Political Economy category archive

Via Paying Attention.

Megan Fox slips and admits that corporations are made-up people.

Wasserman-Schultz misses the opportunity to point out that poor folks who pay no income taxes do so because they are poor, for heaven’s sake.

Meghan Daum dissects politicians’ (and others’) attempts to appear “authentic” and finds them often so much insincere play-acting not to be authentic.

A nugget:

Then again, I’m referring not to the traditional definition of authenticity, but its expanded contemporary definition. Call it “aw, shucks authenticity.” Instead of “true to one’s own personality, spirit or character” (Webster’s words), it’s more like “successfully evoking a culturally agreed-upon idea of ordinariness.” That is, rolling one’s sleeves up to one’s elbows or convincingly wearing plaid shirts, being “plain-spoken,” or displaying small-town roots as proof of trustworthiness.

I exaggerate, but only slightly. Somehow authenticity has gone from a broad term about candor and genuineness to a code word for chimerical perceptions of simple American values and a simple, even rural middle-American life. Never mind that there’s nothing simple about life in rural America and never mind that concerns about authenticity are a hallmark of existentialist philosophy, which doesn’t necessarily jibe with the Wal-Mart meme. It’s still managed to become a staple of advertising and self-help discourse (Eat authentic tapas! Achieve authentic happiness!) and, especially in its aw-shucks form, a major factor in the 2012 political races.

John M. Crisp recounts some of the public facilities that he uses every day, such as the highway system, and those he hopes he never has to use, such as the fire department. Then he points out, as I have from time to time, that taxes are the price for living in a civilized society. A nugget:

This (Are Americans overtaxed–ed.) is a pertinent question since the recent debate over the debt ceiling casually assumed that we already pay too much for the benefits of civilization. It wasn’t just the radical tea party wing that so quickly took new revenues “off the table.” Mainstream Republicans at the state and national levels have made “No New Taxes” their motto, as well.

This position is based on two dubious economic principles: first, that Americans know more about what to do with their money than the government does. And, second, if we let the rich, especially, keep more of their money, they’ll create plenty of jobs for the rest of us.

Perhaps. But these sound like rationales produced in the service of the basic human desire to hold on selfishly to our own resources rather than share them for a greater good. In any case, they violate another fundamental economic principle: You have to pay for what you get.

Can we look around and say that our society is more civilized today than it was before the Republicans started their relentless assault on the polity?

One of the shibboleths of the right wing is the belief in “The Market” as some kind of impartial and implacable external force that exists apart of government.

This supports their ardent faith in deregulation. “Deregulate,” they say, “and The Market will just fix everything.”

It’s almost a form of idolatry, worshipping engraven bits of paper, rather than graven images.

At Asia Times, George Friedman argues that the separation of market and state ain’t necessarily so, even when viewed through the lens of Adam Smith. A snippet:

But we cannot understand what is going on without understanding two things. The first is that the political economic crisis, if not global, is at least widespread, and uprisings elsewhere have their own roots but are linked in some ways to this crisis. The second is that the crisis is an economic problem that has triggered a political problem, which in turn is making the economic problem worse.

The followers of Adam Smith may believe in an autonomous economic sphere disengaged from politics, but Adam Smith was far more subtle. That’s why he called his greatest book the Wealth of Nations. It was about wealth, but it was also about nations. It was a work of political economy that teaches us a great deal about the moment we are in.

Under 400k.

Applications for jobless benefits decreased 7,000 in the week ended Aug. 6 to 395,000, the fewest since early April, the Labor Department said today in Washington. Economists forecast 405,000 claims, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls and those getting extended payments also dropped.

One wonders how much of this is due to expiring benefits for the long-term jobless.

Barbara Ehrenreich, who spent a year living on minimum wage jobs and then wrote about it, sees things getting worse for those who have the least.

The Guardian excerpts the new afterword for her book. A nugget:

The most shocking thing I learned from my research on the fate of the working poor in the recession was the extent to which poverty has indeed been criminalised in America.

Perhaps the constant suspicions of drug use and theft that I encountered in low-wage workplaces should have alerted me to the fact that, when you leave the relative safety of the middle class, you might as well have given up your citizenship and taken residence in a hostile nation.

Most cities, for example, have ordinances designed to drive the destitute off the streets by outlawing such necessary activities of daily life as sitting, loitering, sleeping, or lying down. Urban officials boast that there is nothing discriminatory about such laws: “If you’re lying on a sidewalk, whether you’re homeless or a millionaire, you’re in violation of the ordinance,” a St Petersburg, Florida, city attorney stated in June 2009, echoing Anatole France’s immortal observation that “the law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges.”

Foreclosures still keeping housing affordable (emphasis added):

The housing market in South Hampton Roads remained sluggish in July with home sales slowing and prices down steeply from a year ago, according to a report released Tuesday.

Nearly one of every three homes sold in July – 30 percent – were in foreclosure or sold for less than what the homeowner owed, according to Real Estate Information Network Inc. That’s up from 25 percent a year ago.

David P. Goldman, writing at Asia Times, considers the current economic news.

He finds a bright side:

But the reason for the downgrades is that hedge funds have crippled out. Hedge funds can’t earn the 15%-20% returns they promise investors in a world of 3% bond yields and 2% gross domestic product (GDP) growth. Investors desperate for higher returns, including pension funds, returned to the hedges during 2010 and 2011, and are now suffering spasms of buyers’ remorse.

That prompted an across-the-board liquidation of all assets, including commodities and emerging market equities most favored by the hedges. The nearly $2.6 trillion of hedge fund assets constitute the system’s only real bubble: too much money chasing too few returns, with a lot of fingers on the recall button. As of May, equity hedge funds with $1.25 trillion in assets had strongly net bullish positions.

