Feeds:
Posts
Comments

Posts Tagged ‘Financial Crisis’

9 Signs That We May Be Living Through Another Depression

Three in 10 Americans say we’re living through another depression — are they right?
AlterNet / By Joshua Holland
June 1, 2011  |

A poll released this week found that a majority of Americans are experiencing so much anxiety over the state of the economy that they’re losing sleep, experiencing relationship issues and getting angry. Two-thirds of those polled by Newsweek and the Daily Beast even said they were “angry at God.” Pollster Douglas Schoen concluded that “reality is beginning to break down Americans’ normally optimistic attitude.”

Another poll found that three in 10 Americans believe we’re living through a depression rather than a recession.

Yet the reality that’s breaking down Americans’ sunny optimism is obscured by reports that the economy is in recovery, and has been since June 2009. That’s a technical determination that does absolutely nothing for tens of millions of people living through the worst economic pain since the 1930s.

A little-discussed aspect of this downturn is that many Americans never fully recovered from the last one before the crash hit. In 2000, before the dot-com bust, a person right in the middle of the economic pack took home $27,833 inflation-adjusted dollars, and since then, that same person has only earned more in one year – 2006 (Excel). By 2008, the median income was a thousand bucks less than it had been in 2000, and then in 2009 and 2010 we saw the largest two-year drop in wages and benefits since 1962-’63.

Depressions don’t always unfold in the same way. The bleak period following the 1929 stock market crash has come to be known as the Great Depression, but it was not the first brutal downturn to be characterized as such. Between 1873 and 1896, the big industrial powers went through what was then called the Great Depression, and has since become known as the Long Depression.

The Long Depression never reached the grinding severity of the 1930s downturn; in fact, it was actually two severe recessions that bookended a period of rapid growth in the 1880s. Today, having “lost” much of the past decade, and with the economy looking like it may well head into a second period of recession – or at best a gradual, drawn-out road to economic health – historians may well come to view this period as another kind of Long Depression.

Consider how bleak the 2000s were relative to past decades. According to the Economist, “In the years between 1940 and 1999 the number of Americans employed outside farming grew by an average of 27 percent each decade,” but the 2000s saw the employment rate actually fall by around 1 percent.

MORE HERE

Read Full Post »

Financial System Riskier, Next Bailout Will Be Costlier, S&P Says

Huff Post- Shahien Nasiripour

First Posted: 04/19/11 05:26 PM ET Updated: 04/19/11 06:00 PM ET

The financial system poses an even greater risk to taxpayers than before the crisis, according to analysts at Standard & Poor’s. The next rescue could be about a trillion dollars costlier, the credit rating agency warned.

S&P put policymakers on notice, saying there’s “at least a one-in-three” chance that the U.S. government may lose its coveted AAA credit rating. Various risks could lead the agency to downgrade the Treasury’s credit worthiness, including policymakers’ penchant for rescuing bankers and traders from their failures.

“The potential for further extraordinary official assistance to large players in the U.S. financial sector poses a negative risk to the government’s credit rating,” S&P said in its Monday report.

But, the agency’s analysts warned, “we believe the risks from the U.S. financial sector are higher than we considered them to be before 2008.”

Because of the increased risk, S&P forecasts the potential initial cost to taxpayers of the next crisis cleanup to approach 34 percent of the nation’s annual economic output, or gross domestic product. In 2007, the agency’s analysts estimated it could cost 26 percent of GDP.

Last year, U.S. output neared $14.7 trillion, according to the Commerce Department. By S&P’s estimate, that means taxpayers could be hit with $5 trillion in costs in the event of another financial collapse.

Experts said that while the cost estimate seems unusually high, there’s little dispute that when the next crisis hits, it will not be anticipated — and it will likely hurt the economy more than the last financial crisis.

MORE HERE

Read Full Post »

Bernanke Calls On Congress To Help The Economy — For At Least The Fourth Time In Five Months

Huff Post

William Alden & Shahien Nasiripour

First Posted: 11-20-10 09:01 AM   |   Updated: 11-20-10 01:55 PM

NEW YORK — For at least the fourth time since June, Federal Reserve Chairman Ben Bernanke publicly urged Congress to combat the lackluster recovery by increasing government spending, a recommendation that has gone unheeded by lawmakers.

In a speech at a conference of central bankers in Frankfurt, Bernanke once again said the Fed cannot save the economy on its own. The Fed’s recent move to add to its ballooning balance sheet by committing to buy up to $600 billion of government debt faces “limits” to its effectiveness, Bernanke said. The rest of the government, the chairman added, could aid the Fed’s efforts by hammering out a plan for stimulative spending. The right kind of spending, he noted, could help reduce the budget deficit over the long-term by first boosting economic growth.

“[I]n general terms, a fiscal program that combines near-term measures to enhance growth with strong, confidence-inducing steps to reduce longer-term structural deficits would be an important complement to the policies of the Federal Reserve,” Bernanke said Friday, according to his written remarks.

The fiscal policy recommendation came directly after Bernanke acknowledged it isn’t his job to make such policy proposals. “The Federal Reserve is nonpartisan and does not make recommendations regarding specific tax and spending programs,” the chairman noted.

The official parameters of his job, though, have not stopped Bernanke from engaging in backseat driving. At least four times since June — on June 9, July 21, July 22 and now Friday — he has urged lawmakers to increase spending to jumpstart the lagging economy.

But policy makers have proved to be unable to agree upon such a plan — or even propose one that’s viable. The rest of the nation has suffered as a result, as near-10 percent unemployment continues to hobble the economy. Democrats recently lost control of the House of Representatives, and a substantial part of their majority in the Senate. Voters said the dismal economy was their top concern.

