Unemployment Spikes Unexpectedly to 10.2%

President Barack Obama made a promised earlier this year that unemployment would not go above 8.8 after the $787 billion stimulus package remember. Well for nearly every month except of August unemployment went up,up and away.

On Monday, the president tempered his remarks by warning the American people the unemployment will be 10%. The president was right kind of . Today, the Department of Labor released the latest non-farm payroll  and the number is 10.2% for the month of October.  This come on the heels of last week survey that found consumer confidence took a dive meaning the public is not buying goods and services and worried for their jobs.

So now as people getting ready for the holiday season; they were delt a one-two punch the consumer is frightened to shop or to look for a holiday job.

And retail employers are skittish about hiring temporary and stocking less and less.

Today, President Obama said it “a sobering number that underscores the economic challenges that lie ahead.” Later the president signed a series of bills that extended unemployment and extend the homebuyer tax credit to include people who have owned homes previously. The legislation also allows homeowners who are  underwater  on their loans and about to be foreclosed on to give mortgage to the government via bank or mortgage company; and person will rent the home from Uncle Sam.

If that not enough some economist worry that the unemployment number will climb to if not over 11%. Mark Zandi of Economy.com and Joshua Shapiro US economist with MFR, Inc say they were surprised that Unemployment reached 10% quickly and revised their outlook that unemployment will peak at 11 by mid-2010. Earlier this year the suggested the unemployment rate would reach 10.5% by mid-2010.

“It’s not a good report,” said Dan Greenhaus, chief economic strategist for New York-based investment firm Miller Tabak & Co. “What we’re seeing is a validation of the idea that a jobless recovery is perfectly on track.”

Today’s numbers is the highest in 26 years.

There are some rays of hope. Temporary work is  for the third month in row. Education and Health care industries also grew.

Yahoo Finance

Gold is Racing Toward 11,000 as India’s Central Bank buys 200 Tons

Gold continued is impressive run on Wednesday crashing the 11,000 barrier before retreating to closed at 10, 086.70 after India’s central bank bought 200 tons of the shiny stuff worth $6.7 billion and it’s head saying the US and European markets “collapsed”

The news show Asian markets are quickly moving away from the US dollar.

The purchase by the New Delhi Reserve Bank  form the International Monetary Fund may spur other Central banks across Asia to join India to buy gold and drop the dollar.

Inida’s Finance Minister Pranab Mukherjee says the purchase by India show how strong the Indian economy compared to the west. “We have money to buy gold. We have enough foreign exchange reserves.”

Mukerjee points out India’s strength versus west. “Europe collapsed and North America collapsed.”

“This is a landmark trade,” said Jonathan Spall a director at Barclays Capital and a gold ­specialist. “Central banks are conservative institutions and India’s move is a sign for other central banks and sovereign wealth funds that were contemplating buying gold.”

India gold purchases come after the People’s Republic of China bought their fail share of  golden commodity  over the last six years.

Traders and miners  believed that China and Middle East soverigen wealth funds will  buy more gold.

Financial Times.

Republican Have a Spilt Decision New Jersey and Virginia and Loses Upstate New York

Democrats gain a foothold in US House Representative as conservative candidate Douglas Hoffman loses to Bill Owens.  Until Saturday it was a three person race. The Republican Dede Scozzafava who bow out and gave her support to Bill Owens  took needed votes for Hoffman. Owen won 49% to 45%. Scozzafava  grabbed 6% of the vote even though she got out of the race.

But the bombshell is the landslide in Virginia Robert Mc Donnell defeated Democrat Creigh Deeds by 58%-33%. Deed lost Republicans and Independent voters Tuesday.

In New Jersey, in a very close election Republican Chris Christie former US Attorney in New Jersey beat incumbent Governor Jon Corzine by 5% points49%-45%. The margin would have been bigger however because of Independent candidate Chris Daggett garnered 5% of the vote.

President Obama spent a significant time, money and resources in the Garden State and Old Dominion. It didn’t help.

