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Pay no attention to the people behind the curtain

Showing posts with label Economy. Show all posts
Showing posts with label Economy. Show all posts

Monday, August 22, 2011

180° backwards

by folkbum

Yglesias, today, cites a deal the Financial Times wants progressives to take on another stimulus:
In broad terms, the needed elements are plain: further short-term stimulus combined with credible longer-term fiscal restraint. Cut the payroll tax, extend jobless benefits and subsidise new jobs; then curb entitlement spending by raising the retirement age.
No! You want an immediate, effective stimulus and curb to rising unemployment? Lower the retirement age.

Right now, offer anyone over 60 an early out to Medicare and Social Security. Make it temporary--people would have to pull the trigger by, say, December 31--but offer it.

With millions dropping out of the workforce (and likely, high wage earners too), unemployment falls, labor costs fall, consumer spending rises, and, boom, stimulus.

Short-term it creates additional cost; but short-term borrowing is cheap right now and all of those new retirees would have been entering the system in the next five years anyway.

Not Liked

By Keith R. Schmitz

One thing you have to say about the right wing, they are active on social media, even if their policies are not too sociable. Sarah Palin comes to mind.

Scott Walker is one big Facebook friend, commenting multiple times a day to his fawning legion of supporters, who are seemingly afflicted big time with Stockholm Syndrome.

So interesting to note that since the bad jobless numbers came out last week Thursday, Walker has been strangely mute on Facebook. Not a peep since Friday.

Which is too bad when you think of it because you have to wonder where his friends are from the WMC? You would think that after Walker showered them with numerous goodies in the state budget and whacking public employee unions that they hate so much, his buddies would have reciprocated by at least bringing on some new employees to soften these numbers.

After all, these major companies are no doubt among those US firms that are sitting on $1.2T in cash. You would think that here in Wisconsin they would have used some of that to buy Walker some credibility.

But it looks like they are casting their lot in making the President look bad, which may result in collateral damage here in Wisconsin.

With friends like this...

Monday, July 25, 2011

Today's debt ceiling conundrum

by folkbum

While the conservatives in my comments section are busily prattling on about how Obama is a front for the Chi-coms, or something, here's where we are today. Dem Senate Majority Leader Harry Reid is proposing a debt-ceiling deal that gives Republicans everything they have asked for including things they agreed to in the Biden talks and voted for in the Ryan Budget. Yet GOP House Speaker John Boehner is putting forward a plan that is the single thing that Obama has said he couldn't support--a short-term deal that forces us through all of this again in four months.

This is my question for anyone who likes what Republicans are up to: How is it possible to support a party whose sole purpose anymore seems literally to be saying no to anything Democrats propose, even when those proposals are exactly what Republicans say they want?

Saturday, July 23, 2011

America's going Galt

by folkbum

I found this list of things that will happen immediately upon passing the debt ceiling deadline August 2 interesting, as it apparently comprises the full list of what makes Ayn Rand's America great:
• You just cut the IRS and all the accountants at Treasury, which means that the actual revenue you have to spend is $0.
• The nation's nuclear arsenal is no longer being watched or maintained
• The doors of federal prisons have been thrown open, because none of the guards will work without being paid, and the vendors will not deliver food, medical supplies, electricity, etc.
• The border control stations are entirely unmanned, so anyone who can buy a plane ticket, or stroll across the Mexican border, is entering the country. All the illegal immigrants currently in detention are released, since we don't have the money to put them on a plane, and we cannot actually simply leave them in a cell without electricity, sanitation, or food to see what happens.
• All of our troops stationed abroad quickly run out of electricity or fuel. Many of them are sitting in a desert with billions worth of equipment, and no way to get themselves or their equipment back to the US.
• Our embassies are no longer operating, which will make things difficult for foreign travelers
• No federal emergency assistance, or help fighting things like wildfires or floods. Sorry, tornado people! Sorry, wildfire victims! Try to live in the northeast next time!
• Housing projects shut down, and Section 8 vouchers are not paid. Families hit the streets.
• The money your local school district was expecting at the October 1 commencement of the 2012 fiscal year does not materialize, making it unclear who's going to be teaching your kids without a special property tax assessment.
• The market for guaranteed student loans plunges into chaos. Hope your kid wasn't going to college this year!
• The mortgage market evaporates. Hope you didn't need to buy or sell a house!
• The FDIC and the PBGC suddenly don't have a government backstop for their funds, which has all sorts of interesting implications for your bank account.
• The TSA shuts down. Yay! But don't worry about terrorist attacks, you TSA-lovers, because air traffic control shut down too. Hope you don't have a vacation planned in August, much less any work travel.
• Unemployment money is no longer going to the states, which means that pretty soon, it won't be going to the unemployed people.
And, even better, Ayn Rand's America stops sending all aid to states, so within a month or so after the shutdown, everything from schools to hospitals to public safety folds up, too. It will be awesome!

