U.S. Unemployment Hits 7.2 Percent, Highest Since ’93

theeconomyEmployers slashed nearly 525,000 jobs last month, sending the unemployment rate to 7.2 percent, the highest level since 1993, the Labor Department said today.

The numbers are just plain bad. In 2008 as a whole, the economy lost 2.6 million jobs.

In December, “job losses were large and widespread across most major industry sectors,” the Labor Department said.

It’s a time to exercise caution online — not that one should abandon caution during good times.

Lean times, however, create conditions that permit scams to proliferate. Being unemployed or living in fear that your job will be axed is like a baseball game in which you find yourself trailing 5-0 after the opposition bats in the top half of the first inning. You’re already confronting a big deficit, and the pit in your stomach existed before the game even began.

Just remember there’s no such thing as a five-run homer. You can’t pare a five-run deficit in a single plate appearance.

So, if you’re new online as the result of a job loss — or if you’re worried about losing your job and are looking for ways to supplement your income — just know that plenty of folks will try to get you to believe in a five-run homer.

They’ll tell you to join autosurf programs, for example, explaining that you can earn $100 a day by entrusting $10,000 to them. They’ll tell you the autosurf companies offer an exciting, new way to advertise online. And they’ll promise you’ll become a member of one of the great teams within the multilevel marketing (MLM) organization.

Along those lines, they’ll tell you that you’ll come to ask yourself why you ever worked to begin with once you realize it’s possible to earn huge sums of money by viewing advertisers’ websites for 10 or 12 minutes a day.

And all of it will be bunk — every last syllable of it will be bunk.

What they won’t tell you is that the government views such autosurf programs as Ponzi schemes that engage in the sale of unregistered securities. The government has a history of busting such schemes. Your entire investment could be lost. You could end up like the investors in the alleged Bernard Madoff Ponzi scheme

Avoid such programs like the Plague. Some of our readers have reported they’ve lost upward of $100,000 in such programs. It’s somewhat common for church congregations to get involved in autosufs, some of which sell memberships with an appeal to religion.

Take a leadership stance if you’re approached by a church member to join such a program. The member may be honest — but he or she may be caught up in a happy cloud that has stolen his or her ability to reason.

And there’s always a chance that the member actually knows the game and is using your faith to cloud your ability to reason.

Think about your former job — how your employer made money. The company probably built things or created things or fixed things and produced or supplied products or services that required both manual and intellectual labor.

That’s the only real way to make money: create something of value and sell it. The product can’t be a mirage. Mirages are a dime a dozen on the Web. Someone always will be willing to sell you a mirage, a five-run homer, especially during lean times.

About the Author

8 Responses to “U.S. Unemployment Hits 7.2 Percent, Highest Since ’93”

  1. http://news.bbc.co.uk/1/hi/business/7820164.stm

    More US workers lost jobs last year than in any year since World War II, with employers axing 2.6 million posts and 524,000 in December alone.

    A difficult situation world wide. I read somewhere that the US jobless rate may go in to double figures. UK figures are expected to go somewhere near 3 million.

    Times are bad for many and will be for at least a year. A ponzi-surf or ponzi-HYIP are not the solution. Ponzis are fraud & are criminal ventures. By sending money to ponzi HYIPs/surfs you will be contributing to criminals.

      (Quote)

  2. Hi Tony,

    Thanks for the link. The global economy is shrinking, to be sure. Former U.S. Treasury Secretary Robert Rubin just resigned from Citigroup, which has taken a huge haircut during the banking mess and now needs federal bailout funds.

    Rubin said he regretted not anticipating the severity of the financial mess.

    I’ve been reading some of the U.K. papers and know this is not a U.S.-only problem.

    Take care.

    Patrick

      (Quote)

  3. No, not a US only problem, but some have said that it started in the US with the collapse of the US sub-prime mortgage market. That may be right, but the trigger could have been anything else.

    Did Bush cause the financial crisis?
    http://news.bbc.co.uk/1/hi/world/americas/7814704.stm

    He certainly presided over a widespread failure of regulation.

    On his watch, the US authorities did little to prevent the sale of millions of mortgages to people who could never afford them.

    They failed to police the market in mortgage-backed securities which has now collapsed with such devastating consequences.

    And credit default swaps, those multi-billion-dollar bets on other people going bust, went virtually unregulated.

    In recent days, Congress has been holding hearings to determine how the regulators at the Securities and Exchange Commission (SEC) missed numerous warning signs – “Red Flags” – about Bernard Madoff, the man accused of running a gigantic Ponzi scheme which has defrauded investors of at least $50bn.

    The de-regulation started in the Reagan/Thatcher era and continued through political parties of all colours. Obama seems to be promoting more regulation http://news.bbc.co.uk/1/hi/business/7818347.stm

    Mr Obama said that the crisis was caused “an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington.”

    He added that there had to be a “sweeping effort” to address the foreclosure crisis and keep the financial system functioning.

    He pledged to reform “a weak and outdated” regulatory system to protect consumers and investors from the “reckless greed and risk-taking” that should “never endanger our prosperity again”.

