Author: Megan Carpentier

In the wake of the request by European leaders to institute (at a minimum) mandatory reporting and more regulation of credit default swaps, the Securities and Exchange Commission is jumping on the regulation bandwagon. In a statement by its chair, Mary Schapiro called for regulation of credit default swaps similar to those faced by regular securities.

Reuters had asked Schapiro whether there should be any ban or limits placed on naked swaps, where the holder of the swap does not own the underlying bond.In reply, Schapiro said credit default swaps are often used as substitutes for securities and directly impact the markets.

“As such, they should have at least the level of oversight and transparency that are present in the regulated securities markets,” she said.

Her statements echoed those of Commodities Futures Trading Commission Gary Gensler, who said earlier today that the lack of regulation in derivatives trading allows Wall Street to benefit from market inefficiencies (i.e., that they profit off of investors who they deliberately keep in the dark) rather than from underlying value. Not that it matters to the financial services industry: Money is money, whether it comes from less-than-savvy investors or Treasury coffers.

While Comcast awaits a final decision from the FCC on its acquisition of NBC Universal, it was also busy in court arguing that the FCC’s ban on withholding programs from its cable competitors should be thrown out. The courts disagreed.

Cablevision Systems Corp. and Comcast Corp. had challenged the FCC’s decision to keep the rule in place, arguing that the prohibition wasn’t necessary to preserve competition in the paid-TV market.The U.S. Court Appeals for the District of Columbia Circuit rejected that challenge in a 2-1 ruling.

The ban was initially passed in by Congress in 1992 and will now remain in effect through 2012. After that, if the ban doesn’t remain in place, Comcast will be able to keep Cablevision and other competitors from broadcasting MSNBC, Bravo, SyFy and USA, among other channels. They are currently arguing that “competition” will keep them from doing so — but competition in non-monopoly cable markets is actually the only reason Comcast would be interested in removing the exclusivity ban in the first place.

Long before the financial crisis, Fannie Mae and Freddie Mac were synonymous with moral hazard in the minds and classrooms of most economists. Everyone (including Fannie and Freddie) believed that if they got into trouble by making risky investments, the government would bail them out. Of course, the feeling that they wouldn’t be allowed to fail led to them making risky investments and then, naturally, to a government bailout.

But unlike most of their private sector counterparts, Fannie Mae and Freddie Mac — and the half of the U.S. housing stock that they either own or back — are still owned by the federal government, and despite the administration’s promises, Zachary Goldfarb of The Washington Post says they’re going to stay that way. Why?

1. The administration is “too busy” with other reform efforts.
2. The administration has little desire to wade into another political screaming match this close to an election.
3. Wall Street thinks it could destabilize the housing market even further.
4. The administration plans on using Fannie and Freddie as part of its ongoing efforts to prop up the housing market.
5. Fannie and Freddie have been behind the majority of mortgages made since the housing crisis began.

Of course, critics of Fannie and Freddie and the moral hazard they embodied have been calling for reform for years, to little avail. If, in the midst of government ownership and $125 billion (and counting) in bailout money, the administration can’t reform them now, it never will — and that’s likely just what Fannie and Freddie are counting on.

Pallavi Gogoi at Daily Finance, who watched payday lender regulations die in the Senate, asked payday lenders how they liked the rules under which they are forced to operate for military personnel. Under those rules, members of the military cannot be charged more than 36 percent interest on any loan. She heard the most remarkable thing in response.

“We can’t make a profit on 36% loans,” says Steven Schlein, a spokesman for the payday lending trade group, the Community Financial Services Association.

Leaving aside the somewhat hilarious moniker for a club of payday lenders and check cashers, the group insists that companies can’t make money charging people a 36 percent interest rate plus fees. With savings and most money market accounts paying less than 1 percent interest, stock market returns iffy and credit card companies making billions a year charging about 20 percent interest to its customers, either payday lenders are exceedingly stupid business people or their trade group thinks Americans are.

At least in terms of Congress, they’re right: Further payday lending regulation seems to be off the table after the group’s successful lobbying campaign against it.

When most people shell out for cable service, they expect to get some basic channels — especially since, in most areas, cable companies operate with little or no competition under the protection of local or state governments. But over the last few months, Cablevision customers have seen some of their channels go dark without notice due to disputes between their cable company and various content providers. The federal government is going to contemplate whether consumers should continue being corporate casualties.

“The events of the last two or three months show us that this is an issue that should be looked at seriously,” FCC Chairman Julius Genachowski said Thursday at a Senate hearing on Comcast Corp.’s proposed deal to acquire control of General Electric Co.’s NBC Universal. “It’s certainly something that we’ll be looking into and look at whether this framework makes sense or whether reforms may be necessary.”

But the feds don’t know if they have the authority to protect consumers, and local governments have often been loathe to do anything about cable companies’ monopolistic practices. With a major cable provider’s acquisition of a network, however, it could be an increasingly frequent access problem for cable consumers.

For many people, payday lenders and check-cashing outfits are the scum of the financial-sector earth; they’re called usurious, compared to illegal loan sharks and may finally be subject to at least some federal regulation (if not enforcement). But G.D. at Post Bourgie has an interesting defense of the so-called “fringe” banking services: At least they’re not as bad as banks.

But the proliferation of banks in poor neighborhoods has done little to keep the unbanked from opting for “fringe banking services” — check cashing services, payday lenders, and the like. Those institutions charge onerous fees of their own, but unlike the big banks, their fees are explicitly outlined. Customers may cough up $12 for the privilege of cashing your $300 check, but it makes more economic sense than being stuck with miscellaneous surcharges over the course of several weeks for not maintaining a minimum balance, withdrawing money from an ATM, writing a check, or overdrafting your account — penalties that can accrue much more easily and be much more disastrous when your life is inherently unstable.

Although market research indicates the alternative-to-banking industry as a whole earns about $27 billion in profits a year, banks made $20 billion on debit card overdraft charges alone in 2009 — which means they’re undoubtedly pulling in more than $27 billion in profits from ATM fees, minimum balance fees, check writing fees, bounced check and overdraft charges. Who is it that is screwing over Americans with banking fees again? Because it seems more and more like the answer is “everyone.”

With the news that Citibank screens some of its clients for “objectionable content” — and applies that screening process to gay-themed businesses — many LGBT business people and Citi customers are probably wondering where their business is truly welcome. Luckily, Jeremy Quitner of The Advocate has a great run-down of banking programs designed to cater to the needs of LGBT clients — and, specifically, to the special needs of same-sex couples.

Quitner explains why targeted LGBT banking and financial planning programs are so important.

“It boils down to marriage rights,” says Jennifer Hatch, president of Christopher Street Financial, one of the oldest financial advisories for gays and lesbians, based in New York. “The average straight couple gets a lot of their financial setup simply by saying ‘I do.’”

As LGBT rights advocates have often argued, marriage confers certain legal rights that makes everything easier — and it includes banking.

But some groups, like Christopher Street Financial, work specifically with same-sex couples and LGBT individuals to design financial plans in accordance with their sometimes unique needs and, in the last decade, has seen competitors finally pop up all over the country. Chicago’s Northern Trust, which deals exclusively with high net-worth individuals — a lucrative income stream for many retail banks — just launched its first practice aimed at high net-worth individuals with non-traditional family relationships. Boston’s Wainwright Bank started issuing affiliate credit cards in the 90s that gave a portion of the proceeds to LGBT rights groups — and it says that 10 percent of its employees are openly gay, including two senior executives and one member of the board.

Wells Fargo, based in San Francisco, worked to reach out to the LGBT community for 20 years, though it only established a specific LGBT practice in 2005, and in 2009 it began a program to certify financial planners to work with same-sex couples. Bank of America’s wealth advisory practice through its Merrill Lynch affiliate — again, a personalized banking service aimed at high net-worth individuals — will nonetheless work with LGBT individuals or couples in any income bracket for financial planning fees ranging from $250 -$1,000.

Interestingly, Citibank today announced that it plans to double its private banking force over the next two years. It is not reportedly dedicating any of those new private banking resources to an LGBT-specific practice. Apparently, the money in the LGBT community that is attracting attention from its big competitors isn’t of enough interest to Citibank.

While economists got out their pom-poms last week to celebrate the news that official unemployment is only 9.7 percent (while skillfully ignoring the increase in underemployment and the 40 percent of the unemployed who have been that way for six months or more), Americans weren’t buying their routine. A new Rasmussen poll shows that despite official optimism, 34 percent of Americans think unemployment will be worse in a year. While 29 percent of those polled think that unemployment will go down, another 29 percent think that unemployment will remain more or less the same — which it what economists think, too, when they are not cheering on the markets.

Those with experience job hunting don’t care if official statistics say that job openings were up 7.6 percent in January: 53 percent of the unemployed think the job market is worse than last year, and they’re right. The Labor Department says that there are 5.5 unemployed people competing for every opening, up from 1.7 at the the beginning of the recession. Some 15 percent of unemployed people say it’s better now and 29 percent think it’s similar.

Republicans and independents are more likely to be bearish about the economy, and more likely to know someone who lost a job and gave up looking in frustration. Of course, 45 percent of Americans still believe that it’s possible for someone who wants a job to find a job despite all evidence to the contrary — and Rasmussen doesn’t break that stat down by party affiliation.

One of the reasons many people work for government even when there’s not a recession going on (despite the fact that government jobs often pay lower salaries than private sector ones) is the job security and generous benefits. Particularly for the younger generation of workers, there remain relatively few companies that offer traditional pension plans, but they still abound for workers in government jobs. But if Mary Williams Walsh’s story in The New York Times is any guide, those supposedly secure government pensions are growing less secure than the few private sector pensions left.

Willams Walsh reports that while private companies are shifting their pension investments into securities with lower rates of return and little risk, government pension funds are facing shortfalls and turning to risky stock market investments to make up for shorting contributions for years.

[Governments] use long-range estimates that presume high investment returns will cover most of the cost of the benefits they must pay. And that, they say, allows them to make smaller contributions along the way.Most have been assuming their investments will pay 8 percent a year on average, over the long term. This is based on an assumption that stocks will pay 9.5 percent on average, and bonds will pay about 5.75 percent, in roughly a 60-40 mix.

In other words, governments offered generous pensions to their employees, then paid less into their own pension system than the federal government allows corporations to do, while claiming that the stocks in which they invested would earn 10 percent each and every year, regardless of swings in the market.

That plan, says Williams Walsh, has worked out about as well as a regular investor might expect it would.

The problem now is that bond rates have been low for years, and stocks have been prone to such wild swings that a 60-40 mixture of stocks and bonds is not paying 8 percent. Many public pension funds have been averaging a little more than 3 percent a year for the last decade, so they have fallen behind where their planning models say they should be.

The pension fund contributions earned less than the rate of inflation in some years, meaning that they lost long-term value.

Now, if a regular person lost value in her 401k retirement fund, or saw that it wasn’t earning enough to fund her retirement, that person might put more into the retirement fund. But not a government pension plan!

“In effect, they’re going to Las Vegas,” said Frederick E. Rowe, a Dallas investor and the former chairman of the Texas Pension Review Board, which oversees public plans in that state. “Double up to catch up.”Though they generally say that their strategies are aimed at diversification and are not riskier, public pension funds are trying a wide range of investments: commodity futures, junk bonds, foreign stocks, deeply discounted mortgage-backed securities and margin investing. And some states that previously shunned hedge funds are trying them now.

In order to earn the illusive rates of return that even marginally risky investments couldn’t provide, states are gambling their employees’ pensions on riskier investments — in part because they cannot afford to fund the plans adequately in the first place, let alone in the midst of yet another state budget crisis.

Of course, the elected officials in whose hands the decisions ultimately rest can’t cut benefits, admit that they underfunded their pension obligations or even cop to writing unrealistic rates of return into their pension plans to enable them to underfund their obligations. They’ve got every incentive to gamble that they can make up costs, especially given that they won’t be in office by the time the pension funds have real trouble meeting their obligations to employees.

A new report from the Insight Center for Community Economic Development highlights one big reason that just addressing wage gaps — be they gender- or race-based — won’t necessarily change the disproportionate number of African-Americans who find themselves mired in generational poverty: the wealth gap. Measured as assets less debts, families of color have 16 cents of wealth for every dollar white families have. And single women of color have it worst of all.

• Single black and Hispanic women have a median wealth of $100 and $120 respectively; the median for single white women is $41,500.
• Nearly half of all single black and Hispanic women have zero or negative wealth, the latter of which occurs when debts exceed assets.
• About one-third of single Hispanic women and one-fourth of single black women have no checking or savings account.
• On reservations where unemployment rates can be as high as 70 percent, Native American women are hard pressed to fulfill “job search” requirements to qualify for the Temporary Assistance for Needy Families program.
• While 57 percent of single white women own homes, only 33 percent of single black women and 28 percent of single Hispanic women are homeowners.
• Only 1 percent of single Hispanic women and 4 percent of single black women own business assets compared to 8 percent of single white women.
• While 66 percent of white men and 60.4 percent of white women receive retirement income from assets, the same is true for only 40 percent of Asian women, 25.4 percent of black women and 23 percent of Hispanic women.

