Imagine a group of people being stranded amidst deep amazon forests with nothing to eat except insects and lizards, with nothing to cover their heads, being tugged out into the wilderness of discomfort and agitation. After days of extensive and tireless operations, rescue officers ultimately landed with loads of food and all the amenities they can offer. But there was a tragic turnaround: rescue officers decided not to take the stranded people out of the claws of death; on the contrary, they agreed to continue their operations as long as they can.

This is what Greece is going through. Over the year of crisis, it has been observed that whatever the assistance mechanism (in terms of bailouts and loans) designed and amended so far contributed more towards fiscal chaos and debasement of the economy, affecting the lives of millions of people and its image as a whole.

Assistance extended so far allowed Greek government to spend,  since the engine of the economy has bottomed-out and domestic resources dried away.

Bailouts and loans just sway a nation back and forth in ravines of debt and despair. Bailouts may help a worn-out engine run, but it can’t help reduce deficits. It is very uncommon to witness that after years of crisis, authorities failed to restructure deficits, failed to frame rules concerning public expenditure, failed to eradicate to fiscal illness, and failed to bridge the fiscal gap and move on.

For example, how far have measures taken to stabilize Argentina debt crisis been successful? Ten years after the Argentinean sovereign debt default, the world seems to have ignored or fizzle out lessens learned in South America. Even today, after a decade of financial fall-out, litigation are continuing; debtors are still hopeful that one day they might get their money back.

On the other hand, austerity measures help curtail expenditure. They assist in lowering the possibility of the further accumulation of debt, but in no sense do austerity measures help reduce previously accumulated debt. This is where action by the International Monetary Fund and European Central Bank turns folly.

A system has to be put in place that brings public expenditure under an axis of regulation, under the barricades of the financial capability of a nation to spend, rather than printing stacks of money to purchase government bonds. Institutions aiding financially are just acting like a cushion, instigating or backing-up nations to carry on reckless spending patterns no what matter whether they can withstand the debt burden or not!

Institutions that promote spending cuts followed by hybrid doses of bailouts partly shift responsibility back to themselves from a debt-laden nation, and continue the legacy of fiscal fallacy.

Legal framework on a systematic platform has to be implemented at a global level, so that in the future we live in a debt free world, a world where fiscal discipline matters and budget surpluses are a reality for all. At least in the case of Europe, a fiscal institution has to overlook the fiscal affairs of all the member nations, capping public spending based on the country’s own financial health and current debt.

The situation where Greece is currently dwelling is very close to people stranded in Amazon forest. What is needed is effective fiscal management. International institutions can play a much bigger role with technical guidance on budget management and by discounting policies that hardly bring any substantial change.

The need of the hour is to lift people away from the woods, not to let them survive being the weakest!

Image Courtesy of   Ververidis Vasilis / Shutterstock.com

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The problems in Spain cannot be denied any longer. In fact, the crisis that hit the Eurozone is something that cannot be hidden.

Since the credit crisis that began in the U.S. a few years ago, countries and their banks have fallen like trees, showing black holes that had been hiding for years, as well as very bad practices that did nothing but make what was already a big problem worse.

Now that the complete rescue is about to come to Spain– the first one was only for the banks, although it counts as government debt– many authors and writers of Spanish newspapers question the competence of the European Central Bank (ECB), and wonder what prevents the ECB from saving us from total disaster by buying public debt of states that are worse off. In these writers’ speeches they explain that the ECB should act as the International Monetary Fund (IMF), and provide financial resources to those who need it.

Are they wrong asking for this? Absolutely. The answer to the question of why the ECB does not act as the IMF is this one: because they are not the same. Despite the fact that, apparently, both agencies have similarities, the truth is the objectives for which they were created are completely different in each one, and the way they respond is not the same. That is why it is advisable to make a couple of clarifications on the differences between the two entities, in order to understand why the ECB is not a “European IMF.” It was not intended to be one.

The IMF was created in a completely different context, when the consequences of the Great Depression could be still felt. Its creation reflected the attempt of several countries to avoid repeating the disastrous measures that weakened economic activity during those years.

Meanwhile, the ECB, successor to the European Monetary Institute, was created in 1998, but it did not make full use of its powers until the entry of the euro in 1999. The creation, established in the Maastricht Treaty, responded first to the oversight of the transition of member countries from their national currencies to the euro and, second,  the need for the existence of a bank for this currency.

With these completely different contexts it is logical that the objectives of both entities are not the same. Thus, the main function of the IMF is to oversee the smooth running of international economic policy, and to encourage it, acting as a fund where countries can ask for help when they need temporary financing.

