Wednesday, September 30, 2009

John Pilger - Obama and Empire


John Pilger videos must be viewed. He has a lot of videos but this one is relevant NOW

WSJ "Falling Tax Revenue Slam States"

In Q2 state tax revenue was down 17%. In Arizona, overall tax revenue fell 27% in Q2. It fell 12% in Florida and 14% in California. New York and Wisconsin saw personal income taxes fall more than 30%

The biggest source in drops in state revenue was from state income tax, which was down 28% from a year ago. State sales tax revenue fell 9%

WSJ 9/30/09 page A4.

Tuesday, September 29, 2009

Neoliberalism Hijacks G20

Marshall Auerback has a provocative and interesting article at Creditwritdowns.

Auberback's position is that curtailing deficit spending at this point would amplify deflation. His approach to deficits and GDP is starkly different than the position held by monetarists.

Interesting Video on the Dollar's "controlled" Demise

I don't have enough info to evaluate but it certainly is an interesting argument.

Monday, September 28, 2009

Andy Xie on Bubbles

Andy Xie is a well respected analyst. His article is a sobering look at the most recent bubble. Follow the link to his article. His summary points include the following:

"The basic conclusion is that financial sector debt is the same as it was a year ago, and the reduction in leverage is due to equity base expansion, partly due to government funding..."

"Second, financial institutions are operating as before....What's occurring now is another bubble that is again redistributing income from the masses to the few...."

"Third, financial supervision has not changed....The developments in the past year have actually made financial supervision worse. To support financial institutions, the U.S. government suspended mark-to-market accounting rules for assets on the books of financial institutions, which has allowed them to report profits...."

"The U.S. government sent many more to prison in the 1980s after the junk bond bubble burst. This bubble is 10 times bigger..."

"The lesson from the Lehman collapse seems to be, 'Take whatever you can and, when it crashes, you get to keep it.'"

"Only a multiplier effect from the current bubble is stopping financial institutions from going under...Essentially, the main short-term impact of the current bubble is preventing the financial system from collapsing. It won't lead to substantial demand creation."

"The environment for tolerating such a loose monetary environment ends when inflation surges in emerging economies first and developed economies second.
When inflation becomes a political problem and policymakers are forced to respond, money supplies will be cut. After that, no more bubbles."

Wendy Brown on Saving Univ of California

Wendy Brown explains what is at stake in the privatization of higher education.

Wednesday, September 23, 2009

Greg Palast on US's Response to Europe

Greg Palast has copies of memos sent between Europe and the U.S. covering policy responses to the recession.

Palast's article and the memos are worth reading because they illustrate very different takes on the significance of the recession. For Europe, the recession is ongoing. For the US, it's over.

I find the US response disturbing but wonder whether China is playing a role in the US decision to cut back on its monetary stimulus. One thing is clear, the US response prioritizes Wall Street over Main Street.

Tuesday, September 22, 2009

Ellen Brown's Intriguing Analysis

Ellen Brown cites Sean Olender's argument that the mortgage bailout programs were aimed at protecting banks from lawsuits rather than being aimed at helping homeowners. Here is an excerpt from her analysis:

"Following the Boyko decision, in December 2007 attorney Sean Olender suggested in an article in The San Francisco Chronicle that the real reason for the bailout schemes being proposed by then-Treasury Secretary Henry Paulson was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. Olender wrote:

“The sole goal of the [bailout schemes] is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value – right now almost 10 times their market worth. The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

“. . . The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC . . . .

“What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back.”

Needless to say, however, the banks did not buy back their toxic waste, and no bank officials went to jail. As Olender predicted, in the fall of 2008, massive taxpayer-funded bailouts of Fannie and Freddie were pushed through by Henry Paulson, whose former firm Goldman Sachs was an active player in creating CDOs when he was at its helm as CEO. Paulson also hastily engineered the $85 billion bailout of insurer American International Group (AIG), a major counterparty to Goldmans’ massive holdings of CDOs. The insolvency of AIG was a huge crisis for Goldman, a principal beneficiary of the AIG bailout."

"The Economy is a Lie, Too"

Paul Craig Robert's analysis of the economy. Check out Chris Hedges recent essay on the global reearch site as well.

Both essays address deteriorating standards of living for most Americans.

Every week I have young, talented, hard working students in my office who want to have the same opportunities afforded previously to college graduates. It breaks my heart to think how few opportunities exist presently for these students.

The U.S. needs to invest in providing opportunities for its human capital, instead of bailing out its corrupt financial capitalists.

Monday, September 21, 2009

Steve Keen Advocates "Jubilee"

Steve Keen, an Australian academic economist, argues for a debt jubilee. He also argues that banks should be nationalized (temporarily) in order to get rid of debt.

His recent remarks add to the remarkable amount of economic analyses claiming that the recession will not end until debt is removed from the financial system. This position has been argued from the left and the right.

Report on Projected Job Cuts from State Budget Cuts

Scary read if you happen to be employed by state governments.

International Labor Organization

ILO predicts the number of people in 'working poverty' who earn less than $2 a day will rise to 1.4 billion, or 45% of world's labor force from 1.2 billion in 2007.

Free market, neoliberal style capitalism has NOT worked for the vast majority of the world's population, including the majority of workers in industrialized nations such as the U.S.

It is beyond sickening that 45% of the world's labor force exists on less than $2 a day.

Having travelled to Indonesia and Thailand, I can tell you that $2 a day is not survivable, even in relatively poor nations.

Sunday, September 20, 2009

Grim Figures on Plight of Workers in Poorer Nations

The New York Times reports on the effects of the global recession on poor workers:

"As many as 222 million workers run the risk of joining the ranks of the working poor, earning less than $1.25 a day, according to an estimate by the International Labor Organization.

¶Remittance flows, which reached $328 billion in 2008, will drop by 7.3 percent in 2009, the World Bank predicts.

¶Hunger rates are up in every region in the world, according to the Food and Agriculture Organization.

There are also figures for how many people would be viewed as living below the poverty line, with the report suggesting it will be more than 1.3 billion people, up by more than 100 million in 2009...."

Published: September 17, 2009 New York Times

Income of Young People Down Dramatically

Automation, Globalization, the Decline in Union Jobs all explain what is going on in this report.

Dennis Cauchon of USA Today reports:

"The incomes of the young and middle-aged — especially men — have fallen off a cliff since 2000, leaving many age groups poorer than they were even in the 1970s, a USA TODAY analysis of new Census data found.

People 54 or younger are losing ground financially at an unprecedented rate in this recession, widening a gap between young and old that had been expanding for years.

While the young have lost ground, older people have grown more prosperous over the years and the decades. Older women have done best of all.

The dividing line between those getting richer or poorer: the year 1955. If you were born before that, you're part of a generation enjoying a four-decade run of historic income growth. Every generation after that is now sinking economically.

Household income for people in their peak earning years — between ages 45 and 54 — plunged $7,700 to $64,349 from 2000 through 2008, after adjusting for inflation. People in their 20s and 30s suffered similar drops. Older people enjoyed all the gains...."

Friday, September 18, 2009

Great Analysis at Steve Keen's Debtwatch

Steve Keen is an Australian academic economist. His analyses are very interesting and are accompanied by dramatic charts. His current article is worth reading....

Treasury Backing 85% of New Mortgages

Today's WSJ illustrates that the mortgage market remains frozen. The Treasury is backing 85% of new mortgages and the Fed is purchasing 80% of the securities into which the mortgages were packaged.

The question is, "Why aren't the banks lending with all the $$$$ pumped into their operations by the Fed?"

The answer must be that the banks are (a) either still insolvent or (b) are quite concerned about further debt defaults on mortgages, credit cards, etc.

Provocative Analysis of Economy!-Global-systemic-crisis-In-pursuit-of-the-impossible-recovery_a3797.html

Thursday, September 17, 2009

Crime Against Humanity by Trafigura

The Guardian reports on how the UK oil company Trafigura knowingly dumped toxic pollution, killing a number of people and injuring tens of thousands more.

"How UK oil company Trafigura tried to cover up African pollution disaster"
• Trafigura offers payout to 31,000 victims of toxic dumping
• Secret email trail exposes truth behind £100m legal battle

"The Guardian can reveal evidence today of a massive cover-up by the British oil trader Trafigura, in one of the worst pollution disasters in recent history.

Internal emails show that Trafigura, which yesterday suddenly announced an offer to pay compensation to 31,000 west African victims, was fully aware that its waste dumped in Ivory Coast was so toxic that it was banned in Europe.

Thousands of west Africans besieged local hospitals in 2006, and a number died, after the dumping of hundreds of tonnes of highly toxic oil waste around the country's capital, Abidjan. Official local autopsy reports on 12 alleged victims appeared to show fatal levels of the poisonous gas hydrogen sulphide, one of the waste's lethal byproducts..."

"Foreigners Unload US Assets"

WSJ article today:

"Foreign demand for long-term U.S. financial assets fell in July from a month earlier... Overall, net foreign sales of long-term maturity US securities totaled $7.4 billion in July, following purchases of $70.7 billion the month before."

I think this trend--if it is a trend--reflects growing pessimism about the mid-term prospects for the U.S. economy...

Housing Bubbles

WSJ today (9/17) reports: "Housing Seems Set to Aid Economy a Bit."

I have recently read in the WSJ that the U.S. Government is guaranteeing the vast majority of new mortgages because banks would not otherwise lend.

I have also read that FHA mortgages are defaulting left and right.

Credit delinquencies continue to rise on both mortgages and credit cards as citizens have lost jobs and lost income.

It seems to me that the preoccupation with housing numbers reflects the misguided assumption that housing must recover in order for the economy to recover.

Deja vu?

Reich comments that the U.S. economy should not simply be re-inflated. He argues it must be re-invented.

Housing is not the solution to the US economic woes...

Tuesday, September 15, 2009

One More on Manipulated Rage

This is from Matt Taibi at Smirking Chimp. I believe he was the person who wrote the great Goldman critique in Rolling Stone. Anyway, here is an excerpt:

"After all, the reason the winger crowd can’t find a way to be coherently angry right now is because this country has no healthy avenues for genuine populist outrage. It never has. The setup always goes the other way: when the excesses of business interests and their political proteges in Washington leave the regular guy broke and screwed, the response is always for the lower and middle classes to split down the middle and find reasons to get pissed off not at their greedy bosses but at each other. That’s why even people like Beck’s audience, who I’d wager are mostly lower-income people, can’t imagine themselves protesting against the Wall Street barons who in actuality are the ones who fucked them over. Beck pointedly compared the AIG protesters to Bolsheviks: “[The Communists] basically said ‘Eat the rich, they did this to you, get ‘em, kill ‘em!’” He then said the AIG and G20 protesters were identical: “It’s a different style, but the sentiments are exactly the same: Find ‘em, get ‘em, kill ‘em!’” Beck has an audience that’s been trained that the rich are not appropriate targets for anger, unless of course they’re Hollywood liberals, or George Soros, or in some other way linked to some acceptable class of villain, to liberals, immigrants, atheists, etc. — Ted Turner, say, married to Jane Fonda.

But actual rich people can’t ever be the target. It’s a classic peasant mentality: going into fits of groveling and bowing whenever the master’s carriage rides by, then fuming against the Turks in Crimea or the Jews in the Pale or whoever after spending fifteen hard hours in the fields. You know you’re a peasant when you worship the very people who are right now, this minute, conning you and taking your shit. Whatever the master does, you’re on board..."

Manipulation of Populist Rage

Glenn Greenwall of Salon has a very insightful analysis of how working and middle class populist rage is skillfully manipulated. Here is an exerpt from his must-read essay:

"This is the paradox of the tea-party movement and other right-wing protests fueled by genuine citizen anger and fear. It is true that the federal government embraces redistributive policies and that middle-class income is seized in order that "someone else benefits." But so obviously, that "someone else" who is benefiting is not the poor and lower classes -- who continue to get poorer as the numbers living below the poverty line expand and the rich-poor gap grows in the U.S. to unprecedented proportions. The "someone else" that is benefiting from Washington policies are -- as usual -- the super-rich, the tiny number of huge corporations which literally own and control the Government. The premise of these citizen protests is not wrong: Washington politicians are in thrall to special interests and are, in essence, corruptly stealing the country's economic security in order to provide increasing benefits to a small and undeserving minority. But the "minority" here isn't what Fox News means by that term, but is the tiny sliver of corporate power which literally writes our laws and, in every case, ends up benefiting.

It wasn't the poor or illegal immigrants who were the beneficiaries of the Wall St. bailout; it was the investment banks which, not even a year later, are wallowing in record profits and bonuses thanks to massive taxpayer-funded welfare. ..."

Interesting Media Criticism of WSJ Account of Inequality

In journalism studies it is common to say that the media don't tell people what to think, but rather tell them what to think about.

On the other hand, the media play a powerful role in shaping how people think about issues through their "framing" devices.

See this blog for a good example of prejudicial media framing of growing inequality.

Racial Discrimination

The American Prospect has a good article on racial discrimination against Obama. I feel strongly that blatant forms of disrespect and outright violence directed against Obama have less to do with his policies and more to do with white angst about economic insecurity and latent feelings of racial superiority.

This is not to say that all who disagree with Obama's policies are racist.

Civil disagreement is part of the democratic process.

However, we are witnessing a degree of disrespect and symbolic violence that is truly unprecedented and hints at fascism.

I am not happy with many of Obama's policies so my position that he is subject to such violence is not based on blind allegiance.

Saturday, September 12, 2009

Polycarbonate Plastics and Human BPA Exposure

Drinking from plastic bottles containing BPA poses health risks. Environmental Health Perspectives vol 117 issue 9 reports the following:

"Urinary Levels Rise with Use of Drinking Bottles

Public and scientific concerns about exposure to bisphenol A (BPA) have risen in the last few years, with Canada and some U.S. states and cities banning BPA from polycarbonate baby bottles and other products sold for use by infants and children. Despite these concerns, little is known about whether the use of polycarbonate food or beverage containers actually contributes to BPA body burden in people. A new study of human exposure to BPA from drinking containers now shows that study participants’ urinary concentrations of the molecule increased by two-thirds after they used polycarbonate drinking bottles for 1 week [EHP 117:1368–1372; Carwile et al.]."

We have already switched to aluminum.

Saez on Income Distribution

Emmanuel Saez of U.C. Berkeley has just made available his latest analysis of income inequality in the U.S. He is an authority on the subject and is widely respected by economic critics representing diverse viewpoints. Scroll down his page to "Striking it Richer...."

Health Care Spending

yesterday I visited my primary care provider because my hand ached terribly. He is a nice guy. He is against expansion of federal health care spending. He believes it will raise taxes.

People like him don't seem to realize that national health care costs are rising and will continue to rise as our unhealthy population ages.

Only the largest employers will be help subsidize health care costs for their employees because small and medium size businesses will simply be unable to afford skyrocketing costs.

Individuals will not be able to buy health insurance on the open market and still pay their mortgages as monthly premiums are now exceeding many monthly mortgage payments.

My employer sponsored health care for a family plan now costs 1,440 a month. It is a EPO. I'm fortunate in that my employer helps pay for this cost. Since I have asthma, migraines, and skin cancer, I would be unable to pay for health insurance if I had to purchase it as an individual.

So, the point is that health care costs are becoming too expensive for the vast majority of employers and individuals.

Something must be done.

Health care reform is not simply about government assuming all costs without changing the current system's operations.

We all know that each doctor's office must employ at least one individual to process health care plans. The amount of people involved in the administration of health insurance plans is costly and does not add value to health care.

Additionally, "cover your ass medicine" and pay for procedure protocols raise health care costs but do not add value.

Health care reform has to happen or only elites will have access.

That scenario will put my doc out of business and most of his colleagues as well.

US Recession Over?

I'm having a hard time with this headline. I realize that GDP has stopped falling and that inventory re-stocking is finally happening but it is hard for me to believe that we are out of this mess when nothing essentially has changed on Wall Street (see NYT today, "A Year After a Cataclysm, Little Change on Wall St." By ALEX BERENSON) and foreclosures continue. Calculated Risk reports that 2/3 of August sales in Sacramento were distressed or short sales. These stats don't sound like recovery.

The 2008 census data reveal that poverty had risen to 13%. I wonder what that figure stands at now?

Additionally, the states are still in big trouble. Only the federal stimulus money sent to states kept k-12 and university education from massive--and I mean massive--cuts.

I'm not buying recovery. I believe the bailout has halted the financial crisis but only at great cost and few benefits to the public. I believe the stimulus has helped states and helped boost short term GDP but when the stimulus funds dissipate I'm not sure what will happen.

I know I'm pessimistic--a colleague has added me to the list of Dr. Dooms--but the economic data do not support recovery for main street...

Thursday, September 10, 2009

New Census Data on Falling Incomes

Shawn Fremstad of the Center for Economic and Policy Research writes today (9/10):

"Today the Census Bureau released a report on the trends in income, including poverty, and health insurance between 2007 and 2008. The report shows that working-class and middle-class families were particularly hard hit by the recession that began in December 2007. The decline in real median income between 2007 and 2008 is the largest single-year decline in the 40 years of household median income data on record and the 60 years of family median income data on record.

The report also shows declines in health insurance coverage among middle-income families earning between $50,000 and $75,000."

Similar Data can be found on the Animal Spirits blogpage.
Number unemployed: 14.9 million (up from 7.5 million in December 2007)
• Underemployment rate: 16.8%; Share of workers un- or underemployed: roughly 1 in 6
• Under- and unemployed, marginally attached and involuntary part-time workers: 26.4 million
• Unemployment rate, ages 16 to 24: 18.2%
• Male unemployment: 10.9%; female unemployment: 8.2%
• White unemployment: 8.9%; black unemployment: 15.1%; Hispanic unemployment: 13%
Drop in children covered through parents' employers, 2000 to 2007: 3.4 million
• Share of people under 65, with incomes in the top 20%, covered by employers in 2007: 86.4%; Share with incomes in the bottom 20%, covered by employers: 21.9%
• Share of Hispanic workers who are uninsured: 39.8%
• Percentage of under-65 Americans with employer-sponsored health insurance in 2000: 68.3%; In 2007: 62.9%

Skewed Income Distribution

9/10 WSJ reports that in 2007 the top 1% of families accounte for 23.5% of all personal income. Apparently the top 1% share of income is falling due to the great recession. I wonder why the WSJ has not run an article discussing the falling wages and benefits of the bottom 80%

Wednesday, September 9, 2009

Homeless Children Rise in Number

The New York Times reported Sunday Sep 6 2009 about rising homelessness for children:

"The rise, to more than one million students without stable housing by last spring, has tested budget-battered school districts as they try to carry out their responsibilities — and the federal mandate — to salvage education for children whose lives are filled with insecurity and turmoil.

The instability can be ruinous to schooling, educators say, adding multiple moves and lost class time to the inherent distress of homelessness."

The social and economic costs for this recession for children, (formerly) working poor people, and recent college graduates are incalculable.

Good Article on Unemployment

Could unemployment--the U6 figure--match or exceed the Great Depression's?

A New Gilded Age

Today's Washington Post reports:

"Affluent shoppers are the most important segment of consumer spending, which in turn drives the national economy. The top 20 percent of the nation's households -- with income of at least $150,000 -- account for 40 percent of all spending, according to government data. That makes them a crucial spoke to any turnaround."

The fact that 20% of the population is responsible for 40% of ALL spending should raise alarm bells. We have indeed entered a new Gilded Age where workers must labor 800 years at minimum wage to match the annual income of American executives.

Corporations as Persons

Today the Supreme Court is hearing a case involving the constitutionality of laws limiting corporations' ability to back ads for or against political candidates.

Since 1907 it has been illegal for corporations to campaign directly for/against political candidates.

In the time of robber barons, the public realized that corporate campaigns would decimate the democratic process.

We appear to have re-invented the era of robber barons, producing a new gilded age, so I suppose it is not surprising that corporations are again attempting to overtly and directly shape political processes through the one mechanism denied to them, campaign ads.

One can only hope that the Supreme Court has the integrity to protect what is left of our democracy.

