TGIFriday Reads

Posted: March 25, 2011 | Author: | Filed under: commercial banking, Corporate Crime, Economy, Egypt, financial institutions, Foreign Affairs, morning reads, U.S. Politics, unemployment, Women's Rights | Tags: , , , , | 16 Comments

Good Morning!

There’s been quite a few economists weighing in on the debate going on in congress about the budget.  Paul Krugman’s op-ed is on “The Austerity Delusion”. Krugman’s appalled that more policymakers aren’t concerned with the high rate of unemployment which is contributing to the deficit in several ways.  First, it decreases tax revenues.  Second, it increases state and federal expenditures.  Solve the jobs problem and the deficit will decrease.  He’s worried that all this austerity will just bring on another economic slowdown.

Why not slash deficits immediately? Because tax increases and cuts in government spending would depress economies further, worsening unemployment. And cutting spending in a deeply depressed economy is largely self-defeating even in purely fiscal terms: any savings achieved at the front end are partly offset by lower revenue, as the economy shrinks.

So jobs now, deficits later was and is the right strategy. Unfortunately, it’s a strategy that has been abandoned in the face of phantom risks and delusional hopes. On one side, we’re constantly told that if we don’t slash spending immediately we’ll end up just like Greece, unable to borrow except at exorbitant interest rates. On the other, we’re told not to worry about the impact of spending cuts on jobs because fiscal austerity will actually create jobs by raising confidence.

Politico features a series of Former CEA members who signed  a letter of concern on the deficit and unsustainable US Budgets. Too bad that people like Greg Mankiw–advisor to Dubya–didn’t speak up when the spending problems were originated.  They mostly trace to Reagan and Bush administrations.  They all suggest using the Cat food commission report as the focus of discussions.  Hang on to your social security, folks!  It’s going to be a bumpy ride.

As former chairmen and chairwomen of the Council of Economic Advisers, who have served in Republican and Democratic administrations, we urge that the Bowles-Simpson report, “The Moment of Truth,” be the starting point of an active legislative process that involves intense negotiations between both parties.

There are many issues on which we don’t agree. Yet we find ourselves in remarkable unanimity about the long-run federal budget deficit: It is a severe threat that calls for serious and prompt attention.

While the actual deficit is likely to shrink over the next few years as the economy continues to recover, the aging of the baby-boom generation and rapidly rising health care costs are likely to create a large and growing gap between spending and revenues. These deficits will take a toll on private investment and economic growth. At some point, bond markets are likely to turn on the United States — leading to a crisis that could dwarf 2008.

“The Moment of Truth” documents that “the problem is real, and the solution will be painful.” It is tempting to act as if the long-run budget imbalance could be fixed by just cutting wasteful government spending or raising taxes on the wealthy. But the facts belie such easy answers.

I suppose you know the professional insane Republican Michelle Bachmann is forming an exploratory committee for a possible presidential run.  I’d vote for any one’s dog before I’d consider Bachmann who doesn’t appear to have paid attention to any course she ever attended in school. I’ve never in my life heard any one outside of maybe a grade school that has such a bad grasp of American History, law, and politics.  I think she should’ve just gotten a mail order degree.  Education appears to have been wasted on her.

CNN has exclusively learned that Rep. Michele Bachmann will form a presidential exploratory committee. The Minnesota Republican plans to file papers for the committee in early June, with an announcement likely around that same time.

But a source close to the congresswoman said that Bachmann could form the exploratory committee even earlier than June so that she could participate in early Republican presidential debates.

“She’s been telling everyone early summer,” the source told CNN regarding Bachmann’s planned June filing and announcement. But the source said that nothing is static.

“If you [debate sponsors] come to us and say, ‘To be in our debates, you have to have an exploratory committee,’ then we’ll say, ‘Okay, fine…I’ll go file the forms.'”

Speaking of Republicans, a former aide to Sen. John Ensign has just been indicted for violating conflict of interest laws.

The Justice Department announced the indictment late Thursday, which charges Doug Hampton with seven counts of violating criminal conflict of interest laws for allegedly engaging in unlawful communication with Ensign’s office, violating the Senate’s “revolving door” policy.

According to the indictment, after Hampton left Ensign’s office in 2008 he “knowingly and willfully made, with the intent to influence, communications to staff members of the U.S. senator” on behalf of an energy company he was employed by at the time.

Hampton is alleged to have sought the assistance of Ensign and other staff members for help in moving forward a proposal to build a power plant in eastern Nevada.

Hampton, if convicted, could face up to five years in prison for each of the seven counts in the indictment.  He is set to be arraigned in U.S. District Court in Washington, D.C. on March 31.

Ensign is retiring.  Probably because of all the scuttlebutt around his affairs and possibly what may come out of this prosecution.  Maybe Tom Delay will have a new cell mate on the way.

Glenn Greenwald has written an excellent piece in Salon on withering Miranda rights under the Obama administration.   You may want to check it out.

The number of instances in which Obama has violently breached his own alleged principles when it comes to the War on Terror and the rule of law are too numerous to chronicle in one place. Suffice to say, it is no longer provocative or controversial when someone like Yale Law Professor Jack Balkin writes, as he did the other day, that Obama “has more or less systematically adopted policies consistent with the second term of the George W. Bush Administration.” No rational person can argue that or even tries to any longer. It’s just a banal expression of indisputable fact.

Today, the Obama DOJ unveiled the latest — and one of the most significant — examples of its eagerness to assault the very legal values Obama vowed to protect. The Wall Street Journal reports that “new rules allow investigators to hold domestic-terror suspects longer than others without giving them a Miranda warning, significantly expanding exceptions to the instructions that have governed the handling of criminal suspects for more than four decades.” The only previous exception to the 45-year-old Miranda requirement that someone in custody be apprised of their rights occurred in 1984, when the Rehnquist-led right-wing faction of the Supreme Court allowed delay “only in cases of an imminent safety threat,” but these new rules promulgated by the Obama DOJ “give interrogators more latitude and flexibility to define what counts as an appropriate circumstance to waive Miranda rights.”

Just hope you never get classified as a terrorist or you’ll disappear down some rabbit hole.  You should also read William Grieder over at The Nation on How Wall Street Crooks Get Out of Jail.

Instead of “Old Testament justice,” federal prosecutors seek “authentic cooperation” from corporations in trouble, urging them to come forward voluntarily and reveal their illegalities. In exchange, prosecutors will offer a deal. If companies pay the fine set by the prosecutor and submit to probationary terms for good behavior, perhaps an outside monitor, then government will defer prosecution indefinitely or even drop it entirely. The corporation thus avoids the stigma of a criminal trial and the bad headlines that depress stock prices. More to the point, the “deferred prosecution agreement,” as it’s called, allows the company to escape the more severe consequences of criminal conviction—the loss of banking and professional licenses, charters, deposit insurance or other government benefits, including eligibility for federal contracts and healthcare programs. In other words, the punishment prescribed in numerous laws.

“With cooperation by the corporation, the government may be able to reduce tangible losses, limit damage to reputation, and preserve assets for restitution,” the Justice Department’s authorizing memorandum explained in 2003. “A deferred prosecution or non-prosecution agreement can help restore the integrity of a company’s operations and preserve the financial viability of a corporation that has engaged in criminal conduct.”

The favored argument for the more conciliatory approach was that criminal indictment may amount to a death sentence for a corporation. The fallout will destroy it, and the economy will lose valuable productive capacity. The collateral consequences are unfair to employees who lose jobs and stockholders who lose wealth. Corporate defenders cited Arthur Andersen, the giant accounting firm that imploded after it was convicted in 2002 of multiple offenses in Enron’s collapse. But was it the firm’s indictment or its criminal behavior that caused clients, accountants and investors to abandon it?

A better name for the Justice Department’s softened policy might be “too big to prosecute.”

Wanna rob a bank?  Don’t do it with a gun.  Just become its President and do what you want to do.

Here’s a disturbing headline from Egypt (h/t to Minx):Secret shame of Egypt’s army: Women protesters were forced to have ‘virginity checks’ after being arrested in Tahrir Square,

Women arrested by the Egyptian police during protests in Cairo’s Tahrir Square were subjected to forced ‘virginity tests’, according to Amnesty International.

Eighteen demonstrators were detained after army officers cleared the square on March 9 at the end of weeks of protest.

Amnesty today said that the women had been beaten, given electric shocks and then subjected to strip searches while being photographed by male soldiers.

They were then given ‘virginity checks’ and threatened with prostitution charges if medics ruled they had had sex, according to the charity.

Just when you think things will get better, something comes along that just makes things look worse.

So, what’s on your reading and blogging list today?

Thursday Reads

Posted: March 24, 2011 | Author: | Filed under: Barack Obama, education, fundamentalist Christians, morning reads, right wing hate grouups, Social Security, The Media SUCKS, torture, U.S. Economy, U.S. Politics, unemployment, worker rights | Tags: , , , , , , , , , , , | 32 Comments

R.I.P, Liz Taylor

Good Morning!!

I’ve got a potpourri of news items for you this morning. I realize I’ve been focusing too heavily on stories from the Middle East and Africa. I’ve just so gotten fascinated with all the rebellions going on. Anyway, this post will be dedicated to stories about events in the U.S.

Yesterday we lost the last great movie star, Elizabeth Taylor. She had been in the hospital for weeks with congestive heart failure. Today she died, at 79. From The New York Times:

By the time Elizabeth Taylor left this mortal coil at 79, she had cheated death with a long line of infirmities that had repeatedly put her in the hospital — and on front pages across the world — and in 1961 left her with a tracheotomy scar on a neck more accustomed to diamonds. The tracheotomy was the result of a bout with pneumonia that left her gasping for air and it returned her to the big, bountiful, hungry life that was one of her greatest roles. It was a minor incision (later, she had surgery to remove the scar), but it’s easy to think of it as some kind of war wound for a life lived so magnificently.

Unlike Marilyn, Liz survived. And it was that survival as much as the movies and fights with the studios, the melodramas and men (so many melodramas, so many men!) that helped separate Ms. Taylor from many other old-Hollywood stars. She rocketed into the stratosphere in the 1950s, the era of the bombshell and the Bomb, when most of the top female box-office draws were blond, pneumatic and classifiable by type: good-time gals (Betty Grable), professional virgins (Doris Day), ice queens (Grace Kelly). Marilyn Monroe was the sacrificial sex goddess with the invitational mouth. Born six years before Ms. Taylor, she entered the movies a poor little girl ready to give it her all, and did.

Ms. Taylor, by contrast, was sui generis, a child star turned ingénue and jet-setting supernova, famous for her loves (Eddie & Liz, Liz & Dick) and finally for just being Liz. “I don’t remember ever not being famous,” she said. For her, fame was part of the job, neither a blessing (though the jewels were nice) nor a curse. Perhaps that’s why she never looked defeated, unlike those who wilt under the spotlight. In film after film she appears extraordinarily at ease: to the camera born. She’s as natural in “National Velvet,” the 1944 hit that made her a star at 12, as she is two decades later roaring through “Who’s Afraid of Virginia Woolf,” proving once again that beauty and talent are not mutually exclusive, even in Hollywood.

I’m sure Liz would not be surprised to learn that the Westboro Baptist Church will picket her funeral. She was close friends with many gay men in Hollywood–Rock Hudson, James Dean, Montgomery Clift among them–and she worked tirelessly for AIDS causes. Meanwhile the pastor and members of the Westboro Baptist Church are mean-spirited, soulless haters.

There’s a nice tribute to Taylor at The Independent UK by Julie Burchill: Farewell then, Liz. You knew your beauty was a fuel worth burning

With the death of Elizabeth Taylor, the last of the Hollywood greats is finally gone. True to form – never a lady, barely ever a girl – this tough broad supreme battled on against ill-health for decades after her contemporaries overdosed on barbiturates, booze and self-loathing. And at a time when professional beauties seem terrified to show any sign of ageing lest they be shunted into character cameos in favour of some fresher flesh, Taylor was fascinating for being far less interested in leaving a good-looking corpse than in wringing every drop of the juice from every inch of the ride.

If that sounds a somewhat lewd metaphor, all the better. Married eight times, she was the anti-Marilyn; rather than combine a child’s face with an adult body and be prey to all the weirdos who might be attracted to such a pervy paradox, Taylor was a woman of the world from the get-go. Child stars are notorious for spending a couple of years on the ugly step while the studios wait for them to outgrow adolescent awkwardness, but she went straight from hugging Lassie to snogging Montgomery Clift, it seemed.

To see the teenage Taylor draw Clift towards her in the masterpiece A Place In The Sun (from the book of Theodore Dreiser’s An American Tragedy) with the words “Tell Mama – tell Mama all” is to witness one of the most extraordinary portrayals of lust ever created. And it didn’t stop when the cameras did; years later, according to her housekeeper, Marilyn Monroe would become obsessed with the apparently gay Montgomery Clift and repeatedly complain; “Liz Taylor has the Oscar, she has children, she even has Monty – she has everything!”

From being denounced by the Vatican in the Sixties as “an erotic vagrant” (I think they meant it as an insult, but it sounds gorgeous to me) to being hailed by the director of the UCLA Aids Institute as the “the Joan of Arc of Aids activism”, Taylor lived her life according to her own rules – more Wife of Bath than untouchable ideal of feminine perfection. Looking at the insipid contemporary film-star likes of Gwyneth Paltrow, for whom eating half a cupcake seems a walk on the wild side, this cursing, drinking, swashbuckling goddess is a reminder of when hell-raisers didn’t automatically have to be as mad, bad and sad as Charlie Sheen and Mel Gibson.

Here’s a nice video tribute I found on YouTube:

Now for the rest of the news, which as usual isn’t very good. The Republicans are trying to increase poverty by attacking food stamps and worker’s rights at the same time! They want to cut of food stamps for an entire family if one member goes on strike.

…[A] group of House Republicans is launching a new stealth attack against union workers. GOP Reps. Jim Jordan (OH), Tim Scott (SC), Scott Garrett (NJ), Dan Burton (IN), and Louie Gohmert (TX) have introduced H.R. 1135, which states that it is designed to “provide information on total spending on means-tested welfare programs, to provide additional work requirements, and to provide an overall spending limit on means-tested welfare programs.”

Much of the bill is based upon verifying that those who receive food stamps benefits are meeting the federal requirements for doing so. However, one section buried deep within the bill adds a startling new requirement. The bill, if passed, would actually cut off all food stamp benefits to any family where one adult member is engaging in a strike against an employer:

The bill also includes a provision that would exempt households from losing eligibility, “if the household was eligible immediately prior to such strike, however, such family unit shall not receive an increased allotment as the result of a decrease in the income of the striking member or members of the household.”

At FDL, Phoenix Woman dissects the latest media attacks on Social Security.

Ho-hum. Another day, another set of Peterson patsies explaining yet again why Grandma must starve so that their billionaire bosses and their buddies can keep their twenty-odd homes in the Hamptons and Hobe Sound:

Writing today on the op-ed page of The Washington Post, Robert Pozen makes the casethat liberals should support changes to Social Security. Mr. Pozen is a Democrat , though not necessarily a liberal one; he is a financial executive who served on President George W. Bush’s Social Security commission and in Mitt Romney’s administration in Massachusetts. But his argument is worth considering, whether you’re liberal or conservative.

So what’s the argument that the Pozen part of the Leonhardt-Pozen Legion of Doom tag team’s presenting? It’s their old favorite, the “Social Security is less progressive than it seems” bit of twaddle. How old is it? Why, it even comes pre-debunked, that’s how old it is.

To learn more, click on the link above.

I highly recommend reading this piece by Jeff Kaye, who has been researching and writing about torture for years now. He and Jason Leopold have been working together on a series at Truthout.

As part of a new investigative story, Truthout has published documents written by the former psychologist for SERE, and later CIA contract interrogator for the Bush torture program, Bruce Jessen. Before going to work for the CIA with his former SERE partner, psychologist James Mitchell, Jessen authored a 2002 “draft exploitation plan” for military use, based on his experiences as a SERE instructor. The newly-discovered documents, provided to Truthout by former SERE Air Force Captain Michael Kearns, were written back in 1989 when Jessen was transferred from his clinical role elsewhere in SERE to help staff a new survival training course for Special Mission Units undertaking dangerous assignments for Special Operations forces abroad.

Jason Leopold and I co-authored the new story, which includes a video interview with Captain Kearns, who helped hire Jessen back in 1989 for his new SERE role helping put together the class titled SV-91. The documents include notes for a portion of that class, known as “Psychological Aspects of Detention.” The other document is a paper by Jessen, “Psychological Advances in Training to Survive Captivity, Interrogation and Torture,” which was prepared for a symposium at that time: “Advances in Clinical Psychological Support of National Security Affairs, Operational Problems in the Behavioral Sciences Course.”

Jessen’s notes, in particular, demonstrate that this course material, which was “reverse-engineered” to provide a blueprint for the interrogation and detention policies of the Bush administration — some of which remain in use today — emphasized not just the ways to coercively interrogate an individual for intelligence purposes, but to “exploit” the detainee for a number of uses.

From Catherine Rampell at the NYT Economix blog: More Americans Dropping Out of the Labor Force. Apparently the drop in participation is not just due to the economic crisis. According to Rampell, more women are choosing not to work than in the past, and the the pending retirements of baby boomers are big contributors to the phenomenon.

This piece at The Daily Beast is a few days old, but still worth reading: Obama’s War on Schools

Over the past year, I have traveled the nation speaking to nearly 100,000 educators, parents, and school-board members. No matter the city, state, or region, those who know schools best are frightened for the future of public education. They see no one in a position of leadership who understands the damage being done to their schools by federal policies.

They feel keenly betrayed by President Obama. Most voted for him, hoping he would reverse the ruinous No Child Left Behind (NCLB) legislation of George W. Bush. But Obama has not sought to turn back NCLB. His own approach, called Race to the Top, is even more punitive than NCLB. And though over the past week the president has repeatedly called on Congress to amend the law, his proposed reforms are largely cosmetic and would leave the worst aspects of NCLB intact.

Read it and weep.

From CNN: Suspect in attempted bombing at MLK Day parade pleads not guilty

Kevin Harpham, 36, of Colville, Washington, made the plea during an arraignment hearing in federal court in Spokane. Harpham faces trial on charges of attempting to use a weapon of mass destruction and for possessing an unregistered explosive device.

Federal authorities arrested Harpham March 9, nearly two months after the January 17 discovery of a backpack containing a bomb along the Martin Luther King Day parade route in Spokane. The explosive device was found and disabled before the event began.

Officials called it an incident “of domestic terrorism” that could have resulted in “mass casualties,” had the bomb gone off.

I haven’t been following the Barry Bonds trial, but I was really angry when I read this: Witness says he knew of Bonds’ steroid use in 1999

Honestly, baseball should strike Bonds’ hitting records. It’s disgrace that he gets credit for passing Hank Aaron in home runs. Anyone who saw Bonds when he was younger had to know he was using steroids to get so big.

Poor Bart Stupak is afraid because of all the hate he got for voting for Obama’s health care bill.

After suffering through a “living hell” during negotiations on the healthcare law, former Rep. Bart Stupak (D-Mich.) finds it hard, a year later, to distance himself from his pivotal role.

“I guess I’m the face of healthcare,” Stupak told The Hill in an interview this week. “It goes with the territory.”

Last March, Stupak became the object of a flood of threats and obscene messages, left at his office and his home, as he helped hammer out a deal between anti-abortion-rights Democrats and the White House that was instrumental in passing healthcare reform through the House by a single-digit-margin.

Cry me a river, Bart.


That’s about all I’ve got for today. What are you reading and blogging about?

More on Food and Energy Prices

Posted: March 23, 2011 | Author: | Filed under: Economy, the villagers, unemployment, voodoo economics, We are so F'd | Tags: , , , , | 12 Comments

I wrote a  post recently on why the overall inflation rate remains low and why core inflation is very low while food and energy prices are on the rise.  I know this seems baffling.  Research Economist Daniel Carroll from Fed Cleavland has some more details and analysis on this so I thought I’d take the opportunity to share it with you.  I also have a bit of rant, so be patient with me.

First, you can see the underlying volatility in recent energy prices in the nifty graph to the right.  This volatility is one of the reasons that many economists prefer the core inflation measures to something like the CPI. People adjust their driving and car buying habits when gas prices are high and the CPI doesn’t catch the corresponding buying shifts because it’s based on a fixed basket of purchased goods and services thought to represent a typical urban consumer at that time.  People will drive more when gas prices are low and they’ll cut out unnecessary trips when prices are high at the pump.  Also, commodity prices tend to have seasonality and they experience a lot of shocks that make them have higher than normal price variations.  Think weather, political unrest, and other uncontrollable black swan events.

You can also see from the graph a lesser degree of volatility in food prices coupled with the underlying, increasing trend.  The job of economists is to try to run models that look at the trend that has occurred over time and to search for corresponding explanatory variables.  The other analysis that is frequently done is finding out who is impacted by these changes.  I mentioned that food and energy inflation hurts poor people the most because it represents a big portion of their budgets and incomes.  Carroll’s analysis includes some specifics on that .

It should not come as a surprise that people are particularly concerned about increases in food and energy prices, whether the increases are large or small. Not only do energy prices pass through to other prices, but household expenditures on food and energy make up a significant fraction of total household expenditures. Data from the BLS Consumer Expenditure Survey show that on average from 1999 to 2009, energy (including motor fuel) and food at home accounted for more than 15 percent of total expenditures and 13 percent of after-tax income.

The importance of food and energy prices to households’ bottom lines is not evenly distributed across the income distribution either. For the median household, food and energy are roughly 17 percent of both expenditures and after-tax income. Households in the top 20 percent of the income distribution spend 11.6 percent of total expenditures on food and energy, which adds up to 7.9 percent of disposable income. For the bottom 20 percent these shares rise to 20.4 percent of expenditures and a whopping 44.1 percent of after-tax income!

For those astutely wondering why food and energy expenditures are a larger fraction of total expenditures than of total income for the bottom 20 percent, there is a much higher fraction of households in this quintile which may be using savings and credit markets to consume above their annual income. Likely categories are the unemployed, business owners with temporary losses, students living on loans, and retirees drawing down their nest eggs.

There are two other nifty graphs at that site that show the impact of food and energy prices on the bottom twenty percent–quintile–of all households in terms of their incomes and budgets.  It’s really disturbing to see the impact in bright red and blue.   Increased prices in key budget items force many of these people over the edge.  Because many poor people have no control over the amount of money they earn, these people are more likely to run up credit cards, decrease contributions to retirement savings, or sell off assets. They can also end up on the street and on public programs.  Increases in food and gas basically drive the poor further into the ground.

This brings me to the policy implications.  First, any state with a huge proportion of poor or elderly that derives income from sales taxes on these items is basically creating and perpetuating its own underclass.  It is much more likely they will see increases in populations needing state assistance under these circumstances.  This situation gets worse as it continues.  Second, attempts to remove subsidies for the poor and elderly for their home heating and air conditioning costs will do the same thing or worse.  It’s really difficult for me to understand why we subsidize large banks using bad lending practices to stop them from bankruptcy but some policy makers tout cuts in programs helping the poor pay outrageous gas and light bills or providing increased subsidies to programs like WIC. Republicans–you know, the fetus fetishists?–want to cut WIC by 10%.

At this point, I could even justify cutting rebate checks of $300-$500 for all those households with incomes in the bottom income quintile just to help them with food and energy bills. I know this is unlikely to happen.  It would also provide a slight boost to local economies since this is the income group that is least likely to save and most likely to spend the money on basics.  I’m not a big supporter of tax rebates because they generally just go to pay down debt and have very little economic impact.  This would be different since it’s aimed solely at people who need to spend the money. It’s also aimed at helping a few people stay in their situation long enough to avoid perpetual dependency on state largess.

