Political Economy category archive

New unemployment down slightly.

They’re running out of persons to lay off, plus it was a short week:

Initial claims for state unemployment insurance benefits fell 4,000 to a seasonally adjusted 621,000 in the week ended May 30, the Labor Department said. The week covered the Memorial Day holiday, which could have had an impact on the data.

Also, from the same story,

The number of people staying on the benefit rolls after collecting an initial week of aid fell 15,000 to 6.74 million in the week ended May 23, the latest week for which the data is available.

15,000 is 00.2% (in fractions, that’s two thousandths) of 6,740,000. This is grasping at straws statistics.

The only persons the currrent system benefits are the insurance companies, with their armies of faceless bureaucrats charged with figuring out how to deny paying for care.

Americans with job-based health insurance saw their protection from higher out-of-pocket costs erode between 2004 and 2007, especially those who were sick and of modest means, according to a new study.

The majority of people with health insurance, about 160 million Americans, receive it through their jobs.

“American families with employer-based coverage were worse off in 2007 than they were in 2004,” said Jon Gabel, lead author of the study that was published in a June 2 Health Affairs Web exclusive. “This is during a period of time when the economy was expanding.”

Maybe there’s some hope for action against the fine-print Fagins:

Loan sharks are called mobsters. Thieving legitimate lenders are called capitalists — free to impose any terms short of kneecapping on their troubled borrowers. Washington treated capitalist sharks as role models and beloved campaign contributors — that is, until the economy collapsed and debtors (aka voters) emitted a collective scream.

Now, maybe, borrowers might catch a break. There is serious talk in Congress and the White House about creating a Financial Products Safety Commission, charged with protecting consumers and the country from the depredations of irresponsible lending.

The whole thing is worth a read.

In a move with only one modern-day precedent, Gov. Arnold Schwarzenegger and Democratic lawmakers are pressing the Obama administration and members of Congress for federal loan guarantees to help California out of a multibillion-dollar jam.

The story goes on to cite the Federal bailout of New York City as a comparison.

This situation illustrates the internal contradictions (as Marx would have said) of Republican Economic Theory. Republicans have rendered raising taxes almost impossible in Cali. At the same time, they rendered cutting services almost impossible. For a long time, thanks to Republicanism, Californians have been thinking they can get something for nothing–more expensive government services (it’s called the Price Index) without paying for them.

Before you scream welfare queens, consider that schools and corrections are almost half of the total.

(Note that I am not arguing for any particular tax policy. Far be it from me to offer any solutions.)

I am merely pointing out another example that the Republican theory that cutting taxes is the economic 42, the answer to life, the universe, and everything, is just so much hooey. It is the camouflage for the Party’s mission of making the rich richer and the poor poorer.

Everything has a price.

Taxes are the price of living in a civilized society.

Running out of persons to lay off:

A separate report from the Labor Department showed initial claims for state unemployment insurance dropped by 13,000 to a seasonally adjusted 623,000 in the week ended May 23, falling for a second straight week.

However, the number of people staying on benefit rolls after drawing an initial week of aid increased 110,000 to a higher-than-forecast 6.79 million in the week ended May 16.

On a possibly brighter note, the same story reports that April durable goods orders were up slightly.

I say “possibly” because these preliminary figures, including the unemployment figures, are often revised a month later–usually in the wrong direction. Follow the link to see what happened to the March durable goods estimate.

Fundamental to this whole mess is thinking of one’s primary residence, not as a place to live, but as an investment. That’s gambling with the grocery money.

Home prices in 20 major metropolitan areas fell more than forecast in March as foreclosures surged, threatening to extend the housing slump.

The S&P/Case-Shiller home-price index decreased 18.7 percent from March 2008, matching the drop in the year ended in February. The measure declined 19 percent in January, the most since data began in 2001.

Record foreclosures are depressing the value of other properties, contributing to a slump in household wealth that is hurting consumer spending and the economy. Still, falling prices and mortgage rates have made homes more affordable, helping to stem the slide in sales, which will eventually help prices stabilize.

Douglas A. McIntyre, writing at 24/7, considers the claim that the S&P data is so old (two months) as to be meaningless:

But, the numbers from March are like canned vegetables. It takes them a long time to spoil. That point was driven home by a study Fitch, the credit ratings agency, is preparing that shows “that between 65% and 75% of modified subprime loans will fall 60-days or more delinquent within 12 months of the loan change.” In other words, even if homeowners are given a second chance to keep their homes and enjoy lower monthly payments, they are prepared to walk away.

The market is looking for ways to claim that housing is finding a bottom and that it is possible that a recovery in home prices in in the wings. While there may be some pick-up in sales in the most depressed markets including Nevada and Florida, there is no sign that prices are rising. Clever buyers are moving in to buy homes in foreclosure, but the prices of these houses are so low that their sales may actually bring down the average price of the homes being sold in those markets.

Bonddad has a great series up about the Federal budget.

As is typical of his posts, there’re lots of facts and almost no editorializing.

Part One.

Part Two.

Part Three.

One thing his statistics show is that, despite the caterwauling, Social Security spending is not a big issue; it’s held pretty steady as a percentage of expenditure.

Medical spending–Medicare and Medicaid–that’s another thing.

