Been thinking about 2009 and what happened and what it means for 2010 now that we're in 2010.
Remember the Greatest Recession since the Great Depression comments? Remember the $700 Billion Dollar T.A.R.P bailout for companies and banks "too big to fail". TARP incidentallly means Troubled Asset Relief Program, begun by former Treasury Chair Henry Paulsen ( also former CEO of Goldman Sachs, a chief beneficiary of TARP ) during the waning months of President Bush's administration and supported by President-Elect Barack Obama. By Dec 31 2008 247 billion dollars had been sent to relieve failing Investment Banks and AIG. And at the very least Goldman Sachs was saved and is prospering quite well. It has even returned the $40 Billion dollar outlay. Quite a turnaround! So for Goldman and many other large banks, the Recession appears over. They're back to investing but not necessarily issuing credit.
On the smaller bank front for 2009 140 banks went into Bankruptcy and were saved by the FDIC -- Federal Deposit Insurance Corporations, whose own funds are nearly bankrupt. In 2010 bank failures have continued a pace -- 9 have failed since the beginning of 2010, taken over by FDIC. In 2009 over 1 million foreclosures occured jeopardizing individual families needs for shelter. Furthermore the national unemployment rate reached and has maintained the 10 % level, roughly 16 million individuals and their families. For those families the term Recession if not Depression is very real. Even Wal-Mart is closing many Sam's Club stores and laying off 11,000 workers. Jobs held by Wal-Mart former employees will be outsourced.
On the Investment and Finance front, the Dow has risen from a low of 7100 a year ago to over 10,000 on a continual basis (10,196 today) though there are still daily ups and downs but no dramatic downward shifts. Institutional investors are back playing the Market, confident that the US government and the Federal Reserve will prevent any dramatic decay. So the Investing community is moving forward even though wary of Financial Reform legislation. But there has been no real Financial Reform legislation no new FDIC or regulatory reform. Perhaps that is due to the hands off approach of former deregulators Larry Summers, Tim Geitner and Robert Rubin. Only recently has 82 year old former Treasury head Paul Volker been heard from in marked contrast to the hands off the "too big to fail" proponents.
Financial Reform like HealthCare Reform are both up in the air. Whereas TARP was okayed for 700 billion for 1 year HealthCare was for that same abount over 10 years and is stalled. Small Business have vested interests in seeing Health Care Reform though since it 's a large share of their own budgets, which operate on very small profit margins, unlike the "too big to fail" companies. The Outlook for any major Financial or HealthCare Reform in 2010 is very clouded, if not dim.
And remember that other indicator of onset of Recession that caught economists by surprise. Here I'm talking about Oil and Gas Prices. It was just July of 2008 when gas prices were a steady $4.11, a price that was a shock to individuals then and now. By the end of 2008 gas prices were back down to $1.87 nationally. By that time the US automotive market fell apart. General Motors and Chrysler filed for Bankruptcy protection, Fiat took over Chrysler and US taxpayers put a major financial stake in General Motors; Barack Obama initiated the Cash for Clunkers program to get Americans back into dealer showrooms. The automotive industry is still floundering. Only Ford did not take advantage of TARP. However, when banks do not issue credit, buyers don't buy; so government money went into GM's major financial lender, GMAC.
Now if you have been following gas prices over the last year, they have been inching back up, from aforementioned $1.86 to national prices this week of $2.78 up from $2.60 during the Christmas holiday season. In Pittsfield in December is was $2.63; a year ago it was $1.80. Economists were not even including gas prices in cost of living indexes so they missed the Depressive effects of these high gas prices. Wages simply do not go up to cover these changes. Nor do State budgets have the flexibility to meet these changes. With employment down, investment down, tax collections were down as well and States have initiated 3 to 4 rounds of dollar cutbacks, that in turn has affected municipalities, such as Pittsfield. For libraries, the entire Regional Library System is being cut in favor of one centralized system. Libraries are losing expected levels of state funding and local governments are unable to support library costs. This has resulted in cutbacks in service,days open and in some cases closing of libraries. In western Massachusetts there is no longer Bookmobile service to dozens of rural communities.
So here we are in 2010. Has anything changed? Or does the Recession continue full force. There has been no financial reform and no healthcare reform, no relief for small businesses or workers. There have been none of the great reforms that occurred during the Great Depression other than the hope given by those Great Depression agencies the FDIC and for the banks, the Federal Reserve.
So the question remains What Recession? and the answer remains What A Recession flowing full force to every sector and unit of United States citizenry with the possible exception of big banks and the wary Investment community!!
