Sunday, August 02, 2009

Recession? ... Depression? ... What is Going On? (Part 4)

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As Employers Push Contract Employment, Say Goodbye to Full-Time Jobs With Benefits
Crooks and Liars
By Susie Madrak
Monday June 7, 2010
Is it just me, or does Congress seem completely oblivious to what the rest of us are going through? No security of any kind, and instead of expanding the safety net, they're shredding what's left. In the meantime, we're not even going to have full-time jobs again:
NEW YORK (CNNMoney.com) -- Jobs may be coming back, but they aren't the same ones workers were used to.
Many of the jobs employers are adding are temporary or contract positions, rather than traditional full-time jobs with benefits. With unemployment remaining near 10%, employers have their pick of workers willing to accept less secure positions.
In 2005, the government estimated that 31% of U.S. workers were already so-called contingent workers. Experts say that number could increase to 40% or more in the next 10 years.
James Stoeckmann, senior practice leader at WorldatWork, a professional association of human resource executives, believes that full-time employees could become the minority of the nation's workforce within 20 to 30 years, leaving employees without traditional benefits such as health coverage, paid vacations and retirement plans, that most workers take for granted today.
"The traditional job is not doomed. But it will increasingly have competition from other models, the most prominent is the independent contractor model," he said.
Doug Arms, senior vice president of Ajilon, a staffing firm, says about 90% of the positions his company is helping clients fill right now are on a contract basis.
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Bank of America Workers Sue Company Over Compulsory Unpaid Overtime
Crooks and Liars
By Susie Madrak
Sunday June 6, 2010 03:00 pm
This is always a favored tactic of the corporate elite: Keep employees so desperate and afraid, they'll work extra hours for free -- just so you can be chauffeured around Manhattan in a limo:
NEW YORK: Workers for Bank of America Corp, one of the nation's largest employers, have sued the company for allegedly failing to pay overtime and other wages.
The lawsuit filed Friday in federal court in Kansas City, Kansas, consolidates 12 lawsuits filed on behalf of employees in California, Florida, Kansas, Texas and Washington.
It seeks nationwide class-action status on behalf of employees at retail branches and call centers over the last three years. The federal Judicial Panel on Multidistrict Litigation in April directed that the cases be combined.
According to the 44-page complaint, the largest U.S. bank by assets requires employees to work in excess of eight hours per day or 40 hours per week, yet fails to pay them both for overtime and for all straight time worked.
The complaint also accuses the bank of requiring employees to work during unpaid breaks, failing to provide meal and rest breaks, and failing to timely pay terminated employees for earned wages and accrued vacation time.
"Bank of America enjoys millions of dollars in ill-gained profits at the expense of its hourly employees," violating either the federal Fair Labor Standards Act or various state labor laws, the complaint said.
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Private employers hold back on hiring in May
By Jeannine Aversa, AP Economics Writer
Fri Jun 4, 2010
WASHINGTON – A swell in temporary government hiring for the census drove almost all the job market's gains last month — a huge disappointment to Wall Street and a sign that private employers aren't yet confident enough in the recovery to start adding workers with gusto.
Daunted by the European debt crisis and a falling U.S. stock market at home, American businesses added just 41,000 jobs in May, the fewest since January. The government hired 10 times as many for the national census, but those positions will begin to disappear as summer arrives.
At least on paper, the 431,000 total new jobs was the biggest gain in a decade. The unemployment rate dipped to 9.7 percent from 9.9 percent, mainly because hundreds of thousands of people gave up searching for work and were no longer counted.
"On the surface, they look great," Joel Naroff, president of Naroff Economic Advisors, said of the numbers. "But that beauty was only skin-deep. The private sector is not out there hiring like crazy."
Wall Street interpreted the numbers as a big letdown, a sign that the recovery, if not derailed, is at least stalling. The Dow Jones industrial average sank from the opening bell and tumbled 323.31 points, its second worst slide of the year. The index closed below 10,000 for the second time in two weeks. All the major indexes were down more than 3 percent.
The new employment snapshot, released Friday by the Labor Department, indicated that many private employers are still wary of bulking up their work forces. And it suggested the economic recovery may not bring help fast enough for millions of Americans still unemployed.
The slowdown isn't unusual for an economic recovery. Hiring can slow in one month, then accelerate the next, as was the case after the 2001 recession. But that recession was relatively brief and mild. The Great Recession wiped out so many jobs that it will take unusually strong hiring to bring substantial relief. And neither the Federal Reserve nor the Obama administration expects that to happen soon.
Nor are Americans spending as lavishly as they typically do when recessions end. Wages are barely increasing. And the stock market has taken a beating. If shoppers stay frugal, businesses could become even less confident about adding new workers.
The European debt crisis hurts, too.
"We had all this bad news coming out of Europe, which made employers more cautious," said Tig Gilliam, CEO of Adecco Group North America, an employment services company.
The government hired 411,000 workers in May for the census. But last month was the peak of hiring for the 10-year count, and it will begin to tail off in June. The loss of those temporary jobs could help keep the unemployment rate high.
The nation has produced jobs for five straight months. That's a sharp improvement from last year, when employers were slashing work forces to survive the recession. Yet at the current pace of job creation, it could take at least until the middle of the decade to recoup the 7.4 million jobs lost since December 2007 and reduce unemployment to a more normal 6 percent or below.
Economists think the rate will remain above 9 percent through November, potentially leaving both Democratic and Republican incumbents in Congress more vulnerable to defeat. The weak job market also puts pressure on senators to pass an extension of unemployment benefits.
Unemployment is expected to remain high — in the 7 percent range — all the way into 2012, when President Barack Obama would seek re-election. On Friday, the president stressed the recovery was still in its early stages.
"Things never go completely in a smooth line," he said. Obama urged patience, said his policies are working and said the economy is "moving in the right direction" because it is producing jobs again.
Americans aren't so sure. Only one in five considers the economy in good condition, according to an Associated Press-GfK Poll conducted in mid-May.
House Republican leader John Boehner of Ohio seized on the jobs report as evidence that the president's $787 billion stimulus package isn't working.
"It is disappointing that nearly all of (the job) gains are temporary, taxpayer-funded government jobs through the U.S. Census," he said.
The number of net jobs created each month is calculated from a government survey of companies. The unemployment rate, which has not fallen far from its quarter-century high of 10.1 percent in October, is derived from a separate survey of households.
Some analysts think the rate could peak in June at 10.4 percent. About 125,000 new jobs are needed each month just to keep up with population growth and prevent the rate from rising.
All told, 15 million people were unemployed in May. Counting those who have given up looking for work and part-timers who would rather be working full-time, the "underemployment" rate fell slightly in May to 16.6 percent. That meant fewer people were forced to work part time, even though they wanted full-time jobs.
The number of people out of work six months or longer reached a record high in May, 6.76 million.
One of them is James Phelps, laid off a year ago from his job as a sales executive at the computer hardware company Seagate Technology in Minneapolis.
