Monday Reads: The Adulting Blues
Posted: August 24, 2015 Filed under: morning reads | Tags: economy, Huckabee, hurricane katrina, New Orleans, Racism, Resilience lab, Stock Market, Trump 17 Comments
Good Morning!
Well, today’s the kind’ve day that makes me want to hide under the covers and have my mother do all my laundry and cooking. Well, actually my Dad used to do all the cooking but you know what I mean. It’s been like that for at least a few days as my car’s battery gave out in a very inconvenient location on Thursday night and my bills are bigger than my latest paycheck. A lot of my ennui and accompanying stress has to do with the uberhype of the 10 year anniversary of Hurricane Katrina which for a lot of us is an ongoing process of things becoming more undone than they were before.
Then, there’s just the constant barrage of news–none of which is particularly good–which includes ISIS destroying an ancient wonder. You know what an armchair archaeology buff I am. It’s just so easy to deal with dead civilizations rather than live ones. Trump continues to belittle any one in his path, and every one in the Republican primary is unleashing misogyny and racism. I’m going to focus on the racism today because I think both BB and JJ have given the current misogyny binge complete justice.
My friend Peter has actually written exactly what I’m feeling on this dreadful week where they’re actually pulling out parades and doing “resilience tours” to hype the city and its survival. Like I said, we may have survived Katrina, but I still have my doubts about our surviving the hipsters, the gentrification, and our elected overseers who have forced us to privatize things that weren’t working before but now are worse and to capitalize on things that turn us into a Disaster Minstrel Show. Again, this is not my writing but Peter’s but I could’ve written it word for word except I obviously don’t have his wife!
I am dreading the influx of disaster tourists who will surely be showing up in town this week. Some of them will be sincerely motivated and others will be of the “I volunteered once with Habitat for Humanity after Katrina so I know what it was like” variety. No, you don’t. You don’t know what it’s like to be barred from your home for 6 weeks and have to sneak in like Dr. A and I did. You don’t know what it’s like to have a bad case of survivor’s guilt because you didn’t fare as badly as other people in town. You don’t know what it’s like to have to re-tell your “Katrina story” over and over again. You don’t know what it’s like to be having dinner and have do-gooders burst in to save your pets because you didn’t, or couldn’t, wash the marks off your front door. Actually, neither do I but it happened to some friends of mine. It gives a whole new meaning to the phrase putting on the dog…
The aftermath of the storm was a very painful period in the lives of New Orleanians. We’ve lived it day-in and day-out for 10 years at varying levels of intensity. That’s why I’m not enthusiastic about rehashing those days regardless of whether it’s done by resilience tour types or the krewe of “we’ve gone to hell in a designer handbag.” I wish they’d all piss off and leave me alone. I’m not the only one who feels this way.
Yes. I feel that way. Piss off and leave me alone. Unfortunately, my neighborhood has turned into the mini-Quarter and I can’t even walk the dog around the block or have a beer without either bumping into seven bridesmaids giggling, six film crews taping, and five fucking Air BnB parasites.
This headline from WAPO actually made me scream: A ‘resilience lab’. They’ve obviously bought into the Mayor’s hype. This is the paragraph that’s described my reality. Every day I walk out of my house and feel like screaming “WTF are you doing here? Why don’t you go back to the hell realm you came from instead of bringing it here to me?” No east coast newspaper article on New Orleans is complete these days without telling people that the place to be is my freaking neighborhood, the Bywater. I have fewer and fewer neighbors all the time. My neighborhood has been completely overrun with people hoping to redefine and cash in on cool.
He smiled at first. It looked so charming, all those people driving slowly down Burgundy Street through the Faubourg Marigny and Bywater neighborhoods, pointing cameras.
Then it dawned on Keith Weldon Medley: These folks weren’t tourists or architecture buffs. They were shoppers. And on their shopping list was almost everything that could be had in these neighborhoods, a collection of Creole cottages, shotgun doubles, warehouses and small manufacturers at a humpback bend of the Mississippi River.
In the evolution of post-Katrina New Orleans, few phenomena have been more striking than the dramatic demographic shift of places such as Bywater from majority black to majority white. One census block group in Bywater dropped from 51 percent African American before Katrina to just 17 percent afterward; the largest went from 63 percent to 32, according to a Washington Post analysis of U.S. census data.
“You saw all these white people. Obviously they were displacing black people who were here before,” said Medley, a historian who lives in the house where he grew up in the Marigny.
My daily mantra is “I see fucking stupid White People.”
So, I really don’t intend for this to be my Katrina post. I’ve been there and done that. Let me post a few more things that are pissing me off today.
There’s an obvious asset bubble bubbling away here so the market’s correcting and the Fed is going to start bringing up interest rates. This blog has an interesting take on what’s going on which is particularly relevant to my field of research as a currency bloc and international economist.
Global stock markets are in a 2008ish kind of crash today and I really don’t much time to write this, but I just want to share my take on it.
To me this is fundamentally about the in-optimal currency union between the US and China. From 1995 until 2005 the Chinese renminbi was more or less completely pegged to the US dollar and then from 2005 until recently the People’s Bank of China implemented a gradual managed appreciation of RMB against the dollar.
This was going well as long as supply side factors – the opening of the Chinese economy and the catching up process – helped Chinese growth.
Hence, China went through one long continues positive supply shock that lasted from the mid-1990s and until 2006 when Chinese trend growth started to slow. With a pegged exchange rate a positive supply causes areal appreciation of the currency. However, as RMB has been (quasi)pegged to the dollar this appreciation had to happen through domestic monetary easing and higher inflation and higher nominal GDP growth. This process was accelerated when China joined WTO in 2001.
As a consequence of the dollar peg and the long, gradual positive supply shock Chinese nominal GDP growth accelerated dramatically from 2000 until 2008.
However, underlying something was happening – Chinese trend growth was slowing due to negative supply side headwinds primarily less catch-up potential and the beginning impact of negative labour force growth and the financial markets have long ago realized that Chinese potential growth is going to slow rather dramatically in the coming decades.
As a consequence the potential for real appreciation of the renminbi is much smaller. In fact there might be good arguments for real depreciation as Chinese growth is fast falling below trend growth, while trend itself is slowing.
The market has rebounded but the financial markets are obviously still shaky. China is the world’s largest economy now so anything that happens there is bound to ripple around the world.
The global whiplash underscored investors’ shaken confidence in China’s slowing economy and central bank. The world’s second-largest economy is now reeling over what China’s state media is calling “Black Monday,” during which its markets just recorded their biggest one-day nosedive in eight years.
But the mid-morning bounce off deep trading lows led some analysts to question whether financial markets had already finished their fall. Tech giant Apple, which begun the morning down 13 percent and dipping below $100, was trading 2 percent higher by the afternoon, at about $107.
The dismal opening marked a worrying continuation of last week’s free fall. The Dow’s blue-chip index plunged more than 500 points on Friday, capping its worst week since 2011 and entering what Wall Street calls a correction, having tumbled 10 percent from its May peak.
The sell-off bruised every industry, wiping out gains in rapid order after a year of mostly steady trading. Some of America’s biggest companies shed tens of billions of dollars in market value in only a few days, and the markets’ early gains have yet to restore those losses.
S&P 500 companies lost more than $1 trillion in market value last week, and the Dow and other indices are on track to record their dreariest month since February 2009.
On Friday, China reported its worst manufacturing results since the global financial crisis, following shortly after Beijing earlier this month surprised investors by announcing it would devalue the nation’s currency.
China’s benchmark Shanghai Composite index has fallen by nearly 40 percent since June, after soaring more than 140 percent last year. Markets in Europe also plummeted, and Asian shares on Monday hit a three-year low.
Economist gadfly and miserable human being Larry Summers is pearl clutching about the rate hikes. He seems to be on a search to be relevant again but on a very wrong path. This article alone ought to make you very glad that he’s not the Fed Chairman since he seems completely oblivious to the asset bubbles that I see in assets around the country including houses once again.
Like most major central banks the Fed has put its price stability objective into practice by adopting a 2 per cent inflation target. The biggest risk is that inflation will be lower than this — a risk that would be exacerbated by tightening policy. More than half the components of the consumer price index have declined in the past six months — the first time this has happened in more than a decade. CPI inflation, which excludes volatile energy and food prices and difficult-to-measure housing, is less than 1 per cent. Market-based measures of expectations suggest that, over the next 10 years, inflation will be well under 2 per cent. If the currencies of China and other emerging markets depreciate further, US inflation will be even more subdued.
Tightening policy will adversely affect employment levels because higher interest rates make holding on to cash more attractive than investing it. Higher interest rates will also increase the value of the dollar, making US producers less competitive and pressuring the economies of our trading partners.
Please check out housing and stock prices Lala and then try again.
Republicans continue to show they have no idea about the reality of black people in this country. Trump attacked Martin O’Malley for sensitivity to the Black Lives Matter Campaign.
Appearing on Fox News over the weekend, Donald Trump admitted to being completely ignorant about the Black Lives Matter movement. “I know nothing about it,” the billionaire real estate developer said.
Of course, his lack of knowledge didn’t prevent him from harshly criticizing the effort. Trump said that he’s “seeing lot of bad stuff about it right now.” He said Martin O’Malley, a contender for the Democratic nomination, was a “disgusting little weak pathetic baby” for apologizing to Black Lives Matter activists earlier this year.
Huckabee played the MLK card and completely confused King’s Son.
Martin Luther King III, the son of the late civil rights leader, said he was “perplexed” by GOP presidential hopeful Mike Huckabee’s comments last week suggesting that his father would be “appalled” by the Black Lives Matter movement.
“I think dad would be very proud of young people standing up to promote truth, justice and equality,” King said during an interview on SiriusXM radio. “I was perplexed by the comments, but people attempt to use dad for everything.”
King’s comments come in response to a CNN interview last week in which the former Arkansas governor spoke out against the Black Lives Matter movement, saying racism is “more of a sin problem than a skin problem.”
If you look at the picture of flooded New Orleans and the view over the flooded lower ninth ward towards city, you’ll see a cluster of white tallish buildings sitting right on the river in the middle of that photo. Just a hair to the right is where my house still stands and where I’m there right now with a pillow pulled over my head trying to block out the world of adults. I don’t want to be one of them at the moment.
What’s on your reading and blogging list today?
Romney Career Advice Open Thread
Posted: April 28, 2012 Filed under: 2012 presidential campaign, U.S. Economy, U.S. Politics | Tags: economy, Jimmy John's, John Kasich, Labor Relations Board, Mitt Romney, sick leave, stimulus funds, tone-deaf, work-study 16 CommentsYesterday, presumed Republican Presidential standard bearer Mitt Romney managed a stunning quadruple-gaffe. In one “lecture” at Ohio’s Otterbein University he demonstrated his ignorance about ordinary American families, his disdain for working people, and his cluelessness about the American economy. On top of that, he managed to put his audience to sleep! Watch the video and note the dozing students behind Romney:
Yes, Jimmy John’s! Romney’s pal Jimmy John Liautaud started a sandwich store franchise in 1983 with a $25,000 loan from his dad. Romney advised Otterbein students to do the same:
Accusing the president of attacking successful Americans, Romney urged students to borrow money from their parents — as John did — if they need to do so to succeed in starting their own businesses.
“Even now, I believe you’re watching a president who is trying to deflect and divert from his record by trying to find ways to, if you will, attack fellow Americans, between rich and poor, and other dimensions,” said Romney. “This kind of divisiveness, this attack of success, is very different than what we’ve seen in our country’s history.”
“We’ve always encouraged young people, take a shot, go for it, take a risk, get the education, borrow money if you have to from your parents, start a business,” he said.
Of course! Because everyone has parents with an extra $25,000 lying around. Why didn’t I think of that? It’s a simple answer to the economic crisis–stop attacking rich people and borrow money from your rich parents instead.
And be like Jimmy John’s–a company cited for illegal labor practices! Great idea!
Judge Rules Jimmy John’s Must Re-Hire Workers Fired for Sick Leave Complaints
A National Labor Relations Board administrative law judge has ruled six former Minneapolis Jimmy John’s sandwich shop employees must be re-hired and paid back wages.
The workers in question said if they called in sick and couldn’t find replacements for their shifts they risked being fired. So, they started warning Jimmy John’s customers that they could be eating sandwiches made by under-the-weather sandwich makers….
Davis Ritsema, one of the fired workers, explained how sick leave policy challenge began. “One day I was coughing and had a high temperature, but I felt pressured to work.”
Mike Wilkow, another former Jimmy John’s worker, added, “I was vomiting and handling sandwiches. They made me stay until the end of my shift.”
Yes, take Mitt Romney’s advice: borrow money from your wealthy parents, hire minimum-wage workers and deny them sick leave. That’ll help the economy recover!
Romney also attacked Obama’s economic stimulus, apparently unaware that Otterbein University received more than $80,000 in stimulus funds used for a federal work-study program.
ROMNEY: Then there was the stimulus itself. $787 billion of borrowing. It could have been entirely focused on getting getting the private sector to buy capital equipment, for instance. That puts people to work. Or to hire people. Instead, it primary [sic] protected people in the governmental sector, which is probably the sector that should have been shrinking.
Of course, as Dr. Dakinikat has repeatedly explained, businesses aren’t going to invest capital in equipment to produce products when Americans have so little money to spend. Furthermore, Ohio college are now suffering the loss of stimulus funds, because Governor Kasich, who accompanied Romney at Otterbein, hasn’t done anything to replace them.
What’s on your mind this lovely Saturday morning?
Live Blog: Unions Join #OccupyWallStreet for March in NYC Today!
Posted: October 5, 2011 Filed under: #Occupy and We are the 99 percent!, The Great Recession, U.S. Economy, U.S. Politics, unemployment | Tags: economy, greed, jobs, occupy Wall Street, protests. MSNBC, unemployment, unions 31 CommentsI have to admit, I’m getting really excited by the way the #OccupyWallStreet movement is taking off. I just got home and turned on MSNBC to find that they are covering the Wall Street protests live this afternoon. They have a number of network personnel on the ground, including Dylan Ratigan. And get this: even Beltway Bob is there! That has to be sign that the mainstream Villagers are taking note.
Right now Harrison Schultz, a spokesman for the protesters is on, and he just said, “I call this a revolution. No one is organizing it. It’s just happening.” He says the media is obsolete. The media thinks they are driving people to the protest, but that’s not true. If he would in charge of a major media outlet, he would be nervous now, because this would be happening whether the mainstream media paid attention or not. He says no one knows what is going to happen or where this will go.
The union march will take place at 4:30 this afternoon, according to MSNBC, but ABC says 3PM. If you have access to MSNBC right now, please watch with us and let us know if anything is happening in your area. Awhile ago, they put up a map to show where all the protests are now, and they were in so many states! I’ll see if I can find the map and post it. Meanwhile, here is a little about what we can expect this afternoon.
The cavalry has arrived in Lower Manhattan. Representatives from no fewer than 15 of the country’s largest labor unions will join the Occupy Wall Street protesters for a mass rally and march today in New York City.
The AFL-CIO, United Auto Workers, and Transit Workers’ Union are among the groups expected to stand in solidarity with the hundreds of mostly young men and women who have spent the better part of three weeks sleeping, eating, and organizing from Zuccotti Square.
Their arrival is being touted as a watershed moment for the “Occupy” movement, which has now seen copycat protests spring up across the country. And while the specific demands of the “occupiers” remain wide-ranging, the presence of the unions – implicitly inclined to making more direct demands – may sharpen their focus.
Today’s action is scheduled to begin at 3 p.m. ET, when the protesters in Zuccotti Square march approximately one mile north to Foley Square, where they will be met by community and labor leaders. Then, at 4:30 p.m., they plan to match together back down toward Wall Street. They do not yet have a city-issued permit for the gathering, but are now pursuing one.
ABC is anticipating more arrests today, but on MSNBC, a spokesman said the unions got a permit for today’s march. Furthermore, if NYC chooses to try to break up the protests today, it will only help the growth of this movement.
Here’s a report from Democracy Now today:
UPDATE: MSNBC has moved on to other things for now. But the Guardian has a live blog. It figures we have to go to a British newspaper to find out what’s happening in our own country.
The L shaped recovery and a Bogus Debt Crisis
Posted: July 29, 2011 Filed under: Economy, Federal Budget, Federal Budget and Budget deficit | Tags: 14th amendment, debt crisis, economy, recession 20 CommentsOur economy continues to scuttle across a bottom set by the huge drop in performance during the Great Recession. This economist was not surprised by the lackluster GDP report released today. No one has used the correct fiscal policy prescription in this country since 1999. The current batch of Washington nimrods are going to set us at a new low shortly. We’ll be lucky to see nasty numbers like these a year from now. It’s as if tanking the economy is job 1 now.
