Disenchanted Tomorrows
Of course, it’s too soon to say, but the subject is starting to intrigue some: How America will emerge from the economic crisis? Lately, commentators go down several paths, asking themselves every time: Is the trend solid or an anomaly?
This is applicable to the debate about the big banks. “Too big to fail” — too big to be abandoned to bankruptcy... Congress is passionate about this issue, yet another bank appears. On the one hand, in two and a half years, four “big banks” went down (the business banks Bear Stearns and Lehman, along with the credit banks Countrywide and Washington Mutual), and the “systemic risk” that giants of this scale are likely to generate is of course important.
On the other hand, in thirty months, 243 banks, small and medium, filed for bankruptcy in the United States. And 775, according to the public regulator, are on the verge of it. In Florida, Georgia and Washington states, more than 10 percent of banking institutions went bankrupt, and this phenomenon is accelerating everywhere: a 40 percent rise in 2010. What will be the landscape of American banking in five years, and what impact should we expect, especially for SMEs? These questions are starting to arise, estimated by some to be equally as important as the infamous “too big to fail” issue.
Here’s another question: How do you explain that crime strongly declined since the beginning of the crisis in the USA? It has seen a 5.5 percent drop in 2009 according to the latest FBI report, and this is while prisons are being emptied as the states, due to clear budget cuts, are offloading their prisoners (liberation for small offenders and reduced sentences for big ones).
During the latest big recession, in the second half of the 1980s, crime skyrocketed, as one would logically predict. What explains the current phenomenon? Does it indicate a change to come regarding public security?
But the theme that is being studied the most, because it is perceived as the most striking, is employment. Is the USA getting “Europe-ized?” Is it moving toward a minimum unemployment rate that is higher than before the crisis? As a reminder, that rate was, in the first semester of 2008, still hovering around 5 to 5.5 percent.
Today, most analysts estimate that, even when the economy recovers, the “basic unemployment” will establish itself between 7 and 8 percent. Worse, as was announced mid-May by Jan Hatzius, the chief economist at Goldman Sachs, America might have to get used to a two-step analysis of the reality of unemployment: The flow of unemployment on the one hand, and the non-working population on the other, which is this mass that would be excluded from statistics because they have abandoned the hope of ever finding a job.
A “Europe-ized” America also means the discovery of the social study of unemployment. A notion judged as odd before the crisis, but it is tending to instill itself in the political arena without being publicly stated as such. Immediate motive: long-term unemployment — which is, in the USA, more than 6 consecutive months — now touches 48 percent of the registered unemployed. More than three unemployed people out of ten have been looking for a job for over a year. This has never been seen here. Ever since employment statistics have been taken, 85 percent of unemployed people were working again within three months. And yet, if employment doesn’t pick up again in the United States, it is also because employers have taken advantage of the crisis to increase productivity in their companies.
What will the landscape of employment look like tomorrow? Is this the end of the “American exception?” For the second time, the Obama administration has asked Congress to prolong the extension measures for unemployment benefits beyond the legal 26 weeks. New employment aids are put in place for employers. Measures of social treatment for unemployment are durably being put in place — an idea unlike America, according to Don Lindner a year ago, specialist of the Texan human resources consulting company Worldatwork, is progressively imposing itself in people’s minds. Congress is already debating about extending the benefit period from 36 to 99 weeks in the states that are most impacted. This measure could possibly become permanent.
Finally, there remains a crucial issue at stake in the U.S.: the “interracial gap.” On May 31, a remarkable investigation by the New York Times was titled “Blacks in Memphis Lose Decades of Economic Gains.” This monographic study was illustrating a more general comment.
In 1985, one generation ago, when average unemployment reached 7.2 percent, the white unemployment rate was 6 percent, while among blacks it was 15.1 percent, or 2.5 times more. This differential was progressively reduced until 2007. The crisis brutally brought us back to the old norm: The proportion of unemployed people among blacks is once again double that among whites.
When you know that a black person also has twice as many chances as a white person to be evicted from his home by creditors due to insolvency (and that a black woman alone is two times as often victim of this misfortune than a black man alone), you realize that the American obsession with racial and ethnic statistics, which are often disturbing, sometimes helps us face the facts.
