Obama's policies are routing any type of recovery in the economy.

[Soul Crusher]

How Obama's routing the recovery
Comments: 27
www.nypost.com

By CHARLES GASPARINO

Posted: 1:56 AM, January 11, 2010

     So, despite all the money spent on stimulus, the economy continues to lose jobs and unemployment remains at a staggering 10 percent. That grim news appeared to catch the Obama administration by surprise last week -- but it shouldn't have.

The number-crunchers at the Treasury Department have been celebrating what appears to be the end of the Great Recession as told through rising GDP, higher business profits and a buoyant stock market. But owners of small businesses -- the usual engines of economic growth -- are still refusing to hire back workers as they normally do when the economy turns up from a sharp decline.

Talk to them, and they'll gladly tell you why: Having weathered the recession, they now fear the administration will choke off the nascent recovery and increase their costs through higher taxes to pay for the myriad of programs President Obama has in store for us, including the hyperexpensive health-care overhaul.

If the president wasn't so busy looking to score cheap political points when he met with the heads of the big banks last month, he'd have listened to their warnings on this very issue. At one point, JP Morgan CEO Jamie Dimon politely interrupted Obama's monologue on how the banks should be lending more to small businesses to explain that many businesses simply don't want to borrow to expand their operations and hire more workers.

"Jamie basically said the demand for loans is way down because businesses, particularly those that are making money and can qualify for loans, simply don't want to borrow," said one person with direct knowledge of the conversation.

And they're not borrowing because they don't know just how high their tax bills will be when the president gets done implementing all his "hope" and "change."

That's what stock analyst Peter Sidoti is discovering. Sidoti's firm supplies research on so-called small-cap companies, ones the stock market values at $300 million to $2 billion. With typical payrolls of 100 to 2,000 employees, these are the very definition of the "small businesses" that provide many if not most of the nation's new jobs.

Of the 600 companies Sidoti and his team cover, "There hasn't been one bankruptcy," he tells me. How did they survive the recession? By cutting costs and hoarding cash, not expanding their business and hiring more people, even as the economy now is starting to recover.

During other recoveries, Sidoti says, firms like these would be hiring workers in droves as demand picks up for goods and services. This time around, they're not -- because "they don't know what their costs are going to be." And those costs are, of course, higher taxes.

He recalls a conversation with the CEO of one company he covers, Monroe Muffler, who said his average cost per worker is $35,000 a year, but he isn't going to expand his workforce much more if he has to pay another $8,000 a year in higher taxes, thanks to the new health-care plan and other government initiatives.

"This is a huge problem," Sidoti explains. "Unemployment is at 10 percent and all these businesses see are higher costs in the future from health care and other policies -- so they are hoarding cash. They're making money, but why logically would any businessman use this money to expand if he doesn't know what all his costs will be because of the expansion of these government programs?"

The issue is strikingly similar to what the banks face. As we're all aware, the banks are making big money and waiting to pay out bonuses in the coming days. But the cash isn't coming from lending the money out. Instead, the banks are cutting costs, hoarding cash and investing some of it in low-risk bonds.

Businesses are doing the same even if the economy "grows" according to official statistics. Why risk expanding operations and hiring workers amid a wild boom in government that will lead to massive tax hikes when you can make money simply by doing nothing or laying people off?

All of which translates into a jobless recovery -- the economy appearing to grow while unemployment remains unnaturally high -- unless of course, you work in government.

Charles Gasparino, CNBC on-air editor, is author of "The Sellout," about the Wall Street meltdown.<p>

________________________ ________________________ ____-

Is this anything different than I have said for months on end?   

[Soul Crusher]

JPMorgan chief says bank rules ‘anti-US’
By Tom Braithwaite in New York and Patrick Jenkins in London
Published: September 12 2011 00:01 | Last updated: September 12 2011 00:01
New international bank capital rules are “anti-American” and the US should consider pulling out of the Basel group of global regulators, Jamie Dimon, chief executive of JPMorgan Chase, has said.

In an interview with the Financial Times, Mr Dimon said he was supportive of forcing banks to have more capital but argued that moves to impose an additional charge on the largest global banks went too far, particularly for American banks.

EDITOR’S CHOICE
Dimon sizes up post-crisis banking - Sep-12

Jamie Dimon Q&A - Sep-12

FT series: Future of banking - Sep-13

Search for new approach to banking begins - Sep-08

Video: Sands says European banks face tough times - Jul-06

Interactive graphic: Leading banks’ changing fortunes - Sep-08

The Basel III capital rules are designed to make the financial system safer by making banks build up risk-absorbent “core tier one” capital to at least 7 per cent of risk-weighted assets. The biggest, including JPMorgan, have to reach 9.5 per cent.

“I’m very close to thinking the United States shouldn’t be in Basel any more. I would not have agreed to rules that are blatantly anti-American,” he said. “Our regulators should go there and say: ‘If it’s not in the interests of the United States, we’re not doing it’.”