However, the main objective of the ECB is to maintain the price stability in the euro area by maintaining the inflation at low levels, leaving other objectives subordinates to this first and foremost. Broadly speaking, it seems that we can define the IMF as a fund that lends money to countries who need it, and the ECB as that one who ensures the proper functioning of the Eurozone. So, the role of the first one is active, while the second one’s role is rather passive.

Now the big question is: if the euro is not working properly and there is a risk of its disappearance, can the ECB not protect it through the purchase of public debt? The answer is, again, no. Why? Because of the statutes which regulate it.

Since it was created, the ECB defined itself as completely independent from the member countries of the Eurozone– which has been questioned in recent years, especially by the suspect origin of the last directors of the ECB– and the measures should not respond to the national interests of any country. In the same way, the European institutions and national governments are required to respect this independence, and this means that there is no mechanism by which a member state may compel the ECB to act in one way or another.

This is the main reason why the ECB cannot rescue any Eurozone country. Besides this, there is another powerful reason that we forget sometimes: the conditions for being a member of the Eurozone are strict. It is not enough to wish to adopt the currency, there are steps to follow before completing the transition.

The ECB is responsible for safeguarding the proper functioning of the euro because it assumes that other institutions– created for that purpose– have been responsible for verifying that the candidates have the specific requirements for entry. If someone has not, whose fault is it then?

Image Courtesy of  eisenrah

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Washington, U.S.A. – Memo to Experienced Workers: AARP is offering a unique new way to advance yourself in today’s tight job market with Work Reimagined, a social network based experienced worker jobs program that connects employers seeking experienced workers with qualified professionals searching for new or more satisfying careers. The site (www.workreimagined.org) will leverage the platform of professional networking site, LinkedIn.

AARP President Rob Romasco announced the multi-pronged Work Reimagined online initiative today, outlining some of the key elements, which include:

• original and curated content with advice and insights relevant to experienced workers in today’s job market, and
• access to current job openings with the nearly 120 employers who have taken the Work Reimagined pledge, publicly committing to treat all employees equally regardless of age.

“Work Reimagined enables experienced workers to come together in a vibrant online community to share your views and help move through ‘what’s next’ career moments,” said Romasco. “It opens the way for access to workforce resources, as well as the opportunity to connect with other experienced workers in a peer-to-peer environment.”

The dynamic nature of Work Reimagined is demonstrated by the decision by dozens of forward-looking employers with at least some immediate hiring needs to sign a pledge to recruit across a level playing field when considering experienced workers. These firms are looking for the strong work ethic, maturity, and customer orientation that experienced workers bring to their jobs.

Employers who sign the pledge agree that they have:

• Openness to the value of experienced workers;
• Nondiscriminatory HR policies;
• At least some immediate hiring needs at the time of pledge signing.

With the integration of LinkedIn information, qualified workers are put together in the same space with employers who value those workers.

“Over the past decade, the digital world has transformed how most people look for a job,” said Romasco. “Today, Work Reimagined harnesses the power of social media to offer great opportunities for experienced professionals to connect, to access information and resources, and to leverage their professional network in their pursuit of more fulfilling work and career.”

Work Reimagined also offers job listings independent of LinkedIn, as well as articles, columns, tips and tools to help people navigate today’s workplace.

“This service is especially valuable in the face of a difficult economy that has found many professionals unemployed for, in many cases, a year or more,” Romasco added.

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San Bernardinom, a small Californian city, is the third city in the state forced to opt for bankruptcy in the last few weeks. This highlights the fact that the economic crisis is not over yet.

The elected officials of the 210,000 people in the city have authorized their city’s attorney to seek federal bankruptcy protection. The city is unable to pay the vendors, although a lot of measures have been taken like selling assets or cutting spending, and opting for bankruptcy has been the only possible solution.

The city is facing a budget shortfall of $45 million. City officials said the problem is weak property and sales tax revenue combined with escalating pensions and a loss of state redevelopment funds.

Stockton, a California city with almost 300,000 people was the first that filed bankruptcy on June 29. The second one was the small city of Mammoth Lakes this July 3.

The California Governor Jerry Brown didn’t want to speculate concerning other possible bankruptcy cases, instead declaring that the real problem is that the country, the states and the cities have lived beyond their means, and he specified that these finances were “means created by a mortgage bubble, by greed, by mistakes, by people not knowing what the hell they were doing, and millions of people have been hurt.”

Jim Spiotto, a Chicago attorney who tracks municipal bankruptcies, said that since Congress added chapter 9 to the bankruptcy code in 1937 to allow municipalities to seek protection, about 640 entities have filed. For Spiotto, bankruptcy is considered a measure of last resort because it carries the danger of increasing the city’s borrowing costs.