The easy answer, obviously, is the kind of clean debt-ceiling vote that has happened 80-something times in the last 90 years, including many times that Eric Cantor, John Boehner, Paul Ryan and the rest of the GOP Randroid caucus uncomplainingly approved. It would take five minutes.

The less easy answer is to take advantage of the fact that real interest on government debt right now is negative: We can more than take a clean vote, but do a whole additional stimulus, which can simply be a big payday to struggling states (or interest-free loans to struggling states). This is also a no-brainer, which make it kind of ironic that the GOP will never let it happen.

Tuesday, July 05, 2011

But those mooching teachers have it way too good

by folkbum
The bottom line: It’s not exactly easy street for our $250,000-a-year family.
Seriously, that's the conflicting message of the political right these days: It's possible to be near poverty at a quarter mil a year, but that uppity mid-career teacher needs a 12% cut off her $45k salary.

Alternatively, you could put it this way: The political right weeps for a family living beyond its means in Naperville, IL (notably pleading to keep their taxes low, not suggesting they move to Aurora), but insists that we cut Medicare before the debt monster kills us all.

Monday, June 27, 2011

Stimulus idea

by folkbum

Two billion dollars in dollar coins in vaults around the country? Send 15 of them to each of the 130 millionish households in the US.

Is it going to turn the economy around? No. But, hey, it's as close as we'll get to an actual helicopter drop.

Tuesday, March 15, 2011

Union Thuggery in one graph

by folkbum

As I said, one graph:


Click the image for some analysis; however, this is simply just one more data point in the never-ending stream showing that state budget deficits, private-sector wage pressures, and everything else that's wrong with America is not the fault of public employees.

Who is to blame? I'm not sure, but I might start by asking who benefitted from the great leaps in productivity if not the workers.

Tuesday, September 21, 2010

Chairman Johnson's Workers' Paradise

by folkbum

If only the US Business climate were more like China's, Ron Johnson wistfully dreams. Really?
In China, death from overwork is so common, there's a word for it: guolaosi. But despite the fact that guolaosi kills over 600,000 Chinese workers a year, working conditions in China are improving. And consumers in the West can help prevent guolaosi deaths by demanding fairly-produced goods from China.

Yan Li's family knows the meaning of guolaosi far too well. Li worked for a Foxconn factory in Southern China where he helped assemble components for iPads, Playstations, and mobile phones. He stood on the assembly line in one place, making the same tiny motion with his wrist all day. Sometimes, according to his family, his shifts would last for 24 hours. Sometimes up to 35 hours at a time. Li had no trade union, no group to represent his interests, and if he had tried to form one he'd probably have been imprisoned or killed. This went on until one day 27-year-old, otherwise healthy Li finished a particularly long shift and dropped dead.

Gualoisi is not uncommon in China. In fact, China Daily estimates that up to 600,000 workers a year die from overwork. That figure includes many workers like Li who are young and have no serious health problems before starting brutally strenuous jobs. It also includes workers who commit suicide to escape abusive work environments, which incidentally, happened to another worker at Li's factory the same night he died. These deaths occur at factories that make things all of us have in our home and use daily — cell phones, computers, car parts, etc. The factory where Li died might have made the computer I'm writing this story on, on the one you're using to read it. (via)
For our sakes, lets hope Chairman Ron doesn't get to set economic policy for the US anytime soon.

(Also worth wondering why then PACUR hasn't been shipped to China, like lots of Bemis's other suppliers.)

Monday, September 06, 2010

$50 billion is not enough

by folkbum

Believe me, I appreciate that President Obama came to visit and stump and drop a plan for some infrastructure spending. None of those things present a problem. This does:
President Barack Obama will announce on Monday a six-year infrastructure revamp plan with an initial investment of $50 billion to jump-start job creation, a white house official said. [. . .]

