Wake Up Call of the Day

Via (Ed Morrissey; Hotair)

Ezra Klein calls this “the scariest jobs graph you’ve seen yet,” and for good reason. The center-left Brookings Institute calculated what kind of job growth it would take to reach pre-recession employment levels, and how long it would take. Brookings takes into account population growth and therefore calculates that in this month, the total employment gap has expanded to 11.2 million jobs. According to their analysis, adding jobs at a rate equal to the best average monthly rate for any one year in the past decade will mean we won’t catch up to pre-recession employment until 2022 (via Newsalert):

Looking ahead, there are several challenges to sustained job growth. The boost to economic activity from the American Recovery and Reinvestment Act is winding down and job losses related to temporary Census workers will continue in July. Further, the four-week moving average of initial claims for unemployment insurance have hit their highest level since March and have remained above 450,000 all year.
The “job gap” underlying these numbers is daunting. In recent months, on this blog, we described the job gap — the number of jobs it would take to return to employment levels from before the Great Recession, while also accounting for the 125,000 people who enter the labor force in a typical month. After today’s employment numbers, the job gap stands at almost 11.3 million jobs.
How long will it take to erase this gap? If future job growth continues at a rate of roughly 208,000 jobs per month, the average monthly job creation for the best year for job creation in the 2000s, it would take 136 months (more than 11 years). In a more optimistic scenario, with 321,000 jobs created per month, the average monthly job creation for the best year in the 1990s, it would take over 57 months (almost 5 years).

If we start in 2009Q4, when Obama argued that Porkulus and his other economic policies started taking effect, the rate of job creation under his policies has been … +39,000. Bear in mind that this includes the massive Census Bureau hires made by the Obama administration in 2010.
 
How about just the private sector? The Brookings calculation isn’t limited to the private sector, so it’s a bit like comparing apples and oranges, but few people doubt that private sector jobs have to return in force to close the jobs gap. The average monthly growth in the private sector during the entire Obama term has been -192,000, and the average growth since the beginning of 2009Q4 has been +14,000. In other words, two-thirds of the growth numbers from Porkulus come from government hiring, not private-sector growth.
 
How long will it take to close the employment gap with a growth rate of +14K in the private sector? It’s flat-out impossible, because we’re digging the hole deeper each month at that rate. Under the failed Keynesian policies of the Democrats in Congress and the Obama administration, 2022 looks like a pipe dream instead of a nightmare.

Guess who pays in the new Financial Regulation Bill

Barack Obama celebrated the passage of the new financial regulation bill yesterday. So did Chris Dodd and Barney Frank. And why not? It’s not as though they’ll have to pay for the new bureaucracies and regulation imposed on the American financial system. For that matter, it won’t be the bankers, either. Who pays? Three guesses, and the first two don’t count:

Big banks facing big drops in revenue are looking to Main Street to make up the difference.
Checking accounts, bank statements, even popping into your local bank branch could carry a hefty cost as the nation’s mega-banks scramble to offset expected damage from the sweeping financial overhaul. The uncertain future has overshadowed otherwise strong second-quarter earnings at JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp.
All three companies beat expectations this week with profitable results. Yet their stocks tumbled, helping send the wider market sharply lower Friday.

This is so basic that people inside the Beltway never learn it. Costs imposed on businesses get passed to consumers. It doesn’t matter where those costs originate, whether they come from materials, labor, rent, taxes, or regulation. All of those figure into the price paid by consumers for the product or service provided.
 
How will consumers get hit with these new regulations? Expect more fees on more transactions, including paying premium prices for doing business face to face with bank tellers and other employees. Banks will start demanding higher minimum balances and start charging higher fees on accounts that don’t make the cut. Bank of America will lose between $7 and $10 billion just on charges for debit and credit cards alone, money that will get made up by its customers somewhere.
 
That's the big secret that most of the public fails to realize when Democrats continually issue the battle cry calling for raising taxes and fees on big business. Consumers may not pay the entire price, however, at least not directly. If you like your local branch, better get used to the idea that it may disappear. With billions of dollars in new costs landing with a thud on their balance sheets, we can expect to see branches close up entirely — and the jobs that exist disappear along with them.
 
In short, the bill will erode consumer buying power, harm retirement accounts that rely on the performance of financial institutions, and create more unemployment. What exactly did we get in return for all of this?
 
If you want a refresher course on business, I've done the legwork.  Pay attention!

More from "Recovery Summer".....13 year low in Mortage applications

Thursday, the Associated Press reports that mortgage applications hit a 13-year low last week despite low mortgage rates. Even refinancing applications dropped significantly:

Demand for loans to purchase U.S. homes sank to a 13-year low last week, and refinancing demand also slid despite near record-low mortgage rates, the Mortgage Bankers Association said on Wednesday.

Requests for loans to buy homes dropped 3.1 percent in the week ended July 9, after adjusting for the Independence Day holiday, to the lowest level since December 1996, the industry group said.
Refinancing applications fell 2.9 percent, and the mortgage market index that reflects total loan demand also fell 2.9 percent.
Average 30-year mortgage rates edged up 0.01 percentage point to 4.69 percent, but were near the record low of 4.61 percent set in March 2009, based on MBA records dating back to 1990.

Now that the artificial stimuli have ended, most of those who intended to buy have already done so in order to take advantage of a useless taxpayer subsidy of the sales. There remains only a historically small demand among those who either didn’t qualify for the tax break or didn’t need it, or perhaps a cadre of buyers who think that Congress will create yet another subsidy for sales and are waiting them out.

Remember when the Obama administration announced its plan to spend billions of dollars to prevent foreclosures? Again, it’s the Associated Press informing people today that there will be more foreclosures in 2010 than there were in 2009, breaking records again:

More than 1 million American households are likely to lose their homes to foreclosure this year, as lenders work their way through a huge backlog of borrowers who have fallen behind on their loans.

Nearly 528,000 homes were taken over by lenders in the first six months of the year, a rate that is on track to eclipse the more than 900,000 homes repossessed in 2009, according to data released Thursday by RealtyTrac Inc., a foreclosure listing service.
“That would be unprecedented,” said Rick Sharga, a senior vice president at RealtyTrac.
By comparison, lenders have historically taken over about 100,000 homes a year, Sharga said.

None of the stimuli and the rescue plans worked, because none of them addressed the core problem: joblessness. Without jobs, people lose their homes no matter how much the government intervenes to stop it. Until we get people back to work, these programs are simply futile. A homebuyer tax break doesn’t help someone without a job qualify as a buyer, and restructuring plans for existing mortgages can’t help an unemployed person make a mortgage payment. We need to shift gears quickly to reduce the massive uncertainties created by the radical Democratic agenda, reduce taxes and the regulatory burden, and get capital working in the US again so that we have employment at a level where foreclosures return to their normal level. Only then will housing markets stabilize.