Bloomberg explained that in California “five of its 39 Chapter 9 petitions were made by cities or counties: Orange County in 1994, and the cities of Desert Hot Springs in 2001, Vallejo in 2008, and Stockton and Mammoth Lakes in the past month.”

San Bernardino, Stockton and Mammoth Lakes are not the only cases of city bankruptcy around the nation. Cities like   Harrisburg, Pennsylvania, Jefferson County, Alabama, and Central Falls, Rhode Island are on the same situation. For these cities bankruptcy is a great problem. The jobs in the public sector are threatened so a lot of people could loose their jobs, and also some vital services like the police could loose economic support and employees and would  not be able to fulfill their jobs as they did in the past.

The difference between a company and a city bankruptcy is that companies in this situation have the option to break up, cities do not have this option because this would be unconstitutional, so they must find another solution.

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Although the United States financial crisis is not comparable to the economic situation in Europe, things are not going as well as they should. In St. Petersburg, Florida, the crisis has kicked into many people’s pockets. Although it seems that better times are coming, there are still local stores that struggle.

In Europe, people are tired of expressions such as financial bailout, risk premium or long-term credit ratings. In the United States, dramatic situations have been avoided thanks to the measures that drive America’s economic activity. However, there are negative issues here: the U.S. imports much more than we export and the unemployment rate has reached 8.2 percent. St. Pete’s small businesses say that people don’t consume as much as before, and some stores have closed as a result during the last years. Therefore, we can assume that people are suffering from the crisis in one way or the other.

Toonari reporter Ines Sanchez has out on the streets of St Petersburg, asking local business owners how the crisis has impacted their stores.

Bad or slightly bad. These were the most repeated answers from 24 local business. In particular, seven of them said that it was affecting them in a bad way, while eight said that was impacting them in a slightly bad way. For example, Spencer DeHaven from The Cupcake Spot says that “customers spend much less money than years ago.”

And in what way is the crisis affecting sales? Most agree that it has decreased the number of customers and how much they spend. There are also some stores that have been forced to lower their prices and to increase the number of on-sale events and coupons. For example, Sarah Gecan from Daddy Kool Records was forced to reduce the staff, expenses and inventory due to decreased income.

Meanwhile, six of the surveyed shops said the crisis was not affecting their commerce, that everything remained the same as before the global financial collapse.

Everyone agrees on one thing though: during periods of crisis, small businesses have to be supported somehow by governmental measures. “During the bad economic periods, it is necessary to support the local businesses because that is what makes the city keep on going,” said Sarah Gecan from Daddy Kool Records. And according to Rossana Gahhos from All Sewn Up Boutique, this works well in St Petersburg: “In St Pete there is a loyal customer base and everyone supports each other very well.”

The truth is that during crisis there are some types of businesses that are more affected than others. People still need groceries, eat out and even get tattoos or buy flowers. “I do not think there is an economic crisis,” says a food store manager, who prefers to remain anonymous.

On the other hand, there are stores that are run down by the crisis. One examples is the art galleries. Linda Smolski from An Artisans Gallery recognizes that she might close the store in September if the situation does not change. “There is no money for art. People just look at the pictures but they cannot afford them. There are a 99% of poor people and just 1% of rich and powerful. We have to change the ratio,” she says, remembering a better time.

Phugiyg Huyn from City Hair & Nails agrees with Smolki: “There is no business at all, my store is most of the time empty, we are facing a really bad situation.”

These store owners have come up with possible solutions. “There should be less government rules and regulations. They should let the business do their job instead of interfering so much,” says Alan Rulifson from Green Bench Flowers.

“More funding would help or at very least free advertising to help develop local community businesses,” says Davor Polster from a local grocery store.

Negativity surrounds merchants who see how things are not improving. “The news constantly reports that things are getting better, that real estate values are returning and that unemployment numbers are decreasing, but all we see happening is the exact opposite,” says Justin Chamoun from St. Pete Brasserie.

However, there are also people such as Badr Elamin, owner of El’s Menswear for five years, who stays positive and appeals to faith at these tough moments in life: “The key to success is to have faith in yourself and to develop your own human nature. In a business you have to treat everyone with honesty, loyalty, and integrity.”

It seems that businesses have struggled through the worst phase and that it is “starting to slowly pick up at least in retail,” says Aneesa Shakur from The Trunk Stylists.

“This summer is going much better compared to last one,” says Jennifer Kosharek from Eve-N-Odd gallery.

Let’s hope so.

