All Blog Posts from Econwatch

At the end of this month the Great Recession will officially be two years old. This will be the longest economic crisis in the United States since the Great Depression and the longest American recession since Chester Arthur was president. That 1882-1885 recession was sparked when the railroad boom bubble popped, wiping-out thousands of construction jobs. Sound somewhat familiar?

Of course, all recessions result in job losses. What's helped the American economy recover quickly in the past are innovations that have created new employment to replace the jobs lost during the downturn. One recent example is the employment opportunity created by the explosion in internet-related businesses that followed the 1990-1991 recession.

Unfortunately, there does not seem to be a giant job engine quickly emerging to help the 26.9 million Americans out of work or in part-time jobs find good paying jobs that create prosperity. This is the hand the Obama Administration has been dealt as it approaches its first full year in the White House.

President Obama's new plan to push left over money from the Troubled Asset Relief Program to small business and infrastructure construction is designed to bring the unemployment rate down from 10 percent. The administration's proposal includes tax cuts for small business and tax credits to firms that do hire.

Proponents of the plan are quick to point out that small businesses create about 2 out of 3 new jobs in America. Small businesses are also usually better at innovation. Somewhere there's a grad student and some buddies creating the next Microsoft. The Administration hopes these moves will help such a start-up bloom quickly.

Read full post…

This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

---

I always get nervous when three or more people who don't study the economy or financial markets say exactly the same thing. This past weekend, it was a teacher, a lawyer and a doctor, all of whom proclaimed: "we're definitely headed for a double-dip recession!"


Every time someone says "double dip" I can't help think of a soft serve ice cream cone plunging into that delicious chocolate coating not once, but twice. That said, are fears of a double dip warranted?

One would have to be brain-dead to not consider the possibility of something bad - really bad, derailing the progress that has occurred since the beginning of this fiasco. Here's a just a few ideas to get you started: a commercial real estate collapse could make the residential market look like a walk in the park; unemployment could get much worse; a large multi-national bank bites the bullet; the Fed blows it; and the weekend favorite, this whole recovery is in your head.

Read full post…

Some of New York's largest companies have received the H1N1 vaccine in the last week.

Read full post…

This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

---

Here's the second episode of "Ask the Experts"...please send more questions for the 3rd episode on Thursday morning. Just post your comments below and we'll tackle the questions!

Read full post…

Today's depressed economy is leading more parents to modeling and talent agencies – not for themselves, but for their kids, in the hopes that their looks can bring in some needed extra cash. Child models make as much as $125 an hour.

Read full post…

This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.

---

Third quarter Gross Domestic Product showed that the nation's economy grew by an annualized 3.5% rate. Not bad, especially considering that we've seen contraction in five of the last six quarters. Most economists believe that the most severe economic decline since the Great Depression likely ended in August or September. Of course we'll have to wait until the folks at the National Bureau of Economic Research's Dating Committee declare the actual end date. Still, it's clear that much of the data is improving. "Tell that to my brother-in-law who just lost his job last week," said one Early Show employee.

In our interview this morning, Harry Smith and I discussed the good, the bad and the ugly of the economy. Not surprisingly, a lot depends on which sector of the economy employs you and where you live.

Read full post…

This article by Lewis Braham originally appeared on CBS' MoneyWatch.com.

---

While this month’s stock market action has been relatively benign, October is known to be a particularly spooky month for stocks (see: 1929 and 1987). Perhaps it’s the coming of fall, the days getting shorter, or the arrival of Halloween, but gloom and doom and ghoulish predictions for the future have often prevailed. With that in mind, we asked five money managers and financial gurus to share their worst-case scenarios for the market and the economy. From runaway inflation to sky-high deficits that force the government to slash Social Security and Medicare, we found five fears that keep the experts up at night.

Not to suggest that these spooky scenarios ought to make you hit the panic button. Just consider it a stress test for your portfolio: Are you diversified enough to provide protection if the market goes south, or are you betting the farm on a best-case scenario? Inflation is a recurring theme in our experts’ nightmares; you can hedge that risk by owning inflation-protected securities and boosting your exposure to international markets. That way, you should be able to get a decent night’s sleep no matter what happens.

1. Runaway Inflation

“I don’t think we’ll have a crash like the last one, but the risk that we will have a significant bear market is very real. There could be several catalysts. For one, European banks are undercapitalized and overleveraged — far more overleveraged than U.S. banks. So the likelihood of a major European bank failing in the next two to four years is significant. Also, the likelihood of the commercial real estate sector in the U.S. suffering a significant wave of foreclosures is high. A third risk is any sort of geopolitical shock, such as another terrorist attack or a small war starting in another country. The fourth — and arguably the biggest — potential catalyst is that our aggregated indebtedness as a nation has gotten totally out of hand. Rampant inflation is a serious risk if we keep spending $1 trillion to $2 trillion more than our tax revenues.”

Read full post…

In response to last year's financial crisis, federal regulators offered the nation's banks billions of dollars, arguing they were "too big to fail." Yet that idea is a more serious threat to the nation's economic growth than many realize, Alan Greenspan, former Chairman of the Federal Reserve, said Friday.

"'Too big to fail' is a major problem," Greenspan said at The First Draft of History, a conference in Washington, D.C. "It has a major impact in the way investments are made."

There needs to be a fee or an additional tax, Greenspan said, or some way "to make no institutions too big to fail." Politically, however, he acknowledged that this was very unlikely to happen.

"The problem is when you have institutions too big to fail, it is essentially saying they... cannot compete in the marketplace," he said. "Those institutions' capital... are being financed by national savings. To this extent, it is they and not the more cutting edge technologies getting the capital."

This goes against the very purpose of the financial system, Greenspan said, which is to "direct (the nation's savings) to those physical investments with the greatest promise."

Read full post…

This post by John Keefe originally appeared on CBS' MoneyWatch.com.

---

The Dow at 10,000. Does it mean anything? It may be just fodder for financial writers: a Google search that also specifies September 2009 returns five million results. But it could be that the Dow Jones Industrial Average at 10,000 coincides with some extreme in valuation, and is a "destination" for the market. Otherwise, it's just a number, like one of those small, frequent mile markers that tick by on the interstate.

Read full post…

Princeton economist and New York Times columnist Paul Krugman (pictured left in a file photo) is feeling optimistic — at least in terms of a global financial apocalypse being averted.

Bloomberg's Kati Pohjanpalo reports that, speaking at a seminar in Helsinki today, the Nobel Prize-winner said that "the end of the world appears to have been postponed."

Read full post…