Unemployment - Bleak Future

With unemployment reaching a 26-year high, what's America's future going to be like? As one American longshoreman interviewed on Aljazeera TV said, "The American dream is turning out to be a nightmare."

It looks like the fall of the Twin Towers on September 11 was the prophetic signal for the fall of the American dream. Could it be "Babylon is fallen, is fallen"? Babylon was the world's mightiest military and economic power in its time. But like all empires, Babylon rose and fell.

We cannot help but wonder...

The merchants of the earth will weep and mourn over her because no one buys their cargoes any more... (Rev. 18:11, NIV)

US jobless claims surge to new high

The numbers of US workers filing new claims for unemployment benefit has reached a 26-year high, according to a government report.

New claims for state benefits reached 573,000 for the week ending December 6, the highest since November 1982, said the Labor Department report released on Thursday.

There were 58,000 more new claims than in the previous week - the biggest increase since 2005, the report said.

The figures were higher than many economists expected and are another sign of troubles within the US economy which George Bush, the US president, has said is already in a recession.

"When combined with the decline in import prices, these are more signs of an economy that is decelerating on the downside with price deflation ... it will create additional concerns about weakening in the economy and corporate profits," said Jim Awad, chairman at WP Stewart and Co, a US investment firm.

Markets down

The number of workers applying for state unemployment benefits had briefly declined in the previous two weeks, but have now surged again as companies sack workers following the economic downturn and the global financial crisis.

Data released last week showed employers cut just over half-a-million jobs in November, the largest number in 34 years, pushing the unemployment rate to 6.7 per cent - the highest since 1993.

US stock markets fell after the report was released.

The Dow Jones industrial average slid 10.99 points, or 0.13 per cent, to 8,750.43.

"We keep thinking the financial crisis is over and one by one we find a new industry that is in dire straights," said Carl Birkelbach, head of Birkelbach Management, a Chicago investment firm.

"It appears to me that the credit crunch is going to continue and the ramifications will be negative."

From Aljazeera

Why Not the Auto Industry?

Congress approved a $700 billion bail out plan for Wall Street but refused to approve a $14 billion bail out request from the auto industry. Why?

A hit on Wall Street is a hit at the very pocketbooks of congressmen and senators, while a hit on the auto industry isn't a direct hit for Congress. Could it be self-interest? What's the big difference between a collapse at Wall Street and a collapse in Detroit?

Here's an excerpt of a news report from BBC:

White House considers auto rescue

The White House says it is considering using money earmarked to rescue the US banking industry to bail out the country's struggling carmakers.

A $14bn (£9.4bn) bail-out deal for the US car industry failed to get Senate support, raising fears of job cuts and a possible industry collapse.

The White House said that the US economy could not withstand a body blow like the collapse of the auto industry.

Meanwhile General Motors said it was temporarily stopping some production.

And Honda is also to cut back output in North America.

GM, which has been pleading for an emergency government loan to avert collapse, said it would halt 30% of its North American production "in response to rapidly deteriorating market conditions".

It saw vehicle sales fall 41% in November, when overall US car sales fell 26% industry wide.

The temporary shutdowns will affect 14 US factories as well as three in Canada and three in Mexico, reducing output by 250,000 vehicles in the first three months of 2009.

"The speed and severity of the US auto market's decline has been unprecedented in recent weeks as consumers reel from the collapse of the financial markets and the resulting lack of credit for vehicle financing," it added.

Read more...