The world's economy will begin recovering from a deep recession starting next year, but progress will be slow, according to a revised economic forecast released by the International Monetary Fund (IMF). Private demand remains weak and unemployment will continue to rise in 2010, according to the IMF's semi-annual World Economic Outlook, which was released Thursday. Yet things are looking a little better than they did this summer, according to the IMF. "The recovery has started. Financial markets are healing," IMF chief economist Olivier Blanchard told reporters in Istanbul, where leaders from the IMF and World Bank are gathering for annual meetings.The global economy will contract 1.1 percent this year, but will grow 3.1 percent in 2010, according to the IMF. That is better than figures released by the IMF in July, in which it forecast a 1.4-percent contraction in 2009 and 2.5-percent growth in 2010.
Private demand remains weak and unemployment will continue to rise in 2010, according to the IMF's semi-annual World Economic Outlook, which was released Thursday. Yet things are looking a little better than they did this summer, according to the IMF.
"The recovery has started. Financial markets are healing," IMF chief economist Olivier Blanchard told reporters in Istanbul, where leaders from the IMF and World Bank are gathering for annual meetings.The global economy will contract 1.1 percent this year, but will grow 3.1 percent in 2010, according to the IMF. That is better than figures released by the IMF in July, in which it forecast a 1.4-percent contraction in 2009 and 2.5-percent growth in 2010.
The popular deals are known as "re-remic," which stands for resecuritization of real-estate mortgage investment conduits. The way it works is that insurers and banks that hold battered securities on their books have Wall Street firms separate the good from the bad. The good mortgages are bundled together and create a security designed to get a higher rating. The weaker securities get low ratings....A hypothetical example cited in research by Barclays Capital said that a $100 million asset that required $2 million in capital at a triple-A rating may require $35 million if downgraded to double-B-minus. At triple-C, the capital requirement might rise to 100%, or $100 million. In a re-remic, three-fourths of the same asset may regain a triple-A rating, requiring just $1.5 million in capital, Barclays said. The remaining one-quarter may require 100% capital, but the total capital requirement would fall to $26.5 million...."There is $350 billion to $400 billion in market value of securities with no natural buyer due to their rating," Barclays said in a June report. "The re-remic market provides a way out of this gridlock by creating new AAA securities, which are likely to be viewed as attractively priced."
In a re-remic, three-fourths of the same asset may regain a triple-A rating, requiring just $1.5 million in capital, Barclays said. The remaining one-quarter may require 100% capital, but the total capital requirement would fall to $26.5 million...."There is $350 billion to $400 billion in market value of securities with no natural buyer due to their rating," Barclays said in a June report. "The re-remic market provides a way out of this gridlock by creating new AAA securities, which are likely to be viewed as attractively priced."
The way it works is that insurers and banks that hold battered securities on their books have Wall Street firms separate the good from the bad. The good mortgages are bundled together and create a security designed to get a higher rating. The weaker securities get low ratings.
That was precisely the long, hard work everyone wanted to avoid. And that might well, in many cases, prove impossible, since links to the original mortgages re-re-repackaged may have disappeared.
Mighty Wall Street wizardry indeed.
Plus, theres the whole "who holds the paper" issue. Everything was sliced and diced so opaquely exactly to obscure the fact that a lot of the ratings were bs. Now they have to unwind it, they may find it hard. If I was in a default mortgage right now, I'd try and play "show me the paper", cos I reckoon it's a reasonable bet they can't. How can you lose ? It's a 30% chance you keep the house debt free when you were going to lose it anyway. keep to the Fen Causeway
Eurozone unemployment has edged up to its highest level for more than 10 years but the rate of increase has slowed noticeably, in the latest sign that government policies are curbing steep rises in job losses.Seasonally adjusted unemployment in the 16-country region rose in August by 165,000 to 15.2m, reported Eurostat, the European Union's statistical office. The latest increase was similar to those seen since May but sharply lower than earlier in the year, when monthly increases were averaging about 400,000.At 9.6 per cent of the workforce, however, the eurozone unemployment rate was the highest since March 1999. Unemployment rates also vary markedly between eurozone countries. Joblessness remains by far the worst in Spain, where the unemployment rate leapt from 18.5 per cent in July to 18.9 per cent in August. In contrast, the Netherlands reported a rate of just 3.5 per cent in August, the lowest rate in the European Union.