"First, I thought they'd probably hire me back," said Phelps, 64. "Maybe everyone thinks that."
The offer never came. And he found the job market frozen last summer when he starting casting around for executive-level positions.
The hiring picture for new college graduates has brightened somewhat. Employers plan to hire 5 percent more this year than a year ago, according to the National Association of Colleges and Employers. The group's annual survey found that about 24 percent of 2010 graduates who applied for jobs had landed one, compared with about 20 percent a year ago.
But in a sign of how tough things remain, not even half the students with the most sought-after major for employers — accounting — had jobs waiting after graduation, the group found.
Employers across a range of industries last month added jobs at a slower pace, or cut them. Factories, professional and business services, leisure and hospitality companies, and education and health care firms all slowed hiring.
Financial services, construction companies and retailers all pared jobs. The federal government led the way in hiring last month, but only 1,000 of the 412,000 positions were not census-related. State and local governments cut jobs and are expected to keep doing so as they wrestle with budget crises.
With auto sales rising, Chrysler LLC and Ford Motor Co. announced plans last month to hire. But others are still laying off workers. Hewlett-Packard Co. said this week it is cutting 9,000 jobs in its technology services division, and chocolate-maker Hershey Co. may cut 600 jobs.
Wages did rise modestly last month. Average hourly earnings increased to $22.57, from $22.50 in April.
But inflation was eroding paychecks. A Gallup poll, which surveyed shoppers for the week ended May 23, showed consumer confidence has started to deteriorate, mostly likely reflecting declining stock prices.
Still, most economists think shoppers will spend enough to keep the recovery intact. "Consumers will be ringing up enough sales to prevent employers from suddenly clamming up," said Ken Mayland, president of ClearView Economics. 
Associated Press Writers Anne D'Innocenzio in New York, Christopher Leonard in St. Louis and Eric Gorski in Denver contributed to this report. 
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Jobless benefits start ending on Sunday
By Tami Luhby, senior writer
February 26, 2010
NEW YORK (CNNMoney.com) -- Depending on extended unemployment benefits to see you through the Great Recession?
You'd better not: The Senate failed to push back the Feb. 28 deadline to apply for this safety net.
Starting Monday, the jobless will no longer be able to apply for federal unemployment benefits or the COBRA health insurance subsidy.
Federal unemployment benefits kick in after the basic state-funded 26 weeks of coverage expire. During the downturn, Congress has approved up to an additional 73 weeks, which it funds.
These federal benefit weeks are divided into tiers, and the jobless must apply each time they move into a new tier.
Because the Senate did not act, the jobless will now stop getting checks once they run out of their state benefits or current tier of federal benefits.
That could be devastating to the unemployed who were counting on that income. In total, more than one million people could stop getting checks next month, with nearly 5 million running out of benefits by June, according to the National Unemployment Law Project.
Lawmakers repeatedly tried to approve a 30-day extension this week, but each time, Sen. Jim Bunning, R-Ky., prevented the $10 billion measure from passing, saying it needs to be paid for first.
"Right now, the 1.2 million workers who will lose benefits in March are being held hostage by partisan attempts to delay and block this critical legislation," said Christine Owens, executive director of the National Employment Law Project.
The challenges facing job growth Senate Democrats plan to introduce legislation next week that pushes back the deadline as much as a year, an aide said. The House approved a bill in December that extended the deadline to the end of June.
Of course, once the measure is approved, the jobless would be able to reapply for federal benefits, though they would not receive missed payments.
Critical checks About 11.5 million people currently depend on jobless benefits. Nearly one in 10 Americans are out of work and a record 41.2% have been unemployed for at least six months. The average unemployment period lasts a record 30.2 weeks.
The unemployment rate, which now stand at 9.7%, is expected to rise in February as snowstorms in many states disrupted the economy and stalled hiring.
While unemployment benefits now run as long as 99 weeks, depending on the state, not everyone will receive checks for that long a stretch if the deadline to apply is not extended.
Those extended benefits are vital, experts said. While the economy is slowly recovering, hiring is expected to remain slow in coming years. The unemployment rate is expected to remain at about 10% this year, according to the White House Council of Economic Advisers, and won't fall back to its 2008 level of 5.8% for another seven years.
"Those benefits will expire, but the need to heat their homes and put gas in their cars doesn't expire," said Senate Majority Leader Harry Reid, D-Nev., on Friday. "Those benefits will expire, but the need to take their medicine, or support an aging parent, or take care of their children doesn't expire."
Congressional gridlock The jobless have anxiously watched from the sidelines as efforts to push back the deadlines took many twists and turns in recent weeks.
The extensions were included in an $85 billion bipartisan job creation draft bill that was unveiled in the Senate earlier this month. But then Reid decided to introduce a slimmed-down version that stripped them out, forcing lawmakers to vote on them as a stand-alone measure this week.
In order to speed the process along, the House on Thursday passed a bill extending the deadline to apply for unemployment insurance to April 5 and for COBRA benefits to March 28. That way, the Senate could have just approved the legislation and sent it directly to the president's desk.
However, Bunning's continued objection blocked Senate approval of the bill Friday.
This is not the first time unemployment insurance benefits -- which enjoy wide bipartisan support -- have fallen prey to politics. Last fall, the House approved adding up to 20 weeks to the federal benefits period. But it took seven weeks for the Senate to send it to the president's desk, during which time more than 200,000 people stopped receiving checks.
When lawmakers finally took up the measure, it passed by a 98-0 vote.
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America slides deeper into depression as Wall Street revels
December was the worst month for US unemployment since the Great Recession began
By Ambrose Evans-Pritchard
Published: 6:35PM GMT 10 Jan 2010
The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.
Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.
The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings. The local sheriff will escort them out of the door, often with some sympathy –– just like the police in 1932, mostly Irish Catholics who tithed 1pc of their pay for soup kitchens.
Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody's Economy.com expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck's Grapes of Wrath.
Judges are finding ways to block evictions. One magistrate in Minnesota halted a case calling the creditor "harsh, repugnant, shocking and repulsive". We are not far from a de facto moratorium in some areas.
This is how it ended between 1932 and 1934, when half the US states declared moratoria or "Farm Holidays". Such flexibility innoculated America's democracy against the appeal of Red Unions and Coughlin Fascists. The home siezures are occurring despite frantic efforts by the Obama administration to delay the process.
This policy is entirely justified given the scale of the social crisis. But it also masks the continued rot in the housing market, allows lenders to hide losses, and stores up an ever larger overhang of unsold properties. It takes heroic naivety to think the US housing market has turned the corner (apologies to Goldman Sachs, as always). The fuse has yet to detonate on the next mortgage bomb, $134bn (£83bn) of "option ARM" contracts due to reset violently upwards this year and next.
US house prices have eked out five months of gains on the Case-Shiller index, but momentum stalled in October in half the cities even before the latest surge of 40 basis points in mortgage rates. Karl Case (of the index) says prices may sink another 15pc. "If the 2008 and 2009 loans go bad, then we're back where we were before – in a nightmare."
