recession posts

Ever since the news got out that the U.K. plans to force some of its large, bailout-receiving banks to sell off some operations and become smaller, there's been plenty of speculation on this side of the pond that we might do the same thing.

Richard Fisher, president of the Dallas Federal Reserve Bank, threw down the gauntlet when he said recently that banks considered "too big to fail" should be broken up to make the economy more stable. (Fisher's full speech on the topic is here if you're interested.) A committee in the House of Representatives is pushing for new legislation that would go even further and let the government break up other kinds of companies -- not just banks -- it deemed a threat.

It's a very satisfying idea: Banks that get too big to handle should be forced to downsize. Only trouble is, a lot of economists think it won't address the problem. "The problem is, the really emotionally satisfying things that we could do all create more harm than good," said Douglas Elliott, a fellow at the Brookings Institution, a think tank. On the subject of breaking up banks dubbed too big to fail, Elliot told WalletPop, "It would hurt the economy, which ends up hitting the average person."

If Federal Reserve Chairman Ben Bernanke can get what it takes to dig America out of the recession, why can't President Obama?

"Jobs are the issue right now," Bernanke said Thursday at a hearing on his confirmation for a second term, according to the New York Times.

Creating jobs is the solution, and Obama's jobs summit on Thursday didn't come out with any solid help for the jobless other than affirmation that the "cash for caulkers" program is moving forward to help people weatherize their homes.

That's a start, but is the caulking program the best idea the president has to implement immediately?

Last week I wrote about the need for a solar Works Progress Administration as a way for the federal government to get people back to work fast by installing solar power across the country.

Immediate and long-term jobs are what's needed to drop unemployment, which fell to 10% in November. But it's still the highest unemployment rate in 26 years, and anyone who has been without a job since the recession began two years ago doesn't want to hear about how it's up to the private sector to create jobs.

Businesses won't create jobs until they see business opportunities on the horizon and that the economy is improving. If the country doesn't have a policy to install solar power everywhere, then solar companies won't have as much incentive to ramp up because they don't see the need.

In this "Your Job Will Come" podcast, WalletPop's Aaron Crowe talks with John Rice, CEO and founder of Management Leadership for Tomorrow about the warning signs of downsizing and how to avoid them.

Among the tips are to find a "sponsor" on your first day of work who will promote you and your hardworking skills if the chopping block should ever fall.

A good thing about being unemployed during the recession is that it gives you a lot more time at home -- doing chores, cleaning the garage -- and having sex.

But being jobless and home all day -- whether cooking in the kitchen or cooking in the bedroom -- can lead to frustration with the job hunt that can lead to depression and ultimately migrate to the bed, said Debra Laino, a sex therapist and relationship counselor.

In 2008, Dollar Tree partnered with Operation Homefront and collected $5.8 million in toys that were distributed at U.S. military bases stateside in time for the holidays. That's a whole heap of Christmas cheer!

This year, Dollar Tree is hoping to repeat that success with the help of its customers. In fact, according to the Operation Homefront Web site, the goal this year is to collect $6 million in toys.

And why not? You don't have to spend a lot to make a kid happy and if everyone who could, donated a $5 or $10 toy, this goal could be met and then some.

The 2009 toy drive runs Nov. 15-Dec. 15. All you do is purchase a toy or care item and drop it off in a Toy Platoon collection box located in any of Dollar Tree's 3,700 stores nationwide. Operation Homefront will then collect and distribute these items to needy military families in your area.

There have been a lot of reports about which group of people have been hit hardest by the recession. Men have definitely been hit disproportionately hard by job losses. In fact, men held 71.9% of the jobs lost since the recession began, hurt by mass layoffs in construction and manufacturing, according to the U.S. Bureau of Labor Statistics.

I've even written about how more households are relying on female breadwinners after husbands were laid off.

But single women -- many of whom are mothers or caregivers -- who get laid off don't have a second income to rely on while they hunt for a new job.

In yet another sign that Americans are still cautious -- and growing more so -- about their spending, new research shows that fewer of us will be using credit cards to make our holiday purchases this year.

According to a survey conducted by BIGresearch for the National Retail Federation (as reported here by Reuters), the number of consumers using credit cards for holiday purchases will drop more than 10% this year. Only 28.3% of shoppers say they'll use credit cards to buy presents, down from 31.5% last year.

What are we doing instead? Paying cash. The number of survey respondents who said they'll be using cash to buy holiday gift this year rose by almost exactly the same percentage as the drop in credit-card users, at 9.1%. This is a step in the right direction for consumers, as more of us are making a conscious decision to live within our means.

It's bad news for the already-beleaguered credit-card industry, though; we've recently written about new data showing that credit-card companies will probably have many more defaults next year.

It's also bad news for the nation's retailers, which are already bracing for a weak holiday shopping season. The National Retail Federation survey also revealed that we're buying more practical gifts this year. A greater percentage of consumers plan to buy clothing this year, and fewer are buying electronics and jewelry.

For the last year or so, I've been conducting an experiment. Now, don't hold me to the scientific method because it's been a really informal experiment. But the results have been both scary, enlightening and not very surprising. Cutting to the chase, for almost exactly the last 12 months, I've been applying for various jobs via one of the popular online job search sites.