Monday, September 7, 2009

Mob Mentalities and the Rhetoric of Hate

A friend of mine and I have an ongoing discussion about the U.S. slide toward fascism, encited by hate radio, crazed ministries, and Internet propaganda.

Henry Giroux has an excellent article on this subject at truth out.

Here is an excerpt:

Giroux describes: "A right-wing spin machine, influenced by haters like Rush Limbaugh, Glenn Beck, Michael Savage and Ann Coulter, endlessly spews out a toxic rhetoric in which: all Muslims are defined as jihadists; the homeless are not victims of misfortune but lazy; blacks are not terrorized by a racist criminal justice system, but the main architects of a culture of criminality; the epidemic of obesity has nothing to do with corporations, big agriculture and advertisers selling junk food, but rather the result of "big" government giving people food stamps; the public sphere is largely for white people, which is being threatened by immigrants and people of color, and so it goes. Glenn Beck, the alleged voice of the common man, appearing on the "Fox & Friends" morning show, calls President Obama a "racist" and then accuses him of "having a deep-seated hatred for white people or the white culture." [2] Nationally syndicated radio host Rush Limbaugh unapologetically states that James Early Ray, the confessed killer of Martin Luther King Jr., should be given a posthumous Medal of Honor, [3] while his counterpart in right-wing hate, talk radio host Michael Savage, states on his show, "You know, when I see a woman walking around with a burqa, I see a Nazi. That's what I see - how do you like that? - a hateful Nazi who would like to cut your throat and kill your children." [4] He also claims that Obama is "surrounded by terrorists" and is "raping America." This is a variation of a crude theme established by Ann Coulter, who refers to Bill Clinton as a "very good rapist." [5] Even worse, Obama is a "neo-Marxist fascist dictator in the making," who plans to "force children into a paramilitary domestic army." [6] And this is just a small sampling of the kind of hate talk that permeates right-wing media. This could be dismissed as loony right-wing political theater if it were not for the low levels of civic literacy displayed by so many Americans who choose to believe and invest in this type of hate talk. [7] On the contrary, while it may be idiocy, it reveals a powerful set of political, economic and educational forces at work in miseducating the American public while at the same time extending the culture of cruelty. One central task of any viable form of politics is to analyze the culture of cruelty and its overt and covert dimensions of violence, often parading as entertainment..."

Traumatized Populations

Link to New Report Based on a Survey of Unemployed Workers:

"A comprehensive national survey conducted among 1,200 Americans nationwide who have
been unemployed and looking for a job in the past 12 months, including 894 who are still jobless, portrays a shaken, traumatized people coping with serious financial and psychological effects from an economic downturn of epic proportion."

Today's Arizona Republic featured an article describing workers who will work more hours, harder, for less pay out of fear for their jobs. It appears that not only the unemployed have been traumatized by the downturn.

Banks Not Lending

From today's Washington Post: "Mortgage Market Bound by Major U.S. Role"

"Absent government intervention, there would be no lending," said Nicolas P. Retsinas, director of Harvard University's center for housing studies."

Although I am not advocating irresponsible lending, I find it unbelievable that banks--which have received billions in dollars in bailouts--are not lending to consumers. There is something terribly wrong here....

Saturday, September 5, 2009

Private Sector Capture of the State

Simon Johnson describes the perils of private sector capture of the state. Private sector capture occurs when public entities (a.k.a. states) make decisions that benefit narrow, private (a.k.a. corporate) interests to the expense of the larger public. Johnson has in the past described the banking/financial sector's "capture" of the U.S. Government.

The most cost effective way of dealing with the banking crisis was not pursued because of private sector influence. The most cost effective approach would have been to temporarily nationalize the banks and then systematically sell off good and bad assets. This approach would have cost the taxpayers the least amount of money, although bond holders would have seen hits to their assets. Johnson outlines this argument in an essay published last spring in the Atlantic, "The Silent Coup."

In my opinion, private sector capture of the state is ushering in a kind of neo-feudalism whereupon the public finances corporate greed and moral hazard with little to no benefit to the public.

Executive Excess

See link for report on executive excess. We are living in a new Gilded Age:

"A generation ago, typical big-time corporate CEOs seldom made more than 30 or 40 times what their workers took home. In 2008, the IPS report shows, top executives averaged 319 times more than average U.S. worker pay."

