Infinite Unknown

WASHINGTON — As the presidential election season nears its climax, there is growing evidence that the country is slipping into the deepest recession in decades.

The latest marker came Friday, when the government reported that employers shed 159,000 jobs in September, far more than expected. That was the worst one-month drop in more than five years and brings to 760,000 the number of jobs that have disappeared this year.

Economists say the accelerating pace of job losses, combined with the most severe credit crisis since the Great Depression, make it increasingly likely that the government bureau that determines business cycles will eventually stamp “recession” on this one.

“This should remove any lingering doubts that the economy is in a recession,” said Dean Baker, co-director of the Center for Economic and Policy Research. “The rate of job loss is accelerating and the unemployment rate is virtually certain to cross 7% early in 2009.”

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Tags: Economy, Fed, Federal Reserve, Recession, U.S., UCLA, Unemployment

Federal Reserve chairman Ben Bernanke folds his hands while testifying with US Treasury secretary Henry Paulson before the Senate banking committee on Tuesday. Photograph: Charles Dharapak/AP

The proposed $700bn bailout of US financial markets faced harsh criticism in Congress today, with liberals and conservatives both sceptical that granting the Bush administration power to buy up risky mortgages would avert further economic crisis.

Yet despite the wariness from the Senate banking committee, where Henry Paulson and Ben Bernanke appeared today, the financial rescue seems poised to win approval by next week at the latest.

“This is not something I wanted to ask for,” the US treasury secretary said, assuring senators that “I feel your frustrations” and “I’m angry” at the prospect of Wall Street firms getting saved by the government.

But Paulson and Bernanke did ask for broad latitude to decide which toxic assets would win a purchase by the government. Senators of both parties did not attempt to hide their anger at the request, citing the Bush administration’s previous assurances of market stability.

“We have been given no credible assurances that this plan will work,” Richard Shelby, the senior Republican on the banking panel, said. “Congress does not have time to determine if there are better alternatives.”

The committee’s Democratic chairman, Chris Dodd, questioned Paulson’s request for immunity from any legal or government review of his actions during the bailout process.

“After reading this proposal, I can only conclude that it is not just our economy that is at risk,” Dodd told the treasury secretary, “but our constitution as well.”

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Tags: Ben Bernanke, Bush administration, Congress, Constitution, Credit Crisis, credit crunch, debt, Economy, Foreclosures, GDP, Government, Henry Paulson, mortgage crisis, Mortgages, Politics, Treasury, U.S., Unemployment, Wall Street

A JobCentre office

The true scale of the jobs disaster facing Britain is revealed today as experts issue dire warnings that up to half a million workers will lose their jobs over the next two years, as companies cut costs and scale back investment plans to survive the economic downturn.

Official figures are widely expected to reveal this week that the number of people out of work and claiming benefits increased for a seventh successive month in August.

Finance companies based in London’s Square Mile have already laid off thousands of workers since the US mortgage crisis unleashed chaos in the world’s markets last summer; and the 5,000 UK-based staff at crisis-hit investment bank Lehman Brothers are awaiting news this weekend about how many of them will be made redundant.

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Tags: Bank of England, British Airways, Citigroup, Credit Crisis, credit crunch, Economy, Ford, General Motors, Government, HSBC, Lehman Brothers, Meltdown, Merrill Lynch, mortgage crisis, Mortgages, Politics, Toyota, U.K., Unemployment

MPC member warns of ‘horrible surprise’
Gloomy assessment sends London shares falling

Tens of thousands of people could be laid off every week in the run-up to Christmas as the UK economy falls into recession, David Blanchflower of the Bank of England’s monetary policy committee warned today.

Blanchflower told MPs to expect “a large increase in unemployment”, and warned that a “horrible surprise” could be just around the corner. The gloomy assessment sent shares in London falling, and also weakened sterling yet further against the dollar.

Blanchflower, who has repeatedly tried and failed in recent months to persuade the MPC to cut interest rates, predicted that the unemployment count will rise by 60,000 a month for several months in a row, probably starting in October.

“I believe we will see a deeper economic decline than other people think,” Blanchflower told the Treasury select committee, ruling out the possibility that the UK GDP will not shrink.

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Tags: Bank of England, Economy, GDP, Recession, U.K., Unemployment

NEW YORK (Reuters) - Lehman Brothers Holdings Inc plans to sell a majority stake in its asset management unit and spin off commercial real estate holdings, hoping to restore investor confidence and ensure its survival after reporting a record quarterly loss of about $4 billion.

Shares failed to rebound on Wednesday morning after plunging 45 percent a day earlier, reflecting Wall Street disappointment that Lehman did not announce more concrete actions.

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Tags: Bank, Bear Stearns, Citigroup, Credit Crisis, credit crunch, Economy, Goldman Sachs, JPMorgan, Korea Development Bank, Lehman Brothers, mortgage crisis, Mortgages, NYSE, Stock Market, U.S., Unemployment, Wall Street

Sept. 4 (Bloomberg) — Companies in the U.S. cut an estimated 33,000 jobs in August, a private report based on payroll data showed today.

The decrease followed a revised gain of 1,000 for the prior month that was lower than previously estimated, ADP Employer Services said.

The extended housing slump, high raw material costs and weaker demand are prompting employers to cut staff. Economists forecast the Labor Department will report tomorrow that the U.S. lost jobs for an eighth straight month last month.

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Tags: debt, ecomomy, Government, Labor Department, U.S., Unemployment, United Airlines

Lehman Brothers is planning to axe up to 1,500 more jobs, as part of its desperate struggle to reduce costs, raise money and rebuild its battered balance sheet.

The job losses, which are still being planned by executives at the company’s New York head office, are expected to be spread among its 26,000-strong global workforce, including at its European headquarters in London, where it employs more than 4,500 people.

Rumours of the cuts began circulating internally at Lehman late on Thursday, adding to the gloom at the company, which is engaged in a fire sale of assets in order to replace billions of dollars lost on mortgage investments since the credit crisis began.

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Tags: Credit Crisis, Economy, Lehman Brothers, mortgage crisis, Mortgages, U.K., U.S., Unemployment, Wall Street

WASHINGTON (AP) - Consumer prices shot up in July at twice the expected rate, pushed higher by surging energy and food costs. The latest surge left inflation running at the fastest pace in 17 years.

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Tags: Congress, Economy, energy prices, Fed, Federal Reserve, Food Prices, Inflation, Labor Department, Recession, U.S., Unemployment

WASHINGTON - Stores, factories and other businesses large and small showed workers the door last month, sending unemployment to its highest rate in four years and adding to the evidence an economic recovery remains far off.

Employers clamped down on hiring and cut 51,000 jobs in July, the Labor Department said Friday. The economy has shed jobs each month this year - 463,000 in all.

The unemployment rate rose to 5.7 percent, up from 5.5 percent in June.

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Tags: Economy, U.S., Unemployment

If Wachovia fails, then you can probably forget about the FDIC.

And remember that there are no more bailouts left:
- Fed: No more bailouts, except Fannie Mae and Freddie Mac.
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July 22 (Bloomberg) — Wachovia Corp., the U.S. bank that hired Treasury Undersecretary Robert Steel as chief executive officer two weeks ago, reported a record quarterly loss of $8.9 billion, slashed the dividend and announced 6,350 job cuts. The stock slumped as much as 10 percent in New York trading.

The second-quarter loss of $4.20 a share compared with net income of $2.3 billion, or $1.23, a year earlier, the Charlotte, North Carolina-based company said today in a statement. The loss included a $6.1 billion charge tied to declining asset values.

The writedown, job cuts and second dividend reduction in three months reflect Steel’s response to the worst housing market since the Great Depression, which cost former CEO Kennedy Thompson his job after eight years. Wachovia has dropped more than 75 percent since it spent $24 billion two years ago to buy Golden West Financial Corp. just as home prices were peaking.

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Tags: Bank, Citigroup, Economy, JPMorgan, mortgage crisis, Mortgages, Stock Market, U.S., Unemployment, Wachovia, Wall Street