Several events of the past week should be a wake-up call to the
Obama administration. Bottom line: the medicine isn't working. Stronger
stuff is needed. Consider:
The June Unemployment Numbers.
The green-shoots
school was expecting that the rising rate of unemployment would
continue to slow, as it did in May. But instead the number spiked back
up. A total of 467,000 jobs were lost. The unemployment rate rose to
9.5 percent, and OECD economists project that U.S. unemployment will
still be in double digits as late as 2011.
In recent months, a number of
reports by risk-analysts, insurers and intelligence agencies have
highlighted the possibility of political instability following in the
wake of the global economic turmoil. Most of the potential trouble
spots have been identified as being in poorer parts of the world. Last
week, Lloyds, for example, highlighted the risk of instability in Latin America.
O.K., Thursday's jobs report settles it. We're going to need a bigger stimulus. But does the president know that?
Let's do the math.
Since the recession began, the U.S. economy has lost 6 ½ million jobs - and as that grim employment report confirmed, it's continuing to lose jobs at a rapid pace. Once you take into account the 100,000-plus new jobs that we need each month just to keep up with a growing population, we're about 8 ½ million jobs in the hole.
President
Obama’s financial regulation proposal is doomed to fail.
Why?
Because
it was developed by people who don’t believe in regulation.
That’s
the take of William K. Black, a profess of law and economics at the University
of Missouri-Kansas City.
Black
believes that the only way to prevent future financial meltdowns is to have
in place a regulatory system and prosecutorial system developed by people with
a proven track record.
People
like Michael Patriarca. And William Black
How convenient for the judge and the media to paint Bernard Madoff as Mr. Evil, a uniquely venal blight on an otherwise responsible financial industry in which money is handled honestly and with transparency.
Madoff, sentenced Monday to 150 years in prison for bilking investors of billions, should be exhibit A in why the dark world of totally unregulated private money managers and hedge funds should be opened to the light of systematic government supervision.
Reuters is out with an authoritative story
on finalists being considered for the Financial Crisis Inquiry
Commission, the investigative body created by Congress to launch a
full-scale investigation of the financial crisis in the spirit of the
famous early 1930s hearings led by Ferdinand Pecora.
This is not only the worst global economic downturn of the post-World War II era; it is the first serious global downturn of the modern era of globalization. America's financial markets failed to do what they should have done--manage risk and allocate capital well--and these failures have had a major impact all over the world. Globalization, too, did not work the way it was supposed to. It helped spread the consequences of the failures of US financial markets around the world.
Last February, amid public anger over millions in bonuses at bailed-out insurance giant AIG,
our top national political leaders rushed to express their outrage -
and even took some steps to place a lid on over-the-top executive pay.
That lid has now come off.
It's not working. The Bush-Obama strategy of throwing trillions at the banks to solve the mortgage crisis is a huge bust.