David Rosenberg from Gluskin Sheff said it is remarkable how little traction has been achieved by zero rates and the greatest fiscal blitz of all time. The US economy grew at a 2.2pc rate in the third quarter (entirely due to Obama stimulus). This compares to an average of 7.3pc in the first quarter of every recovery since the Second World War.
Fed hawks are playing with fire by talking up about exit strategies, not for the first time. This is what they did in June 2008. We know what happened three months later. For the record, manufacturing capacity use at 67.2pc, and "auto-buying intentions" are the lowest ever.
The Fed's own Monetary Multiplier crashed to an all-time low of 0.809 in mid-December. Commercial paper has shrunk by $280bn ($175bn) in since October. Bank credit has been racing down a hair-raising black run since June. It has dropped from $10.844 trillion to $9.013 trillion since November 25. The MZM money supply is contracting at a 3pc annual rate. Broad M3 money is contracting at over 5pc.
Professor Tim Congdon from International Monetary Research said the Fed is baking deflation into the pie later this year, and perhaps a double-dip recession. Europe is even worse.
This has not stopped an army of commentators is trying to bounce the Fed into early rate rises. They accuse Ben Bernanke of repeating the error of 2004 when the Fed waited too long. Sometimes you just want to scream. In 2004 there was no housing collapse, unemployment was 5.5pc, banks were in rude good health, and the Fed Multiplier was 1.73.
How anybody can see imminent inflation in the dying embers of core PCE, just 0.1pc in November, is beyond me.
Mr Rosenberg is asked by clients why Wall Street does not seem to agree with his grim analysis.
His answer is that this is the same Mr Market that bought stocks in October 1987 when they were 25pc overvalued on Shiller "10-year normalized earnings basis" – exactly as they are today – and bought them at even more overvalued prices in 2007, long after the property crash had begun, Bear Stearns funds had imploded, and credit had its August heart attack. The stock market has become a lagging indicator. Tear up the textbooks.
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Stimulus Stimulated Much of Nothing in Illinois
None of these “jobs” are real, useful, and economically real jobs
By Warner Todd Huston Thursday, November 26, 2009
The Chicago Tribune has an interesting story that shows that Obama’s $787 billion stimulus really didn’t do much by way of creating any new jobs in Illinois. Though Obama is counting “jobs saved” as some sort of success story, the fact is few jobs have been created and nothing will be sustainable after the stimulus money runs out.
Jobs “saved” apparently means that stimulus money went to keep a job that might otherwise have been lost. But the problem with calling it a job saved is that once the stimulus runs out that same job will still be on the chopping block.
Then there is the other thing to realize: none of these “jobs” are real, useful, and economically real jobs. They are but government handouts given to people with government jobs. The fact is not a single one of these faux jobs “created” by the Obama stimulus is in the private sector. They are all in government and government does not create wealth, it does not grow an economy. All government does is take tax money from one pocket and shift it to another pocket. None of these “jobs” are worthy of being called new jobs.
But the Tribune has a very quick snippet of something that should be explored further and that is the reporting process that the Obama administrating is using to perpetrate their fake success story on the Stimulus.
Hilary Freeman, vice president of quality and performance at the society, said 34 employees got cost-of-living adjustments from stimulus funds. But that’s been counted as 34 jobs created or saved.
“There were no jobs created with this. When we tried to report that, it would not let us enter zero,” Freeman said. “That was 34 people that actually got that cost-of-living adjustment at our agency. We know it’s wrong. We can’t correct it. We’re trying to find out how we can correct it or report it correctly.”
Obama’s reporting system wouldn’t allow the input of a zero to let government know that no job was created? Obama has the reporting process rigged that some number other than zero must be entered in the jobs created tab?
No wonder the reports cannot be believed. It is all fixed ahead of time to produce a happy lie that Team Obama can sell to the beleaguered American people. It’s easy to count jobs that have been “created” when the reporting procedure has a number of them built in ahead of time regardless of whether or not they exist!
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One in Four Borrowers Is Underwater
By Ruth Simon and James R. Hagerty
November 24, 2009
The proportion of U.S. homeowners who owe more on their mortgages than the properties are worth has swelled to about 23%, threatening prospects for a sustained housing recovery.
Nearly 10.7 million households had negative equity in their homes in the third quarter, according to First American CoreLogic, a real-estate information company based in Santa Ana, Calif.
These so-called underwater mortgages pose a roadblock to a housing recovery because the properties are more likely to fall into bank foreclosure and get dumped into an already saturated market. Economists from J.P. Morgan Chase & Co. said Monday they didn't expect U.S. home prices to hit bottom until early 2011, citing the prospect of oversupply.
Home prices have fallen so far that 5.3 million U.S. households are tied to mortgages that are at least 20% higher than their home's value, the First American report said. More than 520,000 of these borrowers have received a notice of default, according to First American.
Most U.S. homeowners still have some equity, and nearly 24 million owner-occupied homes don't have any mortgage, according to the Census Bureau.
But negative equity "is an outstanding risk hanging over the mortgage market," said Mark Fleming, chief economist of First American Core Logic. "It lowers homeowners' mobility because they can't sell, even if they want to move to get a new job." Borrowers who owe more than 120% of their home's value, he said, were more likely to default.
Mortgage troubles are not limited to the unemployed. About 588,000 borrowers defaulted on mortgages last year even though they could afford to pay -- more than double the number in 2007, according to a study by Experian and consulting firm Oliver Wyman. "The American consumer has had a long-held taboo against walking away from the home, and this crisis seems to be eroding that," the study said.
Just months after showing signs of leveling off, the housing market has thrown off conflicting signals in recent weeks. Jittery home builders and bad weather led to a 10.6% drop in new home starts in October, and applications for home-purchase mortgages have dropped sharply in recent weeks.
These same falling prices have boosted home sales from the depressed levels of last year. The National Association of Realtors reported Monday that sales of previously occupied homes in October jumped 10.1% from September to a seasonally adjusted annual rate of 6.1 million, the highest since February 2007.
The bump in sales was ahead of forecasts, spurred by falling prices, low mortgage rates and a federal tax credits for buyers. Congress recently expanded and extended the tax credits.
The latest First American data aren't comparable to previous estimates because the company revised its methodology. First American now accounts for payments made by homeowners that reduce principal, and it no longer assumes that home-equity lines of credit have been completely drawn down.
The changes reduced the total number of borrowers under water -- although both old and new methodology show increases from the previous quarter. Using the old methodology, the portion of underwater borrowers would have increased to 33.8% in the third quarter.
Homeowners in Nevada, Arizona, Florida and California are more likely to be deeply under water, according to the analysis. In Nevada, for example, nearly 30% of borrowers owe 50% or more on their mortgage than their home is worth, said First American.
