Still Recessive


STILL RECESSIVE
by: Paul Goree Las Vegas, Nevada 4/2/2010

The unemployment rate in Nevada is 13.2%. Nationally the unemployment rate is 9.7%.(1) When I started this blog, I wanted to focus on the factors of unemployment and the maneuvers taken by President Obama and state government to resolve them. It was my determination that our American culture would start to tread into new spheres of political governance, as we set to resolve ourselves and future of our nation. I introduced material from Jason Kirby, which detailed and questioned the value of the American dollar and it’s proposed replacement; the Amero. One entry provided a comparison of former Presidents and the various ways each maneuvers the economy. Since this blog began, the nation has witnessed for the first time in our American history, four Tiers of unemployment extended benefits from the federal government.

In some states like Nevada, an extension of state benefits was also provided. These extensions are effort, intended to help the American working class, as the government tackles the unemployment crisis of the nation. The unemployment rate has risen 7 percent, over the pass two years. These risen percentages are nearing 1935, by which the unemployment rate was 25% nationally. To understand these variations, I did an abstract historical comparison, with regards to the state of the union. I chose to compare 1860, 1865 and 1935. With the comparison I read Margaret Mitchell’s “Gone With The Wind”, David Brinkley’s “Washington Goes To War and Don Jordan ”White Cargo”. In Mitchell’s work, the heroine Scarlet O’Hare, facing unemployment issues, as she tries to find a work force for her lumber mill. She resorts to inmates and becomes infuriated to find, the hired management was not properly attending to the needs of the workers. Race is irrelevant in this work. Evident, is the discrepancy of employee rights and employer rights. In a way, Scarlet was suggesting “socialized” care for her employees. More prevalent was the need for good nutrition, which would result in HEALTHY employees. Hint, Hint…This is the same issue we are facing today, as the federal government, occupies the role of health care administer, often neglected or over priced for working Americans.

The comparison, also suggested, the current recession and lingered unemployment is not a new event for the United States of America. Thus having survive the devastating tribulations of the Civil War and the Great Depression of 1929:We can rely upon the resiliency we tend to foster, in such occasions.

I also introduced something new to this blog, the Gross Domestic Product (GDP). The GDP is the amount of products or services and property produced within a given period. The importance of the GDP is closely related to the unemployment rate. As the demand for product and services is reduced due to recessive measures. The need to supply the demand is reduced, thus reducing the work forces involved. The national GDP has a 0.4% increase for 2008, resulting in Dollar GDP of $363.8 billion, representing a 2.6% increase. Within the state of Nevada, the GDP is -0.6 decreasing from 2.7% in 2007. In 2008, the Dollar GDP was $133 million. (2)

With unemployment rates at 13.2% in Nevada and 9.7% nationally. I question, what was it that got us in this predicament. It is odd, how soon we tend to forget the primary factors of occurrences, as time smoothly transgress us forward. So a renewed grasp of the events is necessary at this point. The slowing sprouted in 2008 with the fall of the stock market in February. At that time the federal government refused to lower interest rates, keeping it at 2%.(3) This action created doubt among investors as a slew of historical commences took place within the financial market. It is often believed that when the stock market fall, a quick fix is to lower interest rates, which result in consumer consumption, fueling an increase in the market as investor are reassured of their investments. But in 2008 this did not occur. Instead Alan Greenspan refuse to lower the interest rates, and the actions that followed by the federal government lead to a domino effect of collapse. (3)

Soon after the market fell, the banking industry appeared to be melting from it’s core. Between 2008 to 2010 a total of 206 banks have closed through-out the nation.(4) In March 2010 alone, 19 banks have closed. The importance of this becomes vital, when prior years are compared. In 2007 a total of 4 banks closed nationally. From 2005-2006 no banks closed.(4) The collapse of the banking industry, made it difficult for borrowers to acquire loans. This in effect resulted in a suspension of consumer spending and commercial loans for smalls businesses and luxury item loans (ex: car loans). Then the biggest surprise of 2008 mounted the failing economy, as news spread that AIG was to received a $85 billion dollar loan from the Federal Reserve Board. In exchange the federal government will received 79.9% stalk in the company. (5)

AIG was the nations largest insurer to file bankruptcy. AIG successfully offered credit default swaps. These swaps were insurance like contracts, against a company defaulting on increasing loans. Trouble began for AIG when these defaulted swaps became defaulted and sub-prime mortgage-backed securities holdings began to default also. (5) AIG’s stock fell 91% creating a huge debit for the company. (5) Towards the end of 2008, the company experienced more obstacles, as it’s credit rating was reduced below AA level, effecting it’s ability to acquire credit.