Seasonally adjusted unemployment in the 16-country region rose in August by 165,000 to 15.2m, reported Eurostat, the European Union's statistical office. The latest increase was similar to those seen since May but sharply lower than earlier in the year, when monthly increases were averaging about 400,000.
At 9.6 per cent of the workforce, however, the eurozone unemployment rate was the highest since March 1999.
Unemployment rates also vary markedly between eurozone countries. Joblessness remains by far the worst in Spain, where the unemployment rate leapt from 18.5 per cent in July to 18.9 per cent in August. In contrast, the Netherlands reported a rate of just 3.5 per cent in August, the lowest rate in the European Union.
in the latest sign that government policies are curbing steep rises in job losses.
So government works? In the long run, we're all dead. John Maynard Keynes
Large financial institutions should face a costly combination of higher capital requirements, tougher regulation and higher insurance premiums "making it less profitable to be `too big to fail'", Ben Bernanke told Congress on Thursday.The chairman of the Federal Reserve said there was a case for levying higher premiums on the largest interconnected companies, amplifying the risk adjustment made by the Federal Deposit Insurance Corporation. "The FDIC risk adjusts the premiums they charge to banks for deposit insurance," he told the House financial services committee. "Perhaps it's time to revisit that."
The chairman of the Federal Reserve said there was a case for levying higher premiums on the largest interconnected companies, amplifying the risk adjustment made by the Federal Deposit Insurance Corporation. "The FDIC risk adjusts the premiums they charge to banks for deposit insurance," he told the House financial services committee. "Perhaps it's time to revisit that."
Big Bad Ben Bernanke.
Data has long been the big hurdle to obtaining precise estimates of fiscal multipliers. In CEPR Policy Insight No. 39, we present our estimates of the fiscal multipliers for developed and emerging economies using new quarterly data for 45 countries (20 high-income and 25 developing) spanning 1960 through 2007. Using this, we estimated fiscal multipliers for different groups of countries.1 The main results are presented in more detail in our Policy Insight. Here is a brief summary of the highlights: The response of output to increases in government spending is smaller on impact and considerably less persistent in developing countries than in high-income countries. Fiscal multipliers are much larger in economies operating under predetermined exchange rate regimes than under flexible exchange rates. Relatively closed economies have much larger multipliers than relatively open economies. The output response to increases in government spending is short-lived and much less persistent in highly indebted countries than in countries with a low debt to GDP ratio. The multipliers for the US in the post-1980 period are small both in the short and long-run. On the other hand, multipliers for government investment are large.
What entered the crisis was, we now know, an ill-managed, irresponsible, highly concentrated and undercapitalised financial sector, riddled with conflicts of interest and benefiting from implicit state guarantees. What is emerging is a slightly better capitalised financial sector, but one even more concentrated and benefiting from explicit state guarantees. This is not progress: it has to mean still more and bigger crises in the years ahead....So what is the answer? Division of banking into a "utility" and a "casino" is Mr Kay's answer. The big idea is that insured deposits should be backed by "genuinely safe liquid assets" - known as 100 per cent reserve banking. In practice, these assets would be government bonds. This is the most rigorous form of narrow banking....In practice, however, we have gone much further than this. We have also explicitly guaranteed many deposits and implicitly guaranteed many more liabilities. Indeed, in the crisis, policymakers guaranteed all the liabilities of institutions deemed systemically significant. Today, the core financial institutions are, beyond doubt, a part of the state. Mr Kay's proposal is, in sum, to end the fraud: banks would be forced to hold assets as safe and liquid as their liabilities. ...The most important point is that where we are now is intolerable. Today's concentrations of state-insured private wealth and power must surely go. At present, the official sector believes tighter regulation, particularly higher capital requirements, can contain these risks. But this is likely to fail. If it does, we will need to be radical. Yet narrow banking would still not be enough. We would need to rule out quasi-banking. Otherwise, we would soon return to the world of fragility and bail-outs. Funds that replace banks would have to pass the risks directly on to the outside investors. The authorities will not entertain such radical ideas right now. But the financial system is so inherently fragile that radical reform cannot be pronounced dead. It is only dormant.
