Political Economy category archive

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.

Readers Digest Condensed Books version, courtesy of “Seeing the Forest”:

And the middle class gives up the home mortgage deduction so the rich can get their taxes reduced?

Released early because of the holiday:

Applications for jobless benefits declined by 24,000 to 435,000 in the week ended Nov. 6, lower than the median forecast in a Bloomberg News survey, Labor Department figures showed today in Washington. The total number of people collecting unemployment insurance fell to the lowest level since November 2008, and those receiving extended payments also declined.

Fewer firings are a first step to improvement in the labor market, followed by faster job and income growth that will help fuel gains in consumer spending. Bigger increases in payrolls are also required to bring down an unemployment rate that’s close to 10 percent.

Walmart must be hiring up greeters for the Christmas rush.

Aside: I commend Bloomberg for not be afraid to use the word, “firings.”

He makes it simple and understandable.

A more useful way is to see it as the opening of a golden casket in which are housed billions of tiny money pixies who fly over financial markets sprinkling sparkly confidence dust. Invisible trader elves gather the dust and distribute it to institutional investors. They then take the dust in magic flying sleighs and stuff it down the chimneys of all the good citizens who go out and spend money and stimulate the economy. But it only works if people truly believe. If you don’t believe, you won’t get any confidence dust this Christmas and your economy will stay in the doldrums.

Enough of hearing about the Afghan war during the campaign:

Despite all my complaining, it would be tragic, really, if the war in Afghanistan had been largely ignored by candidates and voters during the election. Or if it was reduced to just another story on the news, alongside stock market reports and celebrity updates.

Thankfully, Campaign 2010 kept this issue front and center, and for that we can all be proud. Fortuitously, the new leadership of Congress promises that its first order of business will be to restore sanity to the federal budget. And after an election focused so overwhelmingly, and necessarily, on the war in Afghanistan, it would be unimaginable if they didn’t start by putting an end to the trillion dollars we’re spending each year on so-called “defense.”

uh, yeah.

Back above 450k:

Jobless claims rose by 20,000 to 457,000 in the week ended Oct. 30 from a revised 437,000 the prior week, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance fell, while those on extended payments increased.

The pace of firings has held within a narrow range in 2010, showing employers continue to focus on cutting costs more than a year into the economic recovery. Calling progress toward lower joblessness and faster growth “disappointingly slow,” Federal Reserve policy makers yesterday announced plans to bolster the recovery through another round of large-scale asset purchases.

Still high, but under 450k.

Initial jobless claims decreased by 21,000 to 434,000 in the week ended Oct. 23, the lowest since early July when fewer auto plants than normal closed for retooling, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance dropped to a two-year low, while those getting extended payments also fell.