Coming into 2010, the general level of civic unrest in the U.S. was one of the most visceral topics from coast to coast.
If one finds themselves unemployed, the tendency leans toward complaint. The unemployment rate in the United States, as dubiously measured by the United States Department of Labor, remains mired just shy of 10 percent, while accurate measures may put it much higher. Overall, the full underemployment rate might have reached a high of 18 percent. As we end the year, it appears that the situation is improving. First-time unemployment claims have hovered around 400,000 for the year, and so far 9 million people are receiving benefits. In the month of November, claims
fell to their lowest level since December 2008. A pliant Congress continues to approve extended benefits and may do so again. Private-sector job creation has been improving all year. However, let us also consider that 400,000 new retirees this year cuts both ways. While the focus may be on the benefits they will draw in Social Security and Medicare, they have also vacated one job. This trend will explode in the
coming decade. 2010 was the year that people started to ask financial questions again. Wall Street, which was once the stuff of folklore and Horatio Alger stories, is finally being viewed as a den of greed and inequity. People are finally learning the name of the favored few that control the world of finance. No name loomed larger than Goldman Sachs, which settled all charges with the SEC in July 2010 for
a mere $550 million.
It was revealed that AIG was given special treatment by the Federal Reserve and obscene multimillion-dollar bonuses received the airing they deserved. Embarrassing emails released last summer revealed the contempt the public was held to by these “masters of the universe” and even the CEO of Goldman claimed to be “doing God’s work”. These events have all shed some well deserved scrutiny on Wall street. Countrywide Financial Corp. former CEO was assessed $67.5 million in fines in an SEC settlement and Congress was finally pushed to do something. The result was the Dodd-Frank Wall Street Reform and Consumer Protection Act.
It sought to impose stricter control on exotic, financial instruments and prevent Wall Street firms from becoming too big to fail. It did n’t address issues relating to this excessive compensation But it did send
a message to the enforcement community. The SEC raided some hedge-funds and launched high profile investigations of Citigroup and JPMorgan.
As we end 2010 we find that foreclosure filings were down 1 percent from 2009. Not to minimize the problem, but for every home in foreclosure there are 140 or so who are not. In 2009, an all time high of 2.8 million foreclosures were started and that was nearly double the amount of foreclosures in the previous two years combined, surely the peak has passed. More ominously for the banks is the fact that people are fighting back. Defendants are asking who owns the mortgage note being foreclosed upon and Judges have dismissed court proceedings sending JPMorgan Chase and Bank of America, back to the lawyers offices in order to revamp procedures such as “robo-signing.” It is doubtful that this morass is likely to be resolved any time
soon and in the meantime the only folks facing foreclosure in judicial states are those who accept it voluntarily. It is very likely that this development will force banks to be a little more accommodating to defaulted homeowners. Throughout the last Presidential campaign, candidate Obama promised to reform the health care system in America. His plan called for Federally provided insurance at affordable rates. Congress passed such a bill in March in the most hotly contentious debates of the new century. The 2400 page bill was by far the most intrusive government intervention in memory. Onerous new regulation in the bill had nothing to do with relating to healthcare. Tea Party Republicans have vowed to repeal the bill or many parts of it. High courts have struck down provisions as unconstitutional. Universal coverage was not achieved and waivers have already been granted from the law on coverage minimums. The Tea Party movement wants smaller government. Many of its members opposed this health care legislation.
President Obama has indicated that he would be willing to consider changes. You can rest assured that the Tea Party movement will be rest assured that this issue is far from settled. This grassroots group of Americans is outraged at government spending and wants to lead the country in the right direction again. Opponents have said the Tea Party is opposed to people based on their religion or their race. That could not be further from the truth. The Tea Party seeds were actually planted in February 2009 on CNBC, when Chicago trader Rick Santelli said, “We’re thinking of having a Chicago Tea Party in July. All you capitalists that want to show up to Lake Michigan, I’m going to start organizing.” By the time of the primaries of 2010, self proclaimed Tea Party candidates had defeated establishment candidates for seats in the House of Representatives, the Senate, and a multitude of State offices. Let us hope the Tea Party and its populist ideas are here to stay, whether or not the American people can withstand the austerity called for by the Tea Party remains to be seen. In 2010, European governments learned that austerity can be an extremely difficult pill for the electorate to swallow. Unsustainable pension plans, insufficient revenues to cover debt service, and public demands for more socialist services forced foreign legislatures to reconsider their spending programs. England, Germany, Greece, Spain and France decided to take a Tea Party page and slash government spending. Ireland found its financial system on the edge of collapse. In Greece, protesters poured into the streets after announced spending cuts and social program curtailments. France saw significant public demonstrations following suggestions that the retirement age be raised to 62. Add televised riots to the mix and the result is a world on the edge of their seats wondering when it will happen in their home country. The U.S. has certainly seen the anger of the citizenry, albeit not as violent, and on the other side of the ledger. Americans are tired of bailouts and unearned benefits. As eventful as 2010 was, 2011 will prove a watershed year in the development of the United States of America. The looming debate is what should our government do; continue to spend and stimulate, or adopt the austerity measures Europeans are rioting against. The first showdown of the new year will likely be on the raising of the Federal debt ceiling. This platform will give us a chance to settle the question.