Political Economy category archive

Rapacious credit card fees to be limited:

Consumers, particularly those who are consistently late in paying their credit-card bills, now can breathe a sigh of relief: The Federal Reserve said Tuesday it is limiting penalty fees to no more than $25 in most cases as well as banning so-called “inactivity” fees.

In its third stage of implementing the sweeping Credit Card Accountability Responsibility and Disclosure Act of 2009, the Fed also said it’s putting the squeeze on late fees that are higher than the consumer’s violation. For example, a consumer who was late paying a $20 minimum payment could be charged a $39 penalty fee. The Fed on Tuesday said penalty fees cannot exceed the dollar amount of the consumer’s violation.

New unemployment claims still in the high 400,000s. Bloomberg:

Initial jobless claims increased by 12,000 to 472,000 in the week ended June 12, Labor Department figures showed. Economists surveyed by Bloomberg News projected the number of applications would drop to 450,000, according to the median forecast.

The figures indicated firings are staying elevated even as the economy grows. Some companies are trimming payrolls to boost or maintain profits at the same time overall employment has grown each month this year.

Other trends are more positive. Follow the link for more.

MarketWatch’s prognosis is less positive.

Locally, foreclosures are still up.

MarketWatch explores four myths about the housing market and explains why the bubble won’t rebubble all over again.

“Bubble” means the prices were far higher than they should have been. They shouldn’t go back to those levels. If they do, run and hide.

The myths (follow the link for the full discussion):

1. The housing recession is over.

2. After markets hit bottom, prices will rebound to boom levels.

3. The worst of the foreclosure mess is behind us.

4. The tax credits saved the housing market.

United States military spending is almost half the federal budget. It should be scrutinized as carefully as any other portion of the budget.

The Boston Globe:

THE NEED to pare down wasteful Defense Department spending has been obvious for some time, yet too many politicians have kept a discreet silence on the issue. So kudos are due to a bipartisan quartet of legislators for making the case that meaningful cuts in the Pentagon’s budget must be part of any serious effort to reduce future deficits. The national interest is plain to see: America must stop borrowing money from other countries to fund weapons systems and foreign military bases for which there is no need.

Kenny Golden, who is running as an independent against Democratic Congressman Glenn Nye and Republican Scott Rigell, is not a responsible fiscal. According to The Slant, his budget plan exempts defense spending completely (it also is arbitrary and capricious, mandating cuts without reference to usefulness or efficiency, but that’s another issue).

From his press release (emphasis added):

Kenny’s Top Three Issues

1. Cutting the budget deficit

• 2% annual budget cuts on each cabinet level department except the Department of Defense

• Consolidate or eliminate redundant federal agencies and functions

Then, again, Mr. Golden was a Republican until he jumped ship to run in this election. The public record of Republicans as responsible fiscals is clear. They talk a lot.

Still above 450k:

Initial jobless claims dropped by 3,000 to 456,000 in the week ended June 5, Labor Department figures showed today in Washington. Economists surveyed by Bloomberg News projected 450,000 claims, according to the median forecast. The number of people receiving unemployment insurance fell to the lowest level since 2008, while those getting extended payments climbed.

While payrolls rose for a fifth month in May, hiring by companies was less than forecast, underscoring Federal Reserve Chairman Ben S. Bernanke’s comments yesterday that there will be “only a slow reduction” in the unemployment rate. Job gains are needed to spur consumer spending, which accounts for 70 percent of the economy, and ensure a sustained expansion.

Roy Edroso explains wingnut capitalism. Shorter version:

Money for us, not for working people.

Via the Brad Blog.

Still in the hight 400Ks.

Initial jobless claims fell by 14,000 to 460,000 in the week ended May 22, Labor Department figures showed today in Washington. Economists forecast claims would drop to 455,000, according to the median estimate in a Bloomberg News survey. The economy expanded in the first quarter at a slower pace than initially estimated, the Commerce Department said today.

(snip)

The four-week moving average for initial claims, a less volatile measure than the weekly figures, rose to 456,500 last week from 454,250, today’s report showed.

The number of people continuing to receive jobless benefits dropped by 49,000 in the week ended May 15 to 4.61 million, the lowest since March 27 and in line with the median forecast.

The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.

The story does not specifically mention unemployment in the oil barrens.

Via the New Sense.

On the way down the road, I stopped at a convenience store to pick up a soda (pop if you are west of the Mississippi) and a newspaper. The store was not a corporate outlet, but one of the gas company travelmart franchise type thingees.

The clerk was a very pleasant young lady (and by young I mean she looked high school age) who helped me find where they hid the paper I was looking for. When we got back to the checkout, she noticed her time slip lying on the counter and mentioned that she was working clocked out. Though speaking lightly, she was clearly disturbed.

I said, “You mean you aren’t being paid?”

She said, “No, we’ve been so busy the manager has been holding me over after I clock out. This is the third time since Wednesday.”

I said, “That’s illegal. Call your Congressman and find out where to report it.” We talked a little more, but that was the substance of the conversation.

We need regulations (and unions), because, left unregulated, American business will even take advantage of children to pad its pockets.

(Her Congressman is, unfortunately, a Republican in the pocket of big business, but that’s another story.)

The party of privilege:

In a dramatic gesture, (New Jersey–ed.) Gov. Christie on Thursday evening vetoed the “millionaire’s tax” just moments after it was passed by the Democratic-controlled Legislature.