Gross domestic product climbed at a 1.3 percent annual rate following a 0.4 percent gain in the prior quarter that was less than earlier estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase. Household purchases, about 70 percent of the economy, rose 0.1 percent.
Treasuries rose as the report dimmed prospects for faster growth in the rest of 2011. The faltering economy may get another blow from spending cuts being negotiated in Congress, keeping pressure on Federal Reserve Chairman Ben S. Bernanke to hold interest rates near zero.
“The second-half rebound is melting away,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, the only forecaster polled to correctly estimate the gain in GDP. “It’s a very, very difficult situation for policy makers. The Fed could give a pretty strong signal that they are not likely to move on interest rates for a very long time.”
The yield on the benchmark 10-year note decreased to 2.85 percent at 1:22 p.m. in New York from 2.95 percent late yesterday. Stocks pared earlier losses on signs that House Speaker John Boehner’s plan to raise the debt ceiling was gaining support. The Standard & Poor’s 500 Index fell 0.3 percent to 1,296.42 after falling as much as 1.4 percent.
Former Labor Secretary Robert Reich tells it like it is in a post that might as well be entitled “It’s the jobs, stupid”. Too bad he’s not up for the Treasury position now occupied by Secretary Slave to Investment Banks. There’s a false equivalency being spread about raising the debt ceiling and increasing the deficit that’s really hampering policy discourse right now. The two things aren’t the same. The debt is the amount we owe and it builds each year when there is a deficit or when interest accumulates. The deficit is a shortage in one year’s budget. The only real crisis we have right now is a jobs crisis and a complete lack of demand. Again, no business person in their right mind is going to create anything if there’s no customers. Oh, there’s also a confederacy of dunces in the US House of Representatives. But, I won’t go there right now.
Get it? We’re really in a “jobs and growth” crisis – not a budget crisis.
And the best way to get jobs and growth back is for the federal government to spend more right now, not less – for example, by exempting the first $20,000 of income from payroll taxes this year and next, recreating a WPA and Civilian Conservation Corps, creating an infrastructure bank, providing tax incentives for small businesses to hire, expanding the Earned Income Tax Credit, and so on.
But what happens next week if Congress can’t or won’t deliver the President a bill to raise the debt ceiling? Remember: This is all politics, mixed in with legal technicalities. Economics has nothing to do with it.
One possibility, therefore, is for the Treasury to keep paying the nation’s bills regardless. It would continue to issue Treasury bills, which are our nation’s IOUs. When those IOUs are cashed at the Federal Reserve Board, the Fed would do what it has always done: Honor them.
How long could this go on without the debt ceiling being lifted? That’s a legal question. Republicans in Congress could mount a legal challenge, but no court in its right mind would stop the Fed from honoring the full faith and credit of the United States.
One of the biggest right wing memes that drives me crazy is that the economy is bad because we have too much taxes still and that the President’s stimulus didn’t work because it was worthless spending. I knew it wouldn’t do much to stimulate the economy simply because it didn’t take advantage of the government spending multiplier in key areas and wasn’t big enough. Also, it was the Biggest Tax Cut Ever which rarely works as efficiently as direct government spending to get consumption going again. So why are so many idiots arguing that more of the same tax cuts are going to improve the economy and cutting all levels of government spending is considered confidence building when the government spending multiplier will just push recessionary momentum? You got me. It’s insanity.
So, what happens if these debt ceilings talk fail? Well, first, every single financial asset, liability, and contract will reprice all over the world. Most of them will reprice in a bad way that will hamper economies every where. Every business project will be evaluated using a risk free rate that will now be higher and will not be considered risk free any more. That means many projects will now be rejected so expansions, new jobs, or anything like that will be rejected. Remember, this is not because we can’t pay those bills, it’s because a few idiots refuse to pay them. Second, the world will continue to step away from the dollar. Third, there will be strong recessionary pressures. It’s not good, folks. As these recent GDP figures show, we’re far from out of the impact of the last financial shock.
