Eye on Freedom

Unemployment is likely to surge above 10 percent during the next few months as millions of “missing” workers return to the labor market.

This will pose a huge challenge for the Obama administration and congressional Democrats, who want to run in 2010 on the back of a strengthening economy.

Economist Mark Zandi expects the unemployment rate to float above 10 percent during the next few months as workers look to take advantage of improving opportunities.
“The increase in unemployment is a sign of a stronger job market, but it is also a sign of how weak the job market still is and vulnerable the recovery is to anything that might go wrong.”

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If the financial regulation bill that passed the House last year becomes law, President Obama and his Treasury Secretary will acquire the right to take over any financial institution they wish to, provided that, in their sole opinion, it is both “too big to fail” and on the brink of insolvency. The House bill provides for no judicial review and does not require any objective evidence of imminent failure to trigger the takeover provisions.

Once the government takes over such a company, it will acquire the right to replace the entire board of directors, fire the management of the company, wipe out stockholder equity and even sell off divisions of the company.

Essentially, this bill permits the government to launch an unfriendly takeover of any financial institution it wishes without risk and with no poison pill or other counter-measures possible.

This legislation, essentially, confers on the federal government police powers that, under our system, are the exclusive preserve of state and local government. The blank check the bill gives the feds to take over any financial institution is really more of an exercise of eminent domain than it is an extension of traditional federal regulatory power.

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Real personal income for Americans – excluding government payouts such as Social Security – has fallen by 3.2 percent since President Obama took office in January 2009, according to the Commerce Department’s Bureau of Economic Analysis.

For comparison, real personal income during the first 15 months in office for President George W. Bush, who inherited a milder recession from his predecessor, dropped 0.4 percent. Income excluding government payouts increased 12.7 percent during Mr. Bush’s eight years in office.

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