Main Street frustration: ‘Everything is going to banks’

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In his State of the Union speech Wednesday night, President Obama touted a slew of federal initiatives aimed at stimulating small business hiring and growth. Again.

Small companies employ around half of America’s workers and drive most of the country’s job growth. Obama talks frequently in his speeches about the vital role small companies play, and his administration has launched several efforts to bolster struggling Main Street businesses. But most of the president’s small business proposals remain in limbo, caught in bureaucratic logjams and the Great Black Hole of Congress.

A year ago, Obama set the stage during his first major economic speech to Congress. “I will not spend a single penny for the purpose of rewarding a single Wall Street executive, but I will do whatever it takes to help the small business that can’t pay its workers or the family that has saved and still can’t get a mortgage,” Obama said in February. “That’s what this is about. It’s not about helping banks; it’s about helping people.”

But small business owners across the nation say they feel left out of the stimulus and recovery action.

Read More: – By Catherine Clifford, staff reporter

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Trichet: U.S., EU Can’t Sustain Such Huge Deficits

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The head of the European Central Bank warned Thursday that U.S. and European Union deficits were unsustainable and urged authorities to take tough measures to strengthen public finances.

“We all have a very, very big challenge there,” Jean-Claude Trichet told CNBC television.

“The levels of public finance deficit are not sustainable on both sides of the Atlantic — that’s absolutely clear,” he said.

“We have to reinforce the confidence of our own people, also our entrepreneurs, in our capacity to go back to a sustainable position.”

He appealed to “all European countries to stick to the rigorous implementation of the programs that have … been decided.”

Read More: – AFP

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Why Obama’s export push won’t save jobs

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In one of his many applause lines at Wednesday night’s State of the Union address, President Obama emphasized the importance of American exports: “Tonight, we set a new goal,” he said, “We will double our exports over the next five years, an increase that will support two million jobs in America.” It’s no surprise that people cheered; what’s not to like? There’s just one problem: Growing exports is almost entirely out of the president’s — and even business’s — hands.

It’s not that the growth he’s calling for is impossible. Since 1960, the U.S. has seen two periods of fast, sustained growth. From 1970 to 1975, exports more than doubled, going from $56.6 billion to $132 billion. Then from 1976 to 1981, they doubled yet again, from $142.7 billion to $294.4.

More recently, the U.S. saw a 68% surge in exports between 2002 and 2007 to $1.1 trillion. (The latest figure for goods exported: $1.3 trillion.) Much of the more recent growth came from the meteoric rise of countries like China and India. The United States’ chief exports — sophisticated manufacturing items like planes and semiconductors — benefited from the countries’ need to rebuild (or, in many cases, to just build) nationwide infrastructures.

Read More: – by Jia Lynn Yang, Fortune

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Teachers pension fund is $43 billion short

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Another pension alarm bell is ringing in Sacramento, this time at the teachers retirement system, where the nation’s second-largest public pension fund is reporting a $43-billion shortfall.

The California State Teachers’ Retirement System said that as of June 30, 2009, it could meet only an estimated 77% of its future pension obligations — far less than the 100% recommended by actuaries.

Known as CalSTRS, the fund took a big hit during the 2008-09 fiscal year, losing a quarter of its value. Since then, its investment returns have improved, but the growth isn’t strong enough to keep up with a widening funding gap.

What’s worse, CalSTRS Chief Executive Jack Ehnes said in a report to be presented to the board Feb. 5, the fund could be broke in 35 years — the length of a typical teaching career.

Read More: – By Marc Lifsher, the LA Times

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Roach: Double Dip Recession Now 40 Percent Certain

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Morgan Stanley’s Steven Roach says a double dip recession is now 40 percent certain.

“There are many stiff headwinds that are going to restrain the global expansion over the next few years,” he says.

“I think global growth is going to be anemic and I’d put a 40 percent chance on a double dip at some point in the next couple of years,” Roach told CNBC.

Roach also says it’s pretty unfair of politicians to put so much blame on banks alone for the financial crisis, and forget the roles played by ratings agencies and government itself.