To combat an ineffectual Washington establishment, the Fed has taken matters into its own hands. By buying up to $600 billion of government debt, the central bank hopes to increase the flow of money through the economy. Critics of the program, which is intended to lower interest rates and encourage corporate spending, have said the cheap money will not convince businesses to create jobs.

MORE HERE

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

As stimulus funds near end, new pain will begin

by Ronald J. Hansen – Nov. 21, 2010 12:00 AM
The Arizona Republic

If people didn’t like the federal stimulus, they may hate when it’s gone.

As the year winds down, the $862 billion plan to rescue the economy from the depths of the recession enters a new phase in which tax cuts and credits expire and countless hard-to-replace construction projects will end. Thousands of workers in some states could lose their jobs.

The political power shift brought about by the midterm elections has likely settled any lingering doubts that the stimulus will largely run out, as scheduled, in the coming months. A smaller package of federal aid that passed in August, primarily for teachers, also will rapidly disappear. With the new Republican majority in the House next year, there will be little support for similar additional measures.

Worries about the national debt and a negative view of the stimulus augur a new period when more businesses must survive on their own and governments must tighten their belts. The austerity will be widely felt.

Nearly every worker in the nation will see slightly slimmer paychecks as $400 individual tax cuts are slated to end this year.

Tax credits, such as those offering incentives for energy-efficiency improvements for homeowners, also are set to lapse at year’s end. The earned-income tax credit, which rewards the working poor, will no longer include funding for those with a third child.

MORE HERE

Read Full Post »

Arianna Huffington  | HuffPost | April 7, 2010 07:42 PM

The cliché tells us that you can’t judge a book by its cover. Agreed. But sometimes you can tell a lot about a book by the blurbs on its cover (and just inside the cover).

Such is the case with Simon Johnson and James Kwak’s 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown, this month’s HuffPost Book Club pick. You know a book is onto something when, even in these politically polarized times, and dealing with a hot button issue like financial reform, it features side-by-side praise from both Jim Bunning and Alan Grayson. Yes, that Jim Bunning, who says that the book “makes it clear why ending ‘too big to fail’ and reforming the institutions that perpetuate it… are essential for our nation’s future economic prosperity and, more fundamentally, our democratic system.” Clearly, the need to reform our out-of-control financial system is not a right vs. left issue. (Full disclosure: I also did a blurb for the book).

The book is also incredibly timely, with the Senate gearing up for a floor debate on Sen. Dodd’s financial reform bill when it returns from Easter break. While offering an in-depth explanation of the factors that led to the financial crisis — a crisis Johnson and Kwak prove beyond any doubt is not over — 13 Bankers has the immediacy and of-the-moment feel of a blog post, the sense that this is happening now.

Original Article

Read Full Post »

Cash from organized crime ‘rescued’ banks during crisis: UN official

By Raw Story
Saturday, December 12th, 2009 — 8:29 pm

The vast majority of an estimated $352 billion in proceeds of organized crime, mostly from the drug trade, was funneled through the global banking system during the financial crisis of the past two years, and in some cases, the money rescued banks from collapse, says the head of the UN Office on Drugs and Crime.

Antonio Maria Costa told the UK Observer that intelligence agencies and prosecutors alerted him 18 months ago to evidence that drug money was being “absorbed into the financial system.”

“In many instances, the money from drugs was the only liquid investment capital,” Costa said. “In the second half of 2008, liquidity was the banking system’s main problem and hence liquid capital became an important factor.”

MORE HERE

Read Full Post »

Stanford Indicted On Criminal Charges

TPM Muckraker- By Zachary Roth – June 19, 2009, 1:12PM

The bell has finally tolled for Allen Stanford.

Federal prosecutors today filed a criminal indictment against the billionaire Texan, as well as three other Stanford Financial Group executives and the former head of the Antiguan bank regulatory agency, charging them with helping to orchestrate a $7 billion Ponzi scheme.

The cricket-loving 21st century Gatsby was arrested in Virginia last night, and is scheduled to make an initial appearance today in Richmond, according to a Justice Department press release.

DOJ adds:

According to the indictment, Stanford and his co-defendants engaged in a scheme to defraud investors who purchased approximately $7 billion in certificates of deposit administered by Stanford International Bank Ltd. (SIBL), an offshore bank controlled by Stanford and located on the island of Antigua. Stanford and his co-defendants allegedly misused and misappropriated most of those investor assets, including diverting more than $1.6 billion into undisclosed personal loans to Stanford himself, while misrepresenting to investors SIBL’s financial condition, its investment strategy and the extent of its regulatory oversight by Antiguan authorities.

The SEC had previously filed civil charges against Stanford. Not indicted is SFG number 2 Jim Davis, suggesting that his cooperation with the government, reported previously, was extensive.

Read Full Post »

Cuomo: Most AIG Bonus Money Went To Foreigners

Nine of the top ten AIG bonus recipients have given back the payouts, according to Andrew Cuomo, the New York Attorney General who is probing the issue.

Cuomo also said, on a conference call this afternoon, that 15 of the top 20 bonus recipients from the firm’s financial products unit, which is at the center of the bonus furor after causing the company’s collapse last year, have returned their awards.

But he added something else that may wind up being less exculpatory for AIG: 47 percent of the $165 million in retention bonuses was awarded to Americans, he said, declaring that he expected to get that money back. That means 53 percent — around $87 million — of taxpayer money went to foreigners, and is unlikely to be recouped.

Cuomo said he didn’t think it would be in the public interest to release the names of those who gave back the bonuses, and that his office is still assessing the risks of releasing any names at all.

Read Full Post »

Older Posts »

%d bloggers like this: