Political Economy category archive

January reports coming in this week, and those folks who got seasonal (Christmas) jobs in retail, package delivery, and things like that there don’t have them any more:

The axe fell on an expected half million jobs last month, economists say, and the only reason the job losses weren’t larger is that weak hiring for temporary jobs in November and December meant fewer people were laid off in January.

The Labor Department will report on the January employment report on Friday, the cap of another busy week for economic data, most of which are expected to be gloomy, if not doomy.

The data calendar includes January purchasing-managers surveys from the Institute for Supply Management; January auto sales; December data on consumer spending, consumer credit, factory orders and construction spending; and the latest weekly figures on jobless claims. The Federal Reserve is also likely to report on its quarterly survey of lending conditions at banks.

The news is expected to be universally grim. The jobs report is the big one, however.

Foreclosed.

Rexrode is living in his house without gas because he cannot pay the bill. He has no hot water and can’t use his stove. He cooks his meals in a microwave. His estranged wife, Rita, pays his electric bill, which gives him lights and allows him to use a portable heater. He suffers from congestive heart failure and was recently hospitalized with breathing trouble.

On that day in December, however, Dawson told Rexrode that he had come to the end of the road. He should have taken exception in April, before the foreclosure sale took place, Dawson advises. The bank had every right to ask for Rexrode’s keys immediately, Dawson acknowledges later.

Instead, Dawson allows Rexrode to stay until Jan. 31. It is the best he could do, he said.

This week, the bank agreed to an extension with Rexrode because of his health problems, Rogers said. Rexrode must be out by Feb. 28.

Remember, the customers did not approve themselves for mortgages.

“Run the government like a business” has been the theme of those who fail to realize that government is not a business.

Well, for the last eight years, that bunch has been in charge.

And they have, indeed, run the government the same way they run their own businesses.

Into the ground.

The glories of Republicanism.

Federal regulators closed three banks in a single day Friday, as the ongoing credit crisis showed no signs of abating.

Utah’s MagnetBank became the fourth bank failure of the year, and the Federal Deposit Insurance Corp. was forced to directly refund depositors after being unable to find another institution willing to take over its operations.

That marked the first time the FDIC has been unable to find an acquirer for a failed bank in nearly five years, according to FDIC spokesman David Barr.

(snip)

The FDIC later said it has also closed Maryland-based Suburban Federal Savings Bank, and Florida’s Ocala National Bank.

Masters of the Universe at Duncan’s:

Am I the only (one) to whom it’s occurred that monetary policy through the banking channel (as opposed to, say, actually dropping money from helicopters) is only likely to be effective if banks are pretty good at allocating capital efficiently, and recent history tells us that the existing set of clowns in charge completely suck . . . at this.

Bet they’ll keep sending me those sweepstakes notices, though.

That’s good. They go right into recycling. I like recycling.

Reader’s Digest Association Inc. said Wednesday it will cut about 280 jobs, or 8 percent of its global work force, and implement other cost-cutting measures.

The job cuts will leave RDA with about 3,220 full-time employees.

Speaks for itself.

The Labor Department reported that the number of Americans continuing to claim unemployment insurance for the week ending Jan. 17 was a seasonally adjusted 4.78 million, the highest on record dating back to 1967. That’s an increase of 159,000 from the previous week and worse than economists’ expectations of 4.65 million.

As a proportion of the work force, the tally of unemployment benefit recipients is the highest since August 1983, a department analyst said.

A local business association is running a seminar about how to be a better CEO.

Got any suggestions as to who should attend?

But rich.

Our monied classes. Read the whole thing. It will give you a break from the want ads:

That was the sixth-largest haul on record, according to a report released Wednesday by the New York State comptroller.

While the payouts paled next to the riches of recent years, Wall Street workers still took home about as much as they did in 2004, when the Dow Jones industrial average was flying above 10,000, on its way to a record high.

Some bankers took home millions last year even as their employers lost billions.

The comptroller’s estimate, a closely watched guidepost of the annual December-January bonus season, is based largely on personal income tax collections. It excludes stock option awards that could push the figures even higher.

