While President Obama is jetting throughout Europe, more bad economic news have hit the fan.  Joblessness continue to be on the rise with sign of slowing, services provided by states such as unemployment benefits previously extended are quickly depleting, state and local taxes on the rise with fiscal budget deficits, and retirement and pensions plans are under pressure due to drop in value and the lack of contributions.

Critics continue to berate the Team Obama economic plan and its ability to solve the crisis as home prices continue to fall and there is lack of marketability of toxic assets to investors other than the banks themselves.  In the latest critical comments offered by experts, the supposed bank stress test move is nothing more than a “scam”, a white wash placebo to calm the American people.  This critique comes quickly on the heels of the news that FASB will relax and make changes to their “mark to market” accounting rules.

How long will American voters and taxpayers wait for results despite trillions of their money are going out the door to failed private corporations?  Take this poll.

Eddie Lampert ex-Goldman Sach’s Executive Turned Hedge Fund Founder…A Retail Genius?

Sears Holdings, the third largest US retailer, on Thursday highlighted the growing pressures it will face this year from mandatory payments to its pension plan, following the steep decline in asset values seen last year.  The retailer said that it had made cash contributions of $224m to its pension plan in its financial year ending on January 30, as it seeks to meet federal requirements to ensure that pensions are fully funded by 2011.

….However, Mr Lampert also called on Congress to ease pension plan regulations to give companies additional time to make required cash contributions to make up losses caused by the financial turmoil….

So basically, Lampert wants help to bailout his obligations to employees or find some loophole to stiff the employees after he has taken over Sears using his ESL Hedge Fund and ran it into the ground.  Of course Wall St and the financial analysts calls him the next Warren Buffett at the time.

Sears under Lampert’s leadership has performed miserably ever since he has assumed the role of its Chairman.  Many retail experts believes he simply doesn’t understand how to be a retail operator.  Even when the stock has shed 80% of its value,  Eddie Lampert continues to play the blame game but himself.

Meanwhile, “Venture capitalist William “Bill” Ackman, founder and CEO of investment and hedge fund firm Pershing Square, has announced to the chagrin of Target’s board and management that he shortly will wage a proxy battle for control of the discount-store giant.”, as reported by “Weekly Retail Fix” of Retailing Today.  Ackman’s hedge fund has accumulated 10% of Target’s stock since April 2007 and is attempting to muscle its way into the company’s board.  What does Target executives and current board think?

We are disappointed that Pershing Square has decided to pursue a costly and disruptive proxy contest, especially in light of our previous dialogue. Target has a long history of being responsive to shareholders and has engaged in numerous discussions with Pershing Square over a 20 month period.

So you think Government should be sympathetic and soft on regulation?  Is leverage of a perfectly healthy company such as Target in the best long term interests of shareholders, the economy, and American employment?

Well, don’t feel alone.  As United Technologies announced today that 11,600 jobs will be eliminated in 2009, these future unemployed will join the 12.5 million Americans who are currently unemployed as of the end of February 2009.  Year to date figures shows 1.3 million jobs eliminated which is an average of 22,135 jobs lost every day.

In the midst of the economic decline, it appears that there is much debate about the causes of the recession and the government remedies to arrest job loss, foreclosures and restore confidence in our financial sector which is widely believed to be the epic center of the crisis.

Jim Puzzanghera of the LA Times wrote on March 9, 2009:

Some experts say what these ventures have done is make an AIG or a Citigroup that’s “too interconnected to fail.” And it’s not just the size that would matter. AIG’s interconnectedness with other companies, markets and economies is so huge and convoluted that it’s almost impossible to foresee what all the consequences of collapse would be.

The prime example of this problem is about $500 billion in unregulated credit default swaps held by AIG. Those complex financial instruments are essentially insurance policies taken out on mortgage-backed securities and other assets. The swaps were designed to pay out money to buyers who got caught in exactly the type of financial crisis taking place right now.

In essence, AIG was committed to insuring hundreds of billions, if not trillions, of dollars in investments. When the housing market crashed and the economy nose-dived, those investments tanked as well. And AIG was liable for the losses — a liability so large that it is now overwhelming the rest of the company, including the still-profitable parts.

What’s worse, because credit default swaps were unregulated and the layers of transactions so arcane that they are difficult to understand clearly, the true cost is essentially impossible to measure with certainty. Once the dominoes began to fall, no one knew where the process would end.

“People don’t know the exposure, so as a result there’s a huge premium on fear and the unknown,” said Kent Smetters, associate professor of insurance and risk management at the University of Pennsylvania’s Wharton School.

However, Ralph Vartabedian of the LA Times wrote on March 10, 2009:

But critics contend that what was originally proposed as an overwhelming gesture of government resolve to get banks on their feet now seems like an intravenous drip, barely sustaining the giant institutions that account for the majority of U.S. bank assets. As time goes on, the problems appear again to be deepening.

“Some of these banks are walking dead and should be closed,” said Sen. Richard C. Shelby of Alabama, a 20-year veteran of the Senate Banking Committee and its senior Republican. “We are propping up financial institutions that are insolvent and have already failed. The government has made a political decision to keep them going at the taxpayers’ expense.”

At the other end of the political spectrum, the AFL-CIO Executive Council voted unanimously last week to urge President Obama to nationalize problem banks as a way to stimulate and stabilize the financial system.

“Every day we delay is another day workers in this country feel the pain of a stagnant economy,” said Richard L. Trumka, secretary-treasurer of the labor organization, a powerful influence on the Democratic-controlled White House and Congress.

Despite, P. Parameswaran wrote of US Federal Reserve Chairman as saying,

“In the near term, governments around the world must continue to take forceful and, when appropriate, coordinated actions to restore financial market functioning and the flow of credit,” he told the Council on Foreign Relations, a think tank, in Washington.

Speaking ahead of a weekend meeting of the Group of 20 finance ministers and central bank chiefs in London, Bernanke said while fighting the current crisis, policymakers should embrace reforms to the financial architecture that could help prevent a similar turmoil from developing in the future.

“We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components,” he said.

“In particular, strong and effective regulation and supervision of banking institutions, although necessary for reducing systemic risk, are not sufficient by themselves to achieve this aim.”

Martin Crutsinger, AP Economics Writer reported today:

Treasury Secretary Timothy Geithner says that within the next couple of weeks the administration will unveil its plan for dealing with the toxic assets that lie at the heart of the current financial crisis.

Geithner says that the plan the administration has put together will provide low-cost government financing to private investors who are willing to purchase the bad assets that are currently clogging banks’ balance sheets.

It is clear that our despite the expectation of the US Government to always have the answers or solutions to the problems of society, it is abundantly clear that they don’t.  As painful as it maybe to experience first hand the fumbling of government, it appears that finally that the government leaders who are charged with turning the economy around are beginning to focus in on the issues and causes which is good news.  The first step to solving any problem is first identifying the problems and causes.

The Dow Jones Industrial Average rallied 380 points today as Citibank reported positive operating profits the first two months of this year.  Perhaps, we’re beginning to see a glimmer of light in this dark and winding tunnel.