(Reuters) - Investors in private equity funds are prepared to wait a year or two to sell their interests because of a gulf in price, a survey said on Wednesday.
London-based private equity research firm Preqin said 11 percent of the 568 institutional investors in private equity it surveyed want to sell fund interests on the so-called "secondary market" -- which allows investors to sell stakes in funds.
But the survey said that, of those, only 10 percent are looking to sell immediately, while 43 percent want to sell in the next 12 months and 47 percent within 12 to 24 months.
Investors, such as endowment and pension funds, typically commit to invest for the life of a private equity fund. But the sharp falls in equity markets has hit overall portfolios and meant some are over-exposed to other asset classes such as private equity and are looking to sell.
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Tuesday, May 12, 2009
Monday, May 11, 2009
Law Firm Founder Dreier Pleads Guilty, Faces Life in Prison
(Bloomberg) -- Marc Dreier, the New York law firm founder accused of defrauding hedge funds by selling $700 million in phony promissory notes, might face life in prison after pleading guilty to fraud charges.
Dreier, who turned 59 today, pleaded guilty in federal court in New York to charges of money laundering, conspiracy, securities fraud and wire fraud. Victims of Dreier’s Ponzi scheme lost more than $400 million, according to prosecutors.
“I engineered a scheme to issue and sell fictitious promissory notes purportedly issued by companies in the United States and Canada,” Dreier told U.S. District Judge Jed Rakoff, reading from a prepared text at yesterday’s hearing.
Dreier’s lawyer, Gerald Shargel, has said he will seek leniency for Dreier at his sentencing. Dreier has cooperated with court-appointed bankruptcy trustees to identify assets that can be used to pay victims and creditors, according to Shargel. Rakoff set a sentencing date of July 13.
Shargel said his client didn’t have a plea agreement with prosecutors.
Dreier has been confined to his Manhattan luxury apartment, watched around the clock by armed guards paid for by friends and relatives, a condition of his $10 million bail. Dreier’s former firm, the 250-lawyer Dreier LLP, is being liquidated in U.S. Bankruptcy Court.
Rakoff agreed to let Dreier remain on bail, confined to his apartment, until sentencing.
Arrested in Canada
Dreier was arrested in Toronto on Dec. 2 and charged with impersonating a lawyer with the Ontario Teachers’ Pension Plan. He was released on bail and arrested again Dec. 7 when he returned to New York.
Prosecutors claimed Dreier sold more than 85 phony promissory notes to at least 13 hedge funds and three individuals from 2004 to 2008. Dreier falsely told investors many of the fake notes were issued by New York developer Sheldon Solow, a client of his firm.
Read more here
Dreier, who turned 59 today, pleaded guilty in federal court in New York to charges of money laundering, conspiracy, securities fraud and wire fraud. Victims of Dreier’s Ponzi scheme lost more than $400 million, according to prosecutors.
“I engineered a scheme to issue and sell fictitious promissory notes purportedly issued by companies in the United States and Canada,” Dreier told U.S. District Judge Jed Rakoff, reading from a prepared text at yesterday’s hearing.
Dreier’s lawyer, Gerald Shargel, has said he will seek leniency for Dreier at his sentencing. Dreier has cooperated with court-appointed bankruptcy trustees to identify assets that can be used to pay victims and creditors, according to Shargel. Rakoff set a sentencing date of July 13.
Shargel said his client didn’t have a plea agreement with prosecutors.
Dreier has been confined to his Manhattan luxury apartment, watched around the clock by armed guards paid for by friends and relatives, a condition of his $10 million bail. Dreier’s former firm, the 250-lawyer Dreier LLP, is being liquidated in U.S. Bankruptcy Court.
Rakoff agreed to let Dreier remain on bail, confined to his apartment, until sentencing.
Arrested in Canada
Dreier was arrested in Toronto on Dec. 2 and charged with impersonating a lawyer with the Ontario Teachers’ Pension Plan. He was released on bail and arrested again Dec. 7 when he returned to New York.
Prosecutors claimed Dreier sold more than 85 phony promissory notes to at least 13 hedge funds and three individuals from 2004 to 2008. Dreier falsely told investors many of the fake notes were issued by New York developer Sheldon Solow, a client of his firm.
