19.09.2011
Policy Points
Writing in The New York Review of Books, financier George Soros wonders if the Euro has a future.
There is no escape from this gloomy scenario as long as the authorities persist in their current course. They could, however, change course. They could recognize that they have reached the end of the road and take a radically different approach. Instead of acquiescing in the absence of a solution and trying to buy time, they could look for a solution first and then find a path leading to it….
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To resolve a crisis in which the impossible becomes possible it is necessary to think about the unthinkable. To start with, it is imperative to prepare for the possibility of default and defection from the eurozone in the case of Greece, Portugal, and perhaps Ireland. To prevent a financial meltdown, four sets of measures would have to be taken. First, bank deposits have to be protected. If a euro deposited in a Greek bank would be lost to the depositor, a euro deposited in an Italian bank would then be worth less than one in a German or Dutch bank and there would be a run on the banks of other deficit countries. Second, some banks in the defaulting countries have to be kept functioning in order to keep the economy from breaking down. Third, the European banking system would have to be recapitalized and put under European, as distinct from national, supervision. Fourth, the government bonds of the other deficit countries would have to be protected from contagion. The last two requirements would apply even if no country defaults.
Soros then explains what he thinks are the “missing ingredients” needed to make such a plan work …
All this would cost money. Under existing arrangements no more money is to be found and no new arrangements are allowed by the German Constitutional Court decision without the authorization of the Bundestag. There is no alternative but to give birth to the missing ingredient: a European treasury with the power to tax and therefore to borrow. This would require a new treaty, transforming the EFSF into a full-fledged treasury.
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That would presuppose a radical change of heart, particularly in Germany. The German public still thinks that it has a choice about whether to support the euro or to abandon it. That is a mistake. The euro exists and the assets and liabilities of the financial system are so intermingled on the basis of a common currency that a breakdown of the euro would cause a meltdown beyond the capacity of the authorities to contain. The longer it takes for the German public to realize this, the heavier the price they and the rest of the world will have to pay.
16.09.2011
News Releases, Policy Points
CHAPEL HILL (September 16, 2011) – August was a stormy month for North Carolina’s labor market. Last month, the state gained 16,500 more payroll jobs than were lost, thanks to an increase in local government payrolls. At the same time, both the number of unemployed persons and the statewide unemployment rate rose sharply, with the unemployment rate reaching the highest level recorded since June 2010. These findings come from new data from the Employment Security Commission.
“Storm winds tossed around North Carolina’s labor market in August,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “A jump in local government employment tied in part to the start of the school year led to the second-highest monthly job gain posted so far in 2011, yet overall employment conditions remained weak. Last month, the labor force contracted, the number of people with a job fell, the unemployment rate reached its highest level in over a year, and the share of adults with a job fell to a 35-year low.”
In August, North Carolina employers added 16,500 more payroll jobs than they cut. Net gains occurred primarily in the public sector (+13,600, driven by a net gain of 16,800 local government jobs), while the private sector netted just 2,900 jobs. Within the private sector, professional and business services gained the most jobs in absolute and relative terms (+3,900, +0.8 percent), while trade, transportation, and utilities lost the most jobs in absolute terms (-3,600, driven by a net loss of 3,800 jobs in the retail trade sub-sector).
A revision to the July data also found that the state lost 2,100 more payroll jobs than first reported (-6,200, versus an original estimate of -4,100). With that adjustment, North Carolina has lost, on net, 289,300 positions, or 6.9 percent of its payroll base, since December 2007. Since bottoming out in February 2010, the state has netted an average of 1,872 payroll jobs per month, resulting in a cumulative gain of just 33,700 positions (+0.9 percent)
“Compared to December 2007, North Carolina has fewer payroll jobs in every major industry sector except for educational and health services and leisure and hospitality services,” noted Quinterno. “While public-sector employment had been a source of strength earlier in the downturn, it recently has weighed on growth. Since February 2010, local government employment has fallen by 1 percent, and state government employment has declined by 7.7 percent.”
Between August 2010 and August 2011, North Carolina gained, on net, 21,100 jobs (+ 0.6 percent). Approximately 42 percent of the net growth that occurred in the private sector (+35,800 positions) was offset by net public-sector losses (-14,700). In terms of individual private industries, professional and business services grew the most in absolute and relative terms (+15,500, +3.2 percent). In the public sector, net losses stemmed from declines in state (-16,300, -8.3 percent) and federal employment (-3,000, -4.3 percent).
The household data for August were particularly alarming. Last month, the total number of employed individuals fell by 14,524 (-0.4 percent), while the number of unemployed individuals rose by 11,747 (+2.6 percent). The size of the workforce fell slightly (-0.1 percent).
Over the year, the number of unemployed North Carolinians rose by 14,556 (+3.2 percent), while the number of employed individuals remained essentially flat. Between August 2010 and August 2011, the size of the labor force increased by 13,577 individuals (+0.3 percent). Over the year, the unemployment rate rose to 10.4 percent from 10.1 percent. The August unemployment rate also was the highest recorded since June 2010, a month when 10.5 percent of the labor force was unemployed.
“North Carolina’s labor market continues to move in the wrong direction,” observed Quinterno. “The job shortfall has closed only marginally, and the unemployment rate has been trending upward since March. Especially alarming is the fact that the share of working-age North Carolinians with a job has fallen to the lowest level recorded since 1976. In August, just 55.3 percent of working-age North Carolinians were employed.”
“Like the nation at large, North Carolina remains mired in a severe jobs crisis—a crisis that only has worsened in recent months,” added Quinterno. “There exist few signs that any kind of recovery is underway, and unless public leaders act aggressively, conditions will continue to deteriorate.”
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