Posted on 11/15/2008 12:39:15 PM PST by BGHater
More than 10 million people are jobless in America, an increase of almost 3 million in 2008. Unemployment is expected to reach 8 percent by year's end. One of the great symbols of American power in peace and war -- General Motors -- is on the verge of bankruptcy. With its myriad subcontractors, GM keeps 2.5 million people employed. But automakers, losing $2 billion to $3 billion a month, and their congressional supporters pleaded for a slice of Treasury's $700 billion rescue package. President-elect Obama favors supporting the auto industry with a greater economic stimulus. In a nutshell, GM's assembly line workers cost the company $77 an hour (including all benefits); Toyota, in its U.S. plants, does the same job more efficiently at $46 an hour. GM, Ford and Chrysler will run out of cash by next summer.
More than 1 million homes have been repossessed from gullible people who were conned by predatory swindlers. Unable to meet their 401(k) obligations, companies are pleading for relief vis-a-vis their employees and are warning they are under no legal obligation to match their staffs' retirement contributions.
The average American's retirement savings nosedived 40 percent during the current recession. And those who invested in the stock market, mostly in mutual funds, have lost, in many cases, 50 percent of their retirement fund. About $1 trillion in shareholder wealth was obliterated in three trading days this week.
The U.S. Treasury's $700 billion rescue plan, dubbed the Troubled Asset Relief Program, doesn't seem to be gaining traction; $250 billion of this taxpayers' money was funneled into insolvent banks to loosen credit, with little likelihood this will save the country from a severe recession. Some banks are hoarding these financial blood transfusions to fund acquisitions and/or as a cushion against further losses.
Treasury Secretary Hank Paulson, the crisis czar during the interregnum through Jan. 20 when President Obama is sworn in, scrapped his original plan to buy troubled assets and tried mouth-to-mouth instead. The Dow Jones was understandably puzzled by trial and error at the highest level. The original intent of Congress in October was to authorize Treasury to buy bad, subprime mortgage loans from bank balance sheets. Paulson admitted his trial-and-error plan was based on the "need to be able to change strategies as the facts change." Not exactly reassuring. And kind of hard to make investment decisions based on what number you expect as Paulson spins the roulette wheel one more time.
From 2004 to 2007 were not only years of two wars at $10 billion a month, but also the height of the lend-to-anyone credit boom when commercial banks doled out more than $600 billion a year in net new lending. Next year, half that amount is the estimate, which means loan portfolios may be flat, or at best plus 5 percent.
While U.S. taxpayers bailed out Wall Street's financial institutions to the tune of billions, and companies decided to freeze payrolls and forget about promised merit raises, executive compensation packages still seemed to be saying, "Let the good times roll," recorded again this year by George Clinton and the Red Hot Chili Peppers.
Ignoring voices urging restraint from the U.S. Congress, European parliaments, national governments and the European Union -- and despite laying off thousands of its own workers -- Wall Street still honored what compensation committees had approved for their executives before the crisis.
Bloomberg -- the gold standard for Wall Street reporting -- estimates the year-end bonus pool for the still standing Big Three investment banks at $20 billion through the third quarter.
At Merrill Lynch, which lost so many billions over five quarters that it sold itself to Bank of America, the bonus pool totals $6.7 billion, an average of $110,049 per employee, up a tad from 2007. At Goldman Sachs and Morgan Stanley, both still profitable, the average per employee is down slightly to $210,322 and $138,749 respectively. But Bloomberg's figures are misleading, as bonuses are not distributed among employees; they are earmarked for top traders and corporate officers.
The American International Group has received $152 billion from the government (i.e., taxpayers). But AIG still managed to squirrel away $503 million in deferred compensation to keep valuable employees from jumping ship.