More than 40% of borrowers who took out a mortgage in 2006 -- when home prices peaked -- are under water. Prices have dropped so much in some parts of the U.S. that some borrowers who took out loans more than five years ago owe more than their home's value.Even recent bargain hunters have been hit: 11% of borrowers who took out mortgages in 2009 already owe more than their home's value.
Andrew Lunsford put 20% down when he bought his home in Las Vegas for $530,000 in 2004. Now, he said, his home was worth less than $300,000.
"I'm to the point where I feel I will never get my head above water," said Mr. Lunsford, a retired state trooper who works for an insurance company. He said his bank won't modify his loan because he can afford his payments, and he's unwilling to walk away, he said: "We're too honest."
Borrowers with negative equity are more likely to default if they live in a state where the bank can't pursue their assets in court, according to a study by the Federal Reserve Bank of Richmond.
But borrowers who are less than 20% under water are likely to maintain their mortgage if their loan is modified and the payments reduced, said Sanjiv Das, head of Citigroup's mortgage unit. "Beyond 120%, the most effective modification is a complete loan restructuring, including a principal reduction."
Mortgage companies have been reluctant to reduce mortgage principal over worries about "moral contagion, with people not paying their mortgage or redefaulting because they believed the bank would reduce their principal," Mr. Das said.
Many borrowers are so deeply under water that they can't take advantage of lower rates and refinance their mortgage. "We're declining hundreds of loans each month," said Steve Walsh, a mortgage broker in Scottsdale, Ariz. "The only way we will make headway is if we allow for a streamlined refinance where the appraisal is irrelevant."
Realtors reported that home sales in October were up 24% from a year earlier. The number of homes listed for sale nationwide was 3.57 million at the end of October, down 3.7% from a month earlier, the trade group said. But that inventory could rebound next year as banks acquire more homes through foreclosure.
About 7.5 million households were 30 days or more behind on their mortgage payments or in foreclosure at the end of September, according to the Mortgage Bankers Association. Many of those homes will be lost to foreclosure, adding to the supply of homes for sale.
A recovery could pay off for the roughly 30% of underwater borrowers who owe 110% or less of their home's value and are able to endure the slump. "Most people prefer to stay in their home" even if the value of their property has declined, said John Burns, a real-estate consultant based in Irvine, Calif.
—Nick Timiraos contributed to this article.
Write to Ruth Simon at ruth.simon@wsj.com and James R. Hagerty at bob.hagerty@wsj.com
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Revealed: The picture that shows even the rich have suffered in the credit crunch
By Daily Mail Reporter
Last updated at 1:30 PM on 17th November 2009
This incredible photograph illustrates the full extent to which the credit crunch has hit even the super rich.
Pawnbroker Paul Aitken poses with six Rolex watches, two Ferraris, a Porsche - and even an aeroplane - which have all been pawned during the recession.
Both Ferraris - F430 F1 paddle-shift models worth a total of £270,000 with a top speed of 198mph - were pawned by bankers who lost their jobs.The £75,000 175mph Porsche 911 Carrera 4S was pawned by a property developer whose assets crashed, leaving him desperate for much-needed capital.
Aitken took possession of the aeroplane, a French-built two-seater Cap 10 aerobatic stunt plane worth £100,000, four months ago when its owner fell on hard times.
The Rolex watches are among more than 1,000 designer timepieces, worth a total of more than £1 million, which have been used as deposit for pawn loans.
Among them are a Breitling Crosswind diamond set worth £3,000, a £33,000 Lange & Sohne Flyback Datograph gents wristwatch in 18ct rose gold, and a £20,000 Patek Philippe 18ct gold gents wristwatch.
Yesterday Aitken, 37, managing director of online pawnbrokers www.borro.com, said: 'We've seen the biggest economic crisis hit this country for years, and everyone is feeling the disastrous effects.
'When someone rang us asking to pawn his Ferrari we thought he was joking.
'This really shows how hard the recession has hit people - even those who are well-off have had to adjust their standard of living.
'Last week a newly married man gave us his Rolex watch his wife bought him as a wedding present.
'But he isn't alone, as many wealthy businessmen are having to take extreme measures once they've realised they aren't able to maintain their lavish lifestyles.
'And that might mean giving up the keys of their Ferrari, Porsche or plane for some much-needed cash.'
While other businesses have struggled to make ends meet over the last two years, Oxford-based www.borro.com has seen a staggering increase in trade.
They have loaned money to everyone from struggling millionaires to Premiership footballers and postmen, all in need of a few quid.
The company, which is the world's first online pawnbrokers, currently has more than £1m worth of supercars in storage.
They hang on to items for six months and then have the right to sell the item to cover their costs, returning any remaining money to the customer.
Aitken added: 'Our average loan is over £1,000 versus £130 on the high street.
'We are attracting a new type of customer to Pawnbroking. In the last ten weeks our loan book has doubled and this year we are up 1,700 per cent.
'Our business works because it is a repeat business; nine out of 10 customers repay their loans and return when the need is there.
'The industry as a whole has been working hard over the past number of years to improve its image and with credit becoming much harder to secure, people have been more open to this form of borrowing which in turn, is helping to reduce the stigma associated with pawnbroking.
'That said a key factor in our success is that Borro.com offers a highly efficient, easy to access, and very discreet service which is attractive to those who do not like the idea of visiting a high street operator.’
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Unemployment in Las Vegas climbs to 13.9 percent
By Jennifer Robison
Las Vegas Review-Journal
Oct. 19, 2009
The last time construction employment was this low in Nevada, MGM Mirage didn"t exist, Bellagio and The Venetian weren't open and the Las Vegas Beltway went from Pecos Road to Interstate 15.
From a jobs standpoint, it's almost as if the economic heyday of the late 1990s and early 2000s never happened. (Was Bobby Ewing in your shower this morning telling you it was all a dream? And if you don't know what we're talking about, then you weren't around either the last time construction employment was so low.)
Nevada has given back all of its boom-era construction jobs and then some, the state Department of Employment, Training & Rehabilitation reported Monday. The department's latest data show records of 13.3 percent joblessness statewide and 13.9 percent in Las Vegas in September, and the building sector leads the way in job loss. Contractors added 48,000 jobs statewide from 1997 to 2007, and they've shed 50,000 positions since the recession began in December 2007.
The leisure sector, at least, managed to hang on to more than half of its long-term job formation: Hospitality operators created 77,300 jobs from 1997 to 2007, and have cut 30,000 posts in the last two years. Year over year in September, the number of jobs in all categories fell by 76,500 statewide.
But Monday's news brought signs of life as well.
The 0.1 percentage-point gain in statewide joblessness was the smallest increase since March. Also, Nevada's employers added 11,000 jobs overall from August to September, for the best growth numbers since February 2007. Sectors that grew month-over-month include government, which added 9,800 jobs thanks partly to the start of a new school year, and professional business services such as accounting and law, which grew by 2,800 jobs.