Read More: – By Julie Cranshaw, Moneynews

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Proposal for Widespread H1-B Visa Program Reform Threatens Global Economy

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Contrary to popular belief – and one often fueled by misperception and misinformation, major IT services companies do not hoard visas and they do not displace American workers. However, before favoring massive H1-B reform or outright abolishment, opponents should take a closer look at its implications from a global perspective. (The US H1B visa is a non-immigrant visa, allowing US companies to employ a foreign individual who is highly skilled, educated or a specialist for up to six years.)

Get ready for the H1-B debate to become a front-burner, if not front page issue in 2010.

The U.S. House of Representatives was last month presented with the Comprehensive Immigration Reform for America’s Security and Prosperity Act of 2009, or CIR ASAP. This bill proposes comprehensive immigration reform, including changes to the H1-B visa program. With all the hype, hysteria and hot air generated around the H1-B visa program issue during the past several years, one fundamental truism remains: the current annual level of H-1B visas being utilized in the United States is about the same level as in 1990.

Read More: -By Shami Khorana, President, HCL America, Inc.

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Jobless Claims, Durable Goods Point to Weak Growth

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Evidence that the economic rebound remains sluggish emerged from reports Thursday on new claims for unemployment aid and orders to U.S. factories.

The number of people claiming jobless aid fell last week, but less than expected. And orders for big-ticket manufactured goods rose but also fell short of analysts’ predictions.

Weak job creation, in particular, is restraining consumer spending and holding back the economic recovery.

Read More: – By Christopher S. Rugaber and Martin Crutsiinger, the Associated Press

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3M signals rocky recovery in autos, housing

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3M is signaling that a steady recovery in the U.S. autos and housing markets is far from certain in 2010.

The company, considered a window into economic health because of the wide variety of products it makes, said Thursday “there is still no real sign of sustained demand” in domestic markets including automotive, housing and commercial construction. In contrast, “China and India are seeing rocket ship growth in those segments,” CEO George Buckley said in a conference call following release of 3M’s 2009 earnings.

Buckley thinks high unemployment will be the culprit in curtailing U.S. growth.

“While we might be through the worst, we were still sailing in very choppy economic waters,” he said. Economists have predicted growth in gross domestic product of just over 3 percent for this year.

Read More: – by Samantha Bomkamp, AP Business Writer, the Associated Press

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Magnus: Sovereign Debt Default Threatens World

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Respected UBS economist George Magnus says sovereign debt default now presents a grave risk to the global economy.

“The sustainability of sovereign debt hangs heavily over bond markets and the prospects for economic and financial stability,” he wrote in the Financial Times.

Since 2007, budget deficits have soared, particularly in Iceland, Ireland, the U.S., Japan, the U.K. and Spain, Magnus points out.

“There is no peacetime precedent for the current speed and scale of public debt accumulation and it is difficult to assess the social tolerance for high debt levels and for the pain of protracted fiscal restraint,” he wrote.

Read More: – By Dan Weil, Moneynews

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Why the markets hate Washington

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The markets might be a heck of a lot calmer if everybody in Washington would just shut up. Of course, that’s not going to happen anytime soon.

Treasury Secretary Tim Geithner is testifying in front of Congress Wednesday about the government’s mishandling of the AIG “rescue.” Later on, the Federal Reserve will release its latest statement about the economy and interest rates.

And if that weren’t enough, President Obama gives his eagerly awaited first State of the Union speech Wednesday night.

“The spate of recent political events that have market implications is increasing. Politics have always mattered but they matter more than ever and it does lead to more uncertainty,” said Rex Macey, chief investment officer with Wilmington Trust.

Read More: – By Paul R. La Monica, editor at large,CNNMoney.com

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The Sound Money Institute is and educational organization dedicated to the stability and soundness of the United States Dollar. Faced with unprecedented pressure to spend beyond its means the United States Government has pressured the Federal Reserve Bank to monetize the debt or in other words they are printing currency to fund deficit spending by the US Treasury.

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