This brings me to one more item for you to discuss.  There were two articles recently pushing the canard that lower taxes for rich people increase revenues to governments (false) and that low taxes are ?good” for the overall economy(false too).  One was a WSJ editorial by trust fund baby Steve Forbes that once again tries to resurrect the much discredited Laffer curve and empirically challenged view of Reaganomics. You already know the antics of trust fund baby David Koch who feels persecuted because of the blowback on his war on nonbillionaires. The other baby of privilege wrecking havoc in Republican political circles is Grover Norquist. All three of these guys come from very rich parents, breezed into ivy league educations as legacies with parents who could buy them in regardless of grades and inherited enough money and gave them ready made businesses run by competent others.  Now, they can spend their useless lives undermining any policy that takes anything from their pockets and boosts their cred on the Forbes 50 list.  There are also some op ed pundits–Thomas Friedman comes to mind–with similar set ups.  Here’s how they spend their lives and their daddies’ money.

According to a report in The Hill newspaper, Americans for Tax Reform president Grover Norquist has received assurances from Republican leaders in Congress that under no circumstances will they vote for any tax increase, either as part of deficit reduction or tax reform. Apparently, the only permissable deficit reduction is spending cuts and the only permissable tax reform is tax cuts. Given that Grover has succeeded in getting all but a small handful of Republicans to sign his no-new-taxes pledge, he essentially controls tax policy by being the sole arbiter of what constitutes a violation of the pledge and what does not. And given the power of the Tea Party to upset incumbent Republicans in primaries when they are viewed as insufficiently loyal to its agenda, it would take a very confident and courageous Republican to risk being accused of violating Grover’s pledge whether he or she signed it or not, since it would guarantee primary opposition from a well financed Tea Party candidate — the Club for Growth will see to that.

What really bothers me is that some how the Krewe of Trust Funds has managed to convince many–mostly white–working class Americans that government is using their hard earned wages to subsidize permanent vacations for the underclass.  None of these leisure class propogandameisters have known a hard days work or food insecurity in their lives.  They popped out of their mother’s uterus with automatic access to food, education, multiple, very large roofs, power, and access to speechifying nonsense on some of the world’s most circulated newspapers and TV channels.  They’re absolute prime examples of the anti-meritocracy they purport to desire.  They think people don’t work because they themselves don’t work at anything. It’s pure projection.

I’m going to throw one more nifty graph at you. This time it’s from the FED in San Francisco. Notice how the World’s Industrial Production and Commodity Prices are following each other closely. Now, read this description of the stylized facts.

Commodity price swings have a direct impact on headline inflation through higher costs of energy and food, which account for 14% of overall consumer spending. However, commodity price swings—even double-digit changes—historically have had only a small effect on underlying inflation, which excludes spending on volatile energy and food components. To some extent, this reflects decisions by businesses to adjust profit margins rather than pass through higher costs to customers, particularly when demand is weak. A more important reason is that for many consumption goods, commodities and raw materials account for only a small part of the overall cost of production, particularly compared with the costs of labor, distribution, and retailing. Moreover, roughly three-fourths of consumer spending is on services such as housing and medical care that do not involve many commodities in production.Over the past 12 months, overall headline inflation as measured by the personal consumption expenditures price index has risen 1.2%, while core PCEPI has risen 0.8%. We expect recent commodity and energy price surges to raise headline inflation temporarily. We foresee relatively little pass-through to core inflation in 2011 and 2012. The slowly recuperating economy, excess capacity, and well-anchored long-term inflation expectations will keep labor costs low. In fact, with labor productivity continuing to rise, unit labor costs have actually been falling recently.

Let me point out some things here.  I bolded that last part because I want to turn it into plain English for you.  The last sentence means that no one is getting any kind of raise, even though they are working harder.  The prior sentence means to expect more of the same.  Prices on the core items will still be moderate while prices on commodities like food and oil are expected to increase.  The graph itself shows that world demand is driving a lot those price increases.  There is some increased “steepness’ in the price series which implies there are most likely other factors at play too.  Chances are the uncertainty around MENA, some bad weather, and speculation has added to food and oil prices increasing at quicker increasing rate.  I haven’t run any regressions on it so I can’t say that for certain, but it’s highly likely.

This should be a signal to policy makers to act appropriately.  Instead, policy makers are acting inappropriately.  That Bruce Bartlett quote about Grover Norquist seems to indicate they are listening to the temper tantrums and following the money of the trust fund babies.  We need economic policy that helps all people.  Instead, we’re getting Paris Hilton lifestyle maintenance programs.  We need well paying jobs in this country, not more tax cuts for billionaires. Why do these guys ‘deserve’ to keep their daddies’ hard earned cash while poor people ‘deserve’ to starve and die of exposure?

update: Mark Thoma tweeted a link to Econbrowser that has a lot more nifty graphs on the inflation in food and oil prices including ones that show the parts of the country suffering most.

