans plan would voucherize Medicare, and, best of all, impose a five-year spending freeze on non-defense discretionary spending (which is, of course, completely insane).

Are you serious? A FIVE YEAR SPENDING FREEZE that would eliminate the stimulus on top of a FOUR TRILLION DOLLAR TAX CUT FOR THE RICH? And turning Medicare into a PRIVATIZED VOUCHER PROGRAM? Not only would that actually increase the deficit over and above Obama's plan, it would completely destroy the economy, Herbert Hoover style. It's ridiculous both on its face and in the deeper analysis.

No sane, educated human being can look at this plan and come to any reasonable conclusion other than the GOP is trying to completely eradicate the American worker and finish the transfer of all wealth in the country to Wall Street oligarchs. This is the cruelest April Fool's joke I've seen in a long, long time. It wouldn't just burden the middle class -- it would eliminate it through inflation, removal of social safety nets, and a crushing tax burden on those who can afford taxes the least.

The Republican party simply cannot be allowed back in power on a national scale ever again. Make $300,000 a year? You get $20,000 a year in tax savings! Make $30,000 a year? You get a 20-pound sledgehammer in the genitals, plus the knowledge that inflation will probably cut a good 20% off the value of your $30,000 in five years! Gotta love the GOP!

TAXEN CUTTEN UBER ALLES!

Jobapalooza

ADP calling March job cuts at 742k.

The private sector lost more than 700,000 jobs in March, according to payroll-processing firm Automatic Data Processing, but a separate report released Wednesday suggested that the pace of job cuts may be slowing.

The ADP report, which is based on payroll data from 500,000 U.S. businesses, said the private sector eliminated 742,000 jobs on a seasonally adjusted basis in March. That up 36,000 from last month's revised figure of 706,000.

Economists surveyed by Briefing.com were expecting a loss of 663,000 private sector jobs.

Separately, Challenger, Gray & Christmas Inc. reported that the number of planned job cuts announced in March fell for the second straight month.

Job cut announcements by U.S. employers totaled 150,411 in March, a decline of 19.3% from February's 186,350 cuts, which was down from a seven-year high in January, according to Challenger.

Just means they are nickel and diming employees to death with 50,000 companies laying off 10 people, not 10 companies laying off 50,000 at a pop, guys. Wise up.

Something Of A Downer

Via Kroog, A Chart!


See that hiccup in 1931 (about 16 months into the Great Depression) where it looked like for a couple of months things were going to turn around? Now see the two years of continued depressionary disaster after that hiccup in 1931?

We're about 16 months into this economic downturn now.

Here endeth the lesson.

[UPDATE] Keep dreaming about that V shaped recovery in 2009, says Roubini.

Series Of Fools

I'm still shaking my head at this whole Sen. Ted Stevens story this morning. It seems like a cruel joke, but unless this is one hell of a prank by Eric Holder, the practical upshot is that former Senator Toobs is a free man.

According to Justice Department officials, U.S. Attorney General Eric Holder has decided to drop the case against Stevens rather than continue to defend the conviction in the face of persistent problems stemming from the actions of prosecutors.

The judge in the Stevens case has repeatedly delayed sentencing and criticized trial prosecutors for what he's called prosecutorial misconduct. At one point, prosecutors were held in contempt. Things got so bad that the Justice Department finally replaced the trial team, including top-ranking officials in the office of public integrity. That's the department's section charged with prosecuting public corruption cases.

With more ugly hearings expected, Holder is said to have decided late Tuesday to pull the plug. Stevens' lawyers are expected to be informed Wednesday morning that the department will dismiss the indictment against the former senator.

Holder's decision is said to be based on Stevens age — the senator is 84 — and because Stevens is no longer in the Senate. Perhaps most importantly, Justice Department officials say Holder wants to send a message to prosecutors throughout the department that actions he regards as misconduct will not be tolerated.

On one hand, the Mukasey/Bush prosecution of Stevens was riddled with multiple incidents of prosecutorial misconduct. On the other hand, Stevens was still easily convicted and clearly guilty in what amounted to an open and shut case against him.

So, Stevens walks. Either way, he lost the election. Holder has followed the law, and done so ethically. Perhaps this was the outcome all along: Stevens is out of politics, is 84, and lost his seat to a Democrat...still a steep price.

But for a man so dedicated to rule of law and doing the right thing as required by that law, he still has no intention of prosecuting Bush officials for breaking the Geneva Conventions, something clearly mandated by the law itself. Spain continues to do Holder's work for him.

Holder's gesture of integrity and probity rings terribly hollow as a result.

StupidiNews, Fools Of April Edition

• At the G-20 Summit, President Obama and Brit PM Gordon Brown want tough bank regs, but France's Sarkozy and Germany's Merkel may get the last laugh.
• It's not a joke, AG Eric Holder is dropping all charges against convicted former Sen. Ted Stevens.
• Scientists are looking to make an artificial nose to smell not laughter but fear at airports.
• Honda workers don't know whether to laugh or cry with a two-week May furlough on the way.
• Sony plays gotcha with gamers by dropping the price...on the Playstation 2, not the PS3.