Friday, December 04, 2009

The Unemployment Numbers Might Be A Good Sign-- But Sheila Bair Actually Wants to Take Some REAL Action


Sheila Bair: Time for action!

The Administration was jumping up and down holding it's wiener this morning when it was announced that unemployment is now "only" 10%, down from 10.2% (11,000 job losses for the month). The great turnaround has come! Maybe. Or maybe there are a just lots more "discouraged workers" who have stopped looking for jobs. Unfortunately, it is also the excuse the Administration is using to refrain from making much needed investments in job creation and the second phase of a Stimulus bill. Bernanke, fighting for his job in an increasingly contentious confirmation battle, actually seems to be making a play for Republican Senate votes by advocating cuts in Social Security and healthcare benefits.

After the data was released economist Dean Baker penned a good look at this, Unemployment Edges Downward, as Employment Loss Slows that goes through all the facts and figures and closes with his assessment:
On the whole, this report is much better news than we have seen since the decline accelerated last September. Still, there is no evidence in this report of anything resembling a robust recovery. It is likely that the economy will continue to shed jobs for at least another month or two and it may be several more months before job growth is fast enough to keep the unemployment rate from rising. And, there are many risks that could make this picture less pleasant.

Christina Romer, chair of the White House's Council of Economic Advisors isn't emphasizing that "could make this picture less pleasant." Her own assessment is that the data is that "the most hopeful sign yet that the stabilization of financial markets and the recovery in economic growth may be leading to improvements in the labor market."

Others who share the fear that we do that this could be used as a wrong-headed excuse to dial back on aggressive ameliorative efforts in the economic arena and that nothing more needs to be done because "the market" has it all under control now, are no less concerned this month than they were last month. The AFL-CIO has a more realistic outlook on this by Tula Connell who agrees with the Economic Policy Institute's Director, Larry Mishel who says he would "not interpret this decline as the beginning of an ongoing reversal in the unemployment rate. In fact, the jobs situation likely will worsen for up to the next 12 months, he says. One reason: There is a backlog of people who dropped out of labor force who will come back in-- up to 3 million jobless workers. And when they start looking for jobs again unemployment will rise."

Tula's point-- in line with what Krugman has been saying as well-- is that if we don't aggressively spend money now to address the real unemployment problem, the deficit and the nation's economy will be in far worse shape in a very short time. Remember, we're in the midst of the deepest payroll downturn since the Great Depression and that even the jobs that are being created aren't really the kinds of good jobs that can sustain middle class lifestyles.

Eric Massa (D-NY), took time out fighting against Obama's Afghanistan escalation plans to address the release of the unemployment numbers. His, like many in Congress, was a measured, mildly optimistic point of view. "I am cautiously optimistic, but I think we are headed in the right direction. The 111th Congress has worked very hard to create jobs and improve our economy which was in freefall when we took office. This is a lot like being given the controls of an airplane while it's in a full nosedive-- it's been discouraging to have lost altitude during the last year, but top economists are saying that we're almost leveled off and ready to start climbing again. I never read too much into individual month-to-month reports like this, but we are working very hard to create an improved economic environment and I am hopeful that we will see improved numbers in the New Year. I remain fully committed to making this happen to the best of my ability."

Much better news than this data was an announcement yesterday from Sheila Bair, the Chair of the FDIC (one of Bush's only good appointments ever to anything), that they're looking into the idea of reducing the principal on as much as $45 billion in mortgages the FDIC has acquired from failed banks. The earliest opponent of Bush's Wall Street bailout, she's lost patience with the Wall Street-centric Treasury Department and their lame, timid and failed excuses to sweet-talk (or "embarrass") the banksters into modifying distressed mortgages. Remember, the FDIC has taken over something like 120 failed banks. She wants to cut the principle of all those mortgages they inherited. She should; in fact, that's what Obama's team should have done six months ago.

(If you enjoyed that clip, you can watch the whole presentation here.)

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At 7:23 PM, Anonymous Anonymous said...

I love how its good news less people have work than a month ago. Only in America!


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