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U.S. economy better - and worse - than you think

But before I get to that, let me tick you off with this piece of news.

The American International Group, aka AIG, recipients of $150 billion in federal bailout funds, has paid some 4,200 employees at least $169 million in "retention pay," in an effort to keep them from leaving for another job. (Like there are other jobs for these people?)

That works out to an average of a little more than $147,000 per employee. Payments are running as high as $4 million per.

No word on whether any of these folks were among the executives AIG spent $440,000 on for a weekend retreat shortly after crying poor and taking Uncle Sam's money.

And people are squawking about auto worker pay?

Now, back to your regularly scheduled outrage. Actually, more of an insight.

The New York Times has had a couple of especially good stories on the bailout. First the bad news.

Most banks getting bailout money aren't using it to lend and simulate the economy. The headline to the story says it all: Bailout Is a Windfall to Banks, if Not to Borrowers.

Reported The Times:

Congress approved the $700 billion rescue plan with the idea that banks would help struggling borrowers and increase lending to stimulate the economy, and many lawmakers want to know how the first half of that money has been spent before approving the second half. But many banks that have received bailout money so far are reluctant to lend ...

Individually, banks that received some of the first $350 billion from the Treasury’s Troubled Asset Relief Program, or TARP, have offered few public details about how they plan to spend the money, and they are not required to disclose what they do with it. But in conversations behind closed doors with investment analysts, some bankers have been candid about their intentions.

Most of the banks that received the money are far smaller than behemoths like Citigroup or Bank of America. A review of investor presentations and conference calls by executives of some two dozen banks around the country found that few cited lending as a priority. An overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future.

In another story, a Times analysis of economic data finds that things are not as bad as they were in 1982.  

The economy is not yet as bad as it was in the early 1980s. It’s not even that close to being as bad. The ranks of unemployed and underemployed, controlling for the size of the population, were much larger in 1982 than today.

The recession of the early 1980s doesn’t have a catchy name, and almost half of Americans are too young to have any real memory of it. But it was terrible — qualitatively different from the mild recessions of 1990-91 and 2001.

All this may be of little comfort, but it does add some perspective.

 

 


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Economic bailout
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