Some of the Wall Street barons believe the current crisis is yet to wreak worldwide havoc -- and they see that coming next. John Thain, chairman and CEO of Merrill Lynch, warned that the global economy is entering a slowdown of epic proportions. Addressing the company's annual banking and financial services conference, Thain said: "Right now, the U.S. economy is contracting rapidly. We are looking at a period of global slowdown. This is not like 1987 or 1998 or 2001. The contraction now going on is bigger than that. We will, in fact, look back to the 1929 period to see the kind of slowdown we are seeing now."
But Thain was optimistic about the absorption of Merrill Lynch into Bank of America because it would give his wealth management advisers access "to a huge pool of wealthy individuals." Any fear the huge pool might soon shrink and that the fat cats might soon dwindle was not addressed.
Why not cut spending first. Then cut taxes. Then lift the excessively restrictive regulations on US industry that drive them to other countries (what, polluting is ok if it's in someone else’s backyard?), then severely restrict immigration, both legal and illegal, until we get ourselves balanced out.
We'll have plenty of jobs and our economy will boom. But that doesn't support your socialist agenda, does it.
bump for later read
“GM keeps 2.5 million people employed. But automakers, losing $2 billion to $3 billion a month, and their congressional supporters pleaded for a slice of Treasury’s $700 billion rescue package.
This is exactly the point. These people are destroying wealth, since the value of the cars they make is less than the cost of their labor and the capital used.
If they lost their jobs, they would be forced to get jobs that produce wealth instead.
For all those in DUmmyland who think that ending the war will payoff ALL the problems, it's my calculation that the forced lending (by the Democrats) to UN-QUALIFIED buyers for fear of attacks for "red-lining", costs about 5 times a year's worth of war spending.
Funny, the MSM doesn't want to talk about THAT.
We're gonna implement bailouts to the mis-managed businesses, along with paying the mortgages of those who don't even pay income taxes, AGAIN, on the backs of the EARNERS/WORKERS who will have MORE taxes taken from them, as if this will "stimulate" the economy.
Those who earn their own way are the consumers who BUY things, and every dollar taken in taxes is a dollar that won't be spent buying goods and/or services......WHAT A PLAN!
There would be plenty of jobs if you just round them up and ship them out. Crime would decrease at the same time.
shhhhhhhhhhhhhhhh, you know too much, they’ll be coming to get you soon!! /sarc...OR is it?
keep the fight going brother, eventually when the economy almost completely collapses under the dems zanadu theology of tax and spending our way out of it even the most zealot libs will have to concede they don’t know squat about how to make an economy heal and grow and a real fiscal conservative will finally be put in to clean up the absolute mess both the weak willed republicans of the last 12-16 years and all the dems have made by overspending at every opportunity.
Everyone who OWES more on their home than it is worth are walking away from them, but as soon as you drive off the car lot in a NEW CAR, your car is worth a ton less.....why aren’t people walking away from their car payments??? Oh....yeah....REPO MAN.....he’s lot harder to stave off than the sheriff.
The demonRATS are pushing bailouts for the “auto companies”, but their main interest is the United Auto Workers union. General Motors spent in excess of $70,000,000 for Viagra last year!GGGGRRRRR!!!!
Yeah; but waiting for their inevitable folly to run its course, there may not be much left of America to restore.
Mark
How’s that “new economy” working out for you? You know, the one where we don’t actually make or build anything anymore, but instead trade each other information and paper. The one where it’s so passe’ to actually manufacture tangible products because it’s so much cheaper to have it done offshore, and make the products you used to manufacture are no longer affordable to the people who used to make them, because they’re now employed (maybe) in some bottom feeder job.
How’s the new paradigm of “shareholder value” working out for you? Your shares aren’t worth the paper their printed on if they don’t actually have any value. You generate wealth by actually producing something vs. gambling with the market. Investors are more likely to go with you when they they see real product going out the door and you booking more sales.
The point I’m driving at is that when we stopped producing here, is when we started to slide downhill into irrelevance in the world. Want to see what we’ll be like in 50 years, look at England today.
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