Obama: Unemployment likely to keep ticking up

[MannyGoldstein]

Source: AP

WASHINGTON (AP) — President Barack Obama on Tuesday declined to predict how high unemployment will climb but made clear he expects it to keep worsening for a while as hiring lags behind other signs of economic recovery.

"How employment numbers are going to respond is not year clear," the president said on a day when he was headed to Michigan, home of a particularly battered economy. "My expectation is that we will probably continue to see unemployment tick up for several months."

The unemployment rate stands at 9.5 percent, the highest in 26 years.

Obama, addressing reporters in the Oval Office, said the stabilization of the financial markets has allowed banks to start lending again and some small businesses to stay afloat. But he said his administration is aware that the most important factor is whether people are able to get good-paying jobs.

Read more: http://www.google.com/hostednews/ap/article/ALeqM5juui7didNwh_vzBmJyrbjxkeF-IgD99EACA00

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The $13 trillion Paulson/Summers/Geithner banker bailout has saved the banker jobs - that's the important part. The $750 billion stimulus for everyone else - less than 6% of the banker bailout - well, not so much yet.

[Oregone]

1. But lemme guess...

We still don't need a corrective adjustment to the stimulus funds

:wtf:

[babylonsister]

2. So he tells the truth. Are we supposed to be outraged at that? nt

[Oregone]

3. Depends on what they do (or don't do) about it

[Iowa]

11. The outrage isn't that he's telling the truth...

...it's that he approaches massive unemployment with FAR less of a sense of urgency than corporate bail-outs. When the banks were in trouble he pulled out all the stops - it was like a three-alarm fire. When working people are suffering, he's content to just wait a few months and see what happens.

[MannyGoldstein]

13. +1 n/t

[babylonsister]

19. What part of that ginormous stimulus passed in the first month

(week?) did you miss? It takes awhile to spread that wealth, but it's not because he's been lax about it.

[No Elephants]

14. Who's outraged? And who's outraged because he told the truth?

[Lorien]

4. Wasn't a large portion of our 6% in taxes cuts?

Tax cuts do little good for the unemployed. Now additional unemployment benefits or food stamps...

[Hydra]

5. Green New Deal please

And screw the Repubs that say "No!"

[Larkspur]

6. This comment will send his poll numbers down again

People want a solution, not more bad news from a guy who keeps allowing banksters to reap millions in bonuses. If Obama keeps kissing Wall Street's a@@ but does little but give lip service to Main Streeters his poll numbers will keep sinking and that will give Repukes fuel to attack and stymie any progressive policy, especially health care reform.

[No Elephants]

15. Having his poll numbers sink in 2009 is not the worst thing that could happen. People are all over

the media, claiming that he said the stimulus would work in two minutes. He never said that. But things are still worsening, rather than improving. Or, at least, some things are. If he calmly says he expects this, it's better than having people despair that no one knows what to do.

I don't know if that makes sense. It makes sense in my thoughts, but I don't think I expressed them well.

[OhioChick]

20. You're absolutely right. n/t

[HamdenRice]

7. Your numbers are way off

The $13 trillion number is an urban legend. That is how much, if you really want to stretch it, was authorized. The amount disbursed was less than half of that.

And if you look at spread sheet of the blogger who first proposed that number, it actually included expenditures for middle class tax cuts, the stimulus and foreclosure relief.

The amount disbursed to banks was around $350 billion of $750 billion authorized TARP 1 funds, and that was in the form of preferred stock that the banks had to redeem (pay back) with interest (dividends), and so far the banks that have paid it back have done so at a profit for the Treasury.

Other parts of the number included FDIC expenses for banks that were closed -- ie that hardly saved bankers jobs. If you were in NYC you would hardly say that bankers jobs were saved.

The biggest amount went to Fed purchases of commercial paper, which were also required to be paid back. This was commercial paper issued by all kinds of companies across the country and not just banks.

Another large facility was currency swaps between the Fed, the European Central bank and other Central banks -- and they also had to be paid back.

[MannyGoldstein]

8. $13.9 Trillion Total Maximum Government Support Announced

http://www.calculatedriskblog.com/2009/06/139-trillion-total-maximum-government.html

It's not exactly the same as the stimulus, but in all cases our tax dollars are at risk, no?

