Political Economy category archive

This is a drop:

Initial jobless claims decreased by 53,000 to 610,000 in the week ended April 11, the fewest since January, the Labor Department said today in Washington.

Bloomberg tries to find a cause for optimism in this report, but there is still this: employers are running out of persons to lay off.

Lemonade out of lemons: two laid off workers find a new product:

A wristband that almost 6 million Americans could legitimately wear.

It reads: “Laid off. Need a Job.”

(snip)

The women ordered 500 of the wristbands from a manufacturer in Texas and did a marketing blitz by handing some of them out for free.

They sell them online for $3 apiece through a Web site Aucoin designed at www.laidoffneedajob.com.

Visit their website here.

UBS:

UBS AG, Switzerland’s largest bank, plans to cut another 7,500 jobs, bringing total staff reductions to almost 20 percent of the workforce, amid mounting losses and customer defections.

UBS remains in a “precarious situation” after clients withdrew 23 billion Swiss francs ($20.1 billion) from the main wealth management unit and the bank posted a first-quarter net loss of almost 2 billion francs, Chairman Peter Kurer, who steps down today, told shareholders today in Zurich.

Aside: Whenever I hear a report about UBS, I remember “Fernwood 2night,” which was brought to you by “UBS: The Network that puts you before the BS.”

Prescient, eh?

Can I get a job writing financial news? I too have a flair for the obvious:

Retail sales in the U.S. unexpectedly fell in March as soaring job losses forced consumers to pull back.

Economists, apparently, do not. From the same story:

Retail sales were projected to rise 0.3 percent in March after an originally reported 0.1 percent decline the prior month, according to the median estimate of 73 economists in a Bloomberg News survey. Forecasts ranged from a decline of 0.2 percent to a gain of 1.2 percent.

The DuPont Co., the state’s (Delaware’s) largest industrial employer, today asked salaried employees worldwide to take unpaid furloughs this year in response to weak market conditions.

DuPont’s 75 senior leaders have agreed to take three weeks off without pay, said Anthony Farina, company spokesman. Other salaried employees are being asked to take the equivalent of two weeks off without pay.

If there is a bright side, it is that DuPont is starting at the top, with the persons who are paid the most, rather than with the persons who are paid the least.

Aside: DuPont was once Delaware’s largest employer, not just the largest “industrial” employer. These days, the largest employers are zombie banks. The way the zombie banking industry is going, DuPont may some day again–oh, never mind.

Banks no more:

New Frontier Bank, Greeley, Colorado.

Cape Fear Bank, Wilmington, NC.

But, no doubt, they are still Masters of the Universe.

Duncan:

Warning should’ve been when people started referring to “financial products.” Financial institutions are middlemen, skimmers. They don’t produce anything. “Financial innovation” is almost entirely a ridiculous concept.

Field Negro on wingnut tea parties:

I enjoy driving on the nice roads my tax dollars help to fund. I enjoy the security that my tax dollars help to provide for me. I enjoy the protections from poisons and other deadly products that could harm me. I enjoy the fact that veterans who serve my country can be taken care of. I like the fact that when I put my money in the bank it is insured. And I like the fact that most children who cannot afford it can get a free education. I could go on but you get the point: Taxes are painful for some of us, but they are necessary.

Which is why I don’t understand this “Tea Party Protest” that the FAKE NEWS people and conservatives have been planning for a little over a month now.

(snip)

I sense that history is repeating itself here. I mean back in the day the colonists didn’t think it was fair to pay taxes to a government who they didn’t believe represented them. They weren’t being taxed by their government, they were being taxed by the British. These conservatives are no different, his O ness does not represent them, just look at the guy; he is the total opposite of everything they represent, so why pay taxes to his government? Funny, they didn’t seem to mind paying their taxes to fund the two wars that the frat boy started. But hey, the frat boy didn’t have a funny name and a…..well, tan.

Fewer initial unemployment claims this week:

The number of U.S. workers filing new claims for unemployment benefits fell last week, government data showed on Thursday, but was still at levels indicating the labor market’s contraction was yet to bottom.

Well, yeah.

They’re running out of persons to be laid off. Later in the same story (emphasis added):

The Labor Department also said the ranks of unemployed who have claimed more than one week of aid vaulted to yet another record in the last week of March as laid-off workers battled to find new job opportunities amid a recession that is now in its 16th month.

Note that “16th month” figure. That goes back to December 2007, year seven of the Bushonomics.

Campbell Soup.

No bull.

Bears.

For all the folklore built around how soup helped Americans survive the Great Depression, one would think it would have some real staying power whenever times get tough. Apparently not.

(snip)

. . . Lassie is long gone and Campbell Soup, which sponsored the popular TV program for its full 19 years, is wondering how to reverse a steep 15.5% decline in soup sales in March.

Not their fault.

Something you can bank on.

Atrios cuts to the quick on the struggles of the newspaper industry.

The point is that it’s lost advertising revenue, not lost subscription revenue, that’s the big problem.

