Political Economy category archive

The whole darn system of tying health insurance to employment was absurd from the git-go; that may be why every other industrialized company does it differently.

A house built on sand and all that, dedicated to the proposition of paying insurance company execs’ country club memberships and Wall Street Banksters trading fees.

Now it is falling apart, and we can see who is more important to our elected representatives incongruously assembled: rich folks or rickety folks.

Look what happens when COBRAs are unleashed:

The government’s COBRA subsidy will expire this month for many people who lost their jobs between September 2008 and February of this year and are still out of work. The federal subsidy, adopted in March in the midst of the deep recession, paid 65 percent of the cost of monthly insurance premiums for up to nine months.

An effort has emerged in Congress to extend the aid, but deficit concerns may make that a tough sell. The end of the subsidy would be a major blow for people battling extended joblessness.

The cost of maintaining the average policy was $398 per month for a family and $144 for an individual, according to the Kaiser Family Foundation. Once the subsidy expires, that cost jumps to $1,137 per month for family coverage and $410 per month for individual coverage.

Commercial real estate–the other shoe is still dropping:

It’s just a hint of the harrowing state of affairs in commercial real estate, where vacancies are on the rise across virtually all sectors, rents and property values are dropping, building owners are low on funds, and financing options are drying up.

And bad as things are, they’re expected to get worse – the next slide in the snowballing economic crisis that began with the collapse of the housing market and continues to claim casualties.

(snip)

For instance, a property bought in 2005 for $10 million with a $7 million mortgage now might be valued at $6 million, said Steve Blank, a senior fellow in finance at the Washington-based Urban Land Institute.

Since these folks are losing their Armani shirts for whole shopping centers and office buildings, rather than for one bungalow or condo, there will be no shortage of state and local government help for them and no pundits calling them deadbeats for taking out the loans in the first place.

No, they are merely victims of the economy. It is only the poor who are responsible for their own fates.

Unemployment figures less bad this week. Bloomberg:

Recent readings on claims for jobless benefits signal firings are slowing as the economy grows. The number of Americans filing first-time claims for unemployment insurance unexpectedly declined by 5,000 to 457,000 in the week ended Nov. 28, the fewest since September 2008, figures from the Labor Department today showed.

“The labor market is turning,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York. “We are set to break into positive job growth over the next few months. The recovery is proceeding on schedule.”

I do find the quotation in the second paragraph to show the hubris one would expect from a Master of the Universe.

Where, praytell, is this schedule of which he speaks?

Addendum:

Bonddad.

Still under half a mil. Must have been a difficult Thanksgiving for these folks:

Initial jobless claims declined to 466,000 in the week ended Nov. 21 from 501,000 a week earlier, Labor Department figures showed today in Washington. The number of people collecting unemployment insurance dropped in the prior week, while those getting extended payments also declined.

(snip)

The report showed the four-week moving average of initial claims, a less volatile measure, dropped to 496,500 last week from 513,000 the prior week.

Continuing claims declined by 190,000 in the week ended Nov. 14 to 5.423 million.

A caller to the Diane Rehm show (about 38 mnutes in):

My question is . . . why it is that our legislators can find a way to turn over $900 billion dollars a year to our Department of Defense to discover new and better ways to destroy people, yet there is a hue and cry from many of them over spending $900 billion over a 10-year period to help the people of this country.

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Perhaps a bit of sunshine: Under half a mil for the first in a month of Sundays.

Initial claims for state unemployment benefits slid to a seasonally adjusted 466,000 in the week ended November 21, from a revised 501,000 in the prior week, the Labor Department said.

(snip)

It was the fourth consecutive week of declines in seasonally adjusted claims, and marked a steady march lower from a recent peak of 674,000 in late March. Analysts say claims must fall below 400,000 to signal payrolls growth, which would be a critical indicator of recovery from the worst recession since the 1930s.

Analysts polled by Reuters were expecting a more modest slip to 500,000 claims from the previously reported 505,000.

Aside: Reuters analysts continue their sterling record. Next time I go to the track, I won’t be asking them to help me pick the exacta.

And, as a long time SEC fan, I generally loathe everything Big Ten on principle.

Ohio’s attorney general sued Standard & Poor’s, Moody’s and Fitch Ratings on Friday, asserting that they provided misleading credit ratings that led to hundreds of millions of losses for state funds.

The persons who certified the bad paper are just as culpable as the ones who printed it.

