Economic Stories of Relevance in Today's World -- October 9, 2011

Reliance on government benefits even higher than during depth of recession - The Lookout - Zachary Roth – October 6, 2011 - More evidence that for many, the "recovery" hasn't been much better than the recession. Nearly half of all Americans lived in a household that received some kind of government benefit during the first three months of last year, the Wall Street Journal reports, based on new Census data. That's even higher than the figure recorded during the depths of the Great Recession. Just over 48 percent of Americans lived in households that took in benefits during the first quarter of 2010--up from 44.8 percent in the third quarter of 2008, the heart of the downturn. The bleak economy appears to be driving the increase. The largest single category of benefits was means-tested programs that are designed to help the needy--things like food stamps, subsidized housing, or Medicaid. Just over 34 percent of Americans lived in a household that received means-tested benefits. The recession officially lasted from December 2007 until June 2009. But growth and job creation since then has been anemic, leaving a growing number of Americans dependent on government help.


Announced Job Cuts Rise 212% From Year Ago - Bloomberg - Alex Kowalski - October 05, 2011 - U.S. employers announced the most job cuts in more than two years in September, led by planned reductions at Bank of America Corp. (BAC) and in the military. Announced firings jumped 212 percent, the largest increase since January 2009, to 115,730 last month from 37,151 in September 2010, according to Chicago-based Challenger, Gray & Christmas Inc. Cuts in government employment, led by the Army’s five-year troop reduction plan, and at Bank of America accounted for almost 70 percent of the announcements. While the bulk of firings are not “directly related” to economic weakness, they “could definitely be a sign of more cuts to come,” John A. Challenger, chief executive officer of Challenger, Gray & Christmas, said in a statement. “Bank of America is not the only bank still struggling in the wake of the housing collapse, and the military cutbacks are probably just the tip of the iceberg when it comes to federal spending cuts.”



U.S. stocks' massive "melt-up" fans investor fears - Reuters - Edward Krudy – October 5, 2011 - NEW YORK (Reuters) - In less than one hour on Tuesday, the U.S. stock market surged by 4 percent -- for no apparent reason. The last hour of trading was the most volatile final hour in two months -- and it occurred at a speed that frightens many, from experienced hedge-fund managers to mom-and-pop investors. The late-day "melt-up" that pushed the S&P 500 index <.SPX> out of bear-market territory might be construed as good news. But it brings back echoes of the "flash crash" that saw markets dive by several hundred points in a matter of minutes, and it's a big reason many are staying away from the market. "Everyone is scared in both ways -- the shorts are scared, the longs are scared, everyone is scared. The high-net-worth investor is very, very scared," said Stephen Solaka, managing partner at Belmont Capital Group in Los Angeles, which manages money for independent wealth advisers and family offices. Tuesday's move was the latest example of an erratic, high-octane stock market increasingly driven by levered exchange traded funds and complicated hedging and options strategies that unwind with dizzying speed.


Obama Has Now Increased Debt More than All Presidents from George Washington Through George H.W. Bush Combined - CNSNews - Terence P. Jeffrey - October 5, 2011 - (CNSNews.com) - The Obama administration passed another fiscal milestone this week, according to new data released by the Treasury Department. As of the close of business on Oct. 3, the total national debt was $14,837,099,271,196.71—up about $44.8 billion from Sept. 30. That means that in the less-than-three-years Obama has been in office, the federal debt has increased by $4.212 trillion--more than the total national debt of about $4.1672 trillion accumulated by all 41 U.S. presidents from George Washington through George H.W. Bush combined. This $4.212-trillion increase in the national debt means that during Obama’s term the federal government has already borrowed about an additional $35,835 for every American household--or $44,980 for every full-time private-sector worker. (According to the Census Bureau there were about 117,538,000 households in the country in 2010, and, according to the Bureau of Labor Statistics, there were about 93,641,000 full-time private-sector workers.) When Obama was inaugurated on Jan. 20, 2009, according to the Treasury Department, the total national debt stood at $10,626,877,048,913.08. At the end of January 1993, the month that President George H. W. Bush left office, the total national debt was $4.1672 trillion, according to the Treasury. Thus, the total national debt accumulated by the first 41 presidents combined was about $44.8 billion less than the approximately $4.212 trillion in new debt added during Obama’s term. As of Monday, Obama had been in office 986 days—or about 32 and a half months. During that time, the debt increased at an average pace of $4.27 billion per day. Were that rate to continue until Obama’s term ends on Jan. 20, 2013, the debt would then stand at about $16.86534 trillion—an increase of more than $6.2 trillion for Obama’s four years. That would equal nearly $53,000 for each American household or more than $66,00 for each full-time private-sector worker. That total national debt did not exceed $6.2 trillion until 2002, when George W. Bush was president.