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During this year’s State of the Union speech in January, President Obama announced the creation of a special unit of prosecutors and state attorney generals which would investigate abusive lending and packaging of risky mortgages. President Obama stated: ”This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.” Yet no significant results have been announced by the task force and no criminal charges have been filed against any top financial institution executive.

Two of Americans’ most important banks, Wells Fargo and Bank of America, have already agreed to pay large amounts of money to compensate for their discriminatory practices, but these damages do not seem to be enough to convince them to discontinue these practices.

In a speech in September 2008, when Barack Obama was only a presidential candidate, he declared: “The era of greed and irresponsibility on Wall Street and in Washington has led us to a financial crisis as serious as any since the Great Depression. The lack of oversight in Washington and on Wall Street is exactly what got us into this mess in the first place.” Some thought this meant the government could enforce a more aggressive policy against Wall Street.

Bank of America acquired Countrywide Financial in 2008, but this  acquisition had a negative impact. The New York Times explains that, “In December 2011, the Justice Department announced that Bank of America had agreed to pay $335 million to settle allegations that Countrywide discriminated against black and Hispanic borrowers during the housing boom. This was the largest residential fair-lending settlement in history.” But no criminal charges were filed against any executive of the company.

US Attorney General Eric Holder stated: “The settlement provides $335 million in compensation to victims of Countrywide’s discrimination during a period when Countrywide served as one of the nation’s largest single-family mortgage lenders and originated more than 4 million residential mortgage loans.”

Bank of America denied their responsibility in this issue, one of their spokesman’s Dan Frahm said that “we reached this settlement to resolve issues about Countrywide’s alleged historic practices that occurred before Bank of America acquired the company.  Bank of America’s practices are not at issue.”

Angelo Mozilo, Former Chief executive of Countrywide Financial, had been investigated in Los Angeles by federal prosecutors, who, after two years of investigation, dropped the case after concluding that Mr. Mozilo did not engage in criminal conduct while directing Country Wide Financial.

Just a few weeks ago the Department of Justice announced that Wells Fargo had agreed to pay $175 million to settle allegations that it discriminated against minority borrowers (Hispanic and African-Americans). The economic compensation the bank has agreed to give does not seem like a lot of money compared to their second quarter profits which are $4.6 billion.

The Department of Justice accused Wells Fargo for charging higher mortgage rates and fees against African-American and Latino customers, and the bank agreed to pay $175 million to settle allegations. But like Bank of America, Wells Fargo denied any wrongdoing and no executive from the company was taken to Court.

Assistant Attorney General for the Civil Rights Division Thomas Perez declared that “this is a case about real people – African American and Latino – who suffered real harm as a result of Wells Fargo’s discriminatory lending practices.” The Assistant Attorney General explained that “”if you were African-American or Latino, you were more likely to be placed in a subprime loan or pay more for your mortgage loan, even though you were qualified and deserved better treatment.”

Mike Heid, president of Wells Fargo Home Mortgage, said in a statement that “Wells Fargo is settling this matter because we believe it is in the best interest of our team members, customers, communities and investors to avoid a long and costly legal fight, and to instead devote our resources to continuing to contribute to the country’s housing recovery.”

So would seem hope is fading for those who believed that President Obama would be the one to finally end discriminatory practices in the banking industry. None of the banks accused have accepted any wrongdoing and they only accepted the economic compensation to avoid contested litigation, but no criminal charges have been filed.

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New Haven, U.S.A. — New analysis from Continuity Control suggests that amid the spectacular rise of regulations, half of the nation’s 7,000 community banks are barely surviving today.

Through examination of FDIC data, Continuity Control, a financial technology company built to help community banks and credit unions meet their growing compliance requirements, has determined that the rise in operating expenses for smaller banks is greatly complicating their ability to achieve an acceptable Return on Assets (ROA).

The firm reports that these banks were forced to deal with 157 rule alerts issued in just the last year, 58 of which came down in the last six months. All together, the analysis shows 762 rule alerts were issued by the individual regulatory agencies over the last five years, with hundreds of subsequent updates.

Continuity Control has added more than 100 new controls to its platform since the beginning of the year in effort to help community financial institutions keep pace.

According to Andy Greenawalt, the firm’s Co-Founder and CEO, the costs attached to the rise of regulatory requirements are pushing the majority of community banks to a ‘compliance tipping point.’

“Without a dramatic improvement in efficiencies for handling regulatory compliance or a sudden drop in regulations, we could see 2,000 bank failures across the U.S. over the next few years,” said Mr. Greenawalt. “I believe the community banking industry, which serves as the backbone of communities across the country, is under real threat.”

