Category: Government

I don't know about you, but today's employment data makes me thankful to have a job. Now 1 person in 10 is out of work. In my anecdotal experience, things feel even worse. I see an increasing number of fathers doing drop off at kids' schools, something I didn't see a year ago. And there doesn't seem to be any change in the number of requests I'm getting for job contacts -- and not just for leads in my field.

One interesting fact I came across: If the 15.7 million unemployed lived in one state, that state would be the country's fifth largest. Wow!

But, even more distressing than today's jobs report is the outlook for employment. After the Q3 GDP report came out, hopes were high that the Great Recession was over, and recovery was finally underway.

The largest financial firms made out under the government's asset guarantee program. That's the conclusion of the panel overseeing the program for Congress. Harvard Law School Professor Elizabeth Warren chairs the panel. She says while the program hasn't lost taxpayers money so far, it has fundamentally changed our system. Now all big financial firms have an implicit guarantee by Uncle Sam. Warren says reforming the financial regulatory system is our "only hope" to fix that moral hazard.

Warren has also championed a new Consumer Financial Protection Agency to keep banks honest. Congressman Barney Frank wants Warren to lead that agency, but her critics say she doesn't have any "real world" experience. Warren says she hates banks that cheat their customers. Watch the video clip below to hear some of her thoughts on how banks treat their customers. Then let me know what you think.

The number of workers receiving pink slips each month is finally beginning to tail off, but companies plan to keep laying off workers despite signs of a pick up in the U.S. economy.

Private-sector employers cut 203,000 jobs in October, after eliminating 227,000 jobs the previous month, according to a report out today by payroll giant Automatic Data Processing Inc. and Macroeconomic Advisers LLC, a consulting firm that specializes in economic forecasting.

On a more encouraging note, U.S. companies said they were planning fewer layoffs going forward. Planned layoffs at U.S. firms fell to 55,679 in October, down from 66,404 a month earlier, according to outplacement-consulting firm Challenger, Gray & Christmas Inc. The bulk of the layoffs are expected to come from the auto industry, non-profit firms, and state and local governments.

For the last couple of weeks, we've been having a huge national debate over what to pay people.

Ken Feinberg, the Treasury's Special Master, has weighed in on bailed -out banks. The Federal Reserve is getting into the act, asking banks to explain the relation between pay practices and risk.

Today it was the Supreme Court's turn to dip a toe into the national discussion.

The case at hand is Jones v Harris Associates. Jones and two other plaintiffs are individual investors. Harris Associates is the sponsor of the Oakmark Funds and the investment adviser, a common feature of the mutual fund industry. To manage the conflict of interest between the adviser and the fund it operates, the law requires compensation be set by an independent board of trustees representing the fund.

The shareholders in this case argue Harris' fees are excessive because they are twice as high as those charged to institutions for virtually identical advice. Harris -- and the mutual fund industry -- argue the advice and services are very different, justifying the higher fees.

Law makers are closing in on approving an extension of federal unemployment-insurance benefits. The bill would provide an extra 14 weeks of benefits for people who've exhausted their benefits. Those who live in states where the unemployment rate is more than 8.5 percent would get up to 20 weeks of extended benefits.

It's tough to argue that extending unemployment benefits is a bad idea at a time when more than 15 million people are out of work. The extension would come at a time when as many as 7,000 people a day are exhausting their unemployment benefits.

But that doesn't stop some people from trying.

That old adage, "lies, damn lies, and statistics," popped into my head after finishing my story tonight. How much will a public health care plan cost? The House bill allows for $2 billion dollars to seed a public option plan. That money would pay for administrative start-up costs and initial reserves. The bill expects the plan to pay back that money over ten years. The American Academy of Actuaries and the Society of Actuaries figures it would take between $1 billion and $42 billion in the first ten years to start up a public plan. The wide range depends on how many people enroll, how high their claims are, and how much they pay in premiums.

The recent moves by the Obama Administration and the Federal Reserve to "examine" what they believe is excessive pay to bank executives is yet another example of contemporary policymakers not learning the lessons of the Great Depression. Putting aside the question of whether bailed out banks have any right to complain about their sugar daddy now wanting to call the tunes, the bigger issue is whether this move will have any positive effect on the economy. A look back at the 1930s suggests that not only won't it help, it may well make matters worse.

One of the notable features of the entire decade of the 1930s was the abysmally low level of private investment. The economic historian Robert Higgs has argued that investors were hesitant because they simply were not clear what the rules of the game were. The inconsistent policy moves by the Hoover and Roosevelt Administration as well as FDR's increasingly anti-business rhetoric and policies through the mid-30s led people to not want to take chances on longer-run investments.

Not too long ago, few people worried about financial firms being "too big to fail," but with hundreds of billions of taxpayer dollars going to bail out Wall Street, that's changed.

House Financial Services Committee Chairman Barney Frank (D-Mass.) is working with Treasury officials on a new proposal to give the government more authority to take over troubled financial firms. The proposal is still being worked on, but what we know so far is that it would give the government powers to seize troubled financial firms, throw out their management, change terms of existing loans and wipe out shareholder stakes.

The FCC today put forward a draft of so-called "net neutrality" rules. It's largely a battle among giants. The Commission is worried that internet providers, like AT&T, Verizon, and Comcast,can use their networks to block or slow down rivals web traffic. Companies like Google, Amazon, and Yahoo say the rules are needed to keep the Internet open for companies to innovate. But the internet companies say that's not the case. They say new regulation will choke off investment in broadband networks.

The issue is politically charged. President Obama promised net neutrality in his presidential campaign. Today, his presidential rival, Sen. John McCain, introduced legislation that would block the FCC from issuing new rules, calling the FCC's effort a "government takeover of the Internet that will stifle innovation."

Small businesses have always been a major engine of growth for the American economy. But as the recession continues, many of these businesses are unable to make profits, to expand or open new operations, and in some cases, they've been forced to close their doors. Yesterday, the administration unveiled a plan to shift TARP money away from too-big-to fail firms and into the arms of struggling small businesses.

Under the administration proposal, funds from the TARP will be made available to community banks at 3% annual interest rates (down from 5%). The funds then can be used to make loans to small firms. President Obama also requested that Congress increase limits for Small Business Administration loans.