Remember the Greatest Recession since the Great Depression comments? Remember the $700 Billion Dollar T.A.R.P bailout for companies and banks "too big to fail". TARP incidentallly means Troubled Asset Relief Program, begun by former Treasury Chair Henry Paulsen ( also former CEO of Goldman Sachs, a chief beneficiary of TARP ) during the waning months of President Bush's administration and supported by President-Elect Barack Obama. By Dec 31 2008 247 billion dollars had been sent to relieve failing Investment Banks and AIG. And at the very least Goldman Sachs was saved and is prospering quite well. It has even returned the $40 Billion dollar outlay. Quite a turnaround! So for Goldman and many other large banks, the Recession appears over. They're back to investing but not necessarily issuing credit.
On the smaller bank front for 2009 140 banks went into Bankruptcy and were saved by the FDIC -- Federal Deposit Insurance Corporations, whose own funds are nearly bankrupt. In 2010 bank failures have continued a pace -- 9 have failed since the beginning of 2010, taken over by FDIC. In 2009 over 1 million foreclosures occured jeopardizing individual families needs for shelter. Furthermore the national unemployment rate reached and has maintained the 10 % level, roughly 16 million individuals and their families. For those families the term Recession if not Depression is very real. Even Wal-Mart is closing many Sam's Club stores and laying off 11,000 workers. Jobs held by Wal-Mart former employees will be outsourced.
On the Investment and Finance front, the Dow has risen from a low of 7100 a year ago to over 10,000 on a continual basis (10,196 today) though there are still daily ups and downs but no dramatic downward shifts. Institutional investors are back playing the Market, confident that the US government and the Federal Reserve will prevent any dramatic decay. So the Investing community is moving forward even though wary of Financial Reform legislation. But there has been no real Financial Reform legislation no new FDIC or regulatory reform. Perhaps that is due to the hands off approach of former deregulators Larry Summers, Tim Geitner and Robert Rubin. Only recently has 82 year old former Treasury head Paul Volker been heard from in marked contrast to the hands off the "too big to fail" proponents.
Financial Reform like HealthCare Reform are both up in the air. Whereas TARP was okayed for 700 billion for 1 year HealthCare was for that same abount over 10 years and is stalled. Small Business have vested interests in seeing Health Care Reform though since it 's a large share of their own budgets, which operate on very small profit margins, unlike the "too big to fail" companies. The Outlook for any major Financial or HealthCare Reform in 2010 is very clouded, if not dim.
And remember that other indicator of onset of Recession that caught economists by surprise. Here I'm talking about Oil and Gas Prices. It was just July of 2008 when gas prices were a steady $4.11, a price that was a shock to individuals then and now. By the end of 2008 gas prices were back down to $1.87 nationally. By that time the US automotive market fell apart. General Motors and Chrysler filed for Bankruptcy protection, Fiat took over Chrysler and US taxpayers put a major financial stake in General Motors; Barack Obama initiated the Cash for Clunkers program to get Americans back into dealer showrooms. The automotive industry is still floundering. Only Ford did not take advantage of TARP. However, when banks do not issue credit, buyers don't buy; so government money went into GM's major financial lender, GMAC.
Now if you have been following gas prices over the last year, they have been inching back up, from aforementioned $1.86 to national prices this week of $2.78 up from $2.60 during the Christmas holiday season. In Pittsfield in December is was $2.63; a year ago it was $1.80. Economists were not even including gas prices in cost of living indexes so they missed the Depressive effects of these high gas prices. Wages simply do not go up to cover these changes. Nor do State budgets have the flexibility to meet these changes. With employment down, investment down, tax collections were down as well and States have initiated 3 to 4 rounds of dollar cutbacks, that in turn has affected municipalities, such as Pittsfield. For libraries, the entire Regional Library System is being cut in favor of one centralized system. Libraries are losing expected levels of state funding and local governments are unable to support library costs. This has resulted in cutbacks in service,days open and in some cases closing of libraries. In western Massachusetts there is no longer Bookmobile service to dozens of rural communities.
So here we are in 2010. Has anything changed? Or does the Recession continue full force. There has been no financial reform and no healthcare reform, no relief for small businesses or workers. There have been none of the great reforms that occurred during the Great Depression other than the hope given by those Great Depression agencies the FDIC and for the banks, the Federal Reserve.
So the question remains What Recession? and the answer remains What A Recession flowing full force to every sector and unit of United States citizenry with the possible exception of big banks and the wary Investment community!!
Posts