The authorities will not entertain such radical ideas right now. But the financial system is so inherently fragile that radical reform cannot be pronounced dead. It is only dormant.
So, if we accept that the existing system is deeply flawed and that the necessary and desirable reforms are seriously lagging, the next question is; who is going to do the lifting?...This leaves us with the EU. The EU's response to the crisis thus far clearly falls short of what Wolf is suggesting although a thorough analysis and reform program of EU policy for the financial sector is under way. The EU however possess the legal competence, the scope and the clout to undertake the kind of reforms that Wolf is suggesting although such a program would be as comprehensive and far-reaching as the introduction of the Euro and would entail a clear break with existing policies. Impetus for a grand projet to re-design the EU's approach to finance would have to come from the highest political level with the full support of Germany and France. With Merkel re-elected on a platform of financial reform, Sarkozy unthreatened on the domestic political scene and with support from the European Parliament and Commission, such a development could not be ruled out entirely. Since the IMF now estimates that we still have a 1,5 trillion in writedowns ahead of us, at least, politicians might soon have to consider all options, including Wolf's revolutionary ideas.
The most important point is that where we are now is intolerable. Today's concentrations of state-insured private wealth and power must surely go.
"Today's concentrations of state-insured private wealth and power must surely go"? Oh, please! It will only go when one or more, and perhaps all, of four things happen:
We do what we can and stay tuned. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Not only that, but imagine the situation of the chief risk manager of a bank in, say, 2004. As Andrew Lo has argued, if he attempted to reduce his bank's exposure to structured securities such as CDOs, he would be out of a job; VaR gave him a handy tool to rationalize a situation that defied common sense but that made his bosses only too happy. And at the top levels, CEOs and directors who probably did not understand the shortcomings of VaR were biased in its favor because it told them a story they wanted to hear. In other words, models succeed because they meet the needs of real human beings, and VaR was just what they needed during the boom. And we should assume that a profit-seeking financial sector will continue to invent models that further the objectives of the individuals and institutions that use them. The implication is that regulators need to resist the group think of large financial institutions. If everyone involved is using the same roadmap of risks, we will all drive off the cliff again together.
In other words, models succeed because they meet the needs of real human beings, and VaR was just what they needed during the boom. And we should assume that a profit-seeking financial sector will continue to invent models that further the objectives of the individuals and institutions that use them. The implication is that regulators need to resist the group think of large financial institutions. If everyone involved is using the same roadmap of risks, we will all drive off the cliff again together.
As a matter of national accounting, the domestic private sector cannot net save unless and until foreign or government sectors net deficit spend. Call this the tyranny of double entry bookkeeping: the government's deficit equals by identity the non-government's surplus. Hence, if the US private sector is to rebuild its balance sheet by spending less than its income, the government will have to spend more than its tax revenue. The only other possibility is that the rest of the world begins to dis-save massively--letting the US run a current account surplus--but that is highly implausible, and socially undesirable, since it means we export our economic output, rather than consume it domestically. And if the government deficit does not grow fast enough to meet the saving needs of the private domestic sector, national income will decline, which, given the size of the private sector's debt problem, will generate a huge debt deflation. This is the foundation of modern monetary theory. Would that the IMF and the G20 understood these basic facts. The anodyne communiqué from last weekend's Pittsburgh summit makes clear that this is not the case. Western policy makers appear determined to consign us to years of additional economic misery because of the continued embrace of a flawed market fundamentalist economic paradigm. So far, instead of trying to revive the productive economy, most of the G20's resources have consisted of mouth-to-mouth resuscitation for a dying financial sector. This has not "worked" to the extent that last weekend's communiqué advertised. The best analogy to describe the current state of our financial system is that we have placed scaffolding over a decaying building, but done little to repair the underlying structure. What happens when the economic scaffolding is removed via "exit strategies", as the G20 participants have advocated? ... For many generations, we didn't face the unprecedented financial fragility we are experiencing today. But there are good reasons why we avoided this until recently. We have spent the past quarter century eviscerating what was fundamentally a robust structure originally devised during New Deal, a system which basically saved the US capitalist system and served the interests of its citizens very well until it was hijacked by a bunch of corporate predators under the guise of deregulation and neo-liberalism.