The pivotal course of change for AIG began in 1968 when it shifted it’s operation from personal insurance to high-margin corporate coverage, under the management of Marcus Greenberg. (5) In a cost cutting effort Greenberg, began using brokers instead of pricy agents. This successful move made him CEO of the company. Soon after he went public with the company in 1969. Over the 45 years that followed, the company grew larger and crucial within the financial industry. Then in 2005, Greenberg was brought up for fraud investigation and accounting scandals.(5) In 2008 CNN’s host Anderson Cooper named Cassano as one of the “Ten Most Wanted: Culprits” of the 2008 financial collapse in the United States. AIG’s role in the recession, was essential for they provided the guarantee of defaulted loans and huge grouped mortgages across the nation. Once they were unable to obtain credit to pay on those securities, fear began rise.

In 2008 the home mortgage industry was ruptured. Huge companies like Countrywide Financial, sold risky mortgages to thousands who could not afford them, leading to the current foreclosure crisis.(6) Nevada currently leads the nation with foreclosures. In 2009 Realty Trac reported 274,399 foreclosures on U.S. properties during the month January: a 10 percent decrease from December but up 18 percent from January 2008. In Nevada the Realty Trac reported 14,444 Nevada properties in January 2009 were foreclosed on: up 137 percent from January 2008. (6)

The instability of the mortgage industry is one of the primary factors which has displaced our nation. From the top, it seems that as the stock market tumbled many huge investors began to request payments on loans, which were push through sometimes violating industry standards. As usual when the stock market continues to fall, production levels are reduced, thus the GDP is decreased and in turn, employment begins to shrink. Unemployment is often linked to the GDP, as employers downsize staff to met effective cost measurements. With unemployment individuals and families find it harder to make timely mortgage payments and maintain day to day living expenses. Also a stressful occurrences is the employment search, as the unemployed attempts to find employment within a work force with an percentage level higher than 10%.

As these factors roll into a continuous event, savings and retirement funds are slowly dwindled. Once these funds are exhausted, unemployment benefits are used and depleted. Finally the hardship of no employment becomes a horror, one faces the reality of homelessness due to foreclosure or exhausted funds. Since I have been tracking these events in Las Vegas, Nevada, I have witness the extent this domino effect has played out in various peoples lives.

Many turn to churches and non-profit organization for assistance. Many spring into retraining or finish degrees, through an academic school or they jump into a new career altogether. Families become co-habitant to combat living cost expenses. And more dreadful is the level of depression that rises among the nations people. In blog 4 (Tier II Unemployment Benefits) I quoted a positive encouraging statement from Franklin D. Roosevelt, as he urged the nations citizens to remain physically and mentally occupied during times of depression. Lofty behavior is the most damaging factor, that we as a nation could not let intruded into our consciousness. FDR, suggested that if compensating employment was not available, then one should work for free. Neighbors should assist one another with basic living essentials and together we can rise above the realms of the depression and unify stronger as a nation assisting a nation during the event that rivets all of us. (7)(8)

Nevada government officials are confronting the grim reality, as the result of a recessive/depression economy seize the state. As the city struggles with negotiations with union representative, Mayor Oscar Goodman, joking stated “that he will fire all city employees, then rehire them at an 8% pay cut.” (9) Fortunately attorneys for the city, informed him that his taunt was not a possible option for the city, as it struggles to budget a $400 million short fall over the next five year. (10) The dwindled budget is the result of falling revenue taxes. (10) Again displaced workers have less money to spend on the entertainment that is an institution in this fabulous city. The mayor admittedly let the press and city employees know, “There’s nothing easy about this…”We’re on top of it, but there hasn’t been any resolutions at this point …” (10).

Union representatives stated that they will relinquish a 3% cost of living increase next year and take 96 hours of furlough. However the city can only offer 8% cut this year and another 8% next year and urge union representative to consider the offer, otherwise 146 lay offs will be the result of failed negotiations. (9) Las Vegas and its employees are stuck in “gridlock” over wage issues, and they are not the only ones effected as many local industry attempt to budget smaller funds.