Continuity Control’s analysis of FDIC data also indicates that a “broad swath” of the worst performing banks must move quickly to reengineer their operations to function with reduced overhead and an efficient regulatory operations platform.

“With a new plan of attack and the right technology, executives willing to make hard choices about change can improve their banks’ efficiency ratios,” says Mr. Greenawalt, “to the point that they’re competitive with the megabanks. A necessary element of that improvement will be the ability to operate in this complex regulatory environment with minimal overhead.”

The only complete compliance platform for community financial institutions, Continuity Control was recognized as one of the five most interesting companies in financial services at FinovateSpring 2010 and recently named among the “10 Tech Companies to Watch” by Bank Technology News.

Image Courtesy of  I-5 Design & Manufacture

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Washington, U.S.A. – Argentina’s sagging international reputation has drawn scrutiny from U.S. lawmakers. The American Task Force Argentina reported that on the eve of the G20 Summit in Los Cabos, Mexico, members of Congress have taken the first steps to call for the removal of Argentina from the G20 if it continues to ignore U.S. court judgments and its international economic obligations. A new resolution introduced by U.S. Rep. Chris Smith (R-NJ), expresses the sense of the Congress that the Republic of Argentina’s membership in the G20 should be conditioned on its “adherence to international norms of economic relations and commitment to the rule of law.”

H.Res.686 stipulates that the Republic of Argentina must “fulfill the responsibilities inherent with membership in the Group of Twenty Finance Ministers and Central Bank Governors (G20), in accordance with the principles articulated by this premier forum for international economic cooperation.” In the event that Argentina fails to comply, the Resolution establishes that President Obama and the Treasury Secretary would work with G20 members to “terminate the participation of Argentina in the G20.”

This resolution is the counterpart to Senate Resolution, S.Res.457, introduced by U.S. Sen. Richard Lugar (R-IN) on May 14, which also supports Argentina’s suspension from the G20, unless it meets its obligations to the U.S. and other countries.

Calls to sanction Argentina have been echoed globally, from Spain and Germany to the United Kingdom. Last week, a UK petition urging British taxpayers to stop supporting multilateral development bank loans to Argentina went viral. In the United States, a House Financial Services subcommittee held a hearing that showcased Argentina as a nation that does not respect U.S. or international law.

“Rep. Smith is to be commended for his resolution. His initiative is part of a growing international outcry against Argentina’s bad acts,” explained Robert Raben, co-chair of American Task Force Argentina.  “Argentina has repeatedly refused to adhere to the spirit and the letter of G20 declarations, and at a time of financial instability, this lawlessness should no longer be tolerated.”

ATFA an alliance of diverse organizations advocating a fair and final resolution to Argentina’s financial and legal obligations to U.S. citizens is led by Executive Director Robert Raben, a former Assistant Attorney General at the U.S. Department of Justice, and co-chaired by The Honorable Robert J. Shapiro, former Under Secretary of Commerce for Economic Affairs in the Clinton Administration, and Ambassador Nancy Soderberg, Ambassador at the U.S. Mission to the United Nations in New York from 1997 to 2001.

Image Courtesy of  Casa Rosada

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Kyiv, Ukraine – Investors claim to profit in Ukraine, said Ukrainian First Vice Prime Minister Valeriy Khoroshkovskyi in an interview with the Polish news agency PAP. Ukrainian official said that the incoming investments would be protected and profitable. “I am certain Ukraine can help EU recover from the economic crisis,” stated Khoroshkovskyi.

He noted that the reforms Ukraine was recently implementing brought the country closer to the EU standards, creating favorable investment conditions. Among the most recent changes Khoroshkovskyi listed the adoption of judicial reform, criminal and customs codes, as well as changes in energy legislation.

Among the highlights of the judicial reform were the salary increases for the judges, the limitation of the duration of the court proceedings, and the introduction of random assigning of a case to a judge.

New criminal code provides for equal opportunities for each party in the criminal proceedings. The result of the proceedings should now be based on the principle of competitiveness. The new legal document broadens investigation opportunities and ensures proceedings are not delayed.

Reform in customs provides for faster and more transparent customs operations. New customs code introduces the right of entities involved in foreign economic activities to be subjected to customs processing at any customs body. Now the customs authorities face several limitations that include the enforcement of the time limit to perform customs control procedure, prohibition to confiscate goods and vehicles, as well as absence of the right to execute court rulings independently.

As for energy legislation, Ukraine changed legal regulations of natural gas and crude oil extraction, transportation, refinement, and sale. These functions now have to be performed by separate, financially and legally independent companies. This reflects the norms of the European Union Directive N2003/55.