Hence, if the US private sector is to rebuild its balance sheet by spending less than its income, the government will have to spend more than its tax revenue. The only other possibility is that the rest of the world begins to dis-save massively--letting the US run a current account surplus--but that is highly implausible, and socially undesirable, since it means we export our economic output, rather than consume it domestically. And if the government deficit does not grow fast enough to meet the saving needs of the private domestic sector, national income will decline, which, given the size of the private sector's debt problem, will generate a huge debt deflation.
This is the foundation of modern monetary theory. Would that the IMF and the G20 understood these basic facts. The anodyne communiqué from last weekend's Pittsburgh summit makes clear that this is not the case. Western policy makers appear determined to consign us to years of additional economic misery because of the continued embrace of a flawed market fundamentalist economic paradigm.
So far, instead of trying to revive the productive economy, most of the G20's resources have consisted of mouth-to-mouth resuscitation for a dying financial sector. This has not "worked" to the extent that last weekend's communiqué advertised. The best analogy to describe the current state of our financial system is that we have placed scaffolding over a decaying building, but done little to repair the underlying structure. What happens when the economic scaffolding is removed via "exit strategies", as the G20 participants have advocated?
...
For many generations, we didn't face the unprecedented financial fragility we are experiencing today. But there are good reasons why we avoided this until recently. We have spent the past quarter century eviscerating what was fundamentally a robust structure originally devised during New Deal, a system which basically saved the US capitalist system and served the interests of its citizens very well until it was hijacked by a bunch of corporate predators under the guise of deregulation and neo-liberalism.
The only other possibility is that the rest of the world begins to dis-save massively--letting the US run a current account surplus--but that is highly implausible, and socially undesirable, since it means we export our economic output, rather than consume it domestically.
So why is this seen as the path to growth and prosperity by so many countries, rich ones like Germany and Japan included? Is it that claims on the rest of the world are naturally seen with suspicion while claims by the rest of the world on the US are safe and natural?
Strange lopsided thinking there... In the long run, we're all dead. John Maynard Keynes
Of course the US financial sector was only too happy to facilitate this process while they extracted fees and profited from "carry trades" made possible by the arrangement. And the financial sector's faithful servants, the mainstream economists, the mainstream media and most of the politicians, the people who are supposed to understand this stuff, kept reassuring the electorate that this was the result of US superiority and was the natural order of things. Religious leaders long ago learned the power of telling people soothing and reassuring things. Mainstream economics is just the new Church.
I recall a friend, who had a masters in economics and dropped out of a PhD program at UCLA in the 60s on account of a gag reflex problem, telling me in the '90s that us getting all of these products and other countries just accumulating US paper was like us just getting the stuff for free. That confounded me and didn't seem right, but I couldn't say why. Ignorant me. I didn't see how there would not be a price at some point. So now perhaps it was "prescient me."
All of these factors have been there in reasonably plain sight for years. Perhaps the take-away is that "connecting the dots is a non-trivial task and that ugly truths are only likely to be acknowledged in the face of ugly events, if then. As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."
Alan Greenspan, former Federal Reserve chairman, continues to argue that even financial products that led to the economic crisis should not be banned, affirming his belief that markets should be the final arbiter over which tools work.Mr Greenspan, who has faced criticism for making decisions that allowed the economic crisis, maintains that the market should judge these products. He disagrees with those, such as George Soros, who has called for an outright ban on tools that may have led to the crisis, and Dominique Strauss-Kahn, director of the International Monetary Fund, who has called for tougher regulation. Video: Greenspan and Strauss-Kahn on financial regulation... Mr Greenspan's remarks came almost a year after he acknowledged at a Congressional hearing that he had "found a flaw" in his thinking and that he was wrong to assume that banks would protect themselves from financial market chaos.