Unemployment Details

Posted: March 4, 2011 | Author: | Filed under: jobs, U.S. Economy, unemployment | Tags: , , , , | 12 Comments


Here’s the details on the current BLS job survey for February.  It came in pretty much as anticipated.  The nifty graph and the following analysis come via Calculated Risk. We can say definitively that this is the worst job market since World War 2.  The recovery path has created far few jobs than any of the previous post WW2 recessions.  You can’t judge a jobs market by the unemployment rate alone.  The devil is definitely in the details so let’s get into the report’s finer points.

This wasn’t a great report. Heck, it wasn’t a “good” report. But it was a little better than most recent reports.

If we average the last two months together, the 63,000 payroll jobs added in January and the 192,000 payroll jobs in February, that gives 127,500 payroll jobs per month. And that is a barely enough to keep up with the growth in the labor force. Private payrolls were a little better at an average of 145,000 per month, as state and local governments continued to lay off workers (something we expect all year).

The decline in the unemployment rate from 9.0% to 8.9%, was good news, especially since the participation rate was unchanged at 64.2%. Note: This is the percentage of the working age population in the labor force.

The decreases for the long term unemployed, and for the number of part time workers for economic reasons, and the decline in U-6 to 15.9% is all welcome news – although the levels are still very high.

The average workweek was unchanged at 34.2 hours, and average hourly earnings ticked up 1 cent. Both disappointing.

You can see the details here at the BLS site. The details that are most overlooked by people that don’t know how to view unemployment statistics representing people that have become so discouraged they either leave the labor force or become what is known as ‘marginally attached’.  Another tell tale sign of problems are the underemployed, workers who can only find part time jobs when they really want to work full time, and workers that are stuck working as temporary workers.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 8.3 million in February. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job. (See table A-8.)

In February, 2.7 million persons were marginally attached to the labor force, up from 2.5 million a year earlier. (These data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)

Among the marginally attached, there were 1.0 million discouraged workers in February, a decrease of 184,000 from a year earlier. (These data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.7 million persons marginally attached to the labor force in February had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities. (See table A-16.)

This is a very sluggish recovery that suggests policymakers are just letting the recession take its ‘natural path’ to recovery. We definitely have do-nothing economic policy right now. What really frightens me is the forthcoming do-damage austerity policy coming from states and the federal government. We wouldn’t have the size of budget deficits that we know have if the government had spent last time healing the capital positions of Wall Street shadow banks and more time healing the jobs and household situation. After all, the real wealth and well-being in an economy comes from actual goods and services produced that add-value. There is a lot more economic well-being derived from better roads, households with modern cars and appliances, and more thriving small businesses than paperwork mills that stand between buyers and sellers of goods and services and financial gambling that drives prices of things unrealistically high through speculation.

What we need is some real leadership with knowledge of economic policy. It’s obvious from these sluggish numbers that we don’t have that at all.

There’s a good article up at Truth Out that you may want to check out. It’s called “How the Rich Soaked the Rest of Us”. It’s got some nifty graphs too. It basically explains how hoarding of money in the hands of a very few has cut off the kind of growth in industries, jobs, and commerce that would allow every one to share in a robust economy.

Over the last half-century, the richest Americans have shifted the burden of the federal individual income tax off themselves and onto everybody else. The three convenient and accurate Wikipedia graphs below show the details. The first graph compares the official tax rates paid by the top and bottom income earners. Note especially that from the end of the Second World War into the early 1960s, the highest income earners paid a tax rate over 90 percent for many years. Today, the top earners pay a rate of only 35 percent. Note, also, how the gap between the rates paid by the richest and the poorest has narrowed. If we take into account the many loopholes the rich can and do use far more than the poor, the gap narrows even more.

One conclusion is clear and obvious: the richest Americans have dramatically lowered their income tax burden since 1945, both absolutely and relative to the tax burdens of the middle income groups and the poor.

It’s obvious this tax policy has contributed to this horrible middle class against middle class anger that is contributing to the current war on teachers, firefighters, and police.   The wealth accumulated from the last few decades of economic growth has shifted to the top while the burden of taking care of everything has shifted to the middle and bottom.  This has fueled this dangerous resentment.  Many people are clearly mad at the wrong folks.   The old conservative adage is that these rich people create businesses and jobs. Evidence shows that this clearly isn’t the case.

How do the rich justify and excuse this record? They claim that they can invest the money they save from taxes and thereby create jobs etc. But do they? In fact, cutting rich people’s taxes is often very bad for the rest of us (beyond the worsening inequality and hobbled government it produces).

Several examples show this. First, a good part of the money the rich save from taxes is then lent by them to the government (in the form of buying US Treasury securities for their personal investment portfolios). It would obviously be better for the government to tax the rich to maintain its expenditures, and thereby avoid deficits and debts. Then, the government would not need to tax the rest of us to pay interest on those debts to the rich.