Add that to the fact that single women with children saw their unemployment rise 68 percent since the start of the recession, that African-Americans as a group continue to to face disproportionately high unemployment rates and that the stimulus isn’t helping many African-Americans, and what you have is a group of women who face disproportionate barriers to employment access and have disproportionately little in the way of a personal financial safety net. If you can’t take time off of work (if you can find work) to go to school, or you don’t have the money for training while unemployed, then it is difficult to better your situation — and difficult to better the situation of your children as they grow up and enter the labor market themselves.

(h/t Miriam Perez at Feministing)

The on-again, off-again immigration reform effort is apparently on again, with a new provision intended to regulate Americans’ access to the job market — and increase government’s access to Americans. According to The Wall Street Journal, a new plan being pushed by Sens. Lindsey Graham (R-S.C.) and Charles Schumer (D-N.Y.) would require that all Americans get a new biometric ID card in order to work.

A person familiar with the legislative planning said the biometric data would likely be either fingerprints or a scan of the veins in the top of the hand. It would be required of all workers, including teenagers, but would be phased in, with current workers needing to obtain the card only when they next changed jobs, the person said.The card requirement also would be phased in among employers, beginning with industries that typically rely on illegal-immigrant labor.

The current immigration verification system, E-Verify, isn’t mandatory for all employers — thankfully, since it both misidentifies a number of legal workers and, unsurprisingly, fails to identify a large number of immigrants not cleared to work in the United States. But Graham and Schumer apparently consider illegal immigration such a huge problem that they want to subject every single American and legal immigrant — and their employers — to additional expenses, hassles and government surveillance in order to keep a much smaller subset of people from office-cleaning, dish-washing and fruit-picking jobs.

Think about this: The federal government wants to spend hundreds of millions of dollars, and force employees and employers still suffering from a recession to do the same, to create and make accessible to every employer a national database of the fingerprints of all Americans from the time they are 14 years old. And they want to do it in order to keep an estimated 11.9 million unauthorized immigrants — less than 4 percent of the total population of the United States — from accessing the job market. Apparently, cost-benefit analyses aren’t the rage on Capitol Hill these days.

When the stimulus was the talk of the town, some women piped up to note that the stimulus funds were seemingly targeted at male unemployment, only to be told that men were disproportionately unemployed. And while there’s been plenty of reporting on how the stimulus has given short shrift to African-Americans, J. Goodrich at Alternet finds that the stimulus has failed single moms at a disproportionate rate, too.

While men, as a whole, have a 10 percent unemployment rate to women’s 7.9 percent, there’s one select group of women beating men at the unemployment game: single mothers.

The Bureau of Labor Statistics, in a report released on Friday, showed the unemployment rate for married women at 6.1 percent, while that of single women “who maintain families,” in the parlance of the BLS, reached a whopping 11.6 percent — 68 percent higher than when the recession began. Add to that the fact that women, as a whole, earn only 77 cents for every dollar a man brings home, and you find many single women whose situation has gone from difficult to dire.

In fact, women with children earn even less than that — 68 cents on a man’s dollar, according to a report released today.

Goodrich notes, too, that groups of people most likely to suffer disproportionate unemployment during this recession — the less educated, the already-poor and people of color — are groups to which single mothers are disproportionately likely to belong.

Unmarried women with children are more likely to be found in all those group pictures than married women because they are younger, less educated and more racially and ethnically diverse. Even if they faced no additional workplace discrimination aimed at their marital/maternal status, these factors place them at a higher risk of joblessness than other women.

Of course, the suggested cure for a boy-only stimulus — more jobs for teachers and librarians in the legislation — would have had little effect on poor, less educated single mothers. The stimulus could have taken into account the disproportionate barriers to labor market access that many single mothers face — and a jobs bill still could.

Less then a month after the announcement that the federal government was going to start an incentive program to encourage buyers and banks to sell houses at depressed values without foreclosures, David Streitfeld of The New York Times has the details — and they’re a little strange.

The basis of the program, which starts April 5, is much as it was described in February: The bank servicing the mortgage will get $1,000 for a short sale if it agrees not to go after the homeowner for the remainder of the mortgage; another $1,000 goes to the servicer of a second mortgage, if there is one; and the homeowner gets $1,500 in “relocation expenses.” If there’s a third mortgage, that bank gets nothing, but can still hold up the short sale.

