EconomicCrisis.US

Thursday’s announcement by the US administration of a “Financial Crisis Responsibility Fee” has turbo-charged an already heated debate – not just on the merit of an incremental tax on banks, but also on its design and the distortive manner in which it could impact on individual institutions.

While interesting, these are no longer the relevant issues. We have left the realm of what should happen and are now embarked on what is going to happen. Specifically, Thursday’s announcement marks the beginning of the era of banks being targeted for selective incremental taxation in advanced economies around the world.
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A 17 percent unemployment and underemployment rate. The real problem behind President Barack Obama’s surprisingly dropping approval rating and what could be a factor in the Massachusetts Senate Race is a not-so-surprising reason; the combined U.S. unemployment and underemployment rate.

According to Portal Seven and based on U.S. Bureau of Labor Statistics data, the U6 Unemployment Rate is:

The U6 unemployment rate counts not only people without work seeking full-time employment (the more familiar U-3 rate), but also counts “marginally attached workers and those working part-time for economic reasons.”

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Blame China, Saudi Arabia and, yes, Canada.

Much of the fault of the financial crisis has been heaped on Wall Streeters, unscrupulous mortgage lenders and weak regulators. But in a new research paper, economist Ricardo Caballero says there is another major group of contributors to America’s monetary mess who are not getting the blame they deserve: foreigners.

“There is no doubt that the pressure on the U.S. financial system [that led to the financial crisis] came from abroad,” says Caballero, who is the head of MIT’s economics department. “Foreign investors created a demand for assets that was difficult for the U.S. financial sector to produce. All they wanted were safe assets, and [their ensuing purchases] made the U.S. unsafe.” (See the financial crisis after one year.)
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After receiving billions of dollars in government bailouts, U.S. banks are under increasing pressure to start lending money again. With banks paying back emergency government loans faster than expected, President Obama is reminding bank executives that it is their turn to help the U.S. economy. But as 2009 comes to a close, some analysts warn the banking crisis is far from over.

As U.S. banks repay billions of dollars in government bailout funds, President Obama held meetings with top bank executives in December, telling them it is time to return the favor.

“The way I see it, having recovered with the help of the American government and the American taxpayer, our banks now have a greater obligation to the goal of a wider recovery,” President Obama said.
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