Hot Air

Yahoo News

WCBS-TV/HD “CBS 2  News”

In Iowa Some Obama Supporter Have Buyers Remorse

For some in Iowa,  Buyer’s remorse is setting in. Meet Pauline McAreavy  76, a retired school nurse in Williamsburg. McAreavy voted for President Obama last year, wanting change from the Bush Administration.  She change her party affiliation to Democrat to vote former Illinois Senator, welcomed young Obama volunteers in her home.

But all that has changed. McAreavy is downcast  about Obama hasn’t been forceful enough. In a recent letter campaign letter she wrote back that she wanted to see results. “Until I see some progress and he lives up to his promises in Iowa, we will not give one penny.”

“I’m afraid I wasn’t realistic,” Ms. McAreavy, 76, a retired school nurse, said on a recent morning on the deck of her home here in east-central Iowa.

“I really thought there would be immediate change,” she said. “Sometimes the Republicans are just as bad as Democrats. But it’s politics as usual, and that’s what I voted against.”

If that’s not enough McAreavy  is worried about Afghanistan and Health Care Reform. She fears that her grandson who is the Iowa National Guard would head to Afghanistan. In regard to health care She is afraid that her Medicaid will be reduced which she may have fewer mammograms. McAreavy sees Obama programs from Democrats purview.

“All my Republican friends — and independents — are sitting back saying, ‘Oh, what did we do?” Ms. McAreavy said. “I’m not to that point yet, but a lot of people are.”

Meet another Obama supporter in Iowa who wonders about his vote.  John Sager a retired electrical engineer in Marshalltown,  felt that Senator Obama was worthy of his vote that he lend his name of to the campaign of Republicans who supported Obama.

“He gave a fairly decent presentation, but that’s what it turned out to be — a presentation,” said Mr. Sager, 77. “I don’t think he should keep hiding behind the fact that he inherited all these problems.”

While some voters have buyers  remorse others are supportive of the president.

Paul Johnson is Student legal services attorney at Iowa State University in Iowa City. He and his wife Kathy are loyal Democrats and very supportive of the president.  As a candidate and nominee they love the soaring optimism but now as President he seem more subdued and tentative and doesn’t own up to his responsibilities .

“I think he was more presidential when he was running for office than he is now,” said Paul Johnson, 58, a student legal services lawyer at Iowa State University. “He seems more subdued, which is probably a result of having to actually deal with the issues on his plate as opposed to just rallying the troops to vote for him.”

Obama want their first choice that was former Senator John Edwards, Senator (now Vice President) Joe Biden,  and third was Hillary Clinton. When Obama won the nomination they enthusiastic supported him. They say his doing a good job, but the believe he need to be more forceful in actions.

“It’s overdue for him to actually take charge here,” said Ms. Johnson, 57, a social worker in the town of Nevada.

Candi Schmieder, 40 is another Obama supporter. She trusted the president but thinks the vote if it happened today thing might be different. In her country the were a tie between Obama and Senator John McCain;  until absentee votes propelled Obama to the win.

Bailouts of banks, car companies, and stimulus and the war in Afghanistan has taken its toll  with the voters but many like the President personally but his approval went from 64% to 53%. So far the verdict is mixed one year later after the historic election.

New York Times

Feds Closes 9 Bank Subsidaries of Chicago’s FBOP Corp.

On Friday, the Federal Deposit Insurance Corporation closed Oak Park,Ill based FBOP Corporation. FBOP had nine regional banks in California, Arizona,Texas and Illinois. The closure of FBOP was the fourth largest bank to fail to this year.

Minneapolis based US Bancorp acquired FPOB subsidiaries:

California National Bank with 68 branches based in Los Angeles.

Pacific National Bank  with 17 branches based in San Francisco.

Park National Bank with 30 branches  based in Chicago.

San Diego National Bank with 28 branches based in San Diego.

FBOP own some smaller banks in Texas and Arizona with one or two branches including: Bank USA based in Phoenix,AZ;  Citizens National Bank of Teague, TX; Madisonville State Bank , Madisonville, TX,  North Houston Bank based in Houston,TX; and Community Bank of Lemont, Lemont,Ill.

These banks re-opened as branches of US Bank on Saturday.