The big supposed benefit is that short sale homes won’t be listed as foreclosures per se, so communities think they won’t be ransacked by former owners or vandals. Since if the bank took possession of the home and then short sold it, the bank would be listed as the seller of record in all legal documents, homeowners will seemingly keep possession of the homes, but they may or may not continue to occupy them.

The really strange thing is that the acceptable value of the home — which is expected to be less than the value of the mortgage but, with many short sales, may be less than the supposed market value of the home — will be determined by the bank in concert with a licensed real estate agent and not shared with the owner. Banks that agree to the program must agree to take any offer that is equal to or lesser than the value as determined by the real estate agent. What’s so strange about that is that normally banks determine the value of a home they are about to mortgage with the help of an appraiser, not an agent. At the height of the real estate crisis, appraisers were the people who verified to banks that the houses were worth at least as much as the mortgages, and during the crisis, those determined values often meant that people had homes worth less than the value of the mortgage.

On the other hand, the National Association of Realtors is a lobbying powerhouse and, in the case of a foreclosure, their army of Realtors may make no money at all. In a short sale, if everyone plays along, a Realtor will earn an appraisal fee from the bank in addition to the standard 6 percent fee he or she collects from a buyer. Unless the home sells for $25,000, the Realtor involved in the short sale stands to make more than the seller and, if the home is worth more $75,000, more than all the parties combined. It sounds like someone else might be getting a nice little bailout, too.

In the Great Recession, African-Americans experience disproportionately high rates of unemployment, and most stimulus funds have yet to make their way to hard-hit African-American communities. A new study shows another facet of the problem: Minority-owned businesses received a disproportionately small share of stimulus-related government contracts.

Latinos and blacks have faced obstacles to winning government contracts long before the stimulus. They own 6.8 and 5.2 percent of all businesses, respectively, according to census figures. Yet Latino-owned business have received only 1.7 percent of $46 billion in federal stimulus contracts recorded in U.S. government data, and black-owned businesses have received just 1.1 percent.

Most of the $862 billion in stimulus funds was awarded in block grants to states, but there is no reliable system for tracking how states award contracts to minority-owned businesses.

The Obama administration argues that the numbers are slightly better then they appear.

The White House also pointed out that about $21 billion of the $46 billion is guaranteed, and the rest are options. Latino-owned businesses have received 3.7 percent of the guaranteed total, and black-owned businesses 2.4 percent.

That’s still a disproportionately small share, and indicates that when the government is paying strict attention, minority-owned business do better.

Minority business owners report continuing problems in obtaining government contracts, from “old-boy” networks that control to whom contracts get awarded and tend to favor existing contractors, to being hired as subcontractors by white contractors to meet standards and then dumped when the government wasn’t looking.

Although the administration is committed to helping racial issues by addressing class issues, since African-Americans and some other minorities fall disproportionately into lower income brackets, studies increasingly show that institutional discrimination and sometimes overt discrimination contribute to economic disparities between racial groups — and that simply working to assist the poorest Americans may not help African-Americans achieve proportional economic parity.

After President Obama called the heads of 12 of the largest banks into his office to lecture them about not lending enough to small businesses, the message was clear: It’s time to get to lending, or the government will get to regulating. So while banks are busy lobbying themselves out of regulation and back into moral hazard, they’re also launching a huge public relations offensive to convince the public that they really are lending to small businesses.

JPMorgan Chase is running newspaper advertisements in major media markets — not an inexpensive endeavor — touting its “Helping Small Business in Even Bigger Ways” campaign that will increase its loans to “small” businesses from $6 billion to $10 billion in 2010. Unlike the federal government, which defines small businesses as those with fewer than 500 employees, Chase will define them as companies with less than $20 million in revenue. Apparently, that’s “small” by Chase standards.

Huntington Bancshares will up its small business lending to $4 billion over three years, offering $1.2 billion in new business loans in 2010, up from $890 million in 2009. Well Fargo plans on increasing its small business lending by 25 percent over 2009 to a total of $16 billion.

