Political Economy category archive

Gas and oil prices jumped again to new highs Thursday as the dollar weakened, although crude’s advance was limited by fresh evidence of a U.S. economic slowdown.

At the pump, gas prices surged 2.1 cents overnight to a record national average of $3.267 a gallon, according to AAA and the Oil Price Information Service. Gas prices are likely to rise much higher this spring; estimates range from about $3.50 a gallon in the Energy Department’s latest forecast to $3.75 or even $4 a gallon according to some analysts.

Remember that, at the start of the War in Iraq (which the Great Minds in the Current Federal Administration claimed would be paid for by Iraqi oil), oil was running at about $25 a barrel.

Meanwhile, CEOs take their toll:

Shareholders of Toll Brothers Inc. on Wednesday approved a controversial compensation plan designed to award bonuses to the chief executive even when the housing market is slumping.

The Horsham-based builder of luxury homes did not disclose how many votes came out in favor of the plan. But a shareholder activist group said executives disclosed at the shareholders meeting that it was at least 50 percent. Media were barred from attending the event.

CEO Robert Toll didn’t get a bonus for 2007 as the housing market slumped. But under the new CEO bonus plan, the company said, he would have received $6.56 million.

The CEO bonus plan “pays him simply for existing,” said Jennifer O’Dell, deputy director of corporate affairs for the Laborers’ International Union of North America, a union whose pension funds own at least 200,000 shares of Toll Brothers. “You should pay CEOs for performance.”

Subprime.

Via Balloon Juice.

Ensuring the future of our children . . .

(Support the troops, go shopping).

. . . will be crap.

The flow of blood may be ebbing, but the flood of money into the Iraq war is steadily rising, new analyses show.

In 2008, its sixth year, the war will cost approximately $12 billion a month, triple the “burn” rate of its earliest years, Nobel Prize-winning economist Joseph E. Stiglitz and coauthor Linda J. Bilmes write in a new book.

Beyond 2008, working with “best-case” and “realistic-moderate” scenarios, they project that the Iraq and Afghan wars, including long-term U.S. military occupations of those countries, will cost the U.S. budget between $1.7 trillion and $2.7 trillion – or more – by 2017.

Interest on money borrowed to pay those costs could add $816 billion to that bottom line, they say.

The nonpartisan Congressional Budget Office has done its own projections and comes in lower, forecasting a cumulative cost by 2017 of $1.2 trillion to $1.7 trillion for the two wars, with Iraq generally accounting for three-quarters of the costs.

Who needs jobs?

When Don Grillet lost his job in the mortgage industry in October, he went through many of the standard stages of unemployment.

There was the “whew, I need a break period.”

There was the “sitting looking at the television period,” in which he was too depressed and too worried to move.

Now Grillet, 30, is in the “omigod, my unemployment insurance runs out in two months phase.”

Today, the closely watched federal monthly jobs numbers will come out to let analysts and economists know what people like Grillet already know – it’s getting harder to find work, especially for people in financial services, a sector that has been shedding jobs for months as the extent of the subprime-mortgage crisis widens.

In pursuit of commisions, they chose to make bad loans. Now let someone else pay for them:

While many people in this country are pushing for more money to get health insurance for kids in low-income families, or to pay for their childcare, the politicians have a different idea. The politicians’ plan to help low- and moderate-income families is to have them pay a special 18% income tax to live in a home in which they have no equity.

Here’s how it works. As we know, millions of families are facing foreclosure on their homes because they have mortgages that they can’t afford and live in homes that are worth less than the amount on their mortgages. This is a situation where the banks would ordinarily take a huge hit since they have no hope of recouping anywhere near the amount owed on the mortgages when the homes go through the foreclosure process.

But politicians can’t resist a bank in distress. They want the government to step in and either guarantee or directly issue new mortgages to these homeowners. When these new mortgages are issued to pay off most or all of the prior mortgages, they will be giving the banks far more money than they can reasonably hope to get if the houses had gone through the foreclosure process.

I paid the fuel oil bill for the church yesterday.

Fortunately, I have gas heat. So, instead of getting rabbit-punched three or four times over the course of the winter, I just slowly bleed to death on a monthly basis.

$3.29 9/10 a gallon. That’s $.24 more than I paid per gallon the last time I filled up my little yellow truck with gasoline and about $.15 to $.20 more than the current price for regular gasoline in these parts as of yesterday.

Oh, yeah, wasn’t oil supposed to pay for the war in Iraq?

Mushrooming problems:

Chester County’s powerful mushroom industry, long immune to the ravages of Mother Nature, is succumbing instead to another potent force these days: the high cost of energy.

The cost of compost, heating oil and other essentials needed to grow mushrooms has risen so quickly since Hurricane Katrina caused a spike in crude-oil prices two years ago that some growers in the area – where more than half the nation’s mushrooms are produced – say they are operating in the red.

So, many Chester County mushroom growers this winter have begun to impose steep price increases, a move they say is essential but makes them more vulnerable to competition that now includes cheap mushrooms grown in China.

One of the most telltale signs of what is happening to our economy is the University of Michigan consumer confidence survey.

It has been trending down for the past two years and has already dropped to levels that were last reached during the 90-91 recession, when unemployment was at 7%. This shows me that increases in health care, energy and food costs are taking there toll.

It is not the fact that people are unemployed that’s the problem; it’s that they have less discretionary income to spend. Less spending will result in higher unemployment in the future, making the situation worse. Where are government’s focus should be is ending runaway inflation in health care energy and food. Addressing the fact that ethanol is causing food prices to soar, health care causes us to totally lose a consumer’s whole family to even a minor illness.

A one time tax rebate is to simplistic a cure to what are fundamental problems that will last for years.

Vacancies.

Via Atrios.

It’s dangerous work.

As cash-strapped Americans fight to keep their homes, an increasing number are losing their cars.

The nation’s busting economy has been a boom for the repo man.

Nationwide, auto repossessions are at a 10-year high, according to an economist at one of the nation’s biggest wholesale auto auction houses.

I mentioned them the other day.

Eliot Spitzer:

Several years ago, state attorneys general and others involved in consumer protection began to notice a marked increase in a range of predatory lending practices by mortgage lenders. Some were misrepresenting the terms of loans, making loans without regard to consumers’ ability to repay, making loans with deceptive “teaser” rates that later ballooned astronomically, packing loans with undisclosed charges and fees, or even paying illegal kickbacks. These and other practices, we noticed, were having a devastating effect on home buyers. In addition, the widespread nature of these practices, if left unchecked, threatened our financial markets.

Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers.

The Republican Party. Making the rich richer and the poor poorer for 150 years.

Addendum, Not So Soon After:

Balloon Juice.

I have mentioned before how one of the most bogus arguments against national health care is that it will lead to “rationing benefits.”

My friends, it’s already rationed, not by guvmint bureaucrats, but by faceless clerks in insurance company office buildings.

She’s “exhausted her lifetime benefits.” She’s 18.

Via Susie.

I have often wondered why there is not more public outrage about are high cost of health care, and why people are not demanding change.

If prices were skyrocketing like this any where else you would be hearing about on the evening news every night.

Then it hit me, the largest sponsor of these shows are health care and drug companies. They are not there to sell product as much as to exert editorial control over the news.

Everyone knows it is not wise to bite the hand that feeds you, so it stands to reason stories that you should be seeing, like 150% longer ER waits for heart attacks and 300% ER longer waits for everything else go unreported.

You call it financial censorship or lies by omission, but it is causing a lot of pain and suffering.

Frank Salamone blames himself, mostly, for his small role in the subprime-debt crisis that has helped hobble the global economy.

With his household debt soaring from a $123,000 mortgage in 1990 to a $425,000 mortgage on the same house by 2006, Frank and his wife, Joan, are a striking example of how the housing bubble’s easy credit allowed consumers to bury themselves in debt.

Now, they are struggling to avoid the worst consequence of what Frank called “crappy decisions.” That would be the loss of their house in Bucks County’s Warwick Township. “I’m not an Oprah victim. I don’t blame anybody,” he said.

No mention, of course, of the failure to regulate the financial industry to keep the industry from selling bags of air.

A brand new worry bead for our worry bead chain has arrived (like we needed it) Stagdeflation!

Normally I would discount it, but it comes from Nouriel Roubini, the guy who seems to get everything right, with a second from George Soros, no dummy himself. They calculate that we are headed into a total financial meltdown so severe that inflation will turn into deflation. This is 1930’s stuff. And coming from Roubini, you can not brush it off.

They unveiled this term at the Davos conference in Switzerland, so it was not meant for our ears, but thanks to the Internet there are no secrets anymore. To be clear, deflation does not normally happen in a recession; it takes a world wide depression to make prices of everything to fall. Both Roubini and Soros gave it a high probability. so be careful out there!

Now I have no ideas about where to put your money.

I was watching CNBC all day as usual today, and as has been the case all year, all the news was bad. Retail sales bad, even at Walmart; first time jobless claims way too high; housing starts way to low. All this endless bad news is pointing to a consumer led recession that is going to be a long lasting bear of a problem. The most troublesome thing about it includes inflation pressures on the consumer in areas such as food, energy, and health care that could well escalate instead of moderate. Add to that we have stagnent wages , no savings, declining home values, and record credit card debt.

The tune “Brother Can You Spare a Dime” keeps playing in my head.

Conundrum defines an intricate and difficult problem. This is in regard to use of ethynol as a automobile fuel. The price of a bushel of corn doubled last year, from 2 to 4 dollars a bushel, causing food prices to rise to record levels. This sets up a painful problem: even if oil prices fall it will cause us to use more ethynol because we will drive more. Since our gas is mixed with corn oil, food prices will rise even higher causing, real hardship for families especially. Talk about being stuck between a rock and a hard place. We finally get lucky, but we don’t save a dime.

While listening to the morning news on a station that I will not humiliate by naming it, I actually heard a reporter refer to Republicans as “fiscal conservatives.”

Yeah.

Right.

Theeeyyyyy’rrrreeee back . . .

The automated spam phone calls trying to sell me loans I don’t need from outfits I never heard of.

Six calls made it through the Caller ID check and the outgoing answering machine message and onto the answering machine in the past two days.

Lord knows how many of the other dozen or so calls that failed the Caller ID check in that time were more of the same.

Dammit, I’m old fashioned (in addition to being old)

If I need a loan, I’ll do it the traditional way.

I’ll just overextent my credit card.

I certainly wouldn’t take a loan from some unknown bozo who calls me up on the tellyphone.

I’ll get it from a known bozo.

AKA Reaganomics voodoo economics.

The Big Lie of Republican economic policy.

From Fact Check dot org. Follow the link for a more nuanced explanation, including very a description of the very limited circumstances in which there may be a soucon of truth hidden in the Big Lie:

Q: Have tax cuts always resulted in higher tax revenues and more economic growth as many tax cut proponents claim?

A: No. In fact, economists say tax cuts do not spark enough growth to pay for themselves.

But it is without doubt that Republican tax cuts make the rich richer and the poor poorer.

That’s why Republicans have to lie about them.