With a jobless rate near 10 percent, Democrats are facing predicted losses in the November 2 congressional elections and the Obama administration is trying to convince voters that Democratic policies can lead the way out of the country's deepest recession in 70 years.
$50b? That's a drop in the bucket. As I have noted before, the current recession has sucked an annual $1.2 trillion, with a T as in Trouble, out of the economy. The stimulus passed so far has amounted to a paltry $150 billion, with a B as in Baloney, annually. Even my readers who listen to Glenn Beck can do math well enough to know that $150b is a lot less than $1.2t, even if the decimals make it confusing.

Another $50 billion, spread out over six years, is a pittance. It's laughable. It's embarrassing. Unless this week brings some additional announcements about additional stimulus, the game is over. Obama and the Democrats had a choice to go big or go home. Apparently, they want to go home.

Sunday, September 05, 2010

In Which The Smartest Guy in the Room is Also the Shortest

By 3rd Way

This Labor Day we should listen to our former labor secretary's analysis of what is ailing our economy.

The national economy isn’t escaping the gravitational pull of the Great Recession. None of the standard booster rockets are working...

That’s because the real problem has to do with the structure of the economy, not the business cycle. No booster rocket can work unless consumers are able, at some point, to keep the economy moving on their own. But consumers no longer have the purchasing power to buy the goods and services they produce as workers; for some time now, their means haven’t kept up with what the growing economy could and should have been able to provide them.

This crisis began decades ago when a new wave of technology — things like satellite communications, container ships, computers and eventually the Internet — made it cheaper for American employers to use low-wage labor abroad or labor-replacing software here at home than to continue paying the typical worker a middle-class wage...

But for years American families kept spending as if their incomes were keeping pace with overall economic growth. And their spending fueled continued growth. How did families manage this trick? First, women streamed into the paid work force...

Second, everyone put in more hours. What families didn’t receive in wage increases they made up for in work increases. By the mid-2000s, the typical male worker was putting in roughly 100 hours more each year than two decades before, and the typical female worker about 200 hours more.

When American families couldn’t squeeze any more income out of these two coping mechanisms, they embarked on a third: going ever deeper into debt... From 2002 to 2007, American households extracted $2.3 trillion from their homes.

Eventually, of course, the debt bubble burst — and with it, the last coping mechanism. Now we’re left to deal with the underlying problem that we’ve avoided for decades. Even if nearly everyone was employed, the vast middle class still wouldn’t have enough money to buy what the economy is capable of producing.

Where have all the economic gains gone? Mostly to the top... In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income...

The rich spend a much smaller proportion of their incomes than the rest of us. So when they get a disproportionate share of total income, the economy is robbed of the demand it needs to keep growing and creating jobs.

What’s more, the rich don’t necessarily invest their earnings and savings in the American economy; they send them anywhere around the globe where they’ll summon the highest returns...

THE Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity. In the 1930s, the American economy was completely restructured. New Deal measures — Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage — leveled the playing field...

Policies that generate more widely shared prosperity lead to stronger and more sustainable economic growth — and that’s good for everyone. The rich are better off with a smaller percentage of a fast-growing economy than a larger share of an economy that’s barely moving. That’s the Labor Day lesson we learned decades ago; until we remember it again, we’ll be stuck in the Great Recession.


Until the political parties controlling this country can agree on the root cause of our economic doldrums I don't see how our government can do much to help the job situation. It is absurd that one party's cure for what ails us is to increase the national debt by continuing tax cuts for some of the wealthiest people in the world while selling themselves as champions of the middle class. It is equally absurd that the opposing party isn't capable of standing up to special interests and truly be the champion of the middle class.

Friday, August 27, 2010

Hearing and Vision Problems

By Keith R. Schmitz

Put the GOP in control of Congress and what will America get for their troubles? Hearings.

We are in the depths of the worst economy in over 70 years and the out party sees the solution as witch trials, but that's what you get from a group that is as comfortable with government as they would be in a steel wool sweater. For good measure throw in their chronic problem with acting out and rational perspective.

As usual, the Republicans can't wait to overplay their hand. Meanwhile, if the Democrats could get out of their fetal ball and come up with some visionary and creative ideas, November could be different. However...

We are so screwed.

Tuesday, August 24, 2010

Not Much of a Socialist

By Keith R. Schmitz

Despite the doubts, the venerable General Motors got by with a little help from its friends -- in government. What was sad was that so many seemed to just give up on GM. Where was the American can-do attitude?