Read more here
Sunday, May 10, 2009
Stanford’s Cowboy Lawyer DeGuerin Shows ‘No Mercy’
(Bloomberg) -- In a newspaper photo on his law office wall in Houston, Dick DeGuerin stands with Robert Durst, a New York real estate heir who admitted shooting a man and using a paring knife and a hacksaw to cut up the body.
A jury in nearby Galveston voted for acquittal after DeGuerin followed his favorite trial strategy: “Embrace the ugly baby,” he said. “You don’t shrink from the problems in the case, but find a way to turn them to your advantage.”
Now the 68-year-old lawyer is representing fellow Texan R. Allen Stanford, accused of orchestrating an $8 billion Ponzi scheme. The case was brought by “storm troopers” at the U.S. Securities and Exchange Commission who “cremated” his client’s business, DeGuerin said in an interview.
“He’s out of the ‘ride ‘em hard and show no mercy’ school of defense,” said William P. Allison, a criminal law professor at the University of Texas School of Law in Austin. “It’s a reputation he’s worked hard to earn, and what people pay for.”
DeGuerin is a member of an elite group of U.S. criminal lawyers who take high-profile cases and can “charge whatever the market will bear,” Allison said.
Among the attorney’s peers, according to the professor, are Richard “Racehorse” Haynes, who won acquittals for Texas oilman T. Cullen Davis, accused of murdering his 12-year-old stepdaughter and his wife’s boyfriend and of hiring a hit man to kill her and a judge; and the late Johnnie Cochran Jr., who helped defend former Buffalo Bills football star O.J. Simpson when he was tried on charges he killed his wife and her friend.
‘Effective’ Defense
So far, DeGuerin hasn’t been paid for his work for Stanford, the lawyer said. U.S. District Judge David Godbey in Dallas is considering Stanford’s bid to unfreeze at least $10 million in assets, locked up when the SEC sued, to pay his legal bills, which the Stanford Group Co. chief executive officer said in a court filing may exceed $20 million.
The SEC and Stanford Group investors told Godbey on May 4 that they oppose giving the financier access to the money. Stanford responded today in a filing that said he needs it to “effectively defend himself.”
His civil lawyers, with the Houston firm of Nickens Keeton Lawless Farrell & Flack LLP, said in court papers that the financier’s insurance company agreed to pay for his criminal defense if he is charged with a crime.
‘Cheap’ Fees
“I’m not doing this for free,” DeGuerin said in the interview, as he leaned back in a cane-seated desk chair, exposing well-worn elephant hide boots. “This case is a huge undertaking that no lawyer in his right mind would take on. It’s going to be a hard job, but not an impossible one.”
Declining to reveal his typical fee, he called his services “cheap at any price.”
The SEC sued Stanford, 59, and two employees, Laura Pendergest-Holt and James M. Davis, on Feb. 17, saying their sale of certificates of deposit through Stanford International Bank in Antigua was a “massive” fraud.
Pendergest-Holt, 35, Stanford’s chief investment officer, was charged with obstruction of justice on Feb. 26 and released on $300,000 bail. She is innocent, said her lawyer, Dan Cogdell of Houston. Davis, 60, the chief financial officer, is in plea negotiations, according to his attorney, David Finn of Dallas.
Stanford denied wrongdoing in an April 21 interview. “I’m not a damn swindler,” he said.
TV News Cameras
He tried to surrender to U.S. marshals in the federal courthouse in Houston on April 30 and was turned away because he hasn’t been criminally charged. DeGuerin escorted him, saying he wanted to prove his client isn’t a flight risk.
Justice Department spokesman Ian McCaleb declined to comment.
DeGuerin said he doesn’t shy away from difficult or notorious clients. He doesn’t run from publicity either, said his friend Tommy Fibich, a Houston plaintiffs lawyer.
“I’d rather be in front of the bulls of Pamplona than between Dick and the TV news cameras,” Fibich said.
One of DeGuerin’s clients was David Koresh, whose mother hired the Houstonian when her son and his followers holed up in Branch Davidian headquarters near Waco, Texas, in 1993.
Federal agents had surrounded the compound, where they said the leader of the religious sect had illegal weapons. Refusing body armor, DeGuerin walked past snipers to talk to his client.
Read more here
A jury in nearby Galveston voted for acquittal after DeGuerin followed his favorite trial strategy: “Embrace the ugly baby,” he said. “You don’t shrink from the problems in the case, but find a way to turn them to your advantage.”
Now the 68-year-old lawyer is representing fellow Texan R. Allen Stanford, accused of orchestrating an $8 billion Ponzi scheme. The case was brought by “storm troopers” at the U.S. Securities and Exchange Commission who “cremated” his client’s business, DeGuerin said in an interview.
“He’s out of the ‘ride ‘em hard and show no mercy’ school of defense,” said William P. Allison, a criminal law professor at the University of Texas School of Law in Austin. “It’s a reputation he’s worked hard to earn, and what people pay for.”
DeGuerin is a member of an elite group of U.S. criminal lawyers who take high-profile cases and can “charge whatever the market will bear,” Allison said.
Among the attorney’s peers, according to the professor, are Richard “Racehorse” Haynes, who won acquittals for Texas oilman T. Cullen Davis, accused of murdering his 12-year-old stepdaughter and his wife’s boyfriend and of hiring a hit man to kill her and a judge; and the late Johnnie Cochran Jr., who helped defend former Buffalo Bills football star O.J. Simpson when he was tried on charges he killed his wife and her friend.
‘Effective’ Defense
So far, DeGuerin hasn’t been paid for his work for Stanford, the lawyer said. U.S. District Judge David Godbey in Dallas is considering Stanford’s bid to unfreeze at least $10 million in assets, locked up when the SEC sued, to pay his legal bills, which the Stanford Group Co. chief executive officer said in a court filing may exceed $20 million.
The SEC and Stanford Group investors told Godbey on May 4 that they oppose giving the financier access to the money. Stanford responded today in a filing that said he needs it to “effectively defend himself.”
His civil lawyers, with the Houston firm of Nickens Keeton Lawless Farrell & Flack LLP, said in court papers that the financier’s insurance company agreed to pay for his criminal defense if he is charged with a crime.
‘Cheap’ Fees
“I’m not doing this for free,” DeGuerin said in the interview, as he leaned back in a cane-seated desk chair, exposing well-worn elephant hide boots. “This case is a huge undertaking that no lawyer in his right mind would take on. It’s going to be a hard job, but not an impossible one.”
Declining to reveal his typical fee, he called his services “cheap at any price.”
The SEC sued Stanford, 59, and two employees, Laura Pendergest-Holt and James M. Davis, on Feb. 17, saying their sale of certificates of deposit through Stanford International Bank in Antigua was a “massive” fraud.
Pendergest-Holt, 35, Stanford’s chief investment officer, was charged with obstruction of justice on Feb. 26 and released on $300,000 bail. She is innocent, said her lawyer, Dan Cogdell of Houston. Davis, 60, the chief financial officer, is in plea negotiations, according to his attorney, David Finn of Dallas.
Stanford denied wrongdoing in an April 21 interview. “I’m not a damn swindler,” he said.
TV News Cameras
He tried to surrender to U.S. marshals in the federal courthouse in Houston on April 30 and was turned away because he hasn’t been criminally charged. DeGuerin escorted him, saying he wanted to prove his client isn’t a flight risk.
Justice Department spokesman Ian McCaleb declined to comment.
DeGuerin said he doesn’t shy away from difficult or notorious clients. He doesn’t run from publicity either, said his friend Tommy Fibich, a Houston plaintiffs lawyer.
“I’d rather be in front of the bulls of Pamplona than between Dick and the TV news cameras,” Fibich said.
One of DeGuerin’s clients was David Koresh, whose mother hired the Houstonian when her son and his followers holed up in Branch Davidian headquarters near Waco, Texas, in 1993.
Federal agents had surrounded the compound, where they said the leader of the religious sect had illegal weapons. Refusing body armor, DeGuerin walked past snipers to talk to his client.
Read more here
Thursday, May 7, 2009
GM burns $10 billion in first quarter as deadline looms
(Reuters) - General Motors Corp said it burned through $10.2 billion in the first quarter as it relied on a federal bailout to ride out a sharp decline in global sales that overwhelmed its cost-cutting efforts.
Revenue dropped by almost half to $22.4 billion as the company cut production by about 900,000 vehicles and worked to run down costly inventories in the United States and Europe.
The results showed the extreme pressure on GM with just four weeks remaining for the embattled automaker to win deals to slash debt and operating costs with its major union and bondholders to avoid bankruptcy.
"Results were awful, as expected, however, GM's cash burn was even worse than we were expecting," Kip Penniman of KDP Investment Advisors said in a note for clients.
