May 2011

Removing Jobs as Job #1

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Have you noticed despite the never ending jobs crisis, Jobs are removed from the political dialog? The unemployed are no longer mentioned? Or if they are, we get absurd nonsense policy that will actually do the opposite? Ship more jobs overseas and lose jobs?

Paul Krugman calls out this sweeping the unemployed under the rug, in an op-ed, Against Learned Helplessness. Krugman calls for policies, that would actually work, to create jobs.

we could have W.P.A.-type programs putting the unemployed to work doing useful things like repairing roads — which would also, by raising incomes, make it easier for households to pay down debt. We could have a serious program of mortgage modification, reducing the debts of troubled homeowners. We could try to get inflation back up to the 4 percent rate that prevailed during Ronald Reagan’s second term, which would help to reduce the real burden of debt.

Right on Krugman and if only politicians would follow the call. What Krugman doesn't mention is the trade deficit or confronting China on currency manipulation, which once again, we get more inaction by Geithner on China:

The Obama administration on Friday declined to cite China for manipulating its currency to gain trade advantages against the United States but said the pace of the currency's rise against the dollar needs to be accelerated.

Swipe Fees, Profits, Banks and the Politicians Who Love Them

Earlier we saw banks posted record profits for the first three months of this year.

Quarterly net income rose to a three-year high. Net income was the best for the industry since the $36.8 billion earned in the second quarter of 2007. More than half of all institutions (56 percent) reported higher net income than a year earlier. Fifteen percent reported negative net income, down from 19 percent in the first quarter of 2010.

Good Economic News... If you're a Turk

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The Turkish people elected a new government in 2002. Recep Tayyip Erdoğan became Prime Minister after his AK Party gained an absolute majority in the nation's unicameral legislature. Erdoğan and AK have governed continuously from 2002 through the present.

The annual change in gross national product (Graph, Turkish Review, January 2011) developed through Turkish management of the economy.

During the critical period that included the global recession, Turkey fared better than most industrial nations. (Trading Economics)

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Negative growth hit Turkey in only three quarters, with a solid rebound starting in 2009. Forth quarter 2010 economic growth was 9.2%. Only China led Turkey during that time with 9.8% growth.

The International Monetary Fund (IMF) announced an end to its formal agreement with Turkey in 2010. In fact, the Turks ended IMF involvement with economic management in 2007 when they rejected IMF's "austerity" requirements for a stand by loan. Since that time, Turkey has paid off 75% of its IMF debt and managed the economy without IMF help.

Highlights - How they did it

SCOTUS Rules Arizona Can Punish Businesses Who Hire Illegal Workers

Score one for Arizona. The Supreme Court gives States the right to close businesses who knowingly hire illegal workers.

Now in spite of the rhetoric one will hear from special interest groups, this is actually a huge win for U.S. labor and workers.

The US Supreme Court ruled Thursday that a state has the right to revoke the license of a business that knowingly employs illegal immigrants, in a case watched for implications on related judicial battles.

The top US court in a 5-3 decision upheld Arizona's 2007 law, saying the state was within its rights under a 1986 federal immigration reform measure.

Like it or not, flooding the U.S. labor market with illegal workers does undermine wages, and in this economy, does cause U.S. worker displacement.

The law "expressly reserves to the states the authority to impose sanctions on employers hiring unauthorized workers, through licensing and similar laws," Chief Justice John Roberts wrote.

"It uses the federal government's own definition of 'unauthorized alien,' it relies solely on the federal government's own determination of who is an unauthorized alien, and it requires Arizona employers to use the federal government's own system for checking employee status."

It was a 5-3 decision, with the left of the court dissenting. Business licenses can be revoked and at last, the Supreme court upheld the use of E-verify, an electronic database to verify social security numbers used by workers are valid and their own.

Farrell and Stockman - Latter Day Prophets of Doom

Michael Collins
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Paul Farrell of MarketWatch caused quite a stir with his recent article, Reagan insider [David Stockman]: GOP destroyed U.S. economy, Part 2, May 24. Farrell breaks some new ground in the strident critique of long standing policy trends and offers a highly functional description of the destructive personalities controlling Wall Street. This article describes the several high points of the Farrell-Stockman thesis, a frontal assault on the modern Republican Party. It also provides important cautions on key information absent from the Farrell-Stockman broadside. (Image: Art & Perception)

Farrell makes his case by using Stockman's July 2010 New York Times OpEd, Four Deformations of the Apocalypse, New York Times and his recent book, The Triumph of Politics: Why the Reagan Revolution Failed.

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