Welcome to our round up of economic shorts. These are the latest outrages that caught our eye which you might have missed. Probably the biggest disaster happening today is the Senate pushing forward with a corporate written cheap labor immigration bill regardless of the negative impact this will have on jobs and the economy. The bill is projected to add 30 million workers to the labor force, 1.6 million additional foreign guest workers in the first year alone, while over 11.6 million, unofficially, closer to 20 million people remain unemployed and the total annual U.S. job growth is 2 million. Labor groups everywhere are protesting, writing letters to oppose the bill, all to no avail.
Immigration Bill Disaster for Workers
Senator Bernie Sanders, a Democratic Socialist, is warning on the Immigration bill:
at a time when nearly 14 percent of Americans do not have a full-time job and when the middle class is working longer hours for lower wages, I oppose a massive increase in temporary guest worker programs that will allow large corporations to import hundreds of thousands of blue-collar and white-collar workers from overseas,” Sanders said in remarks prepared for a Senate floor speech.
There could be an eight-fold jump in the number of blue-collar foreign workers in the U.S. over the next five years and the number of skilled-workers granted visas could more than triple in three years under provisions that Sanders