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Global Economic Doubt Weighs on U.S. Jobs

By Columns FOXBusiness

Putting odds on a recession is tough. Recently the bond market appeared to be pricing in a 60% chance of recession. Numerous economists are laying odds on the future economy with varied views.

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Presidential hopeful Ron Paul has said he would take $1 trillion out of the budget in his first year as president. Herman Cain says he would balance the budget in his first year, a current shortfall of $1.3 trillion.

Taking $1.3 trillion, or anything close to that, out of this economy will take a massive toll in the near term. The other alternative is to continue to kick the can and become Greece in a decade.

We don’t have good choices -- get knocked down now, or get knocked out in 10 years.

David Cameron’s government has started balancing its budget -- the result is the highest unemployment in 17 years.

The recent $35 billion for a jobs bill to states to save jobs was voted down by the Senate. An obvious attempt to keep jobs just through the next election was met with skepticism.

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Our economy and market depends on European politics as much as our own. Greece getting worked out is a long shot. Eighty percent of Germans don’t want to bail out another country. Angela Merkel is the rare politician who is willing to fall on the sword to do what she thinks is right.

The Europe bailout is, in fact, more akin to an AIG bailout -- bailing out Greece as a back door way of bailing out German, and French, banks with exposure to Greek debt.

The odds of success are not good.

France probably will lose its triple-A rating with an increased balance sheet, and Sarkozy is doing badly in the polls -- this downgrade would, most likely, seal his fate like Merkel’s. Add to that the fact that Greece doesn’t want to be beholden to Germany and one can understand how unlikely a good resolution will be.

Banks being forced to re-capitalize in the EU to 9% capital ratios is another drag on the EU. Banks will be forced to find capital somewhere and will not be lending money.

A recession in Europe seems to be in the cards. How much that spreads here remains to be seen -- but we will feel it.

In our own country we face state and local layoffs. We face dramatic cuts in spending. We also have a regulatory environment that is bad for business. 

I hate to be a pessimist but I see nothing positive until after the next election when politics are not front burner. There is no job creation events on the horizon. FDR turned politics into class warfare to get re-elected, which is happening now. However, after FDR was re-elected the country suffered greatly because there was no job creation. We look destined for the same fate.

The one thing that both sides agree on, to a degree, is an increase in offshore drilling to create jobs. We still have no energy plan and with gridlock in DC we won’t have one anytime soon.

John Layfield, formerly known as JBL, was the longest reigning WWE Champion in Smackdown television history, retiring after 17 years of pro wrestling. John, a former collegiate All-American and pro football player, is a lifelong entrepreneur who has worked as an investment banker, is series 7 and 24 qualified, and is currently an active private investor. His Internet radio show can be heard at www.JohnLayfieldShow.com

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