But according to June 2007-June 2008 data from the Small Business Administration — which already showed a slowdown in lending rates — for all the institutions, even their increased lending will be lower than in previous years. The SBA considers business loans of under $100,000 to be “microlending” loans, and loans of between $100,000 and $1 million to be larger small business loans, figuring that, on the average, they square with the definition of a company of 500 employees or fewer. Their data shows that, between June 2007 and June 2008, Chase made $25.7 billion in small business loans, with $15.5 billion in microloans and $10.2 billion in loans to larger small businesses. Huntington made $4.6 billion in small business loans in that time period, offering its clients $679 billion in microloans and $3.9 billion in larger small business loans. Wells Fargo loaned $27.2 billion to small businesses in that same period: $10.1 billion in microloans and $17 billion in larger small business loans.

Public relations initiative aside, the banks’ own numbers, combined with the pre-crash data, show that small business loans fell off dramatically during the crisis — despite the public bailout of Wells Fargo and Chase (among others). Those two banks alone, it is worth remembering, raked in nearly $8 billion and $11.7 billion, respectively, in profits for 2009. They can put whatever spin they want onto their efforts to ramp up small business lending but the truth is that they have no intention of loaning out as much money in 2010 as they did in 2007 or 2008.

Economy cheerleaders erupted today at the news that only 36,000 Americans lost their jobs in February, as compared to the 50,000 American jobs expected to be sacrificed to the Snowpocalypse gods. Of course, that means 15 million Americans remain unemployed, and 40 percent of those people have been unemployed for more than six months — and that’s not even the worst of the bad news.

If you count people that want, but cannot find, full-time work and those who are unemployed but no longer actively looking for jobs (what with employers still shedding jobs rather than creating new ones), underemployment is up to 16.8 percent. Part of that may well be that the Labor Department counts anyone who worked for even an hour during the Snowpocalypse as “employed,” even if they did not get paid for the forced time off.

Worse yet for the many Americans paid by the hour, the average workweek fell to 33.8 hours. Someone working that many hours at minimum wage would earn $12,743 in a year, which is above the poverty line for a single person but far below it for anyone with dependents. The poverty line for a family of two — which could be a mother with one child — is $14,570, or $510 less than a person making minimum wage would earn if she worked 40 hours a week every week for a year. Of course, the official poverty line doesn’t currently take into account the actual cost of living, health care costs or child care costs — all of which, when added into the new supplemental poverty measure, increase the number of officially impoverished people. Most people who were able to work the average number of hours at a job at minimum wage would likely need two such jobs to be able to provide the basics for themselves and their families, but there aren’t enough jobs for nearly 17 percent of Americans to get one, let alone two.

In times of economic downturn, young people often bemoan their job prospects: The ranks of the unemployed swell with people slightly older, more experienced and increasingly willing to work for less money as their time spent unemployed drags on. But for all the difficultly recent graduates have finding jobs in this economy, older unemployed workers have it far worse, as a new AARP study shows.

An analysis of unemployment data from January 2000 to December 2009 shows that the number of unemployed Americans 55 and older increased by more than 331 percent last decade. Importantly, the analysis uses data from the Bureau of Labor Statistics, which does not count people as unemployed if they are retired or if they have ceased to look for work. That means that the more than 2 million Americans over the age of 55 who are unemployed are not retirees –  they are people actively looking for work but unable to find any.

The statistics for unemployment duration are even worse for older Americans.

Average duration of unemployment for workers age 55+ increased from 18.7 weeks in January, 2000 to 34.7 weeks in December, 2009—a jump of 85.6%. Over the same time period, workers age 65+ saw their situation go from bad (24.8 weeks of unemployment) to worse (32.9 weeks), an increase of 32.7%.

That means that older workers spend on average three years seeking new employment before they either find any or give up trying. The U.S. government classifies anyone spending longer than 6 months unemployed as “long-term unemployed” because it is at six months that regular unemployment benefits end. The current series of federal extensions to unemployment allow up to 53 weeks (slightly more than a year) of further unemployment benefits. But the statistics show that even before the Bush recession, unemployed Americans over the age of 55 would spend a year beyond receiving benefits seeking new work before finding it and giving up; in the current economic climate, they will max out their benefits in 18 months and spend almost an additional 18 months with no unemployment looking for a job before they’re successful or decide to throw in the towel.

Presumably, these are facts that Senator Jon Kyl either didn’t have or didn’t care about before he declared that unemployment benefits keep people from seeking work. Plenty of Americans keep trying to find work once their benefits are exhausted, even some at Kyl’s advanced age of 68. Of course, unlike Kyl, many of those people his age who need to find work won’t be collecting a cushy Senate pension worth around $60,000 a year (for a senator like Kyl with more than 20 years in Congress).