He doesn’t editorialize, but I do. We need single payer.

More Americans than forecast filed claims for unemployment insurance last week, and the total number of workers receiving benefits rose to a record, signs the job market continues to weaken even as the economic slump eases.

Initial jobless claims fell by 12,000 to 631,000 in the week ended May 16, from a revised 643,000 the prior week that was higher than initially estimated, the Labor Department said today in Washington. The total number of people collecting benefits rose to 6.66 million, a record reading for a 16th straight week, and a sign companies are still not hiring.

Notice how the revised figures are usually higher than the initial estimates?

They are in the fields where all those unbuilt houses aren’t (not that I’m a big fan of filling fields with houses, but, even so):

Housing starts fell 12.8 percent to an annual rate of 458,000 units last month, the lowest on records dating to January 1959, the Commerce Department said.

The drop reflected a 46.1 percent plunge in groundbreaking activity for multi-family units and suggested homebuilding remains a drag on the economy. Starts for single-family homes, however, rose 2.8 percent, a second straight gain that showed the worst-hit part of the market was stabilizing.

I question whether housing is a drag on the economy. Rather, I think the economy is a drag on housing.

And Wall Street Banks are the deadweight in the drag.

Graph via Andrew Sullivan.

Outfits that depend on volutary contributions, such as churches, are hurting these days.

And the hurt has unexpected side effects. In Virginia:

God may provide, but the state may not when it comes to unemployment benefits for employees laid off by churches, synagogues and religious groups.

(snip)

It was a hard way to learn that under Virginia law, tax exemptions for religious organizations include freedom from paying unemployment taxes. The groups still must pay Social Security and withholding taxes.

SAHW (Stay at home workers):

After hitting a three-month low in the prior week, first-time claims for state unemployment benefits rose due to layoffs in the auto sector, the Labor Department reported Thursday. The number of initial claims in the week ending May 9 rose 32,000 to 637,000.

Oh, wait (emphasis added):

Foreclosure prevention specialists in the area (southeastern Virginia–ed.) said the majority of the clients they see facing foreclosure have been put into that position because of a job loss.

“Very few of the ones we’re seeing now are people who were put into loans they couldn’t afford,” said John Allen, a vice president of The Up Center, a Norfolk organization that provides foreclosure prevention counseling. “It’s almost always job loss, or reduction in hours, or something revolving around that.”

But, after all, they are Wall Street Executives.

They wear expensive suits, look good in meetings, and write nice memos.

They are entitled.

. . . after a year in which Wall Street firms paid $18.4 billion in bonuses while accepting more than $50 billion in government bailouts, many experts say the system may have finally blown itself apart.

“The system is broken,” said Warren Batts, former chief executive of Tupperware Corp., Premark International and Dart Industries who used to sit on the boards of Allstate Corp., Sears, Roebuck and Co. and Sprint. “It needs some guiding principles.”

Without such guideposts, executive pay has run amok. CEOs made 344 times more the average worker in 2007, according to a survey from United for a Fair Economy, which targets economic inequality. That’s up from less than 150-to-one in 1992.

Read the whole thing.

Pop!

Home prices in the U.S. dropped the most on record in the first quarter from a year earlier as banks sold seized homes and foreclosures in California and Florida dominated sales.

The median price fell 14 percent to $169,000, the National Association of Realtors said today. Prices dropped in 134 of 152 metropolitan areas, with the deepest declines in Cape Coral-Ft. Myers, Florida, and the San Francisco and San Jose areas.

What Digby said:

The fiscal zombies said nothing when George W Bush passed out the surplus to all their wealthy friends just 8 years ago and then blindly cheered on an unnecessary, hugely expensive war. No, they waited until the economy was in total meltdown to insist that everyone (but them) needs to “sacrifice.” I don’t know where they get the chutzpah, but it seems to be in endless supply.

Your weekly Presidential address:

Text here.

The credit card banks:

Read more »

FDIC sets up shop in Florida, Because the southeastern banking system is so, you know, healthy.

The Federal Deposit Insurance Corporation (FDIC) today announced it will open a temporary satellite office in Jacksonville, Florida, to manage receiverships and to liquidate assets from failed financial institutions primarily located in the eastern states.

(snip)

Throughout its history, the FDIC has used these offices to keep temporary asset resolution staff closer to the concentration of failed bank assets they oversee. As the work diminishes, the temporary satellite offices are closed.

Follow the links for the full analyses:

Part 1:

GDP is already performing more poorly than the Fed’s stress test.

The worse case scenario for unemployment is the most realistic possibility.

Home prices are already closer to the Fed’s worst case scenario than the median baseline forecast.

Bottom line: the worst case scenario is the most realistic scenario.

Part 2:

Let’s move to the latest report from the Treasury Department. It indicates several problems.

Via Diversity Inc.

New unemployment claims drop to only 601,000 for last week, but the total number of persons collecting benefits continues to set a new record every week.

They are running out of persons to supply-sideline.

Initial jobless claims decreased by 34,000 to 601,000 in the week ended May 2, the fewest since late January, from a revised 635,000 the prior week, the Labor Department said today in Washington. The number of people collecting benefits climbed to 6.35 million the prior week, the 14th consecutive record, showing companies are still not hiring even as staff reductions abate.