credit crunch

Unemployment Rises to 26-Year High of 9.8%; Obama’s Policies Worsen Unemployment and Credit Crunch

by Hans Bader on October 5, 2009

in Bailout Watch, Deregulate to Stimulate, Economy, Employment, International, Labor, Politics as Usual, Stimulus to Nowhere, Trade

Unemployment has risen to 9.8 percent, a 26-year high.

That’s much higher than the Obama administration predicted unemployment would rise, if Congress had refused to pass his $800 billion stimulus package.  The administration claimed unemployment would rise to 8 percent without a stimulus.

Small businesses are finding it more difficult than ever to borrow badly needed money to meet their payrolls.  New financial regulations backed by the administration are contributing to a terrible credit crunch.  Meanwhile, the wealthy Wall Street investment bank Goldman Sachs, perhaps the biggest donor to liberal politicians, received billions of dollars it didn’t even need from the taxpayers’ $170 billion bailout of AIG.

The administration claimed that the stimulus package would deliver a short-run “jolt” that would quickly lift the economy, but unemployment rose very rapidly after its passage, and the package has actually destroyed thousands of jobs in America’s export sector.

Countries that refused to adopt big stimulus packages have fared better than those that imitated Obama. And the biggest-spending countries have suffered worst in the recession.

President Obama claimed the stimulus was needed to prevent an “irreversible decline,” but the Congressional Budget Office said it would actually shrink the economy “in the long run.”  It subsidizes lots of waste, corruption, and welfare, and repeals welfare reform.   It also contains racial set-asides (which are costly) and prevailing-wage rules (which will waste $17 billion).

The international mark-to-market contagion — sending global markets in a downward

by John Berlau on October 10, 2008 · 3 comments

in Bailout Watch, Politics as Usual, Precaution & Risk

Bailouts. Global interest rate cuts. More bailouts. Global government liquidity injections into banks. Direct government buying of commercial paper. And even more types of bailouts.

But nothing seems to stop the downward spiral of equity and credit markets throughout the world that have been accelerating this week. But there is one intervention the governments of the world haven’t tried yet: Standing up to the high priests of the accounting profession and suspending requirements of mark-to-market accounting for illiquid assets.

Markets are more connected across the world than ever before, but, more importantly, so are accounting rules. Over the past decade or so the U.S. Financial Accounting Standards Board (FASB) and the European International Accounting Standards Board (IASB) — private professional organizations that basically have a monopoly on setting the accounting rules that government agencies adopt for regulations on the private sector — have worked on a project of “convergence” of accounting standards. This wouldn’t be so bad if it just amounted to mutual recognition of each others’ rules. But it often has meant mandating a one-size-fits-all-rule throughout the world. And this has meant a disaster with the flawed mark-to-market rule.

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