I have argued before (not here, in person–I actually do see real live persons from time to time) that, more than anything else, Craig’s List, which took the classifieds, led the charge. The Saturday classifieds in the Philadelphia Shrinquier, which used to be easily three sections (I have read the Inky off and on for 25 years), not counting the real estate ads, is now seldom more than one section, including the real estate.

Rowenna Davis, reviewing an ebook called The Crash in the Guardian, argues that most lefties don’t understand financial markets.

She has a point. Indeed, I think most persons don’t understand the markets. Yet, as is daily proven, the markets are important, not just for those who frequent them.

How many persons actually listen to the business news or read the business section in the paper? For most, that’s eyes-glaze-over territory filled with impenetrable double-talk and inane trivialities like “Jane Tribble just got promoted to Second Assistant Director of Beanie Babies.”

There’s a reason the business news comes at the end of the newscast or in the last section of the paper; only the dedicated pay attention to them.

Rant below the Fold

The unregulated free hand of the market:

The Philadelphia region has joined the rest of the nation in the iron grip of an unemployment crisis, with 210,100 unemployed in the eight-county area, costing $2.7 billion in lost monthly production and about $252.1 million in lost spending.

The joblessness is perverse: It is the direct result of the battered economy and the major reason economic recovery will be slow and painful – with most analysts foreseeing little in the way of even a modest turnaround until midway through next year.

Meanwhile, consumer spending and the housing market – to name two key economic drivers – are certain to suffer prolonged damage by the high level of unemployment.

Working persons pay for the incompetence of the suits.

Executives from the Times Co. and Globe made the demands Thursday morning in an approximately 90- minute meeting with leaders of the newspaper’s 13 unions, union officials said. The possible concessions include pay cuts, the end of pension contributions by the company and the elimination of lifetime job guarantees now enjoyed by some veteran employees, said Daniel Totten, president of the Boston Newspaper Guild, the Globe’s biggest union, which represents more than 700 editorial, advertising and business office employees.

Not that I’m a big fan of Larry Summers or of the whole Wall Street rat pack, but the only significance of this is to illustrate what an incestuous inbred little group sits at the top of the financial hill.

Robert Reich:

This is still not the Great Depression of the 1930s, but it is a Depression.

The official numbers are in, subject to (no doubt, upward) revision at a later date:

First-time claims for state unemployment benefits rose a seasonally adjusted 12,000 in the week ended March 28, hitting the highest level since October 1982, the Labor Department reported Thursday.

These initial claims totaled 669,000, a level that is up 72% from the same period in the prior year. The four-week average of these initial claims increased 6,500 to stand at 656,750 — also the highest level since October 1982.

The four-week average is considered a better gauge of labor market conditions than the volatile weekly figures because it smoothes out one-time distortions caused by holidays, bad weather or strikes.

Why subsidize demonstrated incompetence when we can strive for mediocrity as a standard?

Darrell Delamaide at MarketWatch:

As the auto crisis comes to a head, the administration is talking explicitly about bankruptcy as an option, with details of how it would work. If the Public-Private Investment Program (PPIP) proposed last week by Treasury Secretary Timothy Geithner fails because banks won’t negotiate a price with potential private sector buyers, the government might well start talking about bank nationalization after all.

(snip)

In a new article in The Atlantic, (former IMF chief economist Simon–ed.) Johnson compares the plight in the U.S. to that in some emerging market economies that he dealt with first hand while at the IMF — a financial oligarchy pursuing its own selfish agenda has seized control of the government and blocked any effective reform. Unless the administration is willing to break up this financial oligarchy, it will fail in its effort to restore a healthy banking system, says Johnson, now a professor at MIT.

Read Mr. Johnson’s article here. The lead:

Of course, the U.S. is unique. And just as we have the world’s most advanced economy, military, and technology, we also have its most advanced oligarchy.

Afterthought:

The News Pundit explores the world of the zombie banks.

What I’ve been saying:

Many politicians and pundits blame fair value accounting rules – also often called mark-to-market rules – for worsening the current crisis. Attaching distressed market values rather than a higher historical cost or long-term recovery value to financial assets, they say, has caused financial institutions’ capital cushions, as reported to investors, to collapse – unnecessarily overstating the risk of insolvency.

But if a financial firm holds securities specifically for sale or in a liquid trading book, and funds itself partly or mainly with short-term borrowing, what do investors need to know? Pretty obviously, roughly what the securities would fetch if sold. Supporters of a fairly strict mark-to-market approach say its critics are blaming the messenger for problems of financial firms’ own making.

Now FASB appears to be caving under political pressure, at least to a point. Its proposed rules would give financial companies’ bosses and auditors more discretion to ignore actual market transactions as valuation benchmarks – instead using computer models or other methods to arrive at a value.

The Wall Street Bankers balance sheets have been fantasies for years. Now they shall be fantasies with the sanction of the accountancy profession.

Birds of a feather and all that . . . .