Such major international companies as Chevron and Exxon Mobil intend to invest in gas production in Ukraine. Accommodating investors’ interest, the government exempted companies producing shale gas in the country from import tax on equipment and export duty.

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Paul Krugman, one of the most famous economists in the world, recently claimed in an interview with the BBC that Greece’s best option is to leave the Euro. Krugman stated, “Greece was seriously, seriously irresponsible even during the good years.” He compared Greece’s spending to those of the US and other European nations and claimed that the irresponsible spending was “not to the same extent.”

Krugman explained that the problem for Greece is that it cannot print its own money which gives it an “enormous vulnerability.” Therefore Greece has two options: accept the demands that Germany is imposing on them in regards to lending or to leave the Euro. Krugman declared, “Greece must and will leave the Euro.”

However, Krugman also points out that it is difficult for any Greek politician to say that Greece should leave. In fact, Krugman believes “whoever says, ‘that’s it’ will have ended his career.” According to Krugman, Greece leaving the Euro could happen in a couple of weeks depending on the outcome of the Greek elections. The other option is that the European banks will eventually refuse to lend to Greece which will force it to create its own currency again.

Ultimately Krugman claims that this is the most desirable thing for the Greeks and for everyone else in the Eurozone. He believes that the main ramification will be the fact that the Euro membership is reversible. The greatest worry is that there will be a run on the Spanish and Italian banks. However, as long as the European Central Bank is willing to supply the Euros for this run there should not be a major problem.

In another interview with the Independent, Krugman also went more in depth as to who should be blamed for the Eurozone crisis. Krugman believes that the Maastricht Treaty of 1992 is what originally caused this crisis because it led the way for the use of a single currency in Europe.

Michalis Sarris, chairman of the Cyprus Popular Bank also commented on the possibility of Greece leaving the Euro on 17 May 2012. Sarris claimed that Greece leaving the Euro was not “inevitable” but was a “clear possibility.”

 Ultimately Cyprus hopes that Greece will recover without leaving the Euro because many of its finances are tied up in Greek investments. Sarris reported that the Cyprus Popular Bank suffered a loss of about 2 billion Euro do to the financial crisis in Greece. Sarris is hopeful and remains positive that Greece will be able to find a way out of this crisis without having to leave the Euro.

Paul Krugman is winner of the Sveriges Riksbank Prize in Economic Sciences (informally the Nobel Prize in Economics), Princeton professor, and a columnist/blogger for the New York Times. His books include End This Depression Now! and The Return of Depression Economics and the Crisis of 2008.

Image Courtesy of  Portokalis / Shutterstock.com

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The Employee Ownership Foundation has focused on convincing evidence from the most prestigious social survey in the U.S., the General Social Survey (GSS), that showed employees in the U.S who had employee stock ownership were four times less likely to be laid off during the Great Recession than employees without employee stock ownership.

Specifically, the 2010 GSS, funded primarily by the National Science Foundation and conducted by the National Opinion Research Center at the University of Chicago, found that 3% of employees with employee stock ownership, which include the ESOP model and other forms of employee ownership, were laid off in 2009-2010 compared to a 12% rate for employees without employee stock ownership.

In addition, the 2010 GSS data indicated that 13% of the employees with employee stock ownership intended to leave their companies in the coming months whereas the rate was 24% for employees without employee stock ownership. This indicates significantly lower expected turnover for workers with employee stock ownership.

“These numbers confirm what observers of employee stock ownership have been saying for years,” said J. Michael Keeling, president of the Employee Ownership Foundation. “Employees with employee stock ownership, including those with ESOPs, in general, have more sustainable employment. Too bad we had to suffer a Great Recession to have the objective data to shed more light on these claims,” he added.

Additionally, the survey found that employee ownership rates remained stable since 2006 with 17.4% of individuals reporting they owned company stock. About 19 million U.S. citizens own stock in the companies in which they work.

The Employee Ownership Foundation provided significant funding for the supplemental series of questions on shared capitalism in the survey. Shared capitalism is defined as broad-based employee, current or deferred, stock compensation programs, such as ESOPs (employee stock ownership plans), stock purchases, stock options, gain sharing, profit sharing, and bonus programs.

The shared capitalism series of questions were developed and analyzed by well-known employee ownership researchers, Professor Joseph Blasi and Professor Douglas Kruse (School of Management and Labor Relations at Rutgers University) who submitted an application for their inclusion in the GSS.

The researchers are continuing to analyze these and other related data from the Survey to shed light on the role of employee stock ownership in the U.S. economy. ”We need policies that are job sustainers, not just policies that are job creators,” Keeling said.

“Hopefully our national leaders, including the current group of those running for President, of both parties, will take note of this evidence, and understand that national policies to encourage employee stock ownership, and new policies to increase ownership among more working Americans, need to be considered as an effective way to ensure our national employment rate is where we all want it to be.”

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As the holidays approach and most people look forward to taking time off from work to spend with their families, millions of older adults are asking for one important gift this year – a job.

New data from the National Council on Aging (NCOA) shows that older workers employed through the Senior Community Service Employment Program (SCSEP) provide exceptional skills, productivity, and experience to employers looking to fill temporary and part-time positions. At the same time, SCSEP helps older workers gain critical skills that can lead to permanent employment.

Funded through the U.S. Department of Labor, NCOA’s SCSEP program matches eligible older Americans aged 55+ with training and part-time jobs for community service organizations through 27 offices in 11 states. In the 2010-11 program year, over 6,000 older adults were served by NCOA, providing over 4 million hours of community service. Upon completion of the training program, 62.4% of participants were placed into permanent employment.

On average, older adults employed through NCOA’s SCSEP program earned over $7,200, which, when combined with other benefits, served as a lifeline for these struggling older adults, many of whom are one step away from economic crisis.

According to a report released earlier this year by the Congressional Research Service, once they have lost a job, one out of eight (12%) older Americans are more likely than any other age group to remain out of work for 99 weeks or more. Many have spent almost two years looking for work, considerably higher than the 6% figure among unemployed workers under age 35.  Additional data comes from a recent AARP report on unemployment, found here.

“New data released December 15 by the U.S. Labor Department shows the unemployment rate dropping in the U.S. and while this is great new, it’s not necessarily true for older workers,” said Sandra Nathan, senior vice president for economic security at NCOA. “Thousands of older adults are still seeking employment today.

Their skills and experience can be a welcome addition to employers struggling to find qualified applicants, and we hope to connect thousands more mature workers with employers in 2012.”

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The most faltering and tragic questions of the 21st century is how to manage the fiscal system of a country regardless of their level of economic growth. Leaders, politicians, lawmakers and ordinary citizens are deeply baffled and greatly offended by the scale of the problem in their domestic economy, and in the recent global economy.

The economy was still in its sick bed in late 2009 when the Greek government spilled the truth about their official figures being misrepresented for years. The most pronounced effect of the horrific level of public debt has been had the outcome of the unpopular austerity measures.

The unprecedented action to curtail and mitigate the dangerously high proportion of debt failed to bring in the amount of hope that the measures were designed for. Attempts to subsidize or fend-off the crisis were made by the European Commission, the IMF and the European central bank by setting-up a tripartite committee to prepare appropriate programs and economic policies.

A loan agreement was reached between Greece and the other Euro zone members, with an agreement settling on a total of 110 billion €. Greece, being member of the Euro zone, it cannot unilaterally stimulate the economy by expanding monetary policy. According to Vicky Pryce, senior director of economics at FTI, “we will see a haircut on Greek bonds, a recapitalization program of banks and increase in the size of the bailout”

Ultimately, nations under the hammer of fiscal congestion and monetary impossibilities will have fewer possibilities of revitalize the sluggish economy in order to gradually subside the debt debacles. President Obama said when German Chancellor Angela Merkel Visited the US, that “European Debt Crisis must be brought under control predicting disastrous results if there is an uncontrolled spiral and default in Europe”

According to the German Finance minister, Wolfgang Schauble, creditors holding soon-to-mature Greek bonds would need new bonds on similar terms that are payable for several years. But this plan doesn’t release Greece from the shackles of their staggering debt — it only shifts the burden to future generations, providing a short-term relief.

In another plan which has been accepted by the European Central Bank, a ‘no bond exchange’ requires that private creditors can cash in on maturity and be encouraged to re-lend some of their money. This plan is only viable if private creditors believe that re-lending to the government won’t put them back to previous risk levels.

Even so, Greece is not out of the woods completely, since it will also require paying interest with principal for those bonds. Some economists have echoed the option of Greece leaving the Euro zone. Greece has some good reason to leave the Euro zone. If it can devalue its currency, Greek exports will rise and provide a cushion for economic activity and bring in cash.

But it might push the inability of other members of the Euro zone to rescue a financially unstable member country and may endanger the whole financial system of the region.

If Greece withdraws itself from the Euro zone, the confidence in Europe would be tarnished, inviting catastrophic consequences to other debt laden nations like Portugal, Italy, and Ireland. Nevertheless, debt restructuring and beyond could be a possibility now the ECB has granted permission for exposed countries to have unilateral monetary policy.

 
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A group of analysts from the three institutions responsible for granting the country with its next package of financial help, known as the troika, has arrived in Greece to inspect the progress in regards to the budget cuts schedule previously proposed.

If the government doesn’t carry out the timeline proposal agreed by both the government and the troika, it is very possible the latter will not give Greece a vital loan to allow the country to continue with its normal activity. Without that loan, the government will go bankrupt and, therefore, neither Greece’s bonds investors, civil servants, pensioners, and the like will not be paid on time.

For those reasons, the troika, a group comprised of experts from the International Monetary Fund, the European Commission, and the European Central Bank, started to examine the national accounts to verify that the schedule was being followed on September 28.

After September 2, they decided to leave Greece because the government was not applying the measures agreed upon by both parts, thereby putting Greek leaders under more pressure. One of the measures agreed upon was reducing the number of civil servants by 30 percent before 2015 with the immediate layoff of 30,000 employees out of 900,000 employees.

Other measures prescribed will reduce civil servants’ wages and salaries up to 25 percent and include compulsory retirements. These cuts will affect all public services from the health system to education and transportation. Those cuts have caused a deep sense of unease among the Greek population who decided to mobilize themselves to preserve whatever they could from public expenditure cuts.

For instance, the group had to change the place and hour for a meeting with the Transports Minister, Yannis Ragoussi, because some civil servants were protesting against mergers and acquisitions of public companies with private ones, which would result in a decrease in the number of employees by about 10 percent and the liberalization of truck and taxi driver licenses.

In Greece, an unusual day is one without demonstrations. A few days ago, a group of 250 retired soldiers took over some offices in the Ministry of Defense until the minister himself, Panos Beglitis, threatened to resort to the use of force to make them flee. Another example is the students’ strikes, which have taken over more than 400 schools and 100 faculties to protest against cuts in the education system.

All these tug of war games are creating a complicated situation in the country. On one side is the troika, always asking for more and more cuts and new measures to reduce public deficit. On the other side are civil servants who feel as if they are on the verge of being fired, and citizens who see more and more cuts day after day that are worsening the public system.

In between is a government with feet of clay, coping with ministers’ resignations every month, social strikes, and the pressure of the troika. The government is playing a dangerous game: promising a high performance to the troika that they know is impossible to carry out in real life and watching the time pass day after day without being able to find solutions to satisfy both sides.

 
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Over the past year, gold prices have shown an upward tendency but still there is no sign of relief in the markets. Recent debt crisis in Europe and the troublesome turn of events in the United States has again brought the attention of global investment community back to gold.

According to the Wall Street Journal, gold prices have rallied 25 percent this year as the risk appetite of investors has declined in the so-called safe havens of investment like treasuries and dollar.

The global economic environment is very uncertain with mounting debt debacles in the Euro zone leading to stringent austerity measure that eventually led to the weakening of Greek, Portuguese, and Irish economies. According to Mitsui Precious Metals analyst, when a metal has four to five distinct reasons to grow in value it would be foolish to not be bullish on it.

In recent weeks, gold has jumped nearly 8 percent, biggest rally since November 2008, for three days. Yellow metal gained $132.50 or 2.4 percent after downgrading of US credit rating by S & P from AAA to AA+.

Gold prices continued to boost when the Federal Reserve promised that it will keep the interest rates near zero till 2013, in a bid to keep the cost of borrowing low. and would consider further steps to help growth.

The drastic drop in Dow Jones Industrial Average of 400 points on Wednesday and over fear of slippery European economies extended the rally in market that moved the gold prices to hit a record high of $1801 a troy ounce beating Tuesday’s mark to take all time record.

Investors are avoiding anything that poses the slightest degree of risk, the sovereign debt crisis that engulfed US and few economies of the Euro zone have intensified their hunt for more secure and stable vehicle for investment.

Paul Christopher, international market strategist at Wells Fargo, said the appetite for gold is getting out of hand for retail investors. As equities tumble and debt woes mount record breaking rally of gold sparked after the US reached last minute deal to raise its debt ceiling and later S&P’s downgrade of US debt shattered the confidence in US treasuries.

Gold has been considered a store of value or an investment vehicle that can be relied on in times of inflation or deflation; in both cases when the value of money, in terms of purchasing power, is shaken.

The sporadic rise in demand for gold in recent days comes by the fear in the markets about faltering economic recovery and rising unemployment, infused the high degree of sense of security for investment in gold.

Gold and US treasuries were seen as the most secure form of investment in the world, and even many central banks are net purchaser of U.S. treasuries for a long time, but historically low interest rates, weak US dollar and infusion of trillions of dollars in the system in U.S. has generated fears of inflation thereby causing a major shift in investors sentiment with respect to U.S. treasuries.

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