Economic News

The government, which was designed for the people, has got into the hands of the bosses and their employers, the special interests. An invisible empire has been set up above the forms of democracy. ~ President Woodrow Wilson

Today's posting is recent US economic stories that caught my eye.

Criminal Abuse of the Federal bailout!
There are now nearly 20 criminal investigations concerning "public corruption; corporate, stock and tax fraud; insider trading; and mortgage fraud" relating to bailout money.

Bailout Money being used to Lobby for More Money!
The biggest recipients are using taxpayer bailout money lobby Congress for more. According to the Associated Press, "The top 10 recipients of the government's $700 billion financial bailout spent about $9.5 million on federal lobbying during the first three months of the year." Lead among them is GM, which burned through $2.8 million in lobbying in the first quarter alone.

Happy Debt Day!
On Sunday, April 26, the federal government had spent all the money it will raise in taxes for the current fiscal year. From now until the end of the fiscal year in the fall, the government will be spending money that it will borrow from the Chinese and others, which will be repaid by our children and grandchildren. With interest. This is the earliest Debt Day in modern history.

States with Highest Unemployment Also Have High Income Taxes or High Unionization or Both
Perhaps employment requires successful businesses that are not oppressively taxed or unionized? Many states & the US are digging a deep hole . They borrow money to "help" the economy, then raise taxes to pay for the budget gap, which forces some businesses to layoff or close thus dragging down the economy further.

Florida county declares state of economic emergency
Declaring a state of emergency from a natural disaster is normal nowadays. But this is believed to be the first economic declared disaster.

Bottom Line

The US is spending money at new levels beyond the Great Depression, beyond the cost of WWII, beyond going to the moon. And yet as recessions go, this one is not so bad (yet). The economy that Reagan inherited from Carter was far worse. But don't dismiss this one. The Federal government may spend our way into a Great Depression.

The Economist.com warns The worst thing for the world economy would be to assume the worst is over

Action on the current scale has never been tried before and nobody knows ... how much difference it will make. ... it would be a mistake to confuse the twitches of an economy on life-support with a lasting recovery. A real recovery depends on government demand being supplanted by sustainable sources of private spending. ... Growth, when it comes, will [initially] be too feeble to stop unemployment rising and idle capacity swelling. And for years most of the world’s economies will depend on their governments.