Chief Financial Officer Ray Young said there was evidence consumers were scared away from GM cars and trucks because of concern the automaker was headed for bankruptcy.
GM cut $3.1 billion in operating costs in the first quarter, including just over $1 billion in North America, but the latest push in a four-year campaign to cut costs failed to keep pace with the plunge in sales.
"You could not offset the revenue implosion that we experienced here," Young told reporters following release of the quarterly results on Thursday.
GM's North American operations, where it plans to cut 21,000 factory jobs and close and close more than 2,600 dealerships, posted a loss before interest cost and taxes of $2.5 billion.
European operations, which Italy's Fiat SpA has proposed taking over, posted a loss on the same basis of $1.2 billion as vehicle sales in the region dropped 29 percent.
GM still hopes to complete a debt restructuring out of court but is readying plans for what it expects would be a quick bankruptcy if that proves necessary, Young said.
He said GM expects to draw on the experience of Chrysler LLC, which filed for bankruptcy last week under the supervision of the Obama administration.
"We are very, very cognizant of this issue of revenue perishability and how consumers react to the threat of bankruptcy," Young said.
Young said GM would make a decision at the end of this month on whether an offer to extinguish $24 billion in bond debt in exchange for new shares had garnered enough support for the company to avoid a bankruptcy filing.
Read more here
Revenue dropped by almost half to $22.4 billion as the company cut production by about 900,000 vehicles and worked to run down costly inventories in the United States and Europe.
The results showed the extreme pressure on GM with just four weeks remaining for the embattled automaker to win deals to slash debt and operating costs with its major union and bondholders to avoid bankruptcy.
"Results were awful, as expected, however, GM's cash burn was even worse than we were expecting," Kip Penniman of KDP Investment Advisors said in a note for clients.
Chief Financial Officer Ray Young said there was evidence consumers were scared away from GM cars and trucks because of concern the automaker was headed for bankruptcy.
GM cut $3.1 billion in operating costs in the first quarter, including just over $1 billion in North America, but the latest push in a four-year campaign to cut costs failed to keep pace with the plunge in sales.
"You could not offset the revenue implosion that we experienced here," Young told reporters following release of the quarterly results on Thursday.
GM's North American operations, where it plans to cut 21,000 factory jobs and close and close more than 2,600 dealerships, posted a loss before interest cost and taxes of $2.5 billion.
European operations, which Italy's Fiat SpA has proposed taking over, posted a loss on the same basis of $1.2 billion as vehicle sales in the region dropped 29 percent.
GM still hopes to complete a debt restructuring out of court but is readying plans for what it expects would be a quick bankruptcy if that proves necessary, Young said.
He said GM expects to draw on the experience of Chrysler LLC, which filed for bankruptcy last week under the supervision of the Obama administration.
"We are very, very cognizant of this issue of revenue perishability and how consumers react to the threat of bankruptcy," Young said.
Young said GM would make a decision at the end of this month on whether an offer to extinguish $24 billion in bond debt in exchange for new shares had garnered enough support for the company to avoid a bankruptcy filing.
Read more here
Wednesday, May 6, 2009
Cisco sees signs of a turnaround
(CNNMoney.com) -- Cisco Systems Inc. on Wednesday reported a drop in quarterly profit and sales from a year ago, but the network equipment maker said parts of its business are beginning to turn around.
"For the first time in many quarters, many of our global customers are describing business momentum and seeing stabilization," said Cisco Chief Executive John Chambers on a conference call with analysts. "We are going to be very aggressive this year to position ourselves for the eventual upturn."
Chambers cautioned that economic headwinds would continue to pressure the company, but he said he is encouraged by customers' renewed optimism. He said the company has "a very bright future" ahead.
Read more here
"For the first time in many quarters, many of our global customers are describing business momentum and seeing stabilization," said Cisco Chief Executive John Chambers on a conference call with analysts. "We are going to be very aggressive this year to position ourselves for the eventual upturn."
Chambers cautioned that economic headwinds would continue to pressure the company, but he said he is encouraged by customers' renewed optimism. He said the company has "a very bright future" ahead.
Read more here
Tuesday, May 5, 2009
SEC charges money market fund with fraud
(CNNMoney.com) -- The Securities and Exchange Commission has filed fraud charges against the operators of the Reserve Primary Fund for failing to provide important information to investors and trustees about the fund's exposure to Lehman Brothers.