Via Balloon Juice.

Still over half a mil:

Initial jobless claims were unchanged at 505,000 in the week ended Nov. 14, in line with the median forecast of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington. The number of people collecting unemployment insurance dropped in the prior week, while those getting extended payments jumped.

The loss of 7.3 million jobs since the recession began in December 2007, the biggest drop of any postwar economic slump, makes an acceleration in firings less likely as consumers begin to spend. A rebound in hiring may take longer to develop as companies have ample room to boost hours for current employees before taking on additional staff.</blockquote>

November 19, 2009 | Posted by: Frank | Posted in: Political Economy | Bookmark this post

Thoreau at Unqualified Offerings applies Wall Street strategy to lexicography:

Perhaps I should start selling assets based on buzzword usage. I’ll go out to Riverside County (real estate there is so cheap right now! better buy it fast because it won’t stay cheap!) and open a for-profit school that doesn’t actually teach any students but generates huge volumes of paperwork full of buzzwords, sell assets based on these buzzwords, then get out of the market before the bubble bursts. And once it does, I’ll explain that your children will never learn to read if you don’t give me a trillion dollars.

Glimmers. Almost under half a mil.

From Reuters:

Initial claims for state unemployment benefits dropped last week to a seasonally adjusted 502,000, the lowest since January, from a revised 514,000 the prior week. Analysts polled by Reuters had expected initial claims to fall to 510,000 from an initially reported 512,000.

The long-term and two-week figures are also down. Statistics at the link.

Aside: The damage left behind by years of the Republican Economic Theory that the Rich Can Do No Wrong is truly staggering. As is the economy.

Marc Lamont Hill on the November 2, 2009, episode of Radio Times, Hour One:

Fox News is to news as professional wrestling is to sports.

Follow the link and search the archives for November 2 or listen here (mp3).

Before the insurance companies bleed us dry.

In a nutshell:

“My pay has been increasing at the same rate as inflation,” said Hill, who is divorced and lives in Portsmouth. “But with health care costs increasing much more, I’m falling behind. And I suppose that many others are in the same boat.”

To pay the fines. Bloomberg:

Since May 2004, Pfizer, Eli Lilly & Co., Bristol-Myers Squibb Co. and four other drug companies have paid a total of $7 billion in fines and penalties. Six of the companies admitted in court that they marketed medicines for unapproved uses.

In September 2007, New York-based Bristol-Myers paid $515 million — without admitting or denying wrongdoing — to federal and state governments in a civil lawsuit brought by the Justice Department. The six other companies pleaded guilty in criminal cases.

In January 2009, Indianapolis-based Lilly, the largest U.S. psychiatric drug maker, pleaded guilty and paid $1.42 billion in fines and penalties to settle charges that it had for at least four years illegally marketed Zyprexa, a drug approved for the treatment of schizophrenia, as a remedy for dementia in elderly patients.

In five company-sponsored clinical trials, 31 people out of 1,184 participants died after taking the drug for dementia — twice the death rate for those taking a placebo. Those findings were reported in an October 2005 article in the Journal of the American Medical Association.

Still over half a mil:

The Labor Department also reported that initial claims for state unemployment benefits dropped to 512,000 in the week ended October 31, the lowest level since early January. Markets had expected a decline to only 523,000, from the 530,000 reported in the prior week.

The story also reports that productivity is up, but that the pace probably cannot be sustained by the existing workforce, so that hiring may increase. In other news, it doesn’t look like a lot of the hiring will be for Christmas help.

More than half of U.S. retail chains posted October sales that fell short of Wall Street’s heightened expectations, raising doubts about a widespread recovery for the holiday season.

Maybe the two writers should talk to each other.

This is kind of scary.

That (description of moving a 1,000 pound woman to an ambulance–ed.) was an extreme example of something city ambulance crews here and around the country are seeing more of: super-heavy patients.

To help accommodate them – and to cut down on the rash of back injuries suffered by paramedics and firefighters trying to lift them – agencies have invested in costly equipment and modified some of their practices.

Portsmouth (Va,) in recent years has replaced its standard gurneys with battery-driven hydraulic “power stretchers,” said Capt. Paul Hoyle, Emergency Medical Services manager. They’re rated to safely hold 700 pounds and lift at the touch of a button, at nearly the cost of a small car: $8,000 apiece.

Virginia Beach rescue squads added electric lifts to fewer than a dozen of their stretchers, said Bruce Nedelka, EMS division chief.

