Jobless Rate in Western US States Rises Above 10 Percent

Over the years the unemployment rate has been a key indicator for measuring the US economy.  However theses numbers are easily scewed and remember self employed people who are out of work are not factored into this number.

The AP reported unemployment rate in the West jumped over 10% last month, the first time that regional threshold has been broken in about 25 years. On the state level, eight set record-highs and only two Nebraska and Vermont did not report increases.

The Labor Department reported Friday that 48 states and the District of Columbia saw employment conditions deteriorate last month. The fallout from the longest recession since World War II, was the worst in Michigan as automakers cut tens of thousands of jobs. Its unemployment rate rose to 14.1%.

The West region reported the highest jobless rate at 10.1%. The last time any region had a rate of at least 10% was September 1983, when the country was emerging from a severe recession.  The region is home to California, where the jobless rate rose to a record 11.5 % last month, Nevada, where it’s a record 11.3%, and other states that have been slammed when the housing boom went bust snatching jobs and wealth.  

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Short Sided Mortgage Reform Bill

Freddie Mac’s most recent mortgage market survey shows that a thirty-year home loan with fixed interest rates that dropped to 4.80% this week.  At the same time, congress is putting their finishing touches on HR 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009 that claims to address several aspects of the mortgaged origination, loan securitization and servicing process. The mortgage bill was debated Thursday at a House Financial Services Committee hearing.  HR 1728 would require loan officers to determine a borrower’s ability to pay back a home loan, and only extend mortgage refinancing when there is a “net tangible benefit” to the borrower. Loan officers would no longer be able to collect yield-spread premiums or other compensation that many critics say served as incentives to steer borrowers into higher risk home mortgages that cost the consumer higher fees and terms that benefit the mortgage lender.

Last week, Fed Chief, Ben Bernanke talked about the need for government regulation to protect homeowners and American consumers. The central bank had approved new home financing regulations aimed at curbing abuses on home mortgages. The mortgage lending revisions would restrict mortgage lenders from offering home mortgages without proof of a borrower’s income and would require lenders to make sure risky borrowers set aside money to pay for taxes and insurance.  As FHA loan market-share grows, so does the risk for defaults, foreclosures and more “egg on the face” for mortgage companies that originate FHA mortgage loans.

The mortgage reform bill would also drop the trigger for mortgages to be considered “high cost” and subject to the more stringent requirements of the Home Ownership and Equity Protection Act (HOEPA). Mortgage lending companies remain adamant that home loans subjected to HOEPA are difficult or impossible to securitize and sell to secondary-market investors.  To encourage responsible lending, the bill would also create a limited “safe harbor” from lawsuits for “qualified mortgages” prime, fully documented, thirty-year mortgage loans. Those mortgages would be exempt from some of the bill’s requirements.  I find that “exemption” very interesting.  Let me tell you this smells like a short-sided mess that enables the politicians to pat themselves on the back while enhancing their image as “tough” on mortgage crooks.  From a distance it looks great, but they appear to be tacking this bill on poor legislation that lacks the foundation we need for fair and responsible lending.  - Commentary written by

Steve Forbes Hammers Obama Financial Plan

Economic Critics Blast Obama

Bill Plante reports on Obama’s swift action on the economy during his first fifty days gets pans from detractors, Harry Smith talks to Steve Forbes, Peter Morici and the Financial Times’ Chrystia Freeland.

Keeping the Feds Out of the Banking Business

Take a look at this Video from Forbes reinforcing and emphasizeding that the US government needs to oavoid nationalizing banks.

Steve Forbes Video Keep Feds Out of Banking Business

Chairman, CEO of Forbes and Forbes magazine editor-in-chief Steve Forbes says the government should stay out of the banking business.

Fed Chief Considers Lessons of First Great Depression for Capitalism Survival

Watch the Federal Reserve Chief, Ben Bernanke as he reviews the mistakes made in the First Great Depression. Bernanke takes a question from Arnaud de Borchgrave about whether capitalism has failed.  Borchgrave asks the Fed Chief if they have become a casino, divorced from productive activity with social utility.

