Dec 16, 2010

High unemployment may be a permanent part of the new American economy


The bank bailouts of 2008 changed more than the foundation of American finance. The rules of capitalism were thrown out, along with the law of survival of the fittest.  In its wake, the bailed out banks are not only posting record profits, they are hording trillions of dollars in cash. What they are not doing with that cash is making loans and hiring people. Furthermore, the federal TARP loans intended to stabilize the deflation of the housing market have not kept banks from finding ways to profit from to continuing foreclosures with robo-signers and loan servicing agents.

One of the possibilities not being debated in the economic formulas is the concept that a metamorphosis of the American economy is taking place. The collapse of the US financial markets made the banks stronger and more powerful. And as long as they control the money, America is at their mercy.

The fundamental principles of job creation have been changing during the past 20 years. As more jobs have been shipped overseas where labor is cheaper, conditions for US workers has declined. In the 1960’s wagers were lower, but less money bought more goods. Today, an average worker earning $10 an hour can barely keep food on the table and a roof over their head.

According to The National Bureau of Economic Research, “The recession ended in June 2009, 18 months after it began in December 2007.” If that is the case then unemployment rates hovering at the 10% mark are here to stay, perhaps for longer than anyone is ready to admit.



By: TwitterButtons.com

No comments: