U.S. markets slide on trade news
NEW YORK, Jan. 12 (UPI) -- U.S. markets slid early Tuesday after the Commerce Department said the U.S. trade gap grew sharply in November.
The deficit from international trades grew from a revised $33.2 billion in October to $36.4 billion in November, the department's Bureau of Economic Analysis said.
In late morning trading, the Dow Jones industrial average lost 0.24 percent, 26.00 points, to 10,637.99. The Standard & Poor's 500 lost 0.57 percent, 6.59 points, to 1,140.33. The Nasdaq composite index shed 0.71 percent, 16.31 points, to 2,296.10.
The benchmark 10-year U.S. Treasury bill rose 22/32 to yield 3.736 percent.
The euro fell to $1.4493 from Monday's $1.4521. Against the yen, the dollar fell to 91.19 yen from Monday's 92.09 yen.
In Tokyo, the Nikkei 225 index added 0.75 percent, 80.82 points, to 10,879.14.
Obama considers fee for large banks
WASHINGTON, Jan. 12 (UPI) -- Administration officials said President Barack Obama is considering a fee for large U.S. banks to make up for losses in the $700 billion bank bailout program.
The fee would likely be part of the president's budget proposal and aims to make up $120 billion lost in the Troubled Asset Relief Program -- an estimate that may change in the future, the New York Times reported Tuesday.
Politically, the fee is also meant to placate voters angry that banks contributed to the two-year recession, but quickly returned to profitability and awarding staff huge bonus checks.
Rep. Barney Frank, chair of the House Financial Services Committee said he encouraged the White House to pursue a fee.
White House press secretary Robert Gibbs did not confirm a fee was on the way, but said the president was determined to have the bank bailout program at least break even.
Reportedly, Obama's team has already rejected a tax targeting bank bonus checks and a tax on bank transactions.
President of the American Bankers Association Edward Yingling called the proposal a "burden" that would decrease bank lending.
Timothy Ryan, president of the Securities Industry and Financial Markets Association said "institutions and individual investors" would bear the brunt of the fee's costs to banks, The Wall Street Journal reported.
Why some jobs are gone, gone, gone
NEW YORK, Jan. 12 (UPI) -- The U.S. labor market is losing jobs it may have lost with or without a recession, which abruptly accelerated some long established trends, economists said.
As a relatively small example, the Labor Department said jobs in record shops had fallen 23 percent in November compared with 2007, while photofinishing jobs had declined 46 percent -- both victims of the digital age, not economic turmoil, The Wall Street Journal reported Tuesday.
On a larger scale, U.S. manufacturing jobs have been in decline since 1997. In the housing boom that started roughly at that time, many laid off manufacturing personnel turned to construction jobs, which suddenly shed 1.6 million jobs beginning two years ago.
"That was a very unhealthy part of the economy," said Harvard University economist Lawrence Katz, who predicted many construction jobs will not return.
Similarly, New York University Stern School of Business economist Thomas Philippon said the financial sector was bloated before the recession hit.
The industry was about 20 percent over-sized, but has only lost 6.6 percent of its workforce -- almost 550,000 jobs -- since the recession hit. Consequently, the financial sector could lose more jobs, Philippon said.
Fed posts record profit in '09
WASHINGTON, Jan. 12 (UPI) -- The U.S. Federal Reserve will return an estimated $45 billion to the U.S. Treasury after posting record profits in 2009, government documents indicate.
The Washington Post, citing an analysis of public documents, reported Tuesday the Fed profited from pursuing unconventional avenues to bolster the economy during the financial crisis. The $45 billion figure would be the largest in the central bank's 96-year history, the newspaper said.
Although the numbers suggest the Fed has succeeded in propping up ailing private banking institutions, the central bank still faces the possibility of losses in the future, depending on the outcome of other investments or the fate of other bailed-out companies in which the Fed has a stake, the report said.
The Fed's 2009 profits are greater than those reported by banks that benefited from bailout, the Post said. Those banks are set to start handing out bonuses this week to high-level employees. There has been speculation in Washington the Obama administration will propose a fee on the firms as a way of recovering the government's cost of bailing out the firms.
The Fed benefited from an aggressive purchase of bonds, ending the year owning almost $2 trillion in U.S. government debt and mortgage-related securities -- up from almost $500 billion in 2008. The purchases were intended to hold down interest rates and stimulate economic activity, and interest on the investments made up a large portion of the Fed's profit, the Post said.