But don't believe me. Take it from the free market The Economist:
So was the auto bail-out a success? It is hard to be sure. Had the government not stepped in, GM might have restructured under normal bankruptcy procedures, without putting public money at risk. Many observers think this unlikely, however. Given the panic that gripped private purse-strings last year, it is more likely that GM would have been liquidated, sending a cascade of destruction through the supply chain on which its rivals, too, depended.
My point always has been that if GM went down, there was a network of suppliers throughout the Midwest and here in Wisconsin that would have swirled around the drain with it. The impact would have been huge, painful -- and in this case averted.

The critics, who seem more skilled at projection than personality analysis, have accused Obama of wanting to wrap the tentacles of government around vulnerable companies.

Didn't happen. Never happened. And as The Economist put it:
The lesson for American voters is that their president, for all his flaws, has no desire to own the commanding heights of industry. A gambler, yes. An interventionist, yes. A socialist, no.
The point is Obama saw what needed to be done, and he did it. That's leadership.

Friday, August 20, 2010

Here's the Log Jam

By Keith R. Schmitz

There are a number of reasons why we are in the financial ditch, but from the Washington Post, this one may be the most frustrating, and ridiculous:
Corporate profits are soaring. Companies are sitting on billions of dollars of cash. And still, they've yet to amp up hiring or make major investments -- the missing ingredients for a strong economic recovery.

Many Democrats say the economy needs more stimulus. Business lobbyists and their Republican allies say it needs less regulation and lower taxes.

But here in the heartland of America, senior executives say neither side's diagnosis fits.

They blame their profound caution on their view that U.S. consumers are destined to disappoint for many years. As a result, they say, the economy is unlikely to see the kind of almost unbroken prosperity of the quarter-century that preceded the financial crisis.
You know, a good start to encouraging people to spend more money would be to HIRE!

Sure people have debt to pay off. But what the clueless both in those companies and at the WAPO don't get is that right now the wallets remain tightly shut out of the fear among those that have a job that they may loose that job.

What this country needs is a hiring binge, and the executives with the guts and vision to take the plunge, not just for the good of the country but to see their own revenues rise.

The fantasy is that some group of public spirited business leaders would do just that, and take the lead.

But don't hold your breath. Ours is not a generation that sends men to the moon or sticks their necks out.

It is unfortunate that there is this whining about the little bit of taxes these executives will have to pay is the Bush cuts are allowed to lapse. Not only does this point to their hypocrisy about the deficit, but their lack of character. There are millions suffering far worse.

So people are not being hired, and it looks likely that unlike the New Deal, the government will not be stepping in any time soon.

We are so screwed.

Wednesday, August 18, 2010

Let's try that here!

by folkbum

If we put the Republicans back in charge:
The austerity measures that were supposed to fix Greece's problems are dragging down the country's economy. Stores are closing, tax revenues are falling and unemployment has hit an unbelievable 70 percent in some places. Frustrated workers are threatening to strike back.

Thursday, August 12, 2010

Quote of the Day, Paul Ryan edition

by folkbum
He’s saying: ‘Eat your broccoli. And then maybe you don’t get to eat at all for a few days. You don’t get steak--ever.’ ” - Jeb Bush
They always did say Jeb was the smart one.

Also, a chart:


Click it for an explanation.

Thursday, July 22, 2010

Stimulus

by folkbum

Obviously, the city or the state can't print the money to do this, but we could kill a bunch of birds--metaphorical birds, I don't want to get in trouble with yet another interest group this week--with a single stone here.

There are still hundreds of thousands gutters in Milwaukee County that feed into the storm sewer system and, eventually, feed the great mass of water in the deep tunnel during the 100-years storms we seem to get a couple times a year now.

Let's hire a bunch of people--500? 1000?--and have them spend the rest of the summer and fall disconnecting them and installing rain barrels, leaving behind some basic instruction of how to use the rain barrels, of course. MMSD already has a program where homeowners can do this for themselves (at a cost of $45 a barrel), sure. But the vast majority of homeowners haven't done so, and probably won't.

So let's just do it, as stimulus. The barrels are made in Milwaukee. The people installing them will be from Milwaukee, and picking up employability skills and a work history that they can take with them to (hopefully soon) another job once the economy picks up. Plus, injections of cash into the community will stimulate demand more broadly.

Undoubtedly, there are also thousands of miles of water infrastructure that needs updating to the 21st century, too, though MMSD has been among the leaders nationally in that regard. But storm events like tonight's remind us that solutions to infrastructure problems not only are necessary, but can be done now as stimulus.

