Blogs

"Jobs for Us, Jobs for Our Kids" - a Close Encounter of the Senator Cantwell Kind

You may wonder why congressmen and senators seem to be so out of touch with the reality that middle and lower class Citizens face each and every day. In fact, you may wonder why they seem to completely ignore any message you try to get to them via email, phone calls, or even smoke signals. Nothing seems to work.

From what I observe of Senator Maria Cantwell (D-WA), she is a recluse to the middle and lower classes. I have never seen her do a "town hall meeting" like Congressman Jay Inslee frequently does. I also find that when she visits a city within Washington State, she is more likely to be visiting with the Chamber of Commerce than a local labor council.

Real Disposable Income per Capita Remains Lower

Despite large bonuses for some, average real disposable income per capita in February remained lower than in March 2007 as real spending stagnates with meager savings.

Today’s BEA report on personal income and spending in February provides important context for anticipating the possible depth and length of the current recession.

 BEA reports that even with large end-of-year bonuses for a few (mostly in the debt industry that is seeking taxpayer bailouts for their looted companies,) the average real disposable income per capita rose only 0.3% in February, up only 0.3% yr/yr and still below levels reached in March 2007. All of the gain in worker compensation in February (and more than all in January) is accounted for by the large bonuses. Proprietor income fell sharply in February and is down sharply yr/yr. 

  average income per capita, feb. 2008

Job Market 2009

And now for some sarcasm with a ring of truth, brought to you by Screaming Frog Productions:

How many job ads for highly educated professionals are permatemp and have skills requirement lists as long as your arm?

This book, White Collar Sweatshop: The Deterioriation of Work and Its Rewards in Corporate America - Jill Andresky Fraser, published in 2001, goes into great detail on the labor arbitrage of professional careers into the United States.

The Economic Slowdown is Global

For those who claim that China, India, et al. will bail out the US slowdown by picking up the slack, I bring you this chart of China's Shanghai A shares:

The index reached a high of 6430 back in October 2007. This morning it finished at ~3590. That's a 45% decline in 5 months! If it reminds you of the Nasdaq in 2000, it should. This is the chart of a bubble popping. Large numbers of Chinese "investors" opened brokerage accounts in the last year. Just how many? This is from the February 19 edition of USA Today:

New Durable Goods Orders Fall

New durable goods orders and new single-family home sales both fell sharply in February as recession worsens challenging the Presidential candidates

 

Two economic reports from the Census Bureau today reflect the deepening recession and an urgent need for the Presidential candidates to get serious about how they will address what could be a long and severe recession with lasting consequences.

Even with prices rising sharply, the nominal value of new orders for durable manufacturing goods fell another -1.7% in February after plunging by -4.7% in January. Nominal values of new durable orders is now down -8.6% since last July to the lowest levels since March 2007.

New Orders Durable Goods Feb. 08

Measuring Democracy

There are a number of new books out which try to show that more democratic countries have a higher level of economic equality and also a higher level sustained economic growth. There is some question as to whether equality leads to growth or vice versa, but the issue I'd like to discuss is how to measure democracy.

There are many studies and organizations which aim to rate states on an authoritarian - democracy scale, but many also add in civil liberties as well. I have something slightly different in mind.

A dictionary definition.

Democracy: government by the people; a form of government in which the supreme power is vested in the people and exercised directly by them or by their elected agents under a free electoral system.

The problem is that such textbook definitions don't take into account the many ways democracy can be imperfect. I'm aiming at a more realistic measure.

Citizenship

Consumer Expectations Worse

Consumer expectations are the worst since Dec. 1973 -- in the midst of Watergate and first OPEC oil price hikes

The Conference Board reported today that the expectations component of its closely-watched Index of Consumer Confidence plunged further in March to the lowest levels in 35 years – to December 1973. The overall index which measures both expectations and views on current conditions also plunged again in March to the lowest levels in five years, the eve of the invasion of Iraq in March 2003. (see attached graphic of overall index)

Today’s report shows almost four times as many consumers now expect fewer jobs over the next six months as expect more jobs. More than three times as many expect business conditions to worsen rather than to improve and only 14.9% expect their incomes to rise in the next six months.

On "Free" Trade

One of the key axioms of the "Washington Consensus" is that international trade is good for both parties and is the only viable road to development in the third world. They have been promoting this vision, in one form or another, for 50 years.

There are many critics of this view who illustrate their objections with a large number of case studies. These generally fall into two categories. In the first are the examples of states which have been the object of much international advice and intervention and still haven't done well. Much of Africa falls into this category. The second are those states which have done well, but have ignored most of the policy prescriptions promoted by entities such as the World Bank and IMF. Examples include South Korea and China.

Derivatives- Investment Vehicles No One Understands

When you bite down into that hamburger, do you know what's in it?   Well, the new mystery meat is the massive financial black box (what's inside is anyone's guess!) world of derivatives and credit default swaps.

Finally, the New York Times writes a detailed article, What Created This Monster, and exposes even world leading economists do not know what derivatives are or in most cases, the details of how they work.

These products are virtually hidden from investors, analysts and regulators, even though they have emerged as one of Wall Street’s most outsized profit engines. They don’t trade openly on public exchanges, and financial services firms disclose few details about them

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