Summers: Unemployment Will Remain "Unacceptably High"

WASHINGTON — A top economic adviser to President Barack Obama on Friday acknowledged the risks of reining in too quickly the emergency programs put in place to battle the financial crisis.

"We will not make the mistake of prematurely declaring victory or prematurely withdrawing public support for the flow of credit," said Lawrence Summers, director of the White House National Economic Council.

Summers added that he wanted to avoid the mistakes Japan made in the 1990s and the United States in the late 1930s by pulling the plug on government support too soon.

Such a mistake "we must not make today," he said in a session with reporters.

Doing so could short-circuit an economic recovery, freeze up lending, spook financial markets and send interest rates higher.

The economy has been flashing signs of a recovery, and lending has improved some. But the financial system and the economy remain far from normal.

Unemployment, now at a 26-year high of 9.7 percent, is "unacceptably high" and will remain so for "a number of years," Summers conceded. In addition, he noted, the commercial real-estate market is under pressure, and small businesses are having trouble tapping credit.

Still, amid evidence that the worst recession since the Great Depression is ending, the government is winding down some programs.

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Treasury Secretary Timothy Geithner on Thursday said a department program to bolster money market mutual funds will close as scheduled Sept. 18. In June, the Federal Reserve said it would let a separate money market mutual fund program expire Oct. 30. It also scaled back some loans to banks.

Last month, the Fed said it would stop buying government bonds in October. That program had been aimed at driving down rates on mortgages and other consumer debt.

The Federal Deposit Insurance Corp., meanwhile, is considering whether to stop making new guarantees for bank debt at the end of October, as now scheduled, or extend the program.

Summers said the government's first steps toward withdrawing its emergency support show the financial system is strengthening.

President Barack Obama, in a speech set for Monday, will make a fresh pitch for Congress to overhaul financial rules to better guard against future crises.

The push comes a year after Lehman Brothers collapsed, sending financial markets around the world into chaos and nearly halting the flow of loans to investors, businesses and ordinary people.

Efforts to revamp financial rules have bogged down in Congress. White House spokesman Robert Gibbs said Obama's speech Monday will focus on "the need to take the next series of steps in financial regulatory reform."

Summers indicated that the administration is open to negotiation in overhauling regulations but refrained from offering details.

Comments

[prusso]

Could this be a contrarian indicator? How often have these guys been correct over the past few years?
http://www.localetrends.com/st/fl_florida_unemployment.php?MAP_TYPE=curr_ue

[noneIn2008]

Green shoots

[ranch111]

High unemployment. That's the way you like it, Larry.

[mphalen]

"Summers: Unemployment Will Remain "Unacceptably High""

Yes , especially with you and Geitner in charge.

[yourlibral]

Everyday it's the same old rethreads. NO change form Washington.

good articles: http://www.iamned.com

[mat3]

Thank God they saved all those jobs.

[xrepublican]

So.... giving BILLIONS to banks and financial firms who CONTINUE to lay off hundreds of people - while keeping the same senior execs that CAUSED this disaster (and who are STILL getting bonuses) ....... while those same firms CONTINUE to send MORE jobs offshore.......

FIRE those that continue to put their OWN financial welfare above that of their employees, their company and their nation...

Oh wait... all those overseeing this for the government are former executives FROM those companies (and will be returning to them after their brief stint in 'public service')

FDR had it right in EXCLUDING those from the financial industries from his administration..... all the insiders care about is their OWN financial well being.

[therealredstateblues]

if you want people back to work - put money in the hands of those who will spur demand instead of the banskters ,Summers

and stop sending our jobs offshore

[hypnotoad72]

And then they wonder why nobody wants to get educated... (but financial incentives are only for the bankers!!)

[vippy]

And oil has fallen again and gas fell more than 25 cents whole sale. Did the price at the pump go down accordingly, no! Gas went down 1 cent and the gas stations dug in their heels before the
Labor Day Weekend and left the price high. Today I read where oil and gas are taking on different
directions. We are swimming in both and the prices should be way below and I wonder why that is not happening. Congress is reluctant to change their Commodities Futures Modernization Plan,
I guess they love getting rich of their oil/gas investments or lobbyists' bribes.

[vippy]

Times will change when they finally tell us the truth about the real unemployment numbers.
Why the need to lie in the first place. They caused it with their bad decisions. And we thank them all by voting them back into office. Disgusting! Do you see any holes being plugged that caused the job losses in the first place, well, I sure don't. I am beginning to think this is where they want us.
This may be the bleak future for us. Perhaps we need to look at everything we buy and make sure it says MADE IN THE USA but I remember years ago when this was hyped, we, in retail, hung signs
onto just about everything to get with the spirit.

[xrepublican]

REAL unemployment - those still looking, those given up looking, recent grads unable to get jobs, people working part time because that's all they can get, people working at ANY job (at a fraction of thier former salaries) - THAT number is likely at 20% or more.

If THAT number were being trumpeted by the media there would be rioting in the streets.

[LeLoup]

The media will make sure this doesn't happen. After all, they keep telling us day after fay what we think, and how we should think.

This country has a 15 to 30 years of hell on earth to go trough before things get better...if they don't get far worse by then.

Our political leaders didn't install the National Security State for nothing, didn't they?

[jessicajuliette]

agree xrepublican--job went overseas 14 months ago, starting new job tomorrow at 1/3 my former salary,nice huh????

[JackRusselTerrier]

Greed_ on Wall ST

Posted by Jim Hightower
Welcome to the insanity_ of Wall Street. Having fostered a corrupting_ culture of banker greed by basing the lavish pay of top executives on their ability to score short-term profits (whether by hook or crook_) the reckless financial titans crashed their own banks and our economy. So, barely a year after the crash_, what's the response of the banks? "Hey," they're shouting, "that was fun – let's do it again!"

James Reda, an executive pay consultant, studied the changes that 191 of America's largest banks and corporations have made this year in the way they reward top managers. With the public outraged_ by executive excess and congress considering pay limits, Reda presumed that most bosses would have cut_ back on the short-term, grab-all-you-can pay incentives and shifted to a rational system that rewards executives for long-term performance.

Wrong. It seems that corporate culture is at war_ with sanity_. Reda found that companies did change their pay policies – but by increasing short-term incentives and actually reducing incentives for sound, long-term performance! Reda found that these big outfits are even retaining such ridiculous_ perks as "tax gross-ups," which mean that executives don't even have to shell out for the taxes they owe on their exorbitant pay – instead, shareholders pick up their tax tabs. http://www.jimhightower.com/node/6924

[Kassandra]

That's probably becasue they know it's unsustainable and the "bailout bubble" is gonna burst worse than the housing market did.
so, they ARE grabbing while they can and consolidating power in the government at the same time. This will probably lead to more wars as wars are the fastest way to transfer wealth and keep the population under control.

[JackRusselTerrier]

Wars_ are started with propaganda_ and continue... due to
censorship_ and more propaganda_

[artgurrl]

An economic 'recovery' without job creation in this recession is NOT an economic recovery. Seriously, what in the world is Geithner and Summers doing? Summers doesn't want to make the mistakes of Japan and the decisions of mid 1930's by pulling back. O.K, I can accept that. But their mistake is simply not funding this recession enough to create jobs to prevent the heavy unemployment rates. If anything Summers and company are not doing enough to prevent them from doing the mistakes of Japan. All the energy and funding is going hold up the banks and Goldman Sachs. Not enough energy and money is going to the real economy. What are these guys thinking?

[iridium53]

Summers is just out there trying to set the expectations even lower.

I'm interested in outcomes, not excuses.
Every loser has an excuse why he did not succeed.

If Obama can give huge money to bankers - to no effect and with no regulation (to date or in sight), then he can do something effective to improve employment.

Still no regulations to curb bad banker behavior.
But, Obama and Summers sure got them their money so their bloated salaries could be expanded even more.

Some 20% of the workforce is un- or under-employed.
Still no effective help for unemployment.

Obama either does or does not.
Summers is only working hard at lowering expectations.
Is that really why people voted for Obama? To hear excuses and have their expectations lowered?
I thought it was for change we could believe in.

[Kassandra]

Well, I will tell you he's the only game in town at the moment...even if he is punking US. If we get another Republican in there or a huge influx of right wingers in congress, the fat lady WILL have sung for America

[iridium53]

Perhaps so. Perhaps not.

Since Reagan the Republicans have done everything possible to destroy any controls over corporations' short-term greed. They have systematically moved industrial jobs overseas so that they gained short-term profits.

Democrats, especially Summers and Obama, have not acknowledged the urgent need to restore industry and good-paying, non-service jobs to America. Democrats seem to feel that they can just live off the industrial might of America - but, there is little industrial might left.

[Social Construct]

Unemployment will stay high .... get used to it. Corporate welfare before the welfare of people .... get used to it. - The Federal Reserve and the US Treasury. Thank you for your cooperation.

[LeeCalif]

Yet all the while, Summers and Geithner ( the Goldman Sachs boys) keep refreshing funds at their
bud's banks.

Obama, wake up!