"From 2006 through 2008, the top five executives at the 20 banks that have accepted the most federal bailout dollars since the meltdown averaged $32 million each in personal compensation. One hundred average U.S. workers would have to labor over 1,000 years to make as much as these 100 executives made in three."

Friday, September 4, 2009

Unemployment Data

Unemployment reaches 9.7%

Unemployment for adult men is 10.1%

Underemployment also rose in August: "another 298,000 workers involuntarily working part-time. This number now stands at 8.9 million, or 5.8 percent of the labor force"

The stimulus has helped slow down the rate of job losses but has not been sufficient to increasing hiring.

Today's WSJ has an article titled "States Shut Down to Save Costs." If states replace furloughs with job cuts, as some conservatives advocate, we will see skyrocketing unemployment.

Cutting off stimulus spending too early will imperil the economy.

Krugman: "How Could Economists Have Got it So Wrong"

Paul Krugman discusses how economists were blinded by their love of numbers and their idealized notions of market operations before and after the Great Depression:

"Until the Great Depression, most economists clung to a vision of capitalism as a perfect or nearly perfect system. That vision wasn’t sustainable in the face of mass unemployment, but as memories of the Depression faded, economists fell back in love with the old, idealized vision of an economy in which rational individuals interact in perfect markets, this time gussied up with fancy equations. The renewed romance with the idealized market was, to be sure, partly a response to shifting political winds, partly a response to financial incentives. But while sabbaticals at the Hoover Institution and job opportunities on Wall Street are nothing to sneeze at, the central cause of the profession’s failure was the desire for an all-encompassing, intellectually elegant approach that also gave economists a chance to show off their mathematical prowess."

Krugman's essay is defintely worth reading. However, it fails to acknowledge the myriad criticisms of Chicago school economic theories and practices emerging from academics in anthropology, global studies, political science, sociology over the last 30 years. These researchers' studies often employed qualitative methods (e.g., ethnography).

Mainstream economists' disdain for the purportedly "soft" social sciences and humanities and their concomitant disregard for qualitative methods ensured their blindness to the considerable bodies of research demonstrating the theoretical and empirical limits and contradictions of neoliberalism.

Thursday, September 3, 2009

Unemployment and the Great Recession

Considerable debate exists about the scope and depth of this recession in contrast with previous ones in the post-WW II era.

Economists generally agree that what makes this recession particularly noteworthy is the degree of unemployment. Unemployment is not simply resulting from the loss of jobs, but also from the lack of job creation. Simply put, jobs lost are not being replaced with new jobs.

Small businesses are not creating jobs in significant number. Would-be retirees are not vacating jobs due to the decimation of their 401ks (see NYT article on this, "Reluctance to Retire Means Fewer Openings). And state and city governments are cutting jobs. Employers find that worker productivity rises when workers fear for their jobs, making new hiring "unnecessary."

Moreover, detailed analysis of private sector employment since the dot com meltdown reveals that today's unemployment trend began then, but was masked by the housing bubble. Accordingly, Creditwritedowns rights:

"What this data should make plain is that the downturn we are experiencing is really an outgrowth of the recession and jobless recovery of 2001-2003. Only through the extraordinary efforts of Alan Greenspan in inflating a housing bubble to replace the telecom and technology bubble were we able to escape this downturn relatively unscathed."

This interpretation of the data reinforces the argument made by Reich that a new economy has to be created...

Wednesday, September 2, 2009

Falling Wages....

The WSJ reports that "wages and salaries alone have fallen 4.7% since the recession began, dragged down by layoffs, pay cuts and shorter hours."

New Study, “Broken Laws, Unprotected Workers,”
Fromt the NYT:

"The study, the most comprehensive examination of wage-law violations in a decade, also found that 68 percent of the workers interviewed had experienced at least one pay-related violation in the previous work week."

"The study found that 26 percent of the workers had been paid less than the minimum wage the week before being surveyed and that one in seven had worked off the clock the previous week. In addition, 76 percent of those who had worked overtime the week before were not paid their proper overtime, the researchers found."