Still, sectors including manufacturing, construction, hospitality and information technology continued to drop jobs from August to September. The number of unemployed reached 190,700 statewide and 141,000 in Las Vegas in September, and the state has lost so many jobs in recent years that even stabilization will mean sustained hard times for many residents.
"For the foreseeable future, we're going to be struggling," said Bill Anderson, chief economist for the employment department. "We do have a lot of ground to make up. Given the fact that we're looking only for modest improvement in the economy once recovery does take hold, it's going to take a long time to get back to where we were."
Anderson added that he'd need to see at least two more straight months' worth of improvements in hiring and declines in job loss before he could conclude more firmly that the recession had hit bottom.
Keith Schwer, director of the Center for Business and Economic Research at the University of Nevada-Las Vegas, said he won't attempt to pin down a time frame on recovery here until he sees stronger indications that consumers nationwide have more dollars to spend on travel and tourism.
"We're going to have to see noticeable improvement nationally before we can feel comfortable about gains in Nevada," Schwer said. "The national economy is beginning to turn upward, and we should begin in the next few months to see some signs of that here. The better the national economy does, the more likely we are to see improvement."
State economists expect joblessness to peak at 14.8 percent in 2010. That projection doesn't include part-timers seeking full-time jobs and discouraged workers who've given up the job hunt completely. The employment department doesn't have recent estimates of how many underemployed and discouraged residents live in the state, but Anderson said research shows that including such citizens would push up unemployment by 75 percent, for an overall jobless rate of more than 23 percent. Nationally, the jobless rate of 9.8 percent climbs to 17 percent when the Bureau of Labor Statistics includes underemployed and discouraged workers in its calculations.
Unemployment rates in Nevada and Las Vegas have nearly doubled from their levels a year ago. Joblessness in September 2008 was 7.3 percent in Nevada and 7.7 percent in Las Vegas.
Anderson said CityCenter's December opening should help ease job losses and boost Southern Nevadans' morale in coming months, but the outlook for the leisure and hospitality sector has more negatives than positives. Visitor volume in Las Vegas continues to fall and discretionary income remains constrained nationwide.
"You have to keep in mind the broader economy in which we're operating, and those economic fundamentals are not favorable to hospitality," Anderson said.
Senate Majority Leader Harry Reid, D-Nev., released a statement calling the new jobless numbers "troubling." He added that Congress should immediately extend unemployment insurance, and he said the Silver State might not have taken full advantage of economic-recovery money available for job formation.
Contact reporter Jennifer Robison at jrobison@reviewjournal.com
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U.S. Foreclosure Filings Top 300,000 for Sixth Straight Month
By Daniel Taub
Sept. 10 (Bloomberg) -- Foreclosure filings in the U.S. exceeded 300,000 for the sixth straight month as job losses that boosted the unemployment rate to a 26-year high left many homeowners unable to keep up with their mortgage payments.
A total of 358,471 properties received a default or auction notice or were seized last month, according to data provider RealtyTrac Inc. That’s up 18 percent from a year earlier, and down 0.5 percent from July, the Irvine, California-based company said in a statement. One in 357 households received a filing.
Foreclosures rose from a year earlier as companies cut payrolls by 216,000 workers last month, boosting the U.S. jobless rate to 9.7 percent, according to Labor Department data released last week. The rise in unemployment is having a bigger impact than an effort by the U.S. government and banks to modify mortgages and prevent foreclosures, said Morris A. Davis, an assistant real-estate professor at the Wisconsin School of Business.
“The foreclosure numbers are largely unemployment related,” Davis, a former Federal Reserve Board economist, said in an interview. “As long as 15 million Americans are unemployed, record foreclosures will continue.”
Foreclosures aren’t abating even as demand is returning to the U.S. housing market after a three-year slump. The number of contracts to buy previously owned homes rose more than forecast in July and increased for a record sixth consecutive month, while mortgage buyer Freddie Mac said the average price rose 1.7 percent in the second quarter.
Nevada Leads
Nevada had the highest foreclosure rate in August, with one in every 62 households receiving a filing, even with an 8.4 percent decrease in foreclosures from July, RealtyTrac said. August filings were up 53 percent from a year earlier, with 17,902 Nevada properties receiving a foreclosure filing.
The second-highest foreclosure rate in August was recorded in Florida, with one in every 140 households receiving a filing, followed by California, where one in 144 households received a foreclosure filing.
A 9.6 percent month-to-month decrease in filings helped lower Arizona’s foreclosure rate to fourth-highest in August from third-highest in July, RealtyTrac said. One in every 150 Arizona households received a foreclosure filing last month, still more than twice the national average, the company said.
Forty-seven banks have begun 360,165 modifications through the U.S. government’s Making Home Affordable program, up from about 235,247 in July, the U.S. Treasury said in a report yesterday.
Mortgage Modifications
Bank of America Corp. and Wells Fargo & Co., among the worst performers of banks in the foreclosure-prevention plan, stepped up their pace of mortgage modifications by at least 60 percent last month. Bank of America more than doubled its number of modifications started to 59,891 in August from July, while Wells Fargo increased by 64 percent to 33,172.
While the loan revamps may prevent some foreclosures, many homeowners facing repossession have prime loans, mortgages considered less risky than the subprime loans blamed for much of the housing crash, and can’t make their payments because of job losses, said Richard K. Green, director of the University of Southern California Lusk Center for Real Estate.
“When people live in a housing market that’s dropped 30 or 40 percent, and they lose their jobs, that’s a recipe for default,” Green said.
About 4.3 percent of U.S. homes, or one in 25 properties, were in foreclosure in the second quarter, the Washington-based Mortgage Bankers Association said last month. That’s the most in three decades of data, and loans overdue by at least 90 days, the point at which foreclosure proceedings typically begin, rose to 7.97 percent, the highest on record.
Michigan, Idaho
In the RealtyTrac survey, Michigan, Idaho, Utah, Colorado, Georgia and Illinois accounted for the other states with the top 10 highest rates of foreclosure filings. Six states accounted for 62 percent of the nation’s foreclosure filings.
New Jersey had the 11th highest rate with 8,316 filings, a 28 percent increase from a year earlier. Connecticut ranked 24th with 2,189 filings, a 22 percent increase. New York had the 39th highest rate with 5,350 filings, down 2.3 percent.
Las Vegas had the highest foreclosure rate among metropolitan areas with a population of 200,000 or more. One in every 53 households received a notice in August, up 48 percent from a year earlier and down 11 percent from July. Also in Nevada, the Reno-Sparks area had the seventh-highest foreclosure rate, with one in 86 households receiving a filing, RealtyTrac said.
California’s Performance
California had six metropolitan areas among the top 10. Stockton and Merced ranked second and third; Riverside-San Bernardino-Ontario, Vallejo-Fairfield and Modesto were fourth through sixth; and Bakersfield was 10th. Two Florida metropolitan areas were in the top 10, with Orlando- Kissimmee at No. 8 and Cape Coral-Fort Myers at No. 9, according to RealtyTrac, which collects data from more than 2,200 counties representing 90 percent of the U.S. population.
