Bank of America recently announced it is slashing 30,000 jobs; that’s after it already cut 6,000 earlier this year. Obama made a jobs speech, and the stock market tumbled by 300 points the next day. Zero jobs were created in August.
BofA employs 3,500 Rhode Islanders who can ill afford to be laid off. The Rhode Island Department of Labor and Training reported on Friday that unemployment was at 10.6%. Compare that to North Dakota’s mere 3.3% unemployment rate and New Hampshire’s rate of 5.2%. In Rhode Island 6,300 jobs were lost during the month, representing the largest monthly job loss since January 1991, when the state lost 9,800 jobs.
A piece of the Dodd-Frank financial reform legislation passed by the Obama administration eliminates the “swipe fees” that retailers are charged by banks like BofA. So if you go to buy a gallon of milk and use a BofA credit card, BofA can no longer charge the grocery store for making the credit card transaction a possibility. Dodd-Frank was billed as the answer to the housing crisis. What does buying a gallon of milk have to do with the housing crisis?
Also, Dodd-Frank has done nothing to make credit cards any better. There’s still no cap on rates. First Premiere offers a secured card with a 49.9% annual percentage rate as of March. And to get a secured card, you have to make a security deposit. As if borrowers who have to resort to secured consumer borrowing just have money lying around. Rates are no lower after Dodd-Frank—still high at 15% for average cards. So much for the low rates promised for Main Street. But Wall Street’s doing fine.
North Dakota Gets It
What clearly and distinctly separates North Dakota (ND) from its neighbors to the east and west, Minnesota and Montana (MT), is that it’s a right-to-work (RTW) state. They are not. ND’s RTW law acts as a welcoming mat, greeting businesses as they come to the state. In ND you are free to work—you cannot be forced to join a union against your will. It’s an important protection, especially since ND and MT share the Bakken shale formation with Canada’s provinces of Saskatchewan and Manitoba. As exploitation of the Bakken resource picks up, drilling companies will want to flock to states that offer them advantages like RTW laws.
Bernanke’s Free-Money Truck
Prices are up thanks to Bernanke’s free-money truck. The last time I checked, a gallon is still a gallon. So the size of the container for milk hasn’t changed one drop. What has happened is that the open money spigot has ignited food price inflation and weakened the purchasing power of the dollar.
So now that the milk has spilled, Barney Frank came out on Monday to renew his attack against the Federal Reserve’s district presidents, saying their presence has become a “significant constraint” on the economy.
How do guys like Barney Frank continue to get reelected?
When Bernanke pushed the panic button in August and pledged to keep rates close to zero until 2013, it was three district Fed presidents who voted against the plan. They are the watchdogs for the people, and it was the biggest dissent in almost two decades of Federal Open Market Committee history. Congressman Frank feels their dissent is hurting the economy. Frank said, “The 7–3 vote of the FOMC in August in favor of keeping interest rates low is stark evidence of how much of a constraint” these district Fed presidents are. Bottom line is that it’s Frank who needs constraint.