Mr Greenspan, who has faced criticism for making decisions that allowed the economic crisis, maintains that the market should judge these products. He disagrees with those, such as George Soros, who has called for an outright ban on tools that may have led to the crisis, and Dominique Strauss-Kahn, director of the International Monetary Fund, who has called for tougher regulation.
Video: Greenspan and Strauss-Kahn on financial regulation... Mr Greenspan's remarks came almost a year after he acknowledged at a Congressional hearing that he had "found a flaw" in his thinking and that he was wrong to assume that banks would protect themselves from financial market chaos.
Surely an epic market crash can be taken as a final market determination that the tools don't work? En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
</KoolAid>
- Jake If you only spend 20 minutes of the rest of your life on economics, go spend them here.
The World Bank group is set to launch a $5.5bn initiative to raise funds to buy distressed assets from banks in emerging and developing markets in a bid to clean up their balance sheets and free up credit flows.The move came as the International Monetary Fund warned on Wednesday that rising losses on loans were likely to strain bank balance sheets in emerging Europe "for years to come", saying non-performing loan ratios could peak as high as double their current level. The International Finance Corporation - the World Bank's private sector arm - will commit $1.5bn (€1bn, £940m) of its own money to the scheme and hopes to raise $4bn from partners including private sector investors and other development institutions.The idea is to mimic the functions of a "bad bank" at an international level through a number of platforms rather than a single global investment vehicle.
The move came as the International Monetary Fund warned on Wednesday that rising losses on loans were likely to strain bank balance sheets in emerging Europe "for years to come", saying non-performing loan ratios could peak as high as double their current level.
The International Finance Corporation - the World Bank's private sector arm - will commit $1.5bn (€1bn, £940m) of its own money to the scheme and hopes to raise $4bn from partners including private sector investors and other development institutions.
The idea is to mimic the functions of a "bad bank" at an international level through a number of platforms rather than a single global investment vehicle.
"A year ago," said law professor Ross Buckley on Australia's ABC News last week, "nobody wanted to know the International Monetary Fund. Now it's the organiser for the international stimulus package which has been sold as a stimulus package for poor countries." The IMF may have catapulted to a more exalted status than that. According to Jim Rickards, director of market intelligence for scientific consulting firm Omnis, the unannounced purpose of last week's G20 Summit in Pittsburgh was that "the IMF is being anointed as the global central bank." Rickards said in a CNBC interview on September 25 that the plan is for the IMF to issue a global reserve currency that can replace the dollar. "They've issued debt for the first time in history," said Rickards. "They're issuing SDRs. The last SDRs came out around 1980 or '81, $30 billion. Now they're issuing $300 billion. When I say issuing, it's printing money; there's nothing behind these SDRs." SDRs, or Special Drawing Rights, are a synthetic currency originally created by the IMF to replace gold and silver in large international transactions. But they have been little used until now. Why does the world suddenly need a new global fiat currency and global central bank? Rickards says it because of "Triffin's Dilemma," a problem first noted by economist Robert Triffin in the 1960s. When the world went off the gold standard, a reserve currency had to be provided by some large-currency country to service global trade. But leaving its currency out there for international purposes meant that the country would have to continually buy more than it sold, running large deficits; and that meant it would eventually go broke. The U.S. has fueled the world economy for the last 50 years, but now it is going broke. The U.S. can settle its debts and get its own house in order, but that would cause world trade to contract. A substitute global reserve currency is needed to fuel the global economy while the U.S. solves its debt problems, and that new currency is to be the IMF's SDRs.
"A year ago," said law professor Ross Buckley on Australia's ABC News last week, "nobody wanted to know the International Monetary Fund. Now it's the organiser for the international stimulus package which has been sold as a stimulus package for poor countries."