Republican Economic Plan Revealed

by folkbum

If you like what's happening now, you're going to love life under Republican control:
In a meeting with several reporters this afternoon, House Minority Leader John Boehner outlined the top three measures he'd pursue if he becomes Speaker of the House next Congress to create new jobs. But, those who thought he'd outline specific programs and how they would create jobs were disappointed with a familiar litany of wish-list items: repeal health care reform, eschew climate legislation, and renew the Bush tax cuts.

In other words, repeal a program that largely hasn't yet taken effect; prevent new legislation that is also not in effect; and keep a current tax structure in place.
Memo to Boehner: The status quo isn't working. You might want to try something different.

Related: Republicans explicitly eschew something different. And almost unanimously vote today against extending unemployment benefits which, as we all know, is a far better demand stimulus than, say, not.

Saturday, July 17, 2010

McIlheran Watch: The McAdams pre-buttal

by folkbum

As I have noted previously, I am among an oh-so-super-lucky group of punditerati that gets an email preview a couple times a week of what Milwaukee Journal Sentinel calumnist Patrick McIlheran gets up to in print. So no surprise when my inbox dinged this morning with a McIlheran missive:
Don’t worry, says the state agency that’s running radio ads about how you can get a home with (almost) no cash. This time, they’ve got it all figured out.

Sure about that?

The money window’s back open, no place sooner than in Wisconsin. . . . The federal Treasury gave federal mortgage reseller Fannie Mae billions, so Fannie lent $325 million to WHEDA, which is passing it through banks to you if you haven’t owned a house in three years and have managed to save up pretty much nothing. All you need is $1,000 for closing costs and a middling credit score. No mortgage insurance needed, either.
McIlheran is referring to the WHEDA Fannie Mae Advantage program, run by the Wisconsin Housing and Economic and Development Authority, and apparently he doesn't like it.

I am certain a lot of that has to do with the continued insistence by those on the right that the present economic crisis is the result of abuses by Fannie Mae and ACORN intimidation of banks to lend to poor people and the Carter-era Community Reinvestment Act. It grates on many conservatives (though not all) that the wealthy and successful could possibly be responsible for messing up anything. After all, their success is the market's success, and the market is infallible.

That is pretty clearly wrong, and WHEDA's own track record proves it. WHEDA ran for many years a similar Zero Down program, and--

You know what? I'm going to turn this over to Marquette Professor John McAdams--make note of this, as I will never say it again--who is right about WHEDA and actually took this on two weeks ago*:
[R]easonable concessions to allow people with modest assets to buy a home make good public policy sense.

But what concessions are reasonable?

Letting people with poor credit get a mortgage? Certainly not. But the WHEDA program requires a 680 credit score to qualify, and the average credit score of people who get mortgages is 732. That’s credit worthy.

How about employment and income? Under the WHEDA program, employment and income are checked. Too low an income or a spotty employment record can get you rejected. [. . .] WHEDA claims that historically its default rates have been low.
On that last point, WHEDA offers McAdams some specific stats in an email (pdf):
WHEDA and other Housing Finance Agencies around the country were never part of the sub prime mortgage problem thatplagued the housing industry in recent years. Quite the opposite--our 35-year track record of safe, responsible lending is what has resulted in a foreclosure rate of only 1.25%--far lower than the state's average of 1.82% for similar "prime" fixed-rate loans, according to the latest data reported by the Mortgage Bankers Association. During the height of the foreclosureepidemic, WHEDA's rate remained at less than one percent for several months. Moreover, the WHEDA foreclosure rate is miniscule when compared with the Wisconsin foreclosure rates for FHA and subprime loans, which are 4.30% and 11.31%respectively.
And note that none of the conditions for the WHEDA program under discussion here--or any WHEDA program, ever--come close to the greatest abuses of private mortgage brokers making subprime loans, like the infamous NINJA loan. And as we learned last week, wealthy homeowners (at least, those owning million-dollar homes) have defaulted at nearly twice the rate of middle-class and poor homeowners.

McAdams concludes, "[O]n a public policy landscape littered with outrages, this falls far short of being an outrage. In fact, it’s probably an outright good thing." And I agree. McIlheran, indefatigable defender of the upper classes, does not deem the working poor worthy of this assistance.

* Indeed, this WHEDA program was apparently a Charlie Sykes talking point and McAdams stood up for the program then. I'm surprised McIlheran didn't see the McAdams pre-buttal and leave this thing alone.