Doom and Gloom from the Bank of England

This post on Calculated Risk worries me. It reinforces my worry that Obama has failed to reign in the banks...

From The Telegraph: Bank of England says financiers are fuelling an economic 'doom loop'

On the eve of the G20 meeting of finance ministers in Scotland, Andy Haldane, the Bank's executive director for financial stability warned that the relationship between the state and banks represents a "doom loop" which will keep inflicting crises on the public unless arrested.

The warning, which follows Governor Mervyn King's call for investment banks to be split from their high street wings, is the most radical yet from the Bank, and comes amid growing concern that the G20 has abandoned any plans for far-reaching reforms.
...
Mr Haldane, who was a key part of a Bank unit which was among the first to warn, well ahead of the crisis, of a dangerous gap between what banks had in their balance sheets and what they were lending customers ...

Not much has been done to reform the banking system despite warnings from BofE's King, former Fed Chairman Paul Volcker, BofE's Haldane and others. As Haldane says, no reform equals a "doom loop".

I'm astounded that Obama and the Congress can be bought so cleaply by Wall Street. The shysters just took us for a couple of trillion dollars and their lobbyists probably handed over only $10 million, maybe $20 million, to get this handout from the American taxpayer. You would think that the politicians would want to make sure this doesn't happen again because they must know that the American people are not fools.

On second thought, given that the American people just voted in Republicans in several key elections this November...

I guess the politicians figure that if our ancestors in the 19th century could survive panics and depressions where unemployment hit 10% or 15% roughly every 7 years, we can survive that as well. I'm sure such reasoning is easy to come by when you are in the top 10% of the population with a government salary and a gold-plated retirement package. Who cares about the peons who work at near minimum wage and will be tossed out of work every 7 years. They should have arranged to be born as a Rockerfeller, a Morgan, a Duport, a Ford, a Vanderbilt, etc. Or they should have learned how to exploit their fellow citizens with Ponzi schemes and fraudulent business practices. They they could crow about the joys of unfettered capitalism.

Here's a graph to show what our overlords have condemned us to live through:



As David Leonhardt writes in the NY Times:

With the release of the jobs report on Friday, the broadest measure of unemployment and underemployment tracked by the Labor Department has reached its highest level in decades. If statistics went back so far, the measure would almost certainly be at its highest level since the Great Depression.

In all, more than one out of every six workers — 17.5 percent — were unemployed or underemployed in October. The previous recorded high was 17.1 percent, in December 1982.

...

One of the more striking aspects of the Great Recession is that most of its impact has fallen on a relatively narrow group of workers. This is evident primarily in two ways.

First, the number of people who have experienced any unemployment is surprisingly low, given the severity of the recession. The pace of layoffs has increased, but the peak layoff rate this year was the same as it was during the 2001 recession, which was a fairly mild downturn. The main reason that the unemployment rate has soared is the hiring rate has plummeted.

So fewer workers than might be expected have lost their jobs. But those without work are paying a steep price, because finding a new job is extremely difficult.

Second, wages have continued to rise for most people who still have jobs. The average hourly wage for rank-and-file workers, who make up about four-fifths of the work force, actually accelerated in October, according to the new report.

...

It is a strange combination: workers who still have a job are doing better than in other deep recessions, but the unemployment and underemployment have risen to their highest level since the Depression.

Yes... the politicians are content to let a huge number of people wander around jobless, shell-shocked by an economy which has no place for them. Those on the right talk about initiative and personal responsibility as the cure. Those on the left beg for Obama to quit catering to the right and put in a stimulus bill that matches the situation. Meanwhile Obama dithers with his decisions... what should I do in Afghanistan, what should I do about the economy, who can I cut a deal with to water down health care to fit the demands of the right, ...

Tragic!