The recent news that China dumped $34.2 billion in U.S. Treasuries in December hardly made a splash, but L.A. Times writer Don Lee wondered what China did with all that extra cash. He found that it was investing the money in private companies throughout the world. China poured $43.3 billion into foreign direct investments in 2009 and, according to U.S. Treasury figures, it actually shed $45.1 billion in U.S. Treasuries in the last half of 2009.

Not that China’s private investments were primarily American: Experts estimate that, while China bought stock in everything from a theater in Branson, Mo., to Coca-Cola, its total direct investments in the U.S. in 2009 ranged between $3.9 and 6.4 billion. That amounts to a total of about 3 percent of all the foreign direct investment in the United States in 2009.

China’s foreign direct investments have cost it in the past: The political fallout from an attempt by the state oil company to buy Unocal in 2005 met with stiff resistance (and ultimately failure) in Washington; an effort to buy into American financial services companies thereafter led to massive losses in 2008. Now the Chinese are buying up newly cheap real estate. But rather than court the negative attention received by Japanese real estate investors in the 1980s, Chinese investors are focusing on stock purchases and less prominent properties while partnering with American companies, according to Lee. Whether an increasingly protectionist American populace feels better about a Chinese-owned factory than a Japanese-owned real estate landmark, however, remains to be seen.

After banks received billions of dollars when their risky investments failed, most economists understand that, without strict controls, markets and banks are going to continue to operate as though, if banks continue to fail because of risky investments, the government will continue to bail them out. That moral hazard, when added to the moral hazard engendered by lobbying, means the government has to take serious measures to convince both banks and the market that this last bailout was a one-time only thing.

But just saying that the government won’t bail out any further banks — which is exactly what the government said about Fannie Mae and Freddie Mac before it bailed them out — isn’t quite enough. Of course, a government assurance is all the hedge against moral hazard that the Treasury Department is currently prepared to offer. When asked about moral hazard by the Congressional Oversight Panel, Assistant Secretary of the Treasury for Financial Stability Herbert Allison said:

“There is no ‘too big to fail’ guarantee on the part of the U.S. government.”

The government doesn’t plan on bailing out every company it deems “too big to fail,” but Allison didn’t say it wouldn’t, either. Worse yet, Allison doesn’t guarantee anything about bailouts for companies that fall short of the “too big to fail” standard, either. With so little in the way of concrete assurances from the U.S. government that the bailout will never happen again, markets and banks will learn strictly from experience — and that experience is that, when push comes to shove, the government will ride to the rescue rather than face the political fallout from any failure.

In the midst of a jobless recovery and credit-crunched financial sector, U.S. companies have been hoarding $1.9 trillion in cash. The Wall Street Journal reports that $932 billion of that money comes from just 382 non-financial companies on the S&P 500 — and that they’re about to start spending it. Should the unemployed of America rejoice? Hardly.

At a time of low interest rates, reopened credit markets and growing optimism about the economy, CEOs and their boards seem to be questioning the wisdom of sitting on all that cash. And with the S&P 500 still trading 29% below its October 2007 peak, companies are deciding that cash is their preferred currency for acquisitions—rather than shares they see as undervalued.

It’s time for a shopping spree, and they’re not in the market for employees to add value. For instance, Walgreens used the cash it saved to buy Duane Reade, creating some obvious overlaps that will likely result in more store closures.

Like a lot of U.S. companies, Walgreen cut costs during the past year, in its case halting store openings and reducing inventory. Mr. Miquelon said the moves saved the company about $2 billion in cash—freeing up money it later used in the Duane Reade deal. “We are conservative with our cash, but hoarding it right now isn’t probably the best use of it,” he said.

The Duane Reade deal cost Walgreens $618 million — and they got that money by “halting store openings” — i.e., not engaging in job creation. Other companies stored cash by cutting existing jobs, and then used the cash to pay out executive bonuses.

Alcoa Inc., for example, pegged top executives’ 2009 compensation to goals for increasing the company’s stash of cash, according to regulatory filings. The aluminum maker cut 28,000 jobs, or 32% of its work force in 2009, and reduced capital expenditures by 53%. Despite a 31% drop in revenue, Alcoa nearly doubled its cash to $1.5 billion during the year.

And their executives made their bonuses. That’s what’s important, after all.  We wouldn’t want rich people to have an unemployment rate of more than 4 percent or anything.