German carmaker Opel, owned by American automobile giant General Motors, as well as the European division of Ford could both profit from the current crisis at their mothership companies across the big pond. GM and Ford have been hit hard by falling sales of gas-guzzling pickup trucks and SUVs. With drivers having to pay an average of over $4 per gallon, sales of larger cars have slowed to a trickle, blindsiding US automakers, who have focused for years on the formerly lucrative truck and SUV market. Unable to quickly retool to develop their own fuel-efficient models, GM and Ford are both reviewing their units in Europe -- where compact and subcompact models are far more prevalent -- for possible models that could be produced for the American market.
As it turns out, that old saw about how a frog slowly boiled in water never jumps, isn't true. The frog jumps. Recent surveys show that over 80% of Americans believe the country is on the wrong track. They too are "ready to jump."
In order to convince them to jump, and to stay with a revived and long-term progressive coalition, we need to provide them with the coherent, persuasive, intellectual underpinnings of why the Right Wing has failed, and why they should embrace a new New Deal.
There is an absolutely compelling case to be made, but too often among the blogosphere, that case seems to be marginalized, and drowned out by the shouts of "The End is Near!" More than one economic blogger I respect has gone overboard calling for the Apocolypse, only to have to explain why it keeps getting delayed.
We live in an age of bubbles. I suppose that this should come as no surprise.
The Greek roots of the word "economy" are oikos and nomia. The former meaning household, and the latter its management. For most of human history, this has been the purpose of the economy, to provide the means of subsistence by which a people survive. Karl Polanyi, the author of The Great Transformation wrote in the midst of the Second World War about how the market may behave like a type of cancer. Economic activity and the production of profit is seen as an end unto itself, rather than simply the means by which societies produce the means by which they exist. And in doing so it unleashes what Polanyi called the "double movement."
I will be on the road this morning when the CPI is reported. I will check back in later and update after I have had a chance to look at the numbers and the release, but here are a few things to watch for: -- UPDATED with analysis!
Originally I was going to call our new form of rotten economic performance with heightened inflation, "Stagflation nouveau" but I don't think that quite catches the meaning I want to convey. I think "Scroogeflation" works better. What we have here is an inflation which is gradually, month after month, slowly eating away at middle and working class Americans' standard of living. It is the kind of inflation that Ebenezer Scrooge would welcome. Hence, "Scroogeflation". If you think of something better, let me know.
Congress may be still debating a bailout bill, but the bailout of the housing market is already in progress.
Freddie Mac and its fellow GSE Fannie Mae are now financing more than 80 percent of all mortgages in the U.S., up from 40 percent a year ago.
As lenders rely on Freddie Mac to buy their loans, the company is charging higher prices and increasing market share. Freddie Mac, which has a $738 billion portfolio of mortgage bonds and guarantees $1.78 trillion in home loans, is raising prices next month for the fourth time.
"We are nearly the only game in town, and we think we are going to be able to enjoy that position for a number of years," Piszel said.
Considering the implied promise of taxpayer backing for these government-sponsored entities combined with the collapsing real estate market, this should scare everyone.
I am glad to read my co-contributor midtowng's latest contribution to this site's coverage of the oil and commodity crisis. In the last few days, other bloggers -- Calculated Risk, Russ Winter -- have run stories on the collapse of the Shanghai stock market, but readers of this blog got the story first, becuase two months ago I was already telling you about the importance of the Shanghai stock market crash.
Indeed, the pivotal importance of China in the parabolic Bull market for oil, and for commodities in general, has only been confirmed by more news stories in the last few days.
Yep, it's pretty clear that all of our energy woes can be attributed to a small group of evil speculators who are driving up the price of gas. They must have made a fortune when the price of oil spiked $16 a barrel just Friday to $139 (an entire barrel of oil was going for $11 in 1998).
Well, actually... reality is slightly different. In fact, reality is pretty much the opposite of what the media and politicians are telling you.
People, how hard is it? While candidates spew and describe the problem, people are going broke and the economy can potentially grind to a halt over gas prices! Here we are in an election and when almost every American knows what to do, our government cannot even get it together to pass initiatives and emergency legislation!
Here are some ideas to do something and do something right now!
University of Oregon economist Tim Duy is rapidly becoming one of my favorite reads. His insight into how loosey goosey low interest rates in the US have engendered blowback unforeseen by the Fed is a great example:
For my part, I am concerned that the Fed appears to have written off the dollar. My concern stems from rising international tensions - the Fed is dumping additional liquidity into the system at a time when most central banks are attempting to turn off the faucet. The Fed is implicitly, if not explicitly, relying on countries with fixed exchange rates to absorb that additional liquidity at the cost of inflation in those economies. Moreover, those economies with floating rates become the anti-Dollar bets.…
Loss of jobs and real wages worsened in May with no end in sight; an ominous sign for financially strapped households.
Today’s BLS jobs report revises down their previous estimate of the number of jobs in March and April (by a total of -15k) and shows another loss of -49k jobs in May. Indeed, local governments kept adding jobs in May while the number of private sector jobs fell by -66k.
Widespread local government budget shortfalls for the fiscal year ahead will soon eliminate this much-needed, tax-payer-dependent source of job growth.
Over the past 12 months, the private sector has added only 16k jobs despite the fact that bars and restaurants added 227k and private education and health services added another 577k jobs. That is, excluding bars, restaurants and private education and health care, the private sector in the US has lost roughly 800k jobs over the past year.
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