Thursday, December 10, 2009

With a Twinke In Their Eye

Initial unemployment claims were up 17,000 last week dampening hopes that we had really turned that corner on jobs. The news readers then reported with a twinkle in their eye that the number of people receiving extended benefits dropped sharply. They were in fact down 303,000 in just one week. This is not good news, it reflects how many people that exhausted their benefits.

They were estimating that one million people would fall off the rolls by the end of January but I would say that was not an accurate guess. The millions that lost their jobs in the final months of the Bush reign of terror came from out sourced industries. Their jobs are gone for good and with all the other occupations laying off workers their chances of finding a job in a new field are not good.

Great Britain has had enough with its criminal class and has slapped a 50% tax on big bonuses. In the rest of Europe this is about what the normal tax rate is for that income level. Before Reagan there was a 72% top rate in the US. Today these parasites only pay an average of 17%.

Home foreclosures were down slightly again last month but the number of people on track toward eventual foreclosure continues to climb. You can probably add many of the 303,000 who lost unemployment benefits to that list. This year will set another new record for foreclosures.

Bankruptcies continue to climb as well but nearly 2/3 of those cases are people with medical bills who still have a good paying job. The jobless and the working poor either don’t need bankruptcy anymore or can’t afford to file and then jump through all the hoops put in place by the Republicans. The new law doesn’t keep that many people from filing, its real intent was to make securitized debt instruments based on unsecured debt seem more attractive.

This added to the quadrillion Dollar credit derivative market. In fact the added risk made the sale of credit default swaps even more profitable and in turn pumped up the need for derivatives based on the CDS and on and on. One dollar of credit issued could produce hundreds of dollars in market activity. You know, "innovative products" from your financial services industry. Making American capitalism the envy of the world. Better learn to speak Chinese.