At St. Rose Dominican Hospitals administration has eliminated 57 jobs throughout three hospitals in Las Vegas. These jobs were cut as a direct impact of the economic downturn. (11) Clark County School District cuts are taking place at the various public schools through out the county. The proposed cuts would cut athletics, reduce school police patrol and eliminate extracurricular activities, such as fine arts and after school interest groups. The school district must reduce spending by $123 million for the 2010. Some believe that along with furloughs the reduction of teachers will follow the 2011 school years. (11) Clark County School District employees are being asked to take a 5% pay cut, along with reduced scheduling and layoffs. Already the continuance of these cuts can be experienced, as Nevada student place 44th in national reading scores. (11) Education should be one of the last budgets to be cut or eliminated, as it is, an end result in an undermining disaster for the states future.

Employment opportunities within the state, county and city are still on a hiring freeze status, except where budget programs allot, such as civil engineers and legal attorneys. Also the police department and detention centers, have slowly increase their staffs, within the thinning budget.

The cause and effect of the recessive nature of our economy, has caused me to seriously examine efforts by President Obama, as he bravely attempts to battle each dire crisis, with sincerity and fair concordat. His method of stimulus packages, extended unemployment benefits, tax cuts and tax stimulus’s, and job creation have enrage, many conservatives and extremist who believe the President is pushing a Socialistic agenda upon the nation. I find the ordeal funny considering the extensive funds used to bail out “private” industry during this entire ordeal. I support President Obama’s efforts, as a positive change in America, as the government becomes a sovereignty that administers governance as detailed by the people, for the people.

The sentiments expressed by today’s conservative “The Tea Party” and the likes of them; bring to mind something written as criticism of Franklin D. Roosevelt during his New Deal legislative enactment. With concerns of The New Deal John Dewey, the father of humanism, wrote in Individualism, Old and New (1929):

“We are in for some kind of socialism, call it by whatever name we please, and no matter what it will be called when it is realized….There is still enough vitality in the older individualism to offer a very serious handicap to any party or program which calls itself by the name Socialism….The older individualism is still sufficiently ingrained to obtain allegiance in confused sentiment and in vocal utterance.” It was clear to Mr. Dewey that if socialism was to come about, it would have to bear a different title. Later, in 1929, came the stock market crash which brought about the intended condition of despair in this country and the subsequent election of Roosevelt and the “New Deal”. (12)

It’s odd how we seem to be reliving the events of 1935. I adore Franklin D. Roosevelt and in accordance his cousin, who preceded him to the White House with their diplomatic agendas, some titled “Socialism”. Theodor Roosevelt enacted early amendments to workers rights, which included Workman Compensation Act of 1916 and regulatory Child Work conditions. He too was criticism for “socialistic” type legislation. Yet today these very bites of legislation, are the guarantees of the working class in this county. So CHEERS to President Obama, may he continue to set precedence with effective legislation for the people, by the people…(or what some call SOCIALISM).

FOOTNOTES/REFERENCES:

1.) (1) http://www.bls.gov Bureau of Labor Statistics March 2010

2.) (2) http://www.bea.gov national and state GDP 2009, 2008, 2007

3.) (3) Stock Market: Stock Market Crash 2008-2009 by: boycott chapter 27
http://www.hubpages.com

4.) (4) http://www.fdic.gov/bank/individual/failed/banklist.html listing of all bank closures
2000-2010

5.) (5) Feds In AIG Rescue – $85 Billion Loan
by: Tami Luhley Sept 17, 2008 CNN Money http://www.cnn.com

6.) (6) Nevada’s Foreclosure Rate Top nations Once Again
by: Steve Green Feb 2009 Las Vegas Sun http://www.lasvegassun.com

7.) (7) Oglethorpe University Commencement Address FDR quote (22 May 1932)

8.) (8) First Inaugural Address FDR quote (4 March 1933)

9.) (9) News Story | Posted 04/02/2010 | By HUBBLE SMITH LAS VEGAS REVIEW-
JOURNAL

10.) (10) CCSD Online Budget Survey Results Released
channel 8 lasvegasnow.com Posted: Mar 26, 2010 9:46

11.)(11) Nevada reading scores remain below national average
(Results for fourth, eighth grade statistically flat from 2007 to 2009 )
By JAMES HAUG LAS VEGAS REVIEW-JOURNAL Mar. 24, 2010

12.) (12) John Dewey http://www.apfn.org/THEWINDS/1997/05/new_deal.html

13.) (13)SUPREME COURT OF MISSISSIPPI
NO. 2007-CA-01454-SCT FRANKLIN CORPORATION v.
PAULINE TEDFORD, LORA SMITH, JUDY HAIRE AND SAMANTHA
MIXON DATE OF JUDGMENT: 07/26/2007
TRIAL JUDGE: HON. ANDREW K. HOWORTH: court establishes
Theodor Roosevelt’s Workman Compensation Act of 1916

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