By focusing on bank bailouts, the Fed has not helped decrease unemployment.
And now the banks themselves, including Goldman Sachs, are increasing the number of unemployed in the economy by "releasing" some of their employees!
'Did It Work?'
By Al Lewis - The Wall Street Journal, Personal Finances
It's time someone answered this question.
The Federal Reserve and the U.S. government injected trillions into the economy, yet the recovery has remained "moderate" at best for two years.
Instead of generating "shovel-ready jobs," most of that money benefited financial companies that probably deserved to fail. So how are these companies doing? They're laying off thousands of people, according to a report released last week by Challenger, Gray & Christmas, an employment consulting firm.
Layoffs are up 21% this year at banks, brokerage firms and insurance companies. Challenger expects the trend to accelerate through the year and become more or less permanent. So not even those employed at the national targets of bailout envy, such as Goldman Sachs and Morgan Stanley, are safe.
It's one thing when construction and manufacturing jobs disappear, but losing jobs that pay extremely well yet produce nothing -- well, now that's going to be an economic crisis.
Last week, Federal Reserve Chairman Ben Bernanke finally conceded that economic growth is going to be slower than he'd anticipated, that high unemployment and sluggish housing would be around for years to come, and that the Fed has done about all it can do, for now, having kept interest rates at effectively zero for years.
Most Americans already knew this, but it sounded more dire coming from the U.S. economy's cheerleader-in-chief. His words confirmed that the Fed would start pulling back, and they sent stocks reeling.
Additionally, it seems only a matter of time before Greece stops paying its debts, possibly toppling dominoes of defaults and unwinding derivatives contracts around the world that no one can really anticipate. Mr. Bernanke predicts the effects will be small, but he once said the same thing about subprime debt.
Fears of a further economic slowdown also prompted a surprise move from the International Energy Agency to open the spigots on emergency petroleum reserves around the world. The U.S. will put up half of the 60 million barrels to ease the threat of a summer spike in gasoline prices from the war in Libya.
Oil prices, however, were already headed down. Was there some emergency -- beyond the usual economic emergency we've been living with for years? Or was it simply that if the Fed's not going to flood the world with dollars, oil is the next best thing?
People forget that we are not so much recovering from a recession, but from a debt crisis brewed in a cauldron of deception and fraud. At some point, we have to wonder whether all this monetary and fiscal meddling is merely continued economic folly.
No matter how long our jobless, house-poor, consumer-hobbled recovery slogs on, we'll be constantly reassured that trillions from the Fed and the U.S. government spared us from another Great Depression.
But what if we are just trillions more in the hole and still face an inevitable malaise? Can fate be changed? Or did our leaders just bloat the balance sheets and prolong the pain?
Maybe all the economy really needed was a wider acceptance of its failures and time to mend.
Read the column here