Mr Dimon also criticised global liquidity rules, arguing that regulations that viewed covered bonds – a European market feature – as highly liquid but discounted government-backed mortgage-backed securities in the US were unfair and that other details hit investment banking activity core to US banks hardest.

Regulators say all countries compromised on agreeing the rules, which put eight banks – five from outside the US – in the top level of capital. But Mr Dimon said there was a threat that Asian banks, in particular, could take US market share because of the combination of US domestic and global rules.

“I think any American president, secretary of Treasury, regulator or other leader would want strong, healthy global financial firms and not think that somehow we should give up that position in the world and that would be good for your country,” said Mr Dimon. “If they think that’s good for the country then we have a different view on how the economy operates, how the world operates.”

US banks are struggling to deal with new regulations and litigation, both stemming from the financial crisis. Mr Dimon said it could be “three to 10 years” before the industry emerged from lawsuits brought by investors looking for compensation for the losses incurred on structured products underpinned by bad mortgages.

He said he was ready to agree a settlement over lax servicing and foreclosure standards that is expected to see the industry pay $20bn in penalties. But he said banks could not be placed in “double jeopardy” and needed an appropriate release from legal liability.

Additional reporting by Brooke Masters in London

Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

Print articleEmail articleClip this articleOrder reprints


http://www.ft.com/cms/s/0/905aeb88-dc50-11e0-8654-00144feabdc0.html#axzz1XhMHkPuK

[Fury]

This goes without saying for anyone with half a brain. Unfortunately, that rules out most of Team Dicksucker on here. 

[Soul Crusher]

This goes without saying for anyone with half a brain. Unfortunately, that rules out most of Team Dicksucker on here. 

Got to wonder how Dimon feels now after supporting Obama.

[Straw Man]

How Obama's routing the recovery
Comments: 27
www.nypost.com

By CHARLES GASPARINO

Posted: 1:56 AM, January 11, 2010

     So, despite all the money spent on stimulus, the economy continues to lose jobs and unemployment remains at a staggering 10 percent. That grim news appeared to catch the Obama administration by surprise last week -- but it shouldn't have.

The number-crunchers at the Treasury Department have been celebrating what appears to be the end of the Great Recession as told through rising GDP, higher business profits and a buoyant stock market. But owners of small businesses -- the usual engines of economic growth -- are still refusing to hire back workers as they normally do when the economy turns up from a sharp decline.

Talk to them, and they'll gladly tell you why: Having weathered the recession, they now fear the administration will choke off the nascent recovery and increase their costs through higher taxes to pay for the myriad of programs President Obama has in store for us, including the hyperexpensive health-care overhaul.

If the president wasn't so busy looking to score cheap political points when he met with the heads of the big banks last month, he'd have listened to their warnings on this very issue. At one point, JP Morgan CEO Jamie Dimon politely interrupted Obama's monologue on how the banks should be lending more to small businesses to explain that many businesses simply don't want to borrow to expand their operations and hire more workers.

"Jamie basically said the demand for loans is way down because businesses, particularly those that are making money and can qualify for loans, simply don't want to borrow," said one person with direct knowledge of the conversation.

And they're not borrowing because they don't know just how high their tax bills will be when the president gets done implementing all his "hope" and "change."

That's what stock analyst Peter Sidoti is discovering. Sidoti's firm supplies research on so-called small-cap companies, ones the stock market values at $300 million to $2 billion. With typical payrolls of 100 to 2,000 employees, these are the very definition of the "small businesses" that provide many if not most of the nation's new jobs.

Of the 600 companies Sidoti and his team cover, "There hasn't been one bankruptcy," he tells me. How did they survive the recession? By cutting costs and hoarding cash, not expanding their business and hiring more people, even as the economy now is starting to recover.

During other recoveries, Sidoti says, firms like these would be hiring workers in droves as demand picks up for goods and services. This time around, they're not -- because "they don't know what their costs are going to be." And those costs are, of course, higher taxes.

He recalls a conversation with the CEO of one company he covers, Monroe Muffler, who said his average cost per worker is $35,000 a year, but he isn't going to expand his workforce much more if he has to pay another $8,000 a year in higher taxes, thanks to the new health-care plan and other government initiatives.

"This is a huge problem," Sidoti explains. "Unemployment is at 10 percent and all these businesses see are higher costs in the future from health care and other policies -- so they are hoarding cash. They're making money, but why logically would any businessman use this money to expand if he doesn't know what all his costs will be because of the expansion of these government programs?"

The issue is strikingly similar to what the banks face. As we're all aware, the banks are making big money and waiting to pay out bonuses in the coming days. But the cash isn't coming from lending the money out. Instead, the banks are cutting costs, hoarding cash and investing some of it in low-risk bonds.

Businesses are doing the same even if the economy "grows" according to official statistics. Why risk expanding operations and hiring workers amid a wild boom in government that will lead to massive tax hikes when you can make money simply by doing nothing or laying people off?