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  Foreclosures
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Treasury: Millions more foreclosures coming
Official says a strong housing market is crucial for the economy
Reuters
Wed., Sept . 9, 2009
US: Even the Treasury Department admits there are millions more home foreclosures on the way. Yet, they keep talking about the recovery we are having - hoping that repeating it will convince everyone it is true.
WASHINGTON - Only 12 percent of U.S. homeowners eligible for loan modifications under the Obama administration's housing rescue plan have had their mortgages reworked, and millions more foreclosures are coming, the Treasury Department said on Wednesday.
A Treasury report showed 360,165 people had their monthly payments reduced through August, up from 235,247 through July, but a senior Treasury official conceded much more must be done to soften the impact of a severe and prolonged housing crisis.
Treasury has begun releasing monthly reports on the loan modification program, called the Home Affordable Modification Program or HAMP.
In July, it said that just 9 percent of the estimated number of homeowners eligible had had their loans modified, so Treasury's assistant secretary for financial institutions, Michael Barr, was able to claim modest progress in August.
He told a House Financial Services subcommittee that the program launched in February, which brings banks and loan servicers together with at-risk homeowners, was on target to help a half million Americans homeowners by November 1.
But that is a small start on a huge problem at the heart of U.S. economic woes.
Barr said that "even if HAMP is a total success, we should still expect millions of foreclosures" as administration and industry efforts continue to stabilize a crisis-stricken housing sector.
Barr said a strong housing market was "crucial" to a sustained U.S. economic recovery and described the slump in prices and demand in the housing sector as being "at the center of our financial crisis and economic downturn."
He noted that analysts anticipate more than six million Americans could lose their homes in the next three years.
"Much more remains to be done and we will continue to work with other agencies, regulators and the private sector to reach as many families as possible," Barr said.
The Treasury report showed that some lenders had not helped any of their borrowers who were eligible for loan modifications. Others had helped varying numbers of those who were 60 or more days delinquent on their mortgages, ranging up to 100 percent for one bank that only had one eligible borrower.
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Bad Economy
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Food stamp list soars past 35 million
Thu Sep 3, 2009
WASHINGTON (Reuters) - More than 35 million Americans received food stamps in June, up 22 percent from June 2008 and a new record as the country continued to grapple with the worst recession since the Great Depression of the 1930s.
The food stamp program, which helps cover the cost of groceries for one in nine Americans, has grown in step with the U.S. unemployment rate which stood at 9.4 percent in July.
The Labor Department will release August employment figures on Friday.
June was the seventh straight month in which food stamp rolls set a record. The average benefit in June was $133.12 per person.
(Reporting by Roberta Rampton and Chuck Abbott; editing by Jim Marshall)
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The New Mortgage Fraud
Kick 'Em When They're Down
By Kelsey VanOverloop
By Acton Institute Friday, August 21, 2009
As the number of foreclosures rises across the country, many borrowers are willing to do almost anything to keep their homes, opening themselves up to the growing abuse of mortgage and real estate fraud. In the real estate market as in any other, moral failure has negative economic consequences.
Every time you see or hear an ad saying, “We guarantee we can save your home,” beware of a scam. There is no company, agency, or federal affiliate that can save every house from foreclosure. What lenders refer to as loss mitigation—the process of finding ways to keep borrowers in their homes—works on a case by case basis and requires an evaluation of all parts of a borrower’s loan and expenses. Yes, some properties can be saved, but there are no guarantees.
As more is learned about how the industry operated during its boom, we find mortgage fraud is nothing new. But it appears that some of the same people guilty of fraudulent mortgage practices in years past, along with some newcomers, have concocted new schemes to defraud homeowners. Today’s mortgage fraudster preys on the vulnerable, those who have run out of options and are desperate for help. They seek out people known to have fallen on hard times, pressuring them into making snap decisions about things they know little about. Unlike those schemes we saw during the peak of the housing market, which capitalized on the dream of owning a home, the fraud of today takes advantage of the fear of foreclosure. These practices bolster the stereotype of the predatory lender, except now the predators are the ones ostensibly offering assistance, tempting ignorant homeowners into what appears to be an easy solution to their tough problems. All this further erodes trust in the housing market which, in the long term, undermines the stability of lenders and homeowners alike.
Although fraud was common during the housing boom, the FBI’s 2008 Mortgage Fraud Report suggested a rise in activity after the bust: “There is a direct correlation,” it concluded, “between fraud and distressed real estate markets.” According to the study, there was a 36 percent increase from 2007 to 2008 of reported suspicious activity in the mortgage industry. This led to $1.4 billion of losses in 2008, and losses reported so far in 2009 exceeded the same period in 2008 by $208 million.
Nearly 12 percent of homeowners were at least one month behind or in foreclosure at the end of 2008, and that number has been growing steadily during 2009. These are the people targeted by those the FBI calls “mortgage fraud perpetrators.” Senior citizens are viewed as easy marks. The FBI report explains, “(perpetrators) recruit seniors through local churches, investment seminars, television, radio, billboard, and mailer advertisements, to commit fraud.”
The FBI outlines many different kinds of mortgage fraud, from taking advantage of distressed builders to fraudulent offers of credit repair. But the greatest problem in today’s markets is the “Foreclosure Rescue” scheme.
Once the culprits at work in these schemes have a borrower on the hook, they convince him to stop talking to his mortgage company or bank. The perpetrators then ask for an up front fee, usually between $1,000 and $3,000, and once it is paid, promise to handle the rest of the process. A legitimate mortgage lender may charge a fee when stopping the foreclosure process with a loan modification or a repayment plan, but it will not ask for this fee up front and will work to stay in contact with a borrower throughout the process.
Once the mortgage fraud perpetrators have received their fee, they tell the borrower to stop making mortgage payments, or worse, to make mortgage payments to the bogus organization directly. They may use part of the up front fee to file paperwork putting the borrower into bankruptcy, as this places a temporary hold on any foreclosure proceedings. Since the defrauders told the borrower to stop talking to lenders and anyone affiliated with the court system, the borrower has no idea this hold only lasts until the case is heard in court. When the borrower does not show up for the court date, foreclosure proceedings resume. Or, in most other cases, perpetrators falsely tell a borrower that the troubled mortgage can be renegotiated and monthly payments can be reduced with delinquent payments applied to the principle or negotiated away. They tell the borrower that the loan is being worked on, but nothing is ever done. In most cases, once the borrower realizes she or he has been a victim of mortgage fraud, the loan is so delinquent that there is little any legitimate lender can do.
More needs to be done by the mortgage industry to make homeowners aware of these schemes. The Administration of National Banks and the U.S. Treasury Department produced a list of “Consumer Tips for Avoiding Mortgage Modification and Foreclosure Rescue Scams” in April, but it is important for all legitimate lenders to make sure borrowers know what risks are out there.