The fruits of Republicanism:

“Anybody who is looking for a job now is feeling an economic tsunami,” said 48-year-old Wilson, who says he has exhausted his family’s savings and now spends most days searching for jobs at an area employment-assistance center. “It feels like all of a sudden, it has just fallen apart.”

’nuff said:

Officials at the Food and Drug Administration and the Centers for Disease Control and Prevention, which have been investigating the outbreak of salmonella illness, said yesterday that Peanut Corporation of America found salmonella in internal tests a dozen times in 2007 and 2008 but sold the products anyway, sometimes after getting a negative finding from a different laboratory.

Republican economic theory at work:

But the number of other people who have been caught running Ponzi schemes in recent weeks is adding up quickly, so much so that they have earned themselves a nickname: mini-Madoffs.

The Republican theory that there is something intrinsically moral about combining greed, riches, and lack of accountability, . . . oh, well.

Republicanism is bankrupt.

Thanks to it, so are the rest of us.

Aside: Delaware Liberal has a quotation from Adam Smith that Republicans don’t want you to see.

The Guardian lists the suspects.

No bonuses here:

The number of people coming into the nonprofit (Sunday Breakfast Mission) shelter for a hot meal each night has more than doubled in the past year. Volunteers at the dining hall on North Poplar Street in Wilmington served 890 meals to needy men, women and children last month, compared with 398 meals in December 2007.

The reason is no mystery to the Rev. Thomas Laymon, who runs the mission.

“The doubling is very evident every night now,” he said. “And the answer is it has an economic reason behind it, because these are not just the homeless who are coming in.”

Another one bites the dust.

1st Centennial Bank of Redlands, Calif. was seized by the Federal Deposit Insurance Corp. and state regulators on Friday. It was the third bank failure this year, and brings to 28 the number of banks that have closed since the beginning of the current credit crisis.

In other news, Andy Stern, President of SEIU, prepares to attend the Davos World Economic Forum for the first time. He’s done his homework:

“These experts have failed the citizens of the globe. They have wrought economic havoc with financial manipulation, greed and deregulation,” he said, in a telephone interview. “I don’t know if it will do any good, but there is a need for straight talk and ending the backslapping, self-congratulatory noblesse-oblige attitude that I think has been more prevalent in the past.”

Robert Reich:

It’s called Lemon Socialism. Taxpayers support the lemons. Capitalism is reserved for the winners.

And the folks who planted the lemon trees are still going home with their pay for performance bonuses and their fancy cans.

Oh.

I forget.

Performance has nothing to do with it.

They get the bonuses because, well, they wear three-piece suits, write good memos emails, and look good in meetings.

They take us for fools.

And we prove them right.

Addendum, the Next Morning:

Polly Toynbee in the Guardian:

Debenhams is a useful paradigm for much that went wrong. Private equity gobbled it up in 2003. Its new owners sold off its property, took £1bn out of the business and put it back on the market with a £1bn debt round its neck. At the height of financial madness, institutional funds were suckered into buying back the now debt-laden company at a higher price than the marauders paid in the first place. It has not done too well.

(snip)

But it’s business as usual for the masters of this failed universe. Who is to stop them? Shareholder democracy was always an empty myth. The government relies on the men who profited in the balloon years to get us out of this, making them ministers in the Lords to oversee their own. No doubt they will regulate the worst, but don’t expect a scintilla of culture change. There is a sense right now that the financial and political worlds still don’t get it. They are like cartoon characters who have run off a precipice, suspended in mid-air before realising how hard they are going to crash.

Bonddad on the TARP. After a detailed analysis, he concludes that:

My guess is that much of the anger over TARP has as much to do with how we got here rather than what is actually happening with the program. Put another way, there is understandable anger about the stupidity that has cost the US economy dearly over the last year. That anger is understandable. A perfect storm of lack of regulatory enforcement, greed and outright stupidity combined to place the US in the worst financial situation since the early parts of the Great Depression.