Fed Chief Bernanke Considers the Great Depression

Bernanke analyzes the Great Depression, but does not criticize the casino aspects of Credit Default Swaps that led to the current situation. It seems obvious that the financial sector is a large machine with nothing real to invest in, as the real economy has been destroyed or off shored so the financial class are left to invent artificial ‘innovations’ aka derivatives that sucker in investors to invest in things of no real productive value, aka financial weapons of mass destruction. Watch more videos on

New York and LA to lead US Cities in Job Losses

Only 5 metropolitan areas in the U.S. will escape job losses this year, according to a forecast released Saturday by the U.S. Conference of Mayors.  Many analysts anticipate that New York will be hit hardest as thousands of jobs will be cut as Wall Street firms clean house. Large financial firms are cutting work force as they adjust to loss of cash flow and bad debt. Some banking institutions have gone under, like Lehman Brothers which filed for bankruptcy in September.  While other struggling banks like Indy Mac, WAMU and Wachovia are taken over with buy-outs.

The New York marketplace is expected to lose 181,000 jobs in 2009, the report said. Consulting company IHS Global Insight produced the report for the group.  While the greater Los Angeles area is expected to see 164,000 lost jobs, mostly because of the sour housing market that has seen a significant decline in home prices that has tore through the Southern California economy.  After New York and Los Angeles, the Miami area is expected to see the greatest loss, with a decline of 85,000 jobs. Chicago and the surrounding area are next, with losses projected at 80,000.

Unemployment is expected to top 10%  in 70 areas, from already hard-hit cities like Detroit and Cleveland to places that had until recently been prosperous like the Riverside-San Bernardino area in California. Other big cities like Denver and St. Louis are expected to see unemployment rise above 9%.  Ithaca, N.Y.; Fairbanks, Alaska; and St. George, Utah, are among the handful of the nation’s 363 metropolitan areas expected to see employment remain flat or increase slightly.  Get the latest news and insight at  

Read more articles:  Fed Chief Says Obama Stimulus Could Revive Economy and Housing Markets |  California Home Prices Forecasted to Decline Further in 2009  

Fed Chief Says Obama Stimulus Could Revive Economy and Housing Markets

Federal Reserve Chairman Ben Bernanke said today that a giant stimulus package continues to be crafted by the team of President-elect Barack Obama that many believe will give the economy the boost it needs, but additional measures must be taken to reinforce the unstable financial system for any recovery to work.  In his news conference, the Fed Chief suggested the government infuse more funds into banking system. He offered options to deal with bad credit mortgages and other poor performing assets held by financial institutions, a problem that has contributed to stagnant mortgage lending.  Again, Bernanke requested government intervention to stem the foreclosure crisis in the wake of a crumbling housing market.

The Fed Chief mentioned that the $800 billion recovery plan, a combination of tax cuts and increased government spending is now being massaged by the Obama team and the Democrat-controlled Congress could provide a “significant boost” to the hobbling economy. But he made clear that such a plan must be part of a broader, multi-pronged government response to fight the worst financial and housing crisis the hit the U.S. and the global economy since the Great Depression in the 1930s.  “Fiscal policy can stimulate economic activity, but a sustained recovery will also require a comprehensive plan to stabilize the financial system and restore normal flows of credit,” Bernanke said. “History demonstrates conclusively that a modern economy cannot grow if its financial system is not operating effectively.”

To help on that front, the Federal Reserve has agreed to lend billions to finance companies and purchasing some of these companies’ debt to rebuild the credit markets. The US Treasury Department is overseeing a $700 financial bailout program that has pledged to inject $250 billion into banks in return for partial government ownership.   Bernanke said “more capital injections and guarantees may become necessary” to stabilize financial markets and spur more lending. If Obama’s incoming Treasury secretary Timothy Geithner decides to remove toxic assets from financial institutions’ balance sheets — the original but abandoned strategy under the $700 billion bailout — Bernanke suggested some options to do that.

Bernanke said he understands this concern, but added: “This disparate treatment, unappealing as it is, appears unavoidable.”  Washington policymakers, Bernanke said, “must therefore do what they can to communicate to their constituencies why financial stabilization is essential for economic recovery and is therefore in the broader public interest.”

The Federal Reserve Chief reminded us that more Obama led relief efforts were on the way to stop the home foreclosure mess could strengthen the real estate market if the lenders offer loan modification plans that struggling homeowners can afford.   To soften the landing from the recession, last month the Fed Chief cut key rates to an all-time low of between zero and 0.25%. The Federal Reserve renewed his commitment to keep mortgage rates at that level for some time and pledged to use unconventional tools to jump-start the ailing economy. The central bank led by the Fed Chief will reconvene later this month to assess economic and financial conditions.  Sign up today at