By bringing the case, the agency is trying to get the company to release the $3.5 billion it is withholding from shareholders until all lawsuits against the company are resolved.
The money market fund "broke the buck" on Sept. 16, the day after Lehman Brothers filed for bankruptcy, meaning its net asset value fell below $1 a share. Investors seek out money market funds as conservative investments because they are designed to maintain their $1 per share value. Companies also rely on them to purchase short-term corporate debt.
The Primary Fund, however, held $785 million in Lehman-issued securities, which lost most of their worth in the bankruptcy, the SEC said. This dragged down the fund's net asset value.
The agency says that the Reserve Management Company Inc., its chairman Bruce Bent Sr., vice chairman and president Bruce Bent II and Resrv Partners Inc. misled investors and "significantly understated" the volume of redemption requests. They also failed to provide trustees with accurate information about the value of the Lehman securities.
Reserve also said it would provide the money needed to maintain the fund's share value when it "had no such intention," according to regulators.
"Fund managers have serious obligations to keep their trustees and investors informed in both good times and bad, and cannot choose to reveal only favorable facts," said James Clarkson, acting director of the SEC's New York regional office.
The company said in a statement that it intends to defend itself vigorously.
"Since we created the money fund in 1970 we have operated and grown our business by putting our shareholders' interests first," said Bruce Bent Sr. "The Lehman Brothers Bankruptcy filing created an unforeseeable and out-of-control condition for many parties and the results were serious...We remain confident that we acted in the best interest of our shareholders."
There are at least 29 different lawsuits pending against the company, according to the SEC. The agency hopes to bring all claimants together in this case and have it settled together.
The Primary Fund is currently being liquidated. Last month, the company said about $46.1 billion, or approximately 90% of fund assets as of Sept. 15, 2008, has been returned to investors. Approximately $4.5 billion remains in the fund, which once had a value of $60 billion.
The fund's independent trustees, who oversee its operations, said in a statement that they would work with the agency.
"The trustees will continue to fully cooperate with the Securities and Exchange Commission to expedite the distribution of the remaining assets to shareholders and to ensure that all decisions are made in the shareholders' best interest," the trustees said.
Read more here
By bringing the case, the agency is trying to get the company to release the $3.5 billion it is withholding from shareholders until all lawsuits against the company are resolved.
The money market fund "broke the buck" on Sept. 16, the day after Lehman Brothers filed for bankruptcy, meaning its net asset value fell below $1 a share. Investors seek out money market funds as conservative investments because they are designed to maintain their $1 per share value. Companies also rely on them to purchase short-term corporate debt.
The Primary Fund, however, held $785 million in Lehman-issued securities, which lost most of their worth in the bankruptcy, the SEC said. This dragged down the fund's net asset value.
The agency says that the Reserve Management Company Inc., its chairman Bruce Bent Sr., vice chairman and president Bruce Bent II and Resrv Partners Inc. misled investors and "significantly understated" the volume of redemption requests. They also failed to provide trustees with accurate information about the value of the Lehman securities.
Reserve also said it would provide the money needed to maintain the fund's share value when it "had no such intention," according to regulators.
"Fund managers have serious obligations to keep their trustees and investors informed in both good times and bad, and cannot choose to reveal only favorable facts," said James Clarkson, acting director of the SEC's New York regional office.
The company said in a statement that it intends to defend itself vigorously.
"Since we created the money fund in 1970 we have operated and grown our business by putting our shareholders' interests first," said Bruce Bent Sr. "The Lehman Brothers Bankruptcy filing created an unforeseeable and out-of-control condition for many parties and the results were serious...We remain confident that we acted in the best interest of our shareholders."
There are at least 29 different lawsuits pending against the company, according to the SEC. The agency hopes to bring all claimants together in this case and have it settled together.
The Primary Fund is currently being liquidated. Last month, the company said about $46.1 billion, or approximately 90% of fund assets as of Sept. 15, 2008, has been returned to investors. Approximately $4.5 billion remains in the fund, which once had a value of $60 billion.
The fund's independent trustees, who oversee its operations, said in a statement that they would work with the agency.
"The trustees will continue to fully cooperate with the Securities and Exchange Commission to expedite the distribution of the remaining assets to shareholders and to ensure that all decisions are made in the shareholders' best interest," the trustees said.