Mortgage fraud is taking money out of a market working to rebuild itself, and these schemes, along with the intervention it will take to end them, will only slow recovery. They also further deteriorate trust in the housing market, where this quality is critical. We need to trust our builders to build safe homes, trust our realtors to price homes fairly, and trust our lenders to have in mind the best interests of the people who comprise their market. When this trust is damaged, it is more difficult to stem falling home values and housing recessions. Unethical mortgage operations, like all selfish and shortsighted economic activities, do not only harm the immediate victims; they hurt all of us.
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Consumer, Celebrity Bankruptcies May Hit 1.4 MillionBy Linda Sandler and Andrew M. Harris
August 10, 2009
(Bloomberg) -- Consumer bankruptcies show no sign of abating after rising more than a third this year and may hit 1.4 million by Dec. 31 as jobs are lost and loans are harder to get, according to the American Bankruptcy Institute.
More than 126,000 consumers filed for bankruptcy in the U.S. last month, 34 percent more than in July 2008, the ABI said in its latest report on Aug. 4. The increase came after a 36.5 percent rise in personal bankruptcies nationwide in the first six months, to 675,351, according to the ABI research group, which interprets data collected by the National Bankruptcy Research Center.
“Rising unemployment on top of high pre-existing debt burdens is a formula for higher bankruptcies through the end of this year,” ABI Executive Director Samuel Gerdano said in a statement. The group, composed of lawyers, accountants, bankers and judges, is based in Alexandria, Virginia.
Debt problems don’t stop with sub-prime borrowers. Celebrities who filed for bankruptcy in July included movie actor Stephen Baldwin, who sought protection from creditors after lenders began foreclosure procedures against his home. Lenny Dykstra filed for Chapter 11 bankruptcy in a petition that says the former Major League Baseball All-Star owes between $10 million and $50 million.
Banks Hurt
Also last month, con man lawyer Marc Dreier’s luxury Manhattan condominium sold for $8.2 million, 21 percent less than what he paid two years ago, in an auction at U.S. Bankruptcy Court in Manhattan. Proceeds will be used to pay creditors in Dreier’s bankruptcy case and victims of Dreier’s fraud, said Salvatore LaMonica, trustee in the Chapter 7 bankruptcy case.
Steeply rising filings by consumers are hurting commercial banks. JPMorgan Chase & Co., the second-largest U.S. bank, predicted more losses on consumer loans last month even as it announced a rise in second-quarter profit on record investment banking fees. Chief Executive Officer Jamie Dimon said he doesn’t expect the credit card business to make a profit this year or in 2010, and the company increased its loss projections for prime and subprime mortgages.
Credit Card Losses
JPMorgan said losses in its Chase credit-card portfolio may be 10 percent next quarter and will be “highly dependent” on unemployment after that. Losses for cards issued by Washington Mutual, which the bank acquired in September, may reach 24 percent by the end of the year, the company said.
JPMorgan’s credit cards lost $672 million, compared with income of $250 million in the second quarter last year. Home- equity charge-offs climbed to $1.3 billion, or 4.61 percent. Prime mortgage defaults rose to $481 million, or 3.07 percent, from $104 million, or 1.08 percent a year earlier.
Dimon, 53, said the company supported “proper consumer protection” and that pending legislation setting up an agency to monitor consumer lending practices would hurt short-term profits in credit cards.
Congress, in October 2005, enacted the Bankruptcy Abuse Prevention and Consumer Protection Act, a legislative reform package intended to make it harder for consumers to get court orders wiping out their uncollateralized debt.
The act required debt counseling and a means test for would-be filers.
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Panic: Unemployment rate already at 20%!!!
by Anthony Mirhaydari
7 August, 2009
http://investment-blog.net/panic-unemployment-rate-already-at-20/
Really, how hard is it to find a job? Was June’s horrid numbers, in which 467,000 people lost their jobs compared to 345,000 in May, a one-time fluke? Or does it mean that all those Wall Street economists who believe the economic recovery is starting are dead wrong?
Not to scare you, but the situation is actually worse than it seems. Over the years, the government has changed the way it counts the unemployed. An example of this is the criticized Birth-Death Model which was added in 2000. The model is designed to account for the birth and death of businesses and the resultant lag in survey data. Unfortunately, the model doesn’t work that well during economic contractions (like we have now) and consistently overstates the number of jobs being created each month.
John Williams of Shadow Government Statistics specializes in removing these questionable tweaks to the government’s statistical data to better align current numbers with the methodology used to gather historical data. After reviewing the data, Williams believes that “the June jobs loss likely exceeded 700,000.” David Rosenberg of Gluskin Sheff notes that the fall in the number of hours worked in June (to a record low of 33 per week) is equivalent to a loss of more than 800,000 jobs.
There are similar issues with the way the unemployment rate is measured. The headline rate only jumped from 9.4% to 9.5% because of a drop in the number of people in the workforce. The more inclusive “U-6″ measure of unemployment, which includes discouraged workers, jumped from 16.4% to 16.5%. But even this doesn’t adequately capture the situation on the ground: Back in the Clinton Administration, the definition of discouraged worker was changed to only include those that had given up looking for work because there were no jobs to be had within the last year.
By adding these folks back in, William’s SGS-Alternate Unemployment Measure rose to a jaw-dropping 20.6%. Separately, the Center for Labor Market Studies in Boston puts U.S. unemployment at 18.2%. Any way you cut the numbers, the situation is very bad. According to David Rosenberg, one-in-three among the unemployed have been looking for a job for more than six months and still can’t find one.
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Obama warns recession is far from over
President Barack Obama has given warning that the US economy will not recover for "many more months" and said the recession was worse than anyone had thought.
By Jonathan Russell
01 Aug 2009
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5956468/Obama-warns-recession-is-far-from-over.html
The President was responding to Friday's report on gross domestic product which showed that the US economy shrank by 1pc annual rate in the second quarter. The gloomy outlook comes just days after President Obama said the US "may be seeing the beginning of the end of the recession".
Warning the US recession was "even deeper than anyone thought", he said: "Important steps that we have taken over the last six months have helped put the brakes on this recession.
"But history shows that you need to have economic growth before you have job growth."
However the 1pc fall in US GDP was better than many economists had been predicting and was a distinct improvement on the first quarter when the US economy shrank by 6.4pc. The combined falls make the slump the worst recession since the Great Depression in the 1930s.
In the UK, the Monetary Policy Committee (MPC) is expected to leave Bank of England interest rates at 0.5pc when it meets this week. News that UK GDP fell by 0.8pc in the second quarter against the same period last year has also dampened expectations of a fast recovery in the UK. Many economists now believe that interest rates are likely to remain at their present levels until well into next year.
The more testing decision for the MPC will be whether to extend the programme of quantitative easing (QE). The Bank is in the process of spending £125bn on commercial bonds and gilts, with authorisation to spend another £25bn. A decision on whether or not to go ahead with the spending could be made on Thursday.