This is applicable to the debate about the big banks. “Too big to fail” — too big to be abandoned to bankruptcy... Congress is passionate about this issue, yet another bank appears. On the one hand, in two and a half years, four “big banks” went down (the business banks Bear Stearns and Lehman, along with the credit banks Countrywide and Washington Mutual), and the “systemic risk” that giants of this scale are likely to generate is of course important.
On the other hand, in thirty months, 243 banks, small and medium, filed for bankruptcy in the United States. And 775, according to the public regulator, are on the verge of it. In Florida, Georgia and Washington states, more than 10 percent of banking institutions went bankrupt, and this phenomenon is accelerating everywhere: a 40 percent rise in 2010. What will be the landscape of American banking in five years, and what impact should we expect, especially for SMEs? These questions are starting to arise, estimated by some to be equally as important as the infamous “too big to fail” issue.
Here’s another question: How do you explain that crime strongly declined since the beginning of the crisis in the USA? It has seen a 5.5 percent drop in 2009 according to the latest FBI report, and this is while prisons are being emptied as the states, due to clear budget cuts, are offloading their prisoners (liberation for small offenders and reduced sentences for big ones).
During the latest big recession, in the second half of the 1980s, crime skyrocketed, as one would logically predict. What explains the current phenomenon? Does it indicate a change to come regarding public security?
But the theme that is being studied the most, because it is perceived as the most striking, is employment. Is the USA getting “Europe-ized?” Is it moving toward a minimum unemployment rate that is higher than before the crisis? As a reminder, that rate was, in the first semester of 2008, still hovering around 5 to 5.5 percent.
Today, most analysts estimate that, even when the economy recovers, the “basic unemployment” will establish itself between 7 and 8 percent. Worse, as was announced mid-May by Jan Hatzius, the chief economist at Goldman Sachs, America might have to get used to a two-step analysis of the reality of unemployment: The flow of unemployment on the one hand, and the non-working population on the other, which is this mass that would be excluded from statistics because they have abandoned the hope of ever finding a job.
A “Europe-ized” America also means the discovery of the social study of unemployment. A notion judged as odd before the crisis, but it is tending to instill itself in the political arena without being publicly stated as such. Immediate motive: long-term unemployment — which is, in the USA, more than 6 consecutive months — now touches 48 percent of the registered unemployed. More than three unemployed people out of ten have been looking for a job for over a year. This has never been seen here. Ever since employment statistics have been taken, 85 percent of unemployed people were working again within three months. And yet, if employment doesn’t pick up again in the United States, it is also because employers have taken advantage of the crisis to increase productivity in their companies.
What will the landscape of employment look like tomorrow? Is this the end of the “American exception?” For the second time, the Obama administration has asked Congress to prolong the extension measures for unemployment benefits beyond the legal 26 weeks. New employment aids are put in place for employers. Measures of social treatment for unemployment are durably being put in place — an idea unlike America, according to Don Lindner a year ago, specialist of the Texan human resources consulting company Worldatwork, is progressively imposing itself in people’s minds. Congress is already debating about extending the benefit period from 36 to 99 weeks in the states that are most impacted. This measure could possibly become permanent.
Finally, there remains a crucial issue at stake in the U.S.: the “interracial gap.” On May 31, a remarkable investigation by the New York Times was titled “Blacks in Memphis Lose Decades of Economic Gains.” This monographic study was illustrating a more general comment.
In 1985, one generation ago, when average unemployment reached 7.2 percent, the white unemployment rate was 6 percent, while among blacks it was 15.1 percent, or 2.5 times more. This differential was progressively reduced until 2007. The crisis brutally brought us back to the old norm: The proportion of unemployed people among blacks is once again double that among whites.
When you know that a black person also has twice as many chances as a white person to be evicted from his home by creditors due to insolvency (and that a black woman alone is two times as often victim of this misfortune than a black man alone), you realize that the American obsession with racial and ethnic statistics, which are often disturbing, sometimes helps us face the facts.