    In my non-expert opinion, Obama’s solution of more regulation may mean less profits/bonuses for bankers. Not such a bad thing – it’s the cost of asking for tax-payer’s money.

      (Quote)

  4. You are absolutely right about the crisis affecting the rest of the world. The increase in gas prices started of a recession in many European countries. The mortgage crisis, followed on by the banking crisis has had a knock on effect all over the world, especially in those countries who bought from the US. Britain, whose banking system, whilst far more regulated that the US, is still less regulated than some of the other European countries. Countries that have become very involved with the US financial markets have been badly hit.

    The end result is a stagnation of financial and other trading which affects us all.

    Although economic downturns do go in cycles, this one has been exacerbated to an extreme by the near total lack of regulation, self regulation or by the state, in the US over the recent years. The world is shrinking and one power’s acts no longer affect noone but themselves selves, as in the case of the current crisis. More like a pack of cards – the big one goes down and down come tumbling the rest

    As self regulation has certainly failed there, I dont see any alternative to a far stronger and effective regulatory system in the future. The philolosphy of non governement intervention is fine in theory, but we are now living with the practical consequences of its lack.

      (Quote)

  5. Tony,

    Make sure you see this: A credit card in Britain has upped rates to 46 percent!

    http://www.dailymail.co.uk/news/article-1110305/British-Airways-credit-card-UKs-expensive—hiking-charge-46.html

    Actually, one of President Clinton’s big pushes was to increase home ownership in the United States. Some of the abuses that became institutionalized here began under his watch — not that President Bush was big on regulation.

    In 2001, I reviewed 300 mortgages dating back to 1999 while researching an alarming rise in foreclosures. It was clear that brokers and appraisers were working together to fudge the math on deals.

    The appraisers, for instance, grossly inflated the value of the homes, tricking the banks into believing their ends would be covered in the event of a default by the homeowner.

    Because the appraisal values were inflated, homeowners typically qualified for higher loan amounts, often paying off credit cards and car debts with money padded into their mortgages. This meant higher fees for the brokers, who were eager to find appraisers willing to pad the numbers.

    Sometimes they worked in concert with notaries public to close loans in blank — meaning the buyer never attended a formal loan closing, where the terms and conditions were supposed to be spelled out.

    Almost all of the loans cited above worked their way to Wall Street, where they morphed into mortgage-backed securities packages. This scene played itself out in town after town across the United States.

    By the summer of 2007, the bad paper no longer could be hidden, and the mortgage meltdown began — first in the subprime sector, then virtually across the board.

    As a side note, Florida, a haven for scammers and Ponzi schemes, also happens to have one of the highest foreclosure rates in the United States.

    Patrick

      (Quote)

  6. Hi alasycia,

    Over here, gas prices have fallen considerably — a good thing for most families. People who are struggling really would have their backs against the wall had gas prices remained at last summer’s steep levels. I’m paying about $1.75 a gallon now, down from $5. Man, during the summer, some of the saddest people you’d ever want to see were waiting in line to fill up at the pump. I was one of them. :-)

    I’m thinking most Europeans purchase by the liter, rather than the gallon, and are more accustomed to paying more for a fill-up (compared to their cousins across the pond).

    But I know prices became intolerable there, too.

    Over here, the prices increases were incredible — and it started to show up across the economy. I paid $63 to overnight a package to Boston; it used to be $30. At one time, I paid $2.19 for my favorite brand of spaghetti in a three-pound box; it’s now $3.79. This in a matter of months.

    With respect to regulation, well, there have been some celebrated cases of dropping the ball. Parts of the system need to be reinvigorated, to be sure.

    No regulatory apparatus ever will be anything that approaches perfect. People make their livings finding loopholes, and criminals don’t care how stringent the regulations are.

    That said, I understand where you’re coming from. Your comment is much appreciated, and is very thoughtfully presented.

    Regards,

    Patrick

      (Quote)

  7. Credit cards aimed at the “sub-prime” market have often had interest rates in the region of 35% to 50%. What is interesting about that card is it also has an annual fee.

    Fuel has also fallen in the UK but not enough. When oil was at $147, diesel was about £1.389 a litre. Now, oil is at $42-ish, diesel is £0.949 a litre. Fuel in the UK has always been more expensive than most other places, even though the UK produces oil from the North Sea.

    Food prices haven’t changed much either. A loaf of bread is about £1.25 from Sainsburys. ASDA (American owned, Wall Mart) the same bread is £1.00.

    Energy (gas & electricty) is still high, the latest excuse is the dispute between Russia and Ukraine. Yes it is an excuse.

    About the only thing that has not been affected by the recent financial crisis has been Good Ol’ Rip Off Britain. That is still working nicely.
    (Sorry for the grumpy rant).

      (Quote)

  8. We have probably overlooked the toughest situation so far of the global crisis…..Iceland. I am guessing you can buy the entire country for under a billion dollars. Small country, nice summers, etc., but unfortunately they got heavily into international banking and participated in the sub-prime/CDO/leveraging game as well. Trouble is, with only 300,000 people, tough to find the funds for a major government bailout.

      (Quote)

Leave a Reply