Los Angeles Times

FBOP Corporation

Wikipedia

Stimulus Jobs were Overstated.

White House has overstated the number of jobs saved or created  from the $787 Billion Stimulus package are in  the thousands . The White House will correct it later reports to Congress.

The White House first review of the jobs claimed by the stimulus was overstated by 5000. According to the AP review of  the report.

Here are some examples :

• A company working with the Federal Communications Commission reported that stimulus  money paid for 4231 jobs, when about 1000 jobs ere created.

• A Georgia Community College reported creating 280 jobs with recovery money, bu none was created from the Stimulus spending

• A Florida child care center said its stimulus money saved 129 jobs but used the money on raises for existing employees.

The AP found no evidence of the White House manipulated with the numbers in the report. However,  the Fed used the numbers to show that the stimulus is working.

Ed De Seve,  an Obama adviser on the stimulus jobs program says the administation is working with companies,  organizations and local and state government on the accounting problems.

“If there’s an error that was made, let’s get it fixed,” DeSeve said.

AP via My Way News

Wealthy are Fleeing New York’s High Taxes

New report has found that wealthy New Yorkers has decided to flee New York for greener pastures and its losing tax revenue.  More than 1.5 million has fled the state between 2000-2008 according to the Empire Center for the  Study New York Policy.

The overwhelming majority of those who have left are from New York City. 1.1 million have  moved away. This is equivalent of one out seven New Yorkers have moved away.

“The Empire State is being drained of an invaluable resource — people,” the report said.

What does it mean?  Those who have left paid in taxes $93,264. The newcomers earn a lot less about $72,726. A difference of $20,538 for missing from borough of Manhattan. The only other county or borough that suffered a loss of this magnitude is  Staten Island which loss $20,066 difference between newcomer and emigrants.

In 2006-2007 the  New York state tax rolls lost an estimate $4.3 billion in revenue in out migration.

So where are people headed to? Florida and New Jersey.  Florida gained 250,000 new immigrants while New Jersey 172,000 people who fled.

A warning to Governors Patterson , Schwarzenegger, Quinn , Corzine and others whats happening in New York and to a lesser degree California people with money have the ability leave the state and they are leaving.  They are going to states like Florida, Texas, Nevada with no state income tax or go to state with lower taxes like Idaho, Colorado or business friendly states like Oklahoma, Virginia and North Carolina. Be prepared to continuing to lose tax revenue.

New York Post

Health Insurance Profits Not as Big as Believed.

In the Health care reform debate health insurance profits is not as great as the politicians claim. When compared to other companies or industries health insurance industry makes less than other types of insurances.

The profits of health care is about 6%  give or take a point or two. In the last year profits have barely exceed the 2 percentage points.  This has effected the credit rating of several firms which were downgraded from stable to negative. There credit agencies warn of slowing or stagnant growth of private insurance plans.

The industry is a target of politicans mainly who want a government (public) option. Democrats President Barack Obama, this would”keep insurance companies honest.”

“I’m very pleased that (Democratic leader) will be talking, too, about the immoral profits being made by the insurance industry and how those profits have increased in the Bush years.” House Speaker Nancy Pelosi, D-CA, who also welcomed the attention being drawn to insurers’”Obscene profits.”

“Keeping the status quo may be what the insurance industry wants their premiums have move than doubled in last decade and their profits have skyrocketed.” Maryland Representative  Chris Van Hollen, member of the Democratic leadership.

“Health Insurance companies are willing to let the bodies pile up as long as their profits are safe.” A MoveOn.org ad.

Forbes Magazine place the health insurance industry 35th because the 2.2% margins. Medical products and drugs are more profitable.

Railroads (sans Amtrak) make a profit of 12.6%.  Network and communication equipment 20.6%.

The two most profitable firm health insurance Health Spring 5.4% profit margin. United Health Group had a 5% profit margin.

But compared to other products and services for example: Tupperware 7.5%, Yahoo 5.9%, Hershey 6.1%; Clorox 8.7%, Molson Coors 8.1%, and Yum Brand(parent of KFC, A&W, Taco Bell, and Pizza Hut)8.5%

AP via My Way News

Over 100 Banks fall for 2009

Today the Federal Deposit Insurance corporation shuttered six banks in the Midwest and the southeast US to day the largest number of closing on one day in years. Three banks in Florida, one in Georgia, Minnesota; Wisconsin and Illinois each.