As near as I can figure it out (I’m not a banker and hedge funds are notoriously secretive), hedge funds are premised on playing both ends against the middle while having cake eating it too. I do know that an acquaintance of mine who understands the mechanics of this stuff far better than I do has long considered hedge funds to be a destructive force.

Housing prices would be rising, but foreclosures are keeping them within reach of those few persons who can still qualify for mortgages.

But with foreclosures and short sales accounting for more than 50 percent of home sales, overall prices are up only 0.9 percent since January in Miami-Dade. In Broward, overall prices have fallen 3.2 percent since January, according to the report, which uses an index of single-family home prices for June. Non-distressed prices in Broward are down 0.4 percent.

To paraphrase the Secretary, the way to create job is not by laying workers off.

Left unsaid was the “except in Wingnut World.”

Everything is proceeding according to plan to reinvigorate the rental industry:

Last Friday, the Census Bureau reported that the percentage of people who owned a home had dropped to 65.9% during the second quarter — its lowest level since the first quarter of 1998 and a far cry from the high of 69.2% reached in late 2004.

Yet, in a research paper issued a week earlier, Morgan Stanley analysts Oliver Chang, Vishwanath Tirupattur and James Egan argued that the home ownership rate is even lower than the Census Bureau statistics say.

In fact, once they factored in delinquent mortgage borrowers (the ones who are likely to lose their homes at some point), Morgan Stanley calculated that the home ownership rate is more like 59.2%.

At Asia Times, Mike Davis theorizes that the economies of the European Union, the United States, and China are headed for a collision (he also makes a side trip to the hot rod tales of Henry Felsen, many of which I read). Like almost everything in Asia Times, it’s worth a look.

What caught my eye particularly is this:

In addition to making everything else, China now seems to making its own homegrown banksters, who are adopting the tactics of our own U. S. variant and feeding-frenzying a real estate bubble:

In effect, a shadow banking system has arisen with big banks moving loans off their balance sheets into phony trust companies and thus evading official caps on total lending. Last week, Moody’s Business Service reported that the Chinese banking system was concealing one-half-trillion dollars in problematic loans, mainly for municipal vanity projects. Another rating service warned that non-performing loans could constitute as much as 30% of bank portfolios.

Real-estate speculation, meanwhile, is vacuuming up domestic savings as urban families, faced with soaring home values, rush to invest in property before they are priced out of the market. (Sound familiar?) According to Business Week, residential housing investment now accounts for 9% of the gross domestic product, up from only 3.4% in 2003.

It sounds a lot like the U. S. real estate market, circa 2005.

This can’t be good.

Mary Winter, writing at the Denver Post, takes a look at “strategic defaulters”–persons who walk away from their mortgages because the houses are under water–and asks, “Just who broke a promise with whom?” (emphasis added):

Most officials condemn these so-called strategic defaulters — homeowners who technically can afford to make payments but opt not to. “Any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator — and one who is not honoring his obligation,” said former Treasury Secretary Henry Paulson Jr.

But Paulson had it backwards.

Wall Street bankers, not homeowners, failed to honor their obligations. Bankers took excessive risks, designed loans to generate the greatest number of fees for themselves, pushed no-down and predatory loans on unqualified and financially illiterate customers, and paid lip service to modifications.

When housing collapsed, bankers took $175 billion in taxpayer bailouts and, to show their gratitude, promptly handed out $33 billion in performance bonuses to their executives.

The BBC explores the new home of the homeless: cheap motels.

I drop down into Albuquerque, into Joy Junction, which in the red dusk looks like a scene from Steinbeck. There are 300 homeless people staying here, all families.

Jeremy Reynalds, an expat Brit who runs the place, tells me frankly that the mainstay of the place are people with drug, alcohol and domestic violence issues. But as the years of crisis have dragged on, there is a new phenomenon – the homeless middle-class.

Sam Uretsky digs them out, in the Progressive Populist:

The rudiments of macroeconomics date back to Genesis 37: 25-36, the story of Joseph and the Pharaoh, when Joseph increased taxes by collecting grain during the years of plenty and redistributed the grain during the years of famine. Unfortunately, the Republicans under President Bush didn’t build up a surplus, or even maintain a balanced budget, when they had control, but the answer to improving economic conditions remains stimulation through deficit spending, even if the nation’s indebtedness continues to grow. The alternative, cutting spending, will simply cost more jobs and drive the economy further down. President Obama’s role should be to use the bully pulpit to teach economics 101 and explain why bad times are the right time to spend. He didn’t, and walked into the trap.

’nuff said.

Under 400k:

Jobless claims fell by 24,000 to 398,000 in the week ended July 23, Labor Department figures showed today in Washington. The level of claims was fewer than forecast, as the median estimate of economists in a Bloomberg News survey called for a drop to 415,000. There were no special factors associated with the decrease other than the usual volatility that occurs each year in July, a Labor Department spokesman said.

(snip)

The four-week moving average, a less volatile measure than the weekly figures, fell to 413,750 last week from 422,250.

The number of people continuing to receive jobless benefits dropped by 17,000 in the week ended July 16 to 3.7 million.

I’m putting on my “analyst” hat (I’m clearly as qualified as the next guy) and predict the number will be up next week.

If I get it wrong, maybe someone will offer me a job as a forecaster. Getting it wrong seems to be the main qualification.

Foreclosure-based jobs are secure jobs:

Down in Florida – two state Prosecutors – Theresa Edwards and June Clarkson – uncovered rampant foreclosure fraud perpetrated by big banks using robo-signers to kick thousands of families out of their homes illegally. But as the prosecutors were preparing their cases against the banksters – they were inexplicably fired by Florida Attorney General Pam Bondi. Why? Because, as they allege, they were going after banksters TOO aggressively.

Click for a larger image.

Via Hanlon.