Political Economy category archive

A smidgen better. Interesting to see what happens in January when retail lays off its Christmas help.

U.S. jobless claims dipped for a second week, suggesting growth in the labor market, but data on home construction showed that sector remains stressed even as the economy shows signs of a pick up.

Initial claims fell 3,000 to a seasonally adjusted 420,000, the Labor Department said on Thursday, in line with forecasts. The four-week moving average of claims, considered a better measure of labor market trends, touched a fresh two-year low.

I have visited Disney World a couple of times. Disney does a wonderful job at make-believe.

After a week in a Disney hotel on the Disney World property, you can feel as if you have become completely disconnected from the rest of world, at least until you check your bank balance. Some persons enjoy it so much that they buy timeshares and take Disney vacations every year.

As much as I enjoyed the show, I found the disconnection to be slightly eerie.

Now, for some, the fantasy has turned dark.

Walt Disney Co. built Celebration, Florida, as an idealized version of a circa-World War II small town, . . . .

(snip)

Celebration’s foreclosure rate is about double the state’s pace as homeowners who paid a premium for a vision of utopia fall behind on their mortgages. Earlier this month, a resident on the verge of losing his house shot himself after a 14-hour standoff with police. Three days before that, the town had its first murder when a man was bludgeoned with an ax.

Disney, by the way, no longer has a business interest in Celebration.

Andy Borowitz reports. A nugget:

“When we first heard about the deal, we were like, this is too good to be true,” said multibillionaire Thurston Howell IV, a spokesman for the richest .0000001%. “But when our butlers read the plan aloud to us during the cocktail hour, we were incredibly stoked.”

Sometimes the facts render editorials redundant. Bloomberg:

Customer demand is spurring hiring, said Woo, who is responsible for supervising employee welfare at the maker of Apple Inc. iPads and Hewlett-Packard Co. computers. China’s exports rose to a record last month, helped by stronger U.S. and European demand, while retail sales grew 19 percent to 1.4 trillion yuan ($210 billion) in October from a year earlier, the Chinese government said.

Foxconn, the largest private employer in China, plans to expand its workforce to as many as 1.3 million by the end of next year, Woo said in an August interview. The Taipei-based company employed about 920,000 workers at that time.

Listen to Klaatu explain urban camping.

Starting to look like a trend:

The number of workers filing first- time claims for unemployment insurance payments fell last week in the U.S., showing the labor market continues to improve.

Applications for jobless benefits decreased to 421,000, less than the median forecast of economists surveyed by Bloomberg News, from a revised 438,000 the prior week, Labor Department figures showed today. The four-week moving average, a less-volatile measure, dropped to the lowest level in more than two years.

The auction business is bullish.

There were three pages of announcements for foreclosure auctions in this morning’s local rag. In the olden days, there might be one or two–auctions, not pages.

In another story, the local rag recounted the experiences of a couple who regularly buy at auction:

Frantz and his wife had carefully examined the house in the weeks before the foreclosures fire sale run by Auction.com at the Norfolk Waterside Marriott. They knew the area’s property market, projected home prices and how much work the house needed.

That’s how they snagged the property for $108,000 less than its assessed value.

“It’s a more honest way to sell homes,” Frantz said of the auction. “There’s no games.”

He paused.

“There’s games after. The bank can counteroffer. But we’ve been through that process.”
Auctions are growing in popularity as a way to buy real estate, according to Auction.com.

Another in the occasional series, What Digby Said.

Trend?

The number of applications for jobless benefits averaged 431,000 a week over the month ended Nov. 27, the lowest level since August 2008, Labor Department figures showed today in Washington. Claims increased by 26,000 last week, more than forecast, to 436,000, after reaching a two-year low.

“Lower lows and lower highs define a downward trend, and that’s what seems finally to be emerging,” Ian Shepherdson, chief U.S. economist at High Frequency Economics LLC in Valhalla, New York, said in a note to clients. “If it continues, we should expect to see better payroll numbers over the next few months.”

Jay Bookman discusses the implications. A nugget:

When people talk about how much the wealthy pay in taxes, the chart above explains why: They are paying more taxes because they’re making a LOT more money than they used to make. It also helps to explain why the socioeconomic nature of the country has changed so much in the past 30 years. When people say that we’re not the country we used to be, they’re right. We’re not.

Combating TSA security theatre with, well, theatre:

I got in line for security, put my bag in a bin, removed my shoes, and then proceeded to remove my pants and jacket, too, revealing the sheer underthings. Two large male TSA agents quickly moved in and demanded that I put my pants and jacket back on, to which I pointed out that I was only trying to help. They needed to see that I wasn’t hiding anything!

(snip)

The sad thing is, the American outcry over this issue is only because it’s about genitals and nudity. No one cares if their phone calls are being recorded or if the government detains people for years without trials . . . .