But what if all those options failed? What would be the consequence of even a notional default? The IMF has talked of a global recession if there was a loss of confidence in US solvency although it’s not clear that a failure to roll over debt for a few days would qualify for that description.
Having seen what happened with Lehman’s default, the main worry would be a freeze in the markets. Take the finances of banks, for example. Many use Treasury bonds as the risk-free asset for capital purposes. As Capital Economics points out
“Government debt is only automatically 0% risk-weighted for banks under Basel II if it is rated AA- or higher (although regulators can make exceptions for domestic government debt issued in local currency). In principle, therefore, financial institutions would face significantly higher capital charges in the event of a US government default.In practice, it seems likely that the regulators would move quickly to waive the rules. But there might be a few hairy moments while they did. And what about money-market funds? Having been burned by the credit crunch, many have opted for the safe haven of US Treasury bills. Perhaps they could roll over those bills into some form of IOU from the government. But if investors demanded their money back at a time when Treasury bills were illiquid, money-market funds might be forced to suspend resumptions or “break the buck”. Then there is the repo market, widely used by financial institutions to raise money; Treasury securities are used as collateral for such borrowing.”
Standard & Poor’s has considered this scenario and suggests that
“Failure to pay off maturing debt or missing interest payments (approximately $62 billion of interest is payable on Aug. 15) would constitute a selective default pursuant to our criteria, and Standard & Poor’s expects it would lower the sovereign rating to ‘SD’. Even if the Fed and other central banks managed to keep the financial system functioning, we expect that markets around the world would be severely damaged. In such a hypothetical scenario, we expect that equity markets would generally plunge, borrowing costs and interbank lending rates would soar, and corporate credit markets would be closed to all but the highest quality issuers. We envisage that consumers and businesses would likely stop spending on all but essential items, and the value of the dollar would drop by 10% or more against other major currencies. With the dollar heading lower, investors would likely look for hard assets like oil and other commodities, driving prices higher.Given the fragility of the economic recovery, this is an incredible risk to contemplate. It is also worth noting that, even a freeze on government spending that stopped short of a default, would have a significant impact on demand.”
I still can’t believe that a few people are willing to tank the economy for failed economic hypotheses. It’s as if everything we’ve learned over the past 70 years has been completely thrown to the wind and we’re being run by the myth of Reagan’s ghost. I say myth because what they’re going on didn’t even happen on his watch. He was responsible for the biggest single tax increase in history and was responsible for a lot of the debt they’re whining about today. Speaking of Reagan, one of his economists–Bruce Bartlett–has an excellent analytical piece up on how the Debt Crisis is being Fueled by Obama’s weak negotiations. It’s worth a read.
Unfortunately, Obama is really too young to have the kind of experience that previous presidents like Reagan brought to the White House in terms of understanding intransigent enemies and how to deal with them. Consequently, Obama has really been caught flat-footed by the Tea Party era Republican Party. He believed it would respond positively if he offered it half a loaf on just about every issue.
For example, some 40 percent of the 2009 stimulus legislation consisted of tax cuts even though his economic advisers knew that they would have almost no stimulative effect. But Obama viewed them as an important concession to Republicans. Yet despite total rejection of his stimulus package by the GOP, Obama kept the tax cuts rather than reprogramming the money into more effective programs such as state aid or public works.
Nevertheless, Obama offered Republicans another half-loaf by putting forward a health reform plan almost identical to those that they and conservative groups such as the Heritage Foundation had proposedin the 1990s. Obama’s offer was summarily rejected and Republicans suddenly decided that the individual mandate, which previously had been at the core of their own health reform plans, was unconstitutional.
Now we are in the midst of a debt crisis that stems largely from Obama’s inability to accept the intransigence of his political opponents. Last December, he caved in to Republicans by supporting extension of the Bush tax cuts even though there is no evidence that they have done anything other than increase the deficit. There were those who told Obama that he ought to include an increase in the debt limit, but he rejected that idea, believing that Republicans would behave like responsible adults and raise the debt limit just as they did routinely when their party held the White House.
I join Bartlett, former President Clinton, and others in begging the President to invoke the 14th amendment. Then, he should find some economics advisers who know what they are doing and listen to them for a change.
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