Second, the richest Americans take the money they save from taxes and invest big parts of it in China, India, and elsewhere. That often produces more jobs over there, fewer jobs here, and more imports of goods produced abroad. US dollars flow out to pay for those imports and so accumulate in the hands of foreign banks and foreign governments. They, in turn, lend from that wealth to the US government because it does not tax our rich, and so we get taxed to pay for the interest Washington has to give those foreign banks and governments. The largest single recipient of such interest payments today is the People’s Republic of China.

Third, the richest Americans take the money they don’t pay in taxes and invest it in hedge funds and with stockbrokers to make profitable investments. These days, that often means speculating in oil and food, which drives up their prices, undermines economic recovery for the mass of Americans and produces acute suffering around the globe. Those hedge funds and brokers likewise use part of the money rich people save from taxes to speculate in the US stock markets. That has recently driven stock prices higher: hence, the stock market recovery. And that mostly helps – you guessed it – the richest Americans who own most of the stocks.

It’s obvious that we’ve basically slowed the US jobs and growth machine down with policy that siphons off economic growth to wealth hoarding instead of job-creating businesses and infrastructure.  It’s time to find some leaders that realize this and will do what it takes to get us off the ‘natural’ sluggish path and on the path to a better future for every one.  Until we actually have real commerce producing real goods and services being serviced by people with real jobs, we’re not going to see much of a change.  Shuffling paper, creating exotic financial instruments and bubbles, and devastating people’s home values and savings through speculative quagmires isn’t getting the majority of us anywhere.  It’s time for the  majority of us to stand up and demand that our tax dollars and policies represent improvements for all.  It’s time to end privatization schemes, excessive speculation, and captured regulators and move back to the days of when our economy benefited more than just the privileged few.

update: You may want to check out this study at Brookings Institute:  Have Earnings Actually Declined?

This analysis suggests that earnings have not stagnated but have declined sharply. The median wage of the American male has declined by almost $13,000 after accounting for inflation in the four decades since 1969. This is a reduction of 28 percent!

Unemployment is still the Nation’s Number 1 problem

Posted: March 3, 2011 | Author: | Filed under: jobs, unemployment | Tags: , | 16 Comments

The Gallup unemployment survey shows U.S. unemployment back up to 10.3% in February.  It finds underemployment to be 19.9%.

The percentage of part-time workers who want full-time work worsened considerably in February, increasing to 9.6% of the workforce from 9.1% at the end of January. A larger percentage of the U.S. workforce is working part time and wanting full-time work now than was the case a year ago (9.3%).

This is undoubtedly due to the austerity budgets of states and municipalities combined with the inaction on the part of the Federal Government.   The original Obama stimulus was 40% tax cuts and the recent tax cuts enacted and extended in December continue to prove to be worthless in terms of stimulating the economy and creating jobs as many economists–including this one–have warned.

The labor market continues to show mixed results for job creation depending on which study you read.

The report from ADP (.pdf) also shows continued improvement. It says that 217,000 jobs were added to the private sector in February. That’s the second best result, after it’s tally for December of 247,000, since the recovery began last year. It’s also slightly higher than the 189,000 it recorded for January. Of course, the Bureau of Labor Statistics only indicated 50,000 private sector jobs added that month, so the divergence between ADP and the BLS could continue.

Next, there’s the Challenger, Gray & Christmas report (.pdf). It doesn’t provide good news. The report says planned job cuts rose to 50,702 in February — the most since March 2010. This also marks the second straight month of rising planned layoffs, according to the firm. A big chunk of February’s layoffs came from government and non-profit employers, which reported 16,380 planned cuts — up 154% from January. If firings are increasing, then they will make it more difficult for the economy to add net new jobs.

Calculated Risk added two points to consider

• Remember that the weak payroll report in January (only 36,000 jobs added) was blamed on the snow. Usually I don’t buy the weather excuse, but it did appear weather played a role this time. If there is a bounce back, it will be useful to average the last two months together to estimate the current pace of payroll growth. If there is no bounce back – that would definitely be bad news.

• Even if the payroll report shows improvement, the employment situation remains grim. There are 7.7 million fewer payroll jobs now than before the recession started in 2007 with almost 14 million Americans currently unemployed. Another 8.4 million are working part time for economic reasons, and about 4 million more workers have left the labor force. Of those unemployed, 6.2 million have been unemployed for six months or more.

The official rate as measured by the BLS comes out tomorrow morning.   Given the ongoing mixed signals in various labor and job statistics, it seems clear that we need some kind of jobs program.   NFL negotiations are going down to the wire.  Perhaps, a potential NFL lockout will get some people to at least notice what’s going on with jobs, jobs losses, and collective bargaining.  We have to do something to get policy makers to realize that what they’ve been doing isn’t working because it’s not getting people back to work.

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