[HamdenRice]

10. I'd say it's more like the total amount of Federal Reserve, Treasury assets that could be at risk

Because of the role confidence plays in the economic system, when the government simply says things like, "we willing to spend $X to keep Y bank from failing," that bank becomes much less likely to fail. But the government hasn't actually spent anything. You can see in the third line, the biggest item on the chart is a "guarantee money funds." That was really just saying that if you have money in a money market fund, the government will now guarantee it, like the FDIC guarantees bank deposits. But no money fund has collapsed since September, so it was a zero expenditure after the scare and run. It was not a $3.2 trillion expenditure.

If tomorrow everyone panicked, and a money fund collapsed, they the feds would have to pay up.

The Commercial paper facility is way down because the money markets have returned to normal. Commercial paper is just a 30 day loan to a corporation. It was a very big market, and during the run and scare of September, no one would buy commercial paper. So the Fed stepped in and purchased somewhere between $400 billion and $1.4 trillion. But there have been few losses, so that's been paid back (it's very short term) and as you can see the amount outstanding has dropped to $300 billion as the 30 day (or 60 or 90 day) paper gets paid off.

One of the biggest items is "reciprocal currency swaps". But that's just the Fed saying to Japan, European Bank, Korea, Mexico, Brazil, etc., if you need dollars we'll provide them for your yen, euros, pesos, etc., and if we need yen, or euros or pesos, or whatever, you'll provide them to us for dollars:

http://www.boj.or.jp/en/type/release/adhoc09/un0906a.pdf

It's possible to lose money on those currency swaps but there haven't been any drastic currency fluctuations, so it's hard to imagine that was a loss there either.

That's mostly what's on the list. It is exposure of the Fed. It is not expenditure of taxpayer money.

That's why the national debt has not gone up $13 trillion. The government did not spend anywhere near that amount of money on the bailouts.

[MannyGoldstein]

12. True - But They'll Risk It For The Bankers, Not For Consumers

How much safer would this all be if Obama had nationalized the banks, rather than allowing them to continue shooting craps? We have the same players and the same rules - why would we expect different outcomes?

Have you seen Obama work to guarantee, say, credit card balances so that rates don't get taken to 30% based on perceived risk? I haven't. My distinct impression is that Obama et al are more than willing to backstop the bankers and invite them to lunch at the White house. But for the other 99.99% of us, we get finger-wagging lectures on personal responsibility.

[HamdenRice]

16. It's a mix of things

It's much easier (cheaper) to do the paper work to guarantee one bank than 100 million consumers. That's called the problem of "transaction costs."

That said, the biggest item on the list -- $3.2 trillion in guarantees for money markets -- is basically a guarantee of consumer bank accounts (or their equivalent, ie money market deposits).

When the government helps individuals, especially poorer ones without accounts, it's basically easier and cheaper to just give them money, and because there is already a system of paper work (tax returns) it does that through tax rebates and the earned income tax credit.

So I think it's important to point out that during this kind of crisis, the Democratic government lends to banks (and tries to make money at it or at least get their money back) and the government gives to the working/middle class.

[MannyGoldstein]

17. What You're Saying Is Correct, But

It may be that Obama can't really do more, but the Obama administration's actions seem functionally indistinguishable from saving the bankers and letting the average Joe and Jane founder on the rocks. I can't think of any bank reform that's been enacted. The bankers have been made whole, and no limits have been placed on their squeezing everyone else by the cojones (other than long-term credit card reform of sorts, which has disserved debtors in the short run... foreclosures continue to skyrocket...

In other words, from what I can see, everything that *can* be done to help the bankers *has* been done - but almost nothing has been done to help everyone else, unless it happens to *also* help the bankers. Is this statement incorrect?

[HamdenRice]

18. I would have liked to have seen stronger nationalization

but I think you are correct that he was constrained. With a large minority of the population already calling him a socialist and secret Muslim, nationalization was taken off the table to save "socialist" capital for health care.

I also think financial regulation is coming. They are a powerful interest group. They will be re-regulated but in baby steps. THEY will be like the frog in the boiling water. A few Securities Act regs here, then a banking reg there, and soon they'll be under control. But I don't think they could be taken on head on, which is ironic, because they were basically beggers.

I've worked in finance in the 90s, and had to get stuff through the SEC (Clinton's SEC which was very professional and hardnosed), and frankly a change of government can go a LONG way toward reigning them in without actually passing new laws

They'll get theirs, just not as soon as we'd like.

[Freddie Stubbs]

9. He is lowering expectations