Charles Koch (Tea Party Inc.) to Friedrich Hayek (Austrian School Economist): Use Social Security! - The Nation - Yasha Levine and Mark Ames - There’s right-wing hypocrisy, and then there’s this: Charles Koch, billionaire patron of free-market libertarianism, privately championed the benefits of Social Security to Friedrich Hayek, the leading laissez-faire economist of the twentieth century. Koch even sent Hayek a government pamphlet to help him take advantage of America’s federal retirement insurance and healthcare programs. This extraordinary correspondence regarding Social Security began in early June 1973, weeks after Koch was appointed president of the Institute for Humane Studies. Along with his brothers, Koch inherited his father’s privately held oil company in 1967, becoming one of the richest men in America. He used this fortune to help turn the IHS, then based in Menlo Park, California, into one of the world’s foremost libertarian think tanks. Soon after taking over as president, Koch invited Hayek to serve as the institute’s “distinguished senior scholar” in preparation for its first conference on Austrian economics, to be held in June 1974. Hayek initially declined Koch’s offer. In a letter to IHS secretary Kenneth Templeton Jr., dated June 16, 1973, Hayek explains that he underwent gall bladder surgery in Austria earlier that year, which only heightened his fear of “the problems (and costs) of falling ill away from home.” (Thanks to waves of progressive reforms, postwar Austria had near universal healthcare and robust social insurance plans that Hayek would have been eligible for.)


Solyndra loan deal: Warnings about legality came from within Obama administration - Washington Post - Joe Stephens and Carol D. Leonnig - October 7, 2011 - Energy Department officials were warned that their plan to help a failing solar company by restructuring its $535 million federal loan could violate the law and should be cleared with the Justice Department, according to newly obtained e-mails from within the Obama administration. The e-mails show that Energy Department officials moved ahead anyway with a new deal that would repay company investors before taxpayers if the company defaulted. The e-mails, which were reviewed by The Washington Post, show for the first time concerns within the administration about the legality of the Energy Department’s extraordinary efforts to help Solyndra, the California solar company that went bankrupt Aug. 31. The FBI raided Solyndra last month, shortly after it closed its doors. The records provided Friday by a government source also show that an Energy Department stimulus adviser, Steve Spinner, pushed for Solyndra’s loan despite having recused himself because his wife’s law firm did work for the company. Spinner, who left the agency in September 2010, did not respond to requests for comment Friday. The documents offer new evidence of wide disagreement between officials at the Energy Department and officials at the Treasury Department and Office of Management and Budget, where questions were raised about the carefulness of the loan vetting process used to select Solyndra and the special help it was given as its finances deteriorated. Energy Department officials continued to make loan payments to the company even after it had defaulted on the terms of its loan.


G. Edward Griffin (Wikipedia - born November 7, 1931) is an American film producer, author, and political lecturer.^[1] He is perhaps best known as the author of The Creature from Jekyll Island (1994), a critique of much modern economic theory and practice, specifically the Federal Reserve System.
Starting as a child actor, he became a radio station manager before age 20. He then began a career of producing documentaries and books on often-debated topics like cancer, Noah's ark, and the Federal Reserve System, as well as on libertarian views of the Supreme Court of the United States, terrorism, subversion, and foreign policy. Since the 1970s, Griffin has promoted laetrile as a cancer treatment,^[2] a view considered quackery by the medical community.^[3][4] He has also promoted the Durupınar site as hosting the original Noah's ark, against skeptics as well as near-Ararat Creationists. He has opposed the Federal Reserve since the 1960s, saying it constitutes a banking cartel and an instrument of war and totalitarianism.^[5] In 2002, Griffin founded the individualist network Freedom Force International.

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