The IMF may have catapulted to a more exalted status than that. According to Jim Rickards, director of market intelligence for scientific consulting firm Omnis, the unannounced purpose of last week's G20 Summit in Pittsburgh was that "the IMF is being anointed as the global central bank." Rickards said in a CNBC interview on September 25 that the plan is for the IMF to issue a global reserve currency that can replace the dollar.
"They've issued debt for the first time in history," said Rickards. "They're issuing SDRs. The last SDRs came out around 1980 or '81, $30 billion. Now they're issuing $300 billion. When I say issuing, it's printing money; there's nothing behind these SDRs."
SDRs, or Special Drawing Rights, are a synthetic currency originally created by the IMF to replace gold and silver in large international transactions. But they have been little used until now. Why does the world suddenly need a new global fiat currency and global central bank? Rickards says it because of "Triffin's Dilemma," a problem first noted by economist Robert Triffin in the 1960s. When the world went off the gold standard, a reserve currency had to be provided by some large-currency country to service global trade. But leaving its currency out there for international purposes meant that the country would have to continually buy more than it sold, running large deficits; and that meant it would eventually go broke. The U.S. has fueled the world economy for the last 50 years, but now it is going broke. The U.S. can settle its debts and get its own house in order, but that would cause world trade to contract. A substitute global reserve currency is needed to fuel the global economy while the U.S. solves its debt problems, and that new currency is to be the IMF's SDRs.
What about the Fed's traditional role of maintaining price stability? It's nonsense, said Rickards. "What they do is inflate the dollar to prop up the banks." The dollar has to be inflated because there is more debt outstanding than money to pay it with. The government currently has contingent liabilities of $60 trillion. "There's no feasible combination of growth and taxes that can fund that liability," Rickards said. The government could fund about half that in the next 14 years, which means the dollar needs to be devalued by half in that time.Reducing the value of the dollar by half means that our hard-earned dollars are going to go only half as far, something that does not sound like a good thing for Main Street. Indeed, when we look more closely, we see that the move is not designed to serve us but to serve the banks. Why does the dollar need to be devalued? It is to compensate for a dilemma in the current monetary scheme that is even more intractable than Triffin's, one that might be called a fraud. There is never enough money to cover the outstanding debt, because all money today except coins is created by banks in the form of loans, and more money is always owed back to the banks than they advance when they create their loans. Banks create the principal but not the interest necessary to pay their loans back.
Reducing the value of the dollar by half means that our hard-earned dollars are going to go only half as far, something that does not sound like a good thing for Main Street. Indeed, when we look more closely, we see that the move is not designed to serve us but to serve the banks. Why does the dollar need to be devalued? It is to compensate for a dilemma in the current monetary scheme that is even more intractable than Triffin's, one that might be called a fraud. There is never enough money to cover the outstanding debt, because all money today except coins is created by banks in the form of loans, and more money is always owed back to the banks than they advance when they create their loans. Banks create the principal but not the interest necessary to pay their loans back.
Basically, said Professor Buckley, the loans extended by the IMF represent an increase in seniority of the debt. That means developing nations will be even more firmly locked in debt than they are now. At the moment the debt is owed by poor countries to banks, and if the poor countries had to, they could default on that. The bank debt is going to be replaced by debt that's owed to the IMF, which for very good strategic reasons the poor countries will always service... The rich countries have made this $500 billion available to stimulate their own banks, and the IMF is a wonderful party to put in between the countries and the debtors and the banks. Not long ago, the IMF was being called obsolete. Now it is back in business with a vengeance; but it's the old unseemly business of serving as the collection agency for the international banking industry. As long as third world debtors can service their loans by paying the interest on them, the banks can count the loans as "assets" on their books, allowing them to keep their pyramid scheme going by inflating the global money supply with yet more loans. It is all for the greater good of the banks and their affiliated multinational corporations; but the $500 billion in funding is coming from the taxpayers of the G20 nations, and the foreseeable outcome will be that the United States will join the ranks of debtor nations subservient to a global empire of central bankers.