Read more here
Monday, May 4, 2009
‘Great Recession’ Will Redefine Full Employment as Jobs Vanish
(Bloomberg) -- Post-recession America may be saddled with high unemployment even after good times finally return.
Hundreds of thousands of jobs have vanished forever in industries such as auto manufacturing and financial services. Millions of people who were fired or laid off will find it harder to get hired again and for years may have to accept lower earnings than they enjoyed before the slump.
This restructuring -- in what former Federal Reserve Chairman Paul Volcker calls “the Great Recession” -- is causing some economists to reconsider what might be the “natural” rate of unemployment: a level that neither accelerates nor decelerates inflation. This state of equilibrium is often described as “full” employment.
Fallout from the recession implies a “markedly higher” natural rate of unemployment, says Edmund Phelps, a professor at Columbia University in New York and winner of the 2006 Nobel Prize in economics. “It was 5.5 percent; maybe it will be 6.5 percent, maybe 7 percent.”
That has implications for policy makers as well as workers. The Obama administration and the Federal Reserve are counting on the jobless rate to fall to a medium-term equilibrium of about 5 percent as the economy recovers. A natural rate significantly above that would drive up the annual budget deficit -- which will top $1 trillion for the first time this year -- by reducing tax revenue and pushing up spending on unemployment benefits.
A higher rate would also require the Fed to make a choice: Accept an economy with more Americans permanently out of work, or try to boost employment at the risk of heating up inflation.
Unemployment Report
The government may report May 8 that the jobless rate jumped to 8.9 percent in April, the highest since 1983, from 8.5 percent in March, according to economists surveyed by Bloomberg.
Laurence Ball, an economics professor at Johns Hopkins University in Baltimore, says unemployment may peak at 10 percent, and “it will be a long time before we see 5 percent” again.
The more time workers spend without a job, the less attractive they become to potential employers, Ball says. That in itself helps keep the unemployment rate elevated.
“If you’re unemployed” for an extended period, “you’re not keeping up with new technology,” he says. “You become discouraged and you change your lifestyle.”
A burst of productivity growth starting in the mid 1990s helped lower the natural rate of unemployment to around 5 percent from 6 percent, as profit-flush companies took on more workers. Now the fear is that will be reversed as industries downsize.
Read more here
Hundreds of thousands of jobs have vanished forever in industries such as auto manufacturing and financial services. Millions of people who were fired or laid off will find it harder to get hired again and for years may have to accept lower earnings than they enjoyed before the slump.
This restructuring -- in what former Federal Reserve Chairman Paul Volcker calls “the Great Recession” -- is causing some economists to reconsider what might be the “natural” rate of unemployment: a level that neither accelerates nor decelerates inflation. This state of equilibrium is often described as “full” employment.
Fallout from the recession implies a “markedly higher” natural rate of unemployment, says Edmund Phelps, a professor at Columbia University in New York and winner of the 2006 Nobel Prize in economics. “It was 5.5 percent; maybe it will be 6.5 percent, maybe 7 percent.”
That has implications for policy makers as well as workers. The Obama administration and the Federal Reserve are counting on the jobless rate to fall to a medium-term equilibrium of about 5 percent as the economy recovers. A natural rate significantly above that would drive up the annual budget deficit -- which will top $1 trillion for the first time this year -- by reducing tax revenue and pushing up spending on unemployment benefits.
A higher rate would also require the Fed to make a choice: Accept an economy with more Americans permanently out of work, or try to boost employment at the risk of heating up inflation.
Unemployment Report
The government may report May 8 that the jobless rate jumped to 8.9 percent in April, the highest since 1983, from 8.5 percent in March, according to economists surveyed by Bloomberg.
Laurence Ball, an economics professor at Johns Hopkins University in Baltimore, says unemployment may peak at 10 percent, and “it will be a long time before we see 5 percent” again.
The more time workers spend without a job, the less attractive they become to potential employers, Ball says. That in itself helps keep the unemployment rate elevated.
“If you’re unemployed” for an extended period, “you’re not keeping up with new technology,” he says. “You become discouraged and you change your lifestyle.”
A burst of productivity growth starting in the mid 1990s helped lower the natural rate of unemployment to around 5 percent from 6 percent, as profit-flush companies took on more workers. Now the fear is that will be reversed as industries downsize.
Read more here
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