Medical Transport, a private ambulance service, has added eight oversized stretchers to its statewide fleet, four of them in South Hampton Roads, said Elizabeth Beatty, district field supervisor. Her company also operates an oversized ambulance, based in Virginia Beach, that gets requests from across Virginia.

I’m sort of torn here. When I watch the antics of those who want to turn being 10 pounds overweight into a pre-existing condition for health insurance premiums, I scream, “Blaming the victim!”

Nevertheless, 700 pounds plus is slightly more than 10 pounds overweight. Although there can be physiological or genetic causes, they do not seem to explain the explosion of obesity, but in numbers and amount.

All it takes to see that is a walk down the street.

Frankly, I think it has more to do with making Cheetos, Big Macs, and Super-Sizing part of the American Way of Life than with anyone’s personal culpability.

Full Disclosure: I hate Big Macs. I like Cheetos. In fact, I like anything that tastes like cheese, no matter how artificial and no matter how orange it leaves my fingers. I like real cheese even better.

A windfall tax on the banksters’ obscene bonus “pay for attendance” culture:

Government must take on a new strategic authority to build the economy of the future. Its first step must be to end the power of the banking oligarchy and reassure the public that its capture of the political elite is over. The Compass campaign for a windfall tax on bankers’ bonuses is an essential first step in reasserting democracy and bringing the business elite to account. A windfall tax would mark the start of the longer term transformation of the banking sector which will be necessary to meet the challenges of future economic development.

Republican Economic Theory at work:

Defaults by small and medium-sized U.S. businesses on the loans, leases and lines of credit they use to finance capital equipment investment rose in September as lenders remained reluctant to extend fresh financing, PayNet Inc reported on Friday.

The fee hand of the market at work:

Consumer advocates say companies are taking advantage of the recession and the growing number of uninsured people — 1 in 5 American adults under age 65 — to sell “health coverage” that evaporates when customers try to use it, or provides far less than promised.

Just last month, Minnesota Attorney General Lori Swanson sued two out-of-state companies for allegedly misleading customers with phony claims about their health plans; and ten more investigations are underway, she said.

Via Atrios.

Matt Browner Hamlin (emphasis added):

The hypocrisy of how the contracts of Wall Street executives are being treated versus those of union workers is simply stunning. All I want to see in an economic crisis is fairness. If contracts are inviolable, they are inviolable for everyone, regardless of whether they are between blue collar workers in factories, white collar workers in office complexes, or the multi-millionaire executives on Wall Street. If the economic crisis demands that auto workers take a haircut on their pay, benefits, and pensions, Wall Street executives must be held to the same standard. Conversely, if the contracts between big banks and investment firms and their top executives simply cannot be changed, then it’s time to go back and honor the contracts between the auto industry and organized labor. It’s that simple.

If you slurp at the public trough, expect public strings. Frankly, it’s about time (or even much too late) that these bozos realized our money kept them in country club memberships:

The Treasury Department yesterday ordered seven companies that received billions of dollars in government bailouts to halve total compensation for their top executives. But the big reductions will not apply to pay earned before November.

Kenneth Feinberg, the Treasury official leading the pay review, said average salaries for the top 25 executives would be cut 90 percent starting next month.

The action will apply to the top executives at Bank of America Corp., American International Group Inc., Citigroup Inc., General Motors Co., GMAC L.L.C., Chrysler L.L.C., and Chrysler Financial.

Aside: Am I the only person who finds the expression “take a haircut” to refer to taking a loss somewhere on a continuum between stupid and fatuous?

Hamlin link via Eschaton.

(The) International Paper Co. mill that has been the been Franklin’s (Franklin, Va.–ed.) heart for generations will close, perhaps as soon as next spring.

“It’s a travesty, a real travesty,” (Mayor) Councill said. “We have 1,100 families to take care of. We want to help, sustain and find work for these people.”

My high school played Franklin in sports, which required a two and a half hour trip across the Bay to get to the games. And. when I was a young ‘un, we drove through Franklin twice a year on the way to visit my grandmother in South Carolina back.

We would always joke that the smell of the mill was the smell of money. Back then, it was still Union-Bag Camp Paper Co.

Franklin was a neat, well-kept little town on U. S. 58 out in the country (since then, the suburbs of the Hampton Roads area area have marched relentlessly towards it and it is no longer out in the country).

I guess it will no longer have the smell of money.

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