Some background first. I'm self-employed. I write about politics, I produce videos, I make cartoons. But last year when the market tanked and the really serious recession began, I began to seriously worry that my small business work might not endure through the economic slump. So in a panic, I started up a profile at the job search site, uploaded my resume and began to look around.

Fortunately, I've been able to keep busy enough to pay the mortgage and haven't needed to take an actual job somewhere. But just for curiosity's sake, once my studio and writing work appeared to smooth out, I decided to keep sending out applications through the job site for the balance of this year. Just to see what would happen. The experiment.

Here's the result. In a full 12 months, I wasn't called in for a single interview.

No calls. No emails. No interviews. Nothing.

It turns out that the bad economy is great for coin-op laundromats. Because, though houses with laundry rooms will be foreclosed upon, washing machines and dryers will break and be too expensive to fix, and sometimes, we lose our homes entirely, we still need clean clothes.

Long the refuge for college students, the young creative class, jobless, homeless and others not in possession of a few Whirlpools, laundromats are now flourishing. And the middle class is showing up, too, pride and laundry baskets in hand.

By all appearances, this would be a great time to get into the business of laundry; the Wall Street Journal recently profiled one such man, Brian McChristian, laid off in early 2008 and now running the Austin, Texas Community Coin Laundry; and he's one of the lucky ones. His business is doing well, thanks in part to his efforts to keep his parking lot and facility free of anyone not doing laundry.

One of the worst things about the recession may turn out to be one of the best things about it: The layoffs are creating a new workforce -- the part-time workforce.

Cobbling together enough part-time jobs to add up to full-time work is becoming the skill set of the new part-time workforce.

A new economy is being formed, or at least expanded upon, as more laid off workers join the ranks of freelancers and contract workers who don't get benefits such as paid vacation and sick days, but get paid for each project they complete.

How well is the government's loan modification working? WalletPop's four-part special report continues with profiles of some of those trying to get help. To read the overview, click here.

Public relations consultant Mark Bonacorso faced the good and bad news of divorce with resolve. The good: he got the 3,500-square-foot adobe in northwest Tucson. The bad: he also got the first and second mortgages and the $2,700-a-month payments.

He wanted to make it work, especially since his home was worth less than he owed.

At first, with business strong at his firm, Media Ink, this seemed feasible. Then, as the recession slowed work, forcing him to lay off his two employees in March, those payments became daunting.

Bonacorso was not looking for Bank of America, his lender, to cut his principal. He called hoping to reduce his monthly payments by combining his first and second mortgages, lowering their interest rates -- now 5.875% on his first; 7.625% on his second -- and extending the loan's term from 30 years to at least 40.

I noticed some surprisingly good news in the annual report from the city where I live in the San Francisco Bay Area -- crime has dropped. I say surprisingly because in a recession, I'd expect crime to increase as more people lose their jobs and have to find other ways -- some illegal -- to make money.

It turns out my suburban city isn't alone. Large and small cities across the country are seeing crime drop -- particularly burglaries -- during the recession. "With a lot more unemployed people, a lot more people are staying home, and they see more in their neighborhood," Sgt. Thomas Lasater of the police department in St. Louis County, Mo., told the Associated Press.

All your life you wanted to do something outlandish for a living. But that cushy corporate gig and the frills attached to it stopped you from turning your passion into a profession.

Enter recession, pink slips and voila your ticket to be your own boss.

Unemployed folks are taking the leap of faith and investing their time, energy and resources into entrepreneurial ventures. Yes, believe it or not, new entrepreneurs are on the upswing in this downward spiraling economy. While some took that layoff as an excuse, many are jump starting new ventures out of necessity.

Last year, the hemorrhaging economy cost 2.6 -million jobs, the highest tally in more than six decades. The bloodletting hasn't stopped yet. But laid off employees are moving on. They are providing that silver lining to an otherwise gloomy environment.

Americans won't be spending as much this holiday season due to continued worry about their finances, according to new research. The Discover Spending Monitor found that 56% of Americans rated the economy as "poor" in October, a 4% increase over September. In addition, 46% said the economy is getting worse, a 3% increase over September.

Overall, women are more worried about the economy than men. In October, the percentage of women who rated the economy as "poor" shot up by nine points to 58%, while the number of men calling the economy poor actually dropped from 54% in September to 53% in October.

I was helping my second-grader with his homework; he was reluctant to read a the little copy-printed book on bartering, saying, with full eye-rolls, that he'd already read it.

So we read it together, and worked through the questions at the end. Suddenly his eyes lit up. "You and dad barter!" he said.

Exactly. Here in Portland, Ore., I am such a regular user of the barter economy that the book's historical viewpoint (first came bartering, and finally came malls) seems passé.

The grocery co-op where we are member-owners holds an annual holiday barter swap, instead of a bazaar, and we look forward to the seed and start swap in the spring. On Portland's craigslist barter page, hundreds of offerings appear every day, and if it weren't for the constant request to trade something for an iPhone, you'd think it was 1972.

"VHS copies of your favourite horror movies that you replaced on DVD this year for Tokyo Long Scarlet Radishes," reads one ad, also suggesting the trade of an old window for a 10-pound Fielderkraut cabbage.