Mar 6 2009

Major Trends in Employment: College Graduates Now Facing Higher Unemployment, U-6 Rate now at 14.8%, and 4.3 million jobs lost during this Recession.

The BLS has put out its monthly employment report and the data is once again showing weakness in the U.S. employment market.  What we are now seeing is conformation that this will in fact be the deepest and longest recession since the Great Depression.  What is more troubling is in light of the multiple bailouts and market alchemy, not much seems to be boosting the confidence of average Americans.  This is probably due to the fact that employment is contracting and most families facing unemployment have a hard time dealing with anything else than trying to find an additional stream of income for their household.

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Mar 3 2009

Gas Prices going up and Bailing out a Hedge Fund: Why the Average American is Getting Bailout Fatigue. TALF a bailout for Corporations under guise of Lending for Average Americans.

Most Americans are having a challenging time digesting the bitter fruit of all the financial news coming from Wall Street and D.C.  It is hard for many to wrap their brains around what is going on.  In fact, today Ben Bernanke just stated that AIG was operating like a hedge fund.  Which of course begs the question if we are bailing out AIG, are we then bailing out a hedge fund and does that open the door to other beleaguered funds?  This would cause some major dislocation in our philosophy of what initially was to be a credit market bailout to help homeowners.  That was the initial seed and has morphed into a beast rivaling an economic Frankenstein.  Now, we are simply bailing out institutions that are hand selected by Wall Street and Washington D.C.

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Feb 28 2009

Is the California True Unemployment Rate at 18.47 Percent? The 10.1% Headline Number is the Highest Rate in Over a Quarter Century. 1.8 Million Workers Unemployed in one State. How Many are Partially Employed or Have Given up Looking for Work?

California is a microcosm of the entire United States.  The most populous state with a GDP of $1.8 trillion, much of what happens in California does spread throughout the country.  California’s employment situation is deteriorating at a breathtaking speed.  The latest employment numbers were released after the bell closed on Friday, which now seems to be a common trend when news is less than comforting for the soul.  The unemployment rate in California has now shot up to 10.1%, a number not seen since May of 1983.  And what is even more troubling is how quickly the rate is increasing in tandem with a $42 billion budget deficit that will, at least for 2 years, hamper the state’s growth.

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Feb 26 2009

American Consumers Cutting up that Final Credit Card: The End of a 30 Year Consumption Era and the Nervous Breakdown of the Spending Psychosis.

Imagine sitting in a messy room.  Chopped plastic all around you as you sit there clasping a set of red scissors.  Only one more credit card sits in the middle of the room starring back at you.  Can I do it you ask?  Is it possible to go forward in life with no credit cards?  As you make the final cut, a new era has begun.  The American consumer is now psychologically maxed out.

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Feb 24 2009

American International Group: AIG Founded in Shanghai China in 1919. Who are we Bailing out Here?

American International Group, AIG was founded in 1919 by Cornelius Starr who established the agency in Shanghai, China.  The business took off and was very successful in Asia.  Later, Starr expanded the company to Latin America, Europe, and the Middle East.  It is fascinating how many in the media are portraying AIG as some homegrown company when in fact, it didn’t start branching out seriously into the U.S. until 1962, nearly 43 years later.  I just find it fascinating how the media can beat on the automakers, American companies for the most part from day one while not batting an eye to AIG requesting an additional $60 billion lifeline.  The U.S. Treasury and Federal Reserve only represent the U.S. taxpayer in name alone.  They are protecting the highest bidders in the financial industry.

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Feb 21 2009

Stock Market Volatility is Back: Approaching a Decade of Lost Returns on Investments. The S&P 500 can fall another 42%.

The stock market is off to a horrible start for 2009.  Many thought that things could not get worse than what we experienced in 2008.  Yet market volatility, a sign of an unhealthy economy, is still with us and appearing again in a ferocious way.  From January 4, 2008 to February 21, 2008 the S&P 500 was off by -9.2%.  The S&P 500 during that same time for 2009 is now off by -14.75%.  The issues we will now face are a continuing stream of declining earnings because of the pullback in consumption and the tightening up of the credit markets.  It also doesn’t help that consumers are psychologically more cautious because of what is going on.

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Feb 19 2009

Homeowner Affordability and Stability Plan: California and Florida you are Financially on Your Own.

I was cautious about the details in the new Homeowner Affordability and Stability Plan which was announced on Wednesday. It is going to use $75 billion from the additional $350 billion in TARP funds while accessing the $200 billion in backstops to Fannie Mae and Freddie Mac.  Yet one key point, and probably a reason the market ended neutral on Wednesday, is that the plan inches closer at isolating the toxic mortgage waste found in California, Florida, Nevada, and Arizona.  In the mean time, it would also seem that California is still unable to have any effective government and is embarrassing itself on the world stage.  One of the largest economies in the world and you have politicians brushing their teeth in the halls of Sacramento.

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