Meanwhile, Republican Claus is preparing for his seasonal rounds. To pick just one jurisdiction:

The expiration yesterday of the federal emergency unemployment program will leave as many as 60,000 Massachusetts residents without benefits this month — most can expect to be cut off on Christmas Day — unless Congress acts soon.

Afterthought:

No doubt this will stimulate the foreclosure-based economy.

MarketWatch predictions: Bullish on foreclosures, bearish on home prices:

The sputtering economy is the biggest issue, he said. In addition, there is a large supply of houses on the market and further “hidden supply” due to delinquent mortgages, pending foreclosures, or vacant homes, Blitzer said.

Home prices will likely decline further going into the next year, said Yelena Shulyatyeva, an economist with BNP Paribas, in a note to clients.

While housing demand appears to be stabilizing at low levels, housing supply remains excessive, weighing on housing prices, Shulyatyeva said.

Another capsule lesson in economics from the therapist the stars trust. A nugget:

Financiers are not villains, but wealth-creators. They did not bankrupt the economy, they were cruelly led astray by weak regulation. All of our current difficulties are caused by government frittering money away on schools and hospitals. So when the City was in trouble, it was natural for the people to express their support with spontaneous gifts of tax revenue.

You must have missed the heart-warming spectacle of ordinary folk sacrificing their benefits, services and jobs so that bankers might retain their vital bonuses.

Robert Kuttner, writing in the Boston Globe, slices and dices the current wailing and gnashing of shears over the deficit, pointing out that the solution is in feeding the economy, not in starving the citizenry. Here are his main points; follow the link for the full argument (emphasis added):

Economic masochism has become the national fad, when the real issue is restoring economic growth. According to Bowles, if we don’t act soon to rein in the deficit, the economy is on “a path of absolute disaster.’’ Excuse me, but the disaster is here and has nothing to do with projected future deficits.

There are three huge flaws in the austerity program.

• First, in a deep and prolonged slump, the economy needs more public outlay, not less, to make up for a paralyzed private economy.

(snip)

• The second flaw is the timing and composition of the proposed deficit reduction plan.

  (snip)

  Everything is supposed to be on the table, but repealing the Bush tax cuts for the wealthy is not part of the proposed package. Nor are other notable increases in taxation of the best-off. Two thirds of the deficit-reduction would come from cuts in spending, and the proposed revenue increases would mostly hit the middle class.

• A third flaw is the inclusion of Social Security cuts. Social Security has nothing to do with the current deficit, and is in surplus for the next 27 years.

The underlying principle of the plan seems to be that those who should sacrifice the most is them what hasn’t.

Another early release of the numbers because of a holiday. Bloomberg:

Jobless claims declined by 34,000 to 407,000 in the week ended Nov. 20, Labor Department figures showed today in Washington. The median projection of economists surveyed by Bloomberg News called for a drop to 435,000. The total number of people receiving unemployment insurance decreased to the lowest in two years, and those on extended payments also fell.

Fewer firings lay the groundwork for a pickup in job creation that will generate incomes and spur consumer spending, which accounts for 70 percent of the economy. Even with companies firing fewer workers, unemployment will be slow to decline, according to the Federal Reserve’s latest forecast in which policy makers also lowered their growth projections.

Hirings for greeters for Christmas shopping season continues to climb.

An interesting speculation on why they don’t care about the national debt.

If you think that Republicans care because they say they claim to, remember what your Mama used to warn you: “Watch what they do, not what they say.”

Click the chart to be linked to its explanation.

On to the theory:

I suspect that the reason the GOP is not serious about debt reduction is because they see the national debt as a benefit program for the wealthy, who are paid interest for holding it. This has been their default position since Alexander Hamilton and forms the basis for an aristocracy of wealth in this nation.

Mike Thompson explains why the GM bailout was a bad idea: “Freedom’s just another word for nothing left to lose.”

See the video for the clear explanation.

It may be “less than forecast,” but it’s more than last week. That the forecasters (who go eerily unnamed in news story after story, though one suspects that someone knows who they are) were wrong–again–is not a cause for optimism.

I emphasize that I am not arguing that things are not getting a little better; trends do seem to be inching positively, though not quickly nor signicantly enough to rescue many from Wall Street’s three card monte hell.

I am arguing that the media and economists should reconsider basing conclusions about how things are going today on how well these “forecasters” did at forecast roulette yesterday or last week. Judging by their record, I wouldn’t trust them to predict the winner in a race between a Lamborghini and a Ford Escort.

Fewer workers than forecast filed claims for U.S. jobless benefits last week, a sign the labor market is starting to improve.

Applications for unemployment insurance payments rose by 2,000 to 439,000 in the week ended Nov. 13, Labor Department figures showed today in Washington. The total number of people collecting unemployment insurance dropped to the lowest level in two years, while those receiving extended payments climbed.

Furrfu.