At the moment the debt is owed by poor countries to banks, and if the poor countries had to, they could default on that. The bank debt is going to be replaced by debt that's owed to the IMF, which for very good strategic reasons the poor countries will always service... The rich countries have made this $500 billion available to stimulate their own banks, and the IMF is a wonderful party to put in between the countries and the debtors and the banks.
Not long ago, the IMF was being called obsolete. Now it is back in business with a vengeance; but it's the old unseemly business of serving as the collection agency for the international banking industry. As long as third world debtors can service their loans by paying the interest on them, the banks can count the loans as "assets" on their books, allowing them to keep their pyramid scheme going by inflating the global money supply with yet more loans. It is all for the greater good of the banks and their affiliated multinational corporations; but the $500 billion in funding is coming from the taxpayers of the G20 nations, and the foreseeable outcome will be that the United States will join the ranks of debtor nations subservient to a global empire of central bankers.
Video: Joseph Stiglitz James Surowiecki spoke with Professor Joseph Stiglitz, the Nobel Prize-winning economist, about the mishandling of the financial crisis, the relationship between government and markets, and the future of capitalism around the world. They met last month at Stiglitz's office at Columbia University.
James Surowiecki spoke with Professor Joseph Stiglitz, the Nobel Prize-winning economist, about the mishandling of the financial crisis, the relationship between government and markets, and the future of capitalism around the world. They met last month at Stiglitz's office at Columbia University.
Employers cut more jobs than forecast last month and the unemployment rate rose to a 26-year high, calling into question the sustainability of the economic recovery. The unemployment rate rose to 9.8 percent, the highest since 1983, from 9.7 percent in August, the Labor Department said today in Washington. Payrolls fell by 263,000, following a revised 201,000 decline the prior month that was less than previously reported. Federal Reserve Chairman Ben S. Bernanke yesterday said the expansion may not be strong enough to "substantially" bring down unemployment, indicating the central bank will be slow to drain the trillions of dollars it's pumped into the economy....September's losses bring total jobs lost since the recession began in December 2007 to 7.2 million, the biggest decline since the Great Depression....Today's report also showed the average work week shrank to 33 hours in September, matching a record low, from 33.1 hours in the prior month. Average weekly hours worked by production workers dipped to 39.8 hours from 39.9 hours, while overtime decreased to 2.8 hours from 2.9 hours. That brought the average weekly earnings to $616.11 from $617.65.
The unemployment rate rose to 9.8 percent, the highest since 1983, from 9.7 percent in August, the Labor Department said today in Washington. Payrolls fell by 263,000, following a revised 201,000 decline the prior month that was less than previously reported.
Federal Reserve Chairman Ben S. Bernanke yesterday said the expansion may not be strong enough to "substantially" bring down unemployment, indicating the central bank will be slow to drain the trillions of dollars it's pumped into the economy....September's losses bring total jobs lost since the recession began in December 2007 to 7.2 million, the biggest decline since the Great Depression....Today's report also showed the average work week shrank to 33 hours in September, matching a record low, from 33.1 hours in the prior month. Average weekly hours worked by production workers dipped to 39.8 hours from 39.9 hours, while overtime decreased to 2.8 hours from 2.9 hours. That brought the average weekly earnings to $616.11 from $617.65.
U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers: 17.0
A stress test of the European Union's biggest banks showed they could withstand an even deeper recession, though with almost 400 billion euros ($581 billion) in losses, according to a report to EU finance chiefs. Under current EU economic forecasts for 2009 and 2010, the largest banks in the region would maintain an average Tier 1 capital ratio "well above" 9 percent, the officials said yesterday in a statement after meeting in Gothenburg, Sweden. A "more adverse" scenario would boost losses and cut the average ratio to about 8 percent.
Under current EU economic forecasts for 2009 and 2010, the largest banks in the region would maintain an average Tier 1 capital ratio "well above" 9 percent, the officials said yesterday in a statement after meeting in Gothenburg, Sweden. A "more adverse" scenario would boost losses and cut the average ratio to about 8 percent.