(snip)

Democratic legislators argued that with the tax, which would increase the tax rate on income above $1 million from 8.97 percent to 10.75 percent, the state could restore property tax rebates to 600,000 senior citizens and disabled residents.

In RepublicanWorld, it’s clearly better to lay off workers, cut services, attack state employees’ pay, and gut their pensions than to ask the privileged to chip in.

Bad week on jobs front. Unemployment claims back up above 450 grand.

Initial claims for state unemployment benefits increased 25,000 to a seasonally adjusted 471,000 in the week ended May 15, the highest level since the week ended April 10, the Labor Department said on Thursday.

(snip)

Analysts polled by Reuters had expected claims to fall to 440,000. A Labor Department official said there was nothing unusual in the state level data.

The four-week moving average of new claims, which is considered a better measure of underlying labor market trends, rose 3,000 to 453,500.

By the way, don’t let those Reuters analysts help you pick the ponies next time you go to the track.

Doug Noland at the Asia Times explains why he is bearish on the world economy.

There is a lot of financial industry lingo in the article, but plowing through it worth while. The bulk of it is in the first page and a half. The remainder is daily news summaries and citations. As I interpret it, his thesis is that, by sanctioning the creation and growth of instruments such as CDOs, governments, especially the U. S. government and the Fed under Alan Greenspan, encouraged a business model based on selling bags of air.

And that the detrimental results are not over yet.

A sample:

My bearish thesis on our markets and economy is based upon the view that the financial fuel for our recovery has been unsound, unstable and unsustainable. This “monetary process” is now in jeopardy. The global government finance bubble, which lunged into its terminal phase of excess with the collapse of the Wall Street/mortgage finance bubble, has been pierced. Greece’s debt crisis marks a momentous inflection point. And, yes, some government markets – certainly including Treasuries – are benefiting from Greek and periphery European debt woes. Yet key bubble dynamics percolate under the surface.

Joan Vennochi in the Boston Globe:

WHY DOES a single career woman with short hair always have to answer the is-she-gay question?

The bigotry and stereotyping implicit in the questioning of Elena Kagan’s identity are most disgusting. Indeed, it is supremely icky.

Ms. Vennochi skewers it well.

From Fact Check dot org. Follow the link for the analysis; it’s quite extensive and well-footnoted:

Do immigrants take American jobs? It’s a common refrain among those who want to tighten limits on legal immigration and deny a “path to citizenship” — which they call “amnesty” — to the millions of immigrants living in the U.S. illegally. There’s even a new Reclaim American Jobs Caucus in the House, with at least 41 members.

But most economists and other experts say there’s little to support the claim. Study after study has shown that immigrants grow the economy, expanding demand for goods and services that the foreign-born workers and their families consume, and thereby creating jobs. There is even broad agreement among economists that while immigrants may push down wages for some, the overall effect is to increase average wages for American-born workers.

Aside: Phrases using “grow” as in the “grow the economy” phrase in the excerpt above irritate the bejesus out of me. One grows vegetables. The economy grows (or it doesn’t), but one doesn’t grow it like a stalk of corn.

It sounds awkward because it is awkward. That phrasing was invented by consultants angling for marks clients with claims like “We will help you grow your business.”

Writing that sounds awkward is not somehow more important than writing that flows easily. It’s simply more additionally pretentious and crappier than writing that flows easily.

It’s subsidized.

Facing South compiles the figures.

From the website:

The President speaks on the new jobs numbers for April. The economy created 290,000 jobs in April, the vast majority of them private sector, and with new data incorporated April became the fourth consecutive months of positive job growth.

From the transcript:

So this week’s job numbers comes as a relief to Americans who found a job. But it offers obviously little comfort to those who are still out of work. So, to those who are out there still looking, I give you my word that I’m going to keep fighting every single day to create jobs and opportunities for people.

Senator Al Franken proposes an amendment to the Financial Reform bill to change how the investment ratings system works.

Remember that the ratings companies, who are paid by the outfits that issue the stuff that they rate, looked at junk and rated it AAA–“good as gold”–time and again.

Without that AAA rating, the junk would not have sold. The issuers, Goldman Sachs and the like, would shop around and play the ratings agencies off against each other.

The ratings outfits were crucial enablers of the junk derivatives market, and it was Wall Street’s desire to have derivatives to package into bonds that fed the housing bubble:

The Franken amendment looks like a good start.

Franken and fellow Democratic Senators Charles Schumer and Bill Nelson, with Republican Senator Roger Wicker, have filed a proposed amendment to the bill authored by Senator Christopher Dodd, asking for checks and balances on the “issuer pays” model for rating agencies.

The proposed bipartisan amendment is picking up broad support, including the endorsement of the Consumers Union consumer advocate group, Franken’s office said.

The amendment would set up a Credit Rating Agency Board that would choose which rating agency would rate an issuer’s debt. If such a board selected agencies arbitrarily, that could make ratings more impartial, some analysts say, even though the issuer would still pay the agency.

Martin Lobel at the Neiman Watchdog blog:

Tax cuts are expenditures which increase the deficit. That simple fact, which is taught in every econ 101 course, seems to have eluded many Republicans, Tea Party members and the news media.

Follow the link for details.