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Labor Unions Join Wall St. Protesters

Oct 5 (Reuters) – Labor unions including nurses and transit workers planned to join a an anti-Wall Street march on Wednesday through New York’s financial district, and some college students walked out of classes in solidarity with the growing protest movement.

The American Federation of State County and Municipal Employees, Communications Workers of America and the Amalgamated Transit Union said they would be joining the protesters voicing discontent and anger over high unemployment, home foreclosures and the 2008 corporate bailouts.

The nation’s largest union of nurses, National Nurses United, also said it would take part in the New York march, set for late afternoon in downtown Manhattan.

Students on college campuses added their voices, with walkouts scheduled on Wednesday at some 75 universities across the nation.

“We stand in solidarity with those protesting Wall Street’s greed,” said Gerald McEntee, president of the 1.6 million-member AFSCME union, in a statement. “The economy that has wrecked so many lives, obliterated jobs, and left millions of Americans homeless and hopeless is the fault of banks that gamble with our future.”

Wall St. Protest Spreads

The anti-Wall Street protest in Lower Manhattan entered its third week with hundreds of arrests after the group blocked traffic Saturday on the Brooklyn Bridge, and budding copycat movements across the U.S. continued to stage smaller-scale protests, planning them online on social networking sites.

Protesters held sizable gatherings in Chicago and Los Angeles. In other cities, like San Francisco and Pittsburgh, protests were smaller or existed only in a planning stage. A website, occupytogether.org, lists groups that are offshoots of the New York protest. Activists have begun organizing outside the U.S., including in Prague, Melbourne and Montreal.

QE2 Was a Bust

BOSTON (MarketWatch) — It‘s cost $600 billion of your money. And it was supposed to rescue the economy. But has Ben Bernanke’s huge financial stimulus package, known as “Quantitative Easing 2,” actually worked as planned?

QE2 is being wound down in the next few weeks. Fed Chairman Ben Bernanke has said it has left the economy “moving in the right direction.”

Yes, it’s sparked a massive boom on the stock market. Ordinary investors have started piling back into shares again. And last week we saw the latest example of the return of animal spirits on Wall Street, as stock in new dot-com LinkedIn LNKD -7.44% skyrocketed on its debut.

The truth? QE2 has created a massive new bubble in dollar-based financial assets, from stocks to gold. Meanwhile, it has had zero visible effect on the real economy.

Take jobs. According to the U.S. Labor Department, since last August the number of full-time workers has gone up by just 700,000, from 111.8 million to 112.5 million.

At a cost of $600 billion, that’s $850,000 a job.

The picture’s even more meager. Over the same period, the number of part-time workers has gone down by 600,000. In other words, we’ve basically shifted 600,000 or 700,000 workers from part-time jobs to full-time jobs.

Housing is double-dipping. Big time. According to the National Association of Realtors, the average price of an “existing” (i.e. used) home was $177,300 in August, just before QE2.

Today? It’s $163,700 — or 8% less.

Economic growth has slowed. It was 2.6% last summer. It’s a miserable 1.8% now.

Meanwhile inflation has risen, from 1.2% before QE2 to 3.1% now.

Meanwhile QE2 has created an entirely artificial bubble in all dollar-based assets.

Look at the stock market. Since Aug. 27, when Bernanke unveiled his plan for QE2 in Jackson Hole, Wyo., the S&P 500 has risen by 26%.

So far, so good, right? But it’s an illusion. What’s really happened is a decline in the value of the dollars that the shares are measured in.

Measured in hard currencies, the stock market boom has been much less impressive. In Swiss francs, the S&P has risen by just 8.4% since Aug. 27. In currencies like the Swedish krone and Australian dollars it’s even less. Measured in gold, the S&P 500 is up just 4.5%.

Meanwhile the illusion of a boom is causing all sorts of investors to take crazy risks. Witness LinkedIn’s IPO. Economists from the so-called “Austrian” school say this is a reason to go back to a gold standard. It certainly makes you wonder what’s next.

The Other Plot to Wreck America

THERE may not be a person in America without a strong opinion about what coulda, shoulda been done to prevent the underwear bomber from boarding that Christmas flight to Detroit. In the years since 9/11, we’ve all become counterterrorists.

But in the 16 months since that other calamity in downtown New York — the crash precipitated by the 9/15 failure of Lehman Brothers — most of us are still ignorant about what Warren Buffett called the “financial weapons of mass destruction” that wrecked our economy. Fluent as we are in Al Qaeda and body scanners, when it comes to synthetic C.D.O.’s and credit-default swaps, not so much.

What we don’t know will hurt us, and quite possibly on a more devastating scale than any Al Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin.

Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed.

Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks — secure that it can keep the bonanzas while we get stuck with the losses.

That 1937 Feeling

Here’s what’s coming in economic news: The next employment report could show the economy adding jobs for the first time in two years. The next G.D.P. report is likely to show solid growth in late 2009. There will be lots of bullish commentary — and the calls we’re already hearing for an end to stimulus, for reversing the steps the government and the Federal Reserve took to prop up the economy, will grow even louder.

But if those calls are heeded, we’ll be repeating the great mistake of 1937, when the Fed and the Roosevelt administration decided that the Great Depression was over, that it was time for the economy to throw away its crutches. Spending was cut back, monetary policy was tightened — and the economy promptly plunged back into the depths.

This shouldn’t be happening. Both Ben Bernanke, the Fed chairman, and Christina Romer, who heads President Obama’s Council of Economic Advisers, are scholars of the Great Depression. Ms. Romer has warned explicitly against re-enacting the events of 1937. But those who remember the past sometimes repeat it anyway.

During the good years of the last decade, such as they were, growth was driven by a housing boom and a consumer spending surge. Neither is coming back. There can’t be a new housing boom while the nation is still strewn with vacant houses and apartments left behind by the previous boom, and consumers — who are $11 trillion poorer than they were before the housing bust — are in no position to return to the buy-now-save-never habits of yore.

What’s left? A boom in business investment would be really helpful right now. But it’s hard to see where such a boom would come from: industry is awash in excess capacity, and commercial rents are plunging in the face of a huge oversupply of office space.

Will the Fed realize, before it’s too late, that the job of fighting the slump isn’t finished? Will Congress do the same? If they don’t, 2010 will be a year that began in false economic hope and ended in grief.

Bubble Trouble?

Traders in Sao Paulo’s futures and commodities market. Photograph: Dado Galdieri/AP

Everywhere the story is the same. Gold: at a record high, above $1,100 an ounce. Shares: 50% up since March. Oil: back to almost $80 a barrel. Bonds: yields on two-year gilts at a record low. Average UK house prices: up £11,000 this year.

Around the world, asset prices are booming. Relief that the global economy has avoided the Armageddon feared in March, combined with large dollops of virtually free money, have helped put a smile back on the faces of the speculators. Too big a smile, according to some experts, since the buoyancy of asset markets is not reflected in the real economy.

Away from the frenzied financial world, among struggling firms and cash-strapped families, signs of recovery from the worst downturn since the 1930s have been much patchier.

The US returned to growth in the third quarter, thanks to Washington’s cash-for-clunkers scheme and tax breaks for first-time homebuyers. But unemployment is at its highest level since 1983 and the number of Americans losing their homes is still rocketing, so Fed chairman Ben Bernanke still has plenty to worry about.