Economic crumble slow to hit Mass.

Employers nationwide cut 533,000 jobs in November, the largest monthly decline in more than three decades, according to a report released by the Bureau of Labor Statistics Friday. The economic recession also caused the unemployment rate to increase to 6.7 percent, leaving 10.3 million people in the United States without jobs.

The grim news came after a year-long tumble during which when some of the country’s largest financial institutions were unable to borrow money to cover losees on risky investments. This, in combination with the decline of housing market prices and increased oil prices, led to the country’s largest financial disaster in decades.

The mortgage crisis has its roots in President Jimmy Carter’s Community Reinvestment Act in 1977, which encouraged banks to lend more money to borrowers in low- and middle-income neighborhoods to spread the benefits of home ownership to people who would not normally have the opportunity to own homes, Boston College economics professor Thomas Hale said.

‘No doubt the motives were good, but the perverse incentives this law established have finally caught up with us,’ Hale said.

After the passage of the CRA, the Federal National Mortgage Association stirred more trouble into the mix by buying subprime loans and selling them on Wall Street as ‘investment instruments’ in order to play down the risk of these loans to reluctant banks, Hale said. No one noticed the danger of these loans because real estate prices were climbing, but when real estate prices started to decline this year, investors and banks found themselves with loans that were more valuable than the property itself, he said.

Financial institutions have become so wary of the credit market that they have decided to hold their money rather than loan it out, waiting for the economy to stabilize. This is a problem for the economy because now few companies can borrow money easily, BU economics professor Randall Ellis said.

The bailout plan is of September an effort to keep banks and other financial institutions liquid, meaning the banks will be able to give customers their money back when necessary. That, along with the advice of financial experts around the country, should help the economy get back on track, Ellis said.

‘Some smart people at the federal reserve bank have been helping advise the treasury on the types of measures that are needed to keep the economy moving forward,’ Ellis said. ‘Hopefully these measures will keep our economy from deteriorating even more by slowing down the rate that companies are laying off workers.’

INITIATIVES TO PREVENT JOB LOSS

Boston-based nonprofit organization Jobs for the Future works to increase competitiveness in the workforce by educating people about high-risk lending situations,’ Director Geri Scott said.

‘We work with businesses to get them to look at how inefficient practices are actually very high cost,’ she said.

Once a business starts saving money, it can hire more workers and have a more efficient business model, Scott said.

Scott said though the entire country has felt the repercussions of the financial crisis, the New England area has felt it the least.

‘Our economy is very diversified and we’re not dependent on any single industry as other parts of the country are,’ she said. ‘There have been have few anticipated layoffs, and the global economy is not even talking about retrenching with their expansion plans.’

Though the national unemployment rate in November was almost 7 percent, the unemployment rate in Massachusetts was only 5.5 percent in October, according to the Bureau of Labor Statistics.

‘Education and health services have actually added 10,900 jobs over the year [in New England], so that’s a big growth industry right now in this area,’ Bureau of Labor Statistics employee Bethany Rapoza said.

EYE TO THE FUTURE

Now the country is looking to President-elect Barack Obama to improve the unemployment rate and the economy as a whole.

A goal at the forefront of the Obama administration is to shore up credit markets and get credit flowing again, BU political science professor Douglas Kriner said.

‘The incoming administration seems set to pursue a significant stimulus package of government spending in the form of aid to states and infrastructure improvements in the hopes of creating jobs and counteracting decreasing private sector investment,’ he said.

BU College Democrats Secretary Allison Glass said she believes Obama’s plans are feasible, but is wary of what she will have to sacrifice to shore up the economy.’

‘With anything you have to pay for, you have to take from somewhere else,’ Glass said. ‘I would imagine that some of the plans Obama focused on in the beginning are going to be put aside at least for his first term until he is able to pick back up the economy. He’s really going to have to change his priorities in order to get the economy back on track.’