How the Financial Reform Plan Protects the Status Quo

Obama's (Latest) Surrender to Wall Street

By MICHAEL HUDSON

In reaching across the aisle for Republican support – and no doubt future campaign contributions from the financial sector Pres. Obama is morphing into Joe Lieberman. There also is a touch of Boris Yeltsin in his sponsorship of a financial “reform” ominously similar to what advisor Larry Summers backed in Russia – relinquishing government power to a banking elite. The Financial Regulatory Reform proposal promotes Wall Street’s “product,” debt creation, at the expense of the economy at large, and lets financial chieftains continue to self-regulate the debt industry – and to keep scot-free all their gains from the past decade’s worth of fraudulent lending.

Confronting the wreckage of a debt crisis worse than any since the Great Depression, Mr. Obama has achieved what no Republican could have: rescuing the Bush Administration’s pro-creditor policies that fostered the Bubble Economy in the first place. “Most of the financial sector lobby community is happy with what has emerged,” the Financial Times summarized. A spokesman for the Financial Services Forum, a major Wall Street lobbying organization, called the proposals “careful and balanced.”1/  With such endorsements, victims of predatory lending have good reason to worry. The Obama plan is just the opposite from reforming the financial system along lines that progressive Democrats and other critics have urged.

The plan’s six most fatal flaws are apparent in its preamble, which lays out a false diagnosis of the financial problem in a way that whitewashes Wall Street (in contrast to Mr. Obama’s nice televised populist speech giving verbal criticism to “culture of irresponsibility”). A false diagnosis must lead to wrong-headed cures – rarely by accident. There invariably is a financial beneficiary who gains from blind spots in a legal “reform” package. (full article)

• US gives IMF $100bn to re-assert the IMF's influence in the increasingly competitive global lending market to sovereign nations

2009 global unemployment up by up to 60 million from 2007

GENEVA -  The International Labour Office (ILO) today issued new labour market projections for 2009, showing a further increase in unemployment, working poor and those in vulnerable employment.
In presenting the new data, ILO Director-General Juan Somavia, said the ILO’s annual International Labour Conference, to be held in Geneva on 3-19 June, was to consider an emergency “global jobs pact” designed to promote a coordinated policy response to the global jobs crisis.
“We are seeing an unprecedented increase in unemployment and the number of workers at risk of falling into poverty around the world this year”, Mr. Somavia said. “This is cause for grave concern. To avoid a global social recession we need a global jobs pact to address this crisis, and mitigate its effects on people. The choice is ours and the time to act is now.”
In the Global Employment Trends Update, May 2009 the ILO revised upwards its unemployment projections to levels ranging from 210 million to 239 million unemployed worldwide in 2009, corresponding to global unemployment rates of 6.5 and 7.4 per cent respectively.
The Trends report projects an increase of between 39 and 59 million unemployed people since 2007 (Note 1) as the most likely range. Actual outcomes will depend on the effectiveness of fiscal expenditures decided by governments and on a functioning financial sector. In this regard, Mr. Somavia recalled the important decisions taken by the G20 Leaders at their London Summit.
Updated projections of working poverty across the world indicate that 200 million workers are at risk of joining the ranks of people living on less than USD 2 per day between 2007 and 2009.
The crisis is hitting youth hard. The number of unemployed youth is expected to increase by between 11 and 17 million from 2008 to 2009. The youth unemployment rate is projected to increase from around 12 per cent in 2008 to a range of 14 to 15 per cent in 2009.
Mr. Somavia cautioned that past experience suggested a considerable lag of 4 to 5 years on average in the recovery in labour markets after economic recovery. There was a risk of the global jobs crisis “persisting” for the next several years.
“This is why the International Labour Conference is considering a global jobs pact aimed at placing employment creation and social protection at the centre of recovery policies,” Mr. Somavia said. “The aim of the pact is to make sure that both the extraordinary stimulus measures together with other government policies better address the needs of people who need protection and work in order to accelerate combined economic and employment recovery.”
The ILO report said 2009 will represent the worst global performance on record in terms of employment creation. The report underlined that the global labour force is expanding at an average rate of 1.6 per cent, equivalent to around 45 million new entrants annually, while global employment growth decreased to 1.4 per cent in 2008 and is expected to drop further to between 0 and 1 per cent in 2009.
The ILO also said that in the 2009-2015 period, around 300 million new jobs will have to be created just to absorb the growth in the labour force (Note 2).

Fuel prices rise as demand drops