Howard Archer, chief economist for IHS Global Insight said: "It is very possible that divisions could emerge within the committee on whether or not to extend QE, and to what extent.
"Given the surprisingly deep GDP contraction in the second quarter and still major uncertainties about the outlook for the economy and bank lending, we suspect that the MPC will come to the conclusion at its August meeting that there is a strong enough case to use the final £25bn of the £150bn that it is currently permitted to spend on QE by the Treasury."
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How the Federal Reserve Created the US Recession
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More bodies go unclaimed as families can't afford funeral costs
The weak economy is taking its toll, with an increasing number of bodies in Los Angeles County being cremated at taxpayers' expense.
By Molly Hennessy-Fiske, July 21, 2009
http://www.latimes.com/news/local/la-me-unclaimed21-2009jul21,0,2534079.story
The poor economy is taking a toll even on the dead, with an increasing number of bodies in Los Angeles County going unclaimed by families who cannot afford to bury or cremate their loved ones.At the county coroner's office -- which handles homicides and other suspicious deaths -- 36% more cremations were done at taxpayers' expense in the last fiscal year over the previous year, from 525 to 712.
The county morgue, which is responsible for the indigent and others who go unclaimed, saw a 25% increase in cremations in the first half of this year over the same period a year ago, rising to 680 from 545.
The demands on the county crematorium have been so high that earlier this year, officials there stopped accepting bodies from the coroner. The coroner's office since has contracted with two private crematories for $135,000 to handle the overflow."It's a pretty dramatic increase," said Lt. David Smith, a coroner's investigator. "The families just tell us flat-out they don't have the money to do a funeral."
Once the county cremates an unclaimed body -- typically about a month after death -- next of kin can pay the coroner $352 to receive the ashes. The fee for claiming ashes from the morgue is $466.Christopher Agosta's ashes are among those waiting.Last month, the coroner called his sister, Tarnya Baker, 41, of Amesbury, Mass., to notify her that Agosta, 43, of West Hollywood, had shot himself in the head. Although Baker was her brother's next of kin, they had not spoken since he left Massachusetts for California 15 years ago. Only after he died did she learn that he was in debt. He shot himself as sheriff's officials attempted to evict him. He left a note giving his possessions to the local AIDS clinic.Baker said she wants to claim his ashes, but she and her husband have two children and a struggling glass-glazing business. During the last two years, they have had to lay off their two employees."I know that I can't afford to handle all this," Baker said. "I can't afford to fly out there and ask questions."Coroners and funeral directors around the country say they are seeing the same trend as cash-strapped families cope with funeral costs. Just claiming a body from the L.A. County coroner costs $200. Once a body is claimed, private cremations usually run close to $1,000, Smith said. Funeral homes charge an average of $7,300 to transport and bury a body in a simple grave, according to the National Funeral Home Directors Assn."No one is immune from this," said Bob Achermann, executive director of the California Funeral Directors Assn. in Sacramento. "The economic malaise we're in is affecting everybody."Coroner's investigators see the emotional and financial fallout up close."You go to the house where the person who died was the only breadwinner, a traffic accident, and there's the wife and you see children," Smith said. "Especially with a younger family, it blows them out of the water."Smith said that in his dozen years at the coroner's office, he cannot remember seeing such a high number of families unable to afford the cost of claiming a body. If families ask, coroner's staff will refer them to several funeral homes, including 70-year-old Allen English & Estrada Funeral Services in Bell Gardens, which offers cremations through its Cremation Society of Los Angeles.The society's director assistant, Joseph Harvey, said cremations have increased about 15% since the economic downturn last year. His office cremates about 400 bodies a year and charges about $700.
Harvey said the funeral industry is trying to do a better job of marketing itself in this economy. He said the casket manufacturers he deals with have stopped selling some expensive models as demand wanes."Families are making different choices based on the economy, choosing different caskets or urns or holding shorter services," said Jessica Koth, a spokeswoman for the National Funeral Home Directors Assn. "They're cutting back on floral memorials. If they have a funeral procession, they're not having the family limousine." Alfredo Xochipa, 27, said he shopped around for a lower-cost casket after his 21-year-old brother, Pedro, was shot to death at a party in Los Angeles on July 4.Xochipa, who works for the county's Department of Public Social Services, found a metal casket at a warehouse store in Boyle Heights for $1,300, about $1,000 less than retail. Because his brother was a crime victim, Xochipa said, the coroner's office waived its $200 fee. A week after his brother was killed, the family held a funeral and buried Pedro at Resurrection Cemetery in Montebello.But even after receiving $7,500 from a state crime victims fund to defray costs, his family still owed more than $4,000."He had a lot of friends, and we have a lot of family, so that helped us out, we got a lot of donations," Xochipa said. "But there was still money that my dad had to request as a loan from friends."Xochipa said his father, a truck driver, has not had luck finding work to pay off the funeral debt. The family has applied for assistance from the Catholic Archdiocese.Smith said he has seen many families go to great lengths to claim their loved ones' remains, despite financial setbacks."We've had families try to have car washes and other little fundraising events. . . . They try to do right," he said.For the dead left to the county, officials attempt to recover cremation costs from the estates. But the county does not require relatives to prove they are too poor to pay. Smith said his office, with a staff of four, cannot investigate. The morgue is similarly strapped. If records later show a family could have paid to claim a body, by law the county can recover the cost.Other counties investigate families' ability to pay. San Mateo County Coroner Robert Foucrault, first vice president of the California State Coroners' Assn., said his office recently began requiring applicants for county-funded cremations to submit a three-page application listing bank accounts, property or other assets."We figure that will be a deterrent," Foucrault said. "We have found people that take advantage of the system. They do have the funds to pay but feel because they have been estranged from somebody, they shouldn't have to be responsible for the burial."In some cases, family members say they have been delayed by Los Angeles County's next-of-kin policy, which requires that the closest living relative be given time to claim the remains.Mark Hooper, 49, of Lancaster, died in December of complications from hepatitis C. After his body went unclaimed, he was cremated at county expense.At the time of his death, the carpet contractor was unemployed, ill, in debt and living near his parents in Lancaster.His 22-year-old daughter, Angelica Hooper, who lives in the San Diego area, said she intends to allow her grandparents to claim the ashes. She also said she's been busy with work."I have to keep my mind on other things," she said. "Just him passing was a lot to deal with."Carol Hooper, 70, a retired aircraft mechanic, said last week that her son struggled with addiction and had trouble holding down jobs. But, she said, he was also a kind, giving person who made many friends growing up in Redondo Beach. If her granddaughter does not claim the ashes, she will."We're not rich; we're retired," Hooper said. "But we'll make it for him."In Massachusetts, Christopher Agosta's sister said she, too, is determined to do the right thing."He is my brother," Tarnya Baker said. "He died alone. I'm bringing him home."She has two years to claim his remains. If she doesn't, Agosta's ashes will be buried with those of hundreds of others in a pauper's grave.
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