All of which translates into a jobless recovery -- the economy appearing to grow while unemployment remains unnaturally high -- unless of course, you work in government.

Charles Gasparino, CNBC on-air editor, is author of "The Sellout," about the Wall Street meltdown.<p>

________________________ ________________________ ____-

Is this anything different than I have said for months on end?    

This is a great example of the absurdity of the popular right wing narrative that supposed  uncertainty over taxes is what is preventing business from expanding or hiring

Lack of DEMAND is the problem and that has nothing to do with with the so called uncertainty over taxes (and clearly I don't even buy the claim that there is so much so called uncertainty caused by Obama)

[Soul Crusher]

You really are dumber than shit straw.   There is no demand because people are broke due partially to the energy, food, health care, and monetary inflation by Obama bernake and geithner. 

[Soul Crusher]

The Dodd-Frank Layoffs
As regulation cuts profits, Bank of America cuts 30,000 jobs. .Article Comments (68) more in Opinion ».
Email Print Save ↓ More .
.smaller Larger 
What is the cost of overregulation? Bank of America appears to have provided part of the answer by announcing yesterday that the nation's largest bank will cut 30,000 jobs between now and 2014. CEO Brian Moynihan said the bank's plan is to slash $5 billion in annual expenses from its consumer businesses.

Mr. Moynihan didn't say this, but we will: These layoffs are part of the bill for the last two years of Washington's financial rule-writing. After loose monetary policy had combined with insane housing policy to create a financial crisis, the Democrats who ran Washington in 2009 and 2010 enacted myriad new rules that had nothing to do with easy money or housing.

Take the amendment that Illinois Democrat and Senator Dick Durbin (with the help of 17 Senate Republicans) attached to last year's Dodd-Frank financial law. Mr. Durbin's amendment instructed the Federal Reserve to limit the amount of "swipe fees" that banks can charge merchants when customers use debit cards.

How exactly does forcing banks to charge Wal-Mart less money for operating an electronic payment system prevent the next financial crisis? Readers may wait a long time for a satisfactory answer, but the cost of this Dodd-Frank directive is straightforward.

The Fed dutifully ordered banks to cut their fees almost in half. Bank of America disclosed in its most recent quarterly report that this change will reduce the bank's debit-card revenues by $475 million in just the fourth quarter of this year. The new rules take effect on October 1, so BofA seems to have sensible timing as it begins to shed workers from a consumer business that has become suddenly less profitable by federal edict.

Make that the latest federal edict. In 2009, when a comprehensive overhaul of financial regulation was still a gleam in Barney Frank's eye, President Obama signed the CARD Act into law. It limited the ability of banks to increase rates on delinquent borrowers and to charge fees on unprofitable customers. As Washington encouraged card issuers to be more selective in advancing credit and to demand higher rates when they do, interest rates on card customers predictably increased relative to other types of lending in the months after the law took effect.

Restricting bank profits on a particular product may have obvious populist appeal, but politicians shouldn't be surprised if banks decide that such consumer credit operations aren't good businesses and can function with fewer employees. Add in the various federal programs aimed at extracting penalties for this or that mortgage-foreclosure error and it's understandable that a bank would have trouble forecasting growth to justify its current work force.

To be sure, Bank of America is also suffering from its own mistake in deciding to buy Countrywide Financial in 2008. As for the financial industry generally, it had become distended and needed to shrink after the bubble years of easy money.

But given the real-world results for bank employees, politicians should not be allowed to pretend that there are no consequences when they deliberately reduce the profitability of employers. Mr. Obama proposed last week to spend some $450 billion more in outlays or tax credits to create more jobs, but it would have cost a lot less to save these 30,000.

[OzmO]

There is no demand because 18% are unemployed, millions are under employed, and the rest are being conservative with their money due to the gloom and doom they hear 24/7 and threat of losing their jobs.

bTW great thread.

[Soul Crusher]

There is no demand because 18% are unemployed, millions are under employed, and the rest are being conservative with their money due to the gloom and doom they hear 24/7 and threat of losing their jobs.

bTW great thread.

Energy inflation is killing the economy.  When people have to drop $70 into a tank where they used to pay $35, guess where that $35 is not going? 

[OzmO]

Energy inflation is killing the economy.  When people have to drop $70 into a tank where they used to pay $35, guess where that $35 is not going? 

It's more like an extra $20. But yeah, that's part of it.

[dario73]

This is a great example of the absurdity of the popular right wing narrative that supposed  uncertainty over taxes is what is preventing business from expanding or hiring

Lack of DEMAND is the problem and that has nothing to do with with the so called uncertainty over taxes (and clearly I don't even buy the claim that there is so much so called uncertainty caused by Obama)

Right here. Right here. Pay attention folks. This poster has mindlessly repeated what he learned in college but can't see other factors (already mentioned by 3333) that are affecting the economy.

This is the typical "intelligentsia" that Obama has surrounded himself.