However, I would caution that the anger be stored away from the current discussion and instead brought out when we discuss reform which will be forthcoming. Right now the goal is to keep the economy moving — or, perhaps more precisely, to keep it from falling off a cliff. It’s a bit like lecturing a drunk driver while he’s in the emergency room; yes, he needs to be dealt with, but it’s more important at that time to keep him alive. That’s what we have to do right now — keep the economy alive.

“The evil that men do lives after them”:

First-time applications for state unemployment benefits rose 62,000 to a seasonally adjusted 589,000 in the week ending Jan. 17, the Labor Department said Thursday. The level of initial claims is up 82% from the same period in the prior year, and the last time the level was higher was in November 1982. The four-week average of new claims was unchanged at 519,250. The number of people collecting benefits in the week ending Jan. 10 rose 97,000 to 4.61 million, a level that is 72% higher than in the prior year. The four-week average of continuing claims rose 58,750 to 4.56 million — the highest level since November 1982. The insured unemployment rate remained at 3.4%.

And the ripple effect:

New York State’s unemployment insurance system, besieged by claims from laid-off workers, ran out of money on the first business day of the year and is borrowing daily from the federal government to bridge a fast-growing and potentially huge deficit, state labor officials say.

Despite paying lower benefits to its jobless residents than other Northeastern states, the state’s unemployment fund has been borrowing about $90 million a week from the federal unemployment trust fund, state officials said. The deficit has already reached $212 million and is expected to exceed $2.5 billion by the end of 2010, they said.

Paul Krugman:

Old-fashioned voodoo economics — the belief in tax-cut magic — has been banished from civilized discourse (One can only hope–ed.). The supply-side cult has shrunk to the point that it contains only cranks, charlatans, and Republicans.

But recent news reports suggest that many influential people, including Federal Reserve officials, bank regulators, and, possibly, members of the incoming Obama administration, have become devotees of a new kind of voodoo: the belief that by performing elaborate financial rituals we can keep dead banks walking.

But, then again, Wall Street bankers wear three-piece suits (even the female ones), drive (or are driven in) expensive cars, and vote Republican, so it must not be their fault. Right?

Looming poverty raises enlistments:

The Army exceeded its targets each month for October, November and December — the first quarter of the new fiscal year — bringing in 21,443 new soldiers on active duty and in the reserves. December figures were released last week.

Recruiters also report that more people are inquiring about joining the military, a trend that could further bolster the ranks. Of the four armed services, the Army has faced the toughest recruiting challenge in recent years because of high casualty rates in Iraq and long deployments overseas. Recruitment is also strong for the Army National Guard, according to Pentagon figures. The Guard tends to draw older people.

“When the economy slackens and unemployment rises and jobs become more scarce in civilian society, recruiting is less challenging,” said Curtis Gilroy, the director of accession policy for the Department of Defense.

And how does a flair for the obvious seem so revolutionary?

Oh, I forgot. The obvious is too obscure for most economists because, well, it’s not obscure enough. And it doesn’t require long mathematical formulae and fanciful notions about how people behave that are in no way related to how people behave.

According to Dr. Ravi Batra, economics professor and author of The New Golden Age: A Revolution Against Political Corruption and Economic Chaos, (see: ravibatra.com ), bailing out banks is like bailing out criminals while victims are left to suffer.

The only difference here is that the victims, homeowners and consumers, are the foundation of the economy, and they are hurting because their wages have not kept pace with rising prices.

The celebrated economist Milton Friedman once said that the true test of a theory is its forecasting ability. Batra’s theories easily pass this sterling test.

This is because in the first edition of his book printed in 2006 Batra vividly foresaw the current economic chaos in all its dimensions. He forewarned us about stock market losses, the credit crunch, homeowner defaults and above all soaring unemployment, starting in 2007 and lasting at least till 2010.

The obvious was too obscure for any but liberal economists, who have been all over this thing like a bad suit for years.

But they were (hoick! ptui!) liberals (which we all know is a dirty thing–Rush Limbaugh told us so), so no one listened to them, for they just weren’t serious enough and, besides, their concern for the average Joe and Jane meant they had no Republican crud cred.

Besides, they did not qualify as members of the Masters of the Universe, given their belief that there is more to civilized society than survival of the fattest.

Batra quotation via Alan J. Heavens.