The bank failures has slowly drained the FDIC insurance fund. So far the closures have cost the fund over $25 billion. By 2013 bank failure could cause the federal government up to $100 billion. To build up the fund the FDIC is demanding that banks  pay in three years advance a total of $45 billion.

The growing list of banks in trouble as of June is 416 up from 252 from beginning of the year. On the other hand the number of banks closing seems to slow down for example in July the FDIC shuttered 24 banks, in September 11 were closed and in October so far 11.

Whenever a bank fails to maintain operational set by the FDIC, the fed swoop in and immediately shut the financial institution and find a buyer or take over the deposits. The quickly reopen the bank between 24 and 72 hours.

The FDIC’s main priority, spokesman Andrew Gray said, is to keep up the confidence of the American People with the banking industry. “As evidenced by the stability of insured deposits throughout last year, the mission has been a success.” He said.

Those in banking and law industries say the FDIC’s main goal to provide confidence in banking. That means the fed uses a go slow approach not to cause fear or panic in the minds of the public.

“The FDIC was set up to create confidence and prevent bank runs,” says Mark Williams, a former bank examiner for the Federal Reserve. Being too aggressive about bank closing “can be counter to the mission.”

Maryland banking regulator Sarah Bloom Raskin says, Technically it’s the states who decide, but in reality it’s the FDIC calling you and to say” when the bank will closed.

Small banks have hard hit by bad real estates, commerical and industrial loans that went south during this recession.

Here are the banks in question that have been taken over by the feds.

Partners Bank and Hillcrest Bank Florida, both based in Naples were closed on Friday and its assets have been bought by Stonegate Bank in Fort Lauderdale both banks and branches will become branches of Stonegate Bank. Partner Bank had only  two branches both in Naples. Hillcrest Bank Florida had six branches they will become  Stonegate Bank.

Flagship National Bank based in Bradenton was closed by the FDIC and is assets and  four branches in Sarasota,Bradenton. First Federal Bank of Florida in Lake City will take the assets and branches of Flagship National and will open as branches of First Federal Bank Florida.

American United Bank in the Atlanta suburb of Lawenceville,GA was shut by regulators on Friday. This bank has only one branch. It will be come a branch of Ameris Bank of Moultrie, Ga and assume all $111 in assets.

Racine based Bank of Elmwood was closed by regulators and it’s assets and 5 branches in Racine and Kenosha will become a branch of  Tri-City National Bank of Oak Creek, Wisconsin near Milwaukee.

Riverview Community Bank based in Minneapolis suburb was shuttered by regulators. Otsego based Central Bank will assume all assets and two branches of Riverview Community.

and Lastly First DuPage Bank in the Westmont, IL a western suburb of Chicago was closed by state and federal regulators Friday. It’s sole branch will become a branch of First Midwest Bank based in Itasca,IL also in the western suburbs of Chicago.

AP via My Way News

Chicago Tribune

Marco News Eagle

South Florida Business Journal

Market Watch

Minneapolis Star-Tribune

Pay Master Meet the Pay Czar: Feds to Cut Salaries of Bailout Companies CEO’s

Attention bailout companies get ready Washington is coming for your  wallets. According the New York Times Kenneth Feinberg the US Treasury special appointee for executive compensation will order salary cut up to 90% of the 25 highest paid employees this would include benefits, salaries and bonuses.

This affect the following institutions including Citigroup, Bank of America, American International Group,General Motors and Chrysler and their finance houses. For example AIG which received $180 billion in bailout funds. The top executives will make no more than $200,000 . Imagine a person going from tens  of million of dollars to a fraction of that. Wow!

If that not enough if an executive that want any perk that is over than $25,00 including limousines, private jets, joining a country club or company car they must get permission from Feinberg.

The Fed demand AIG to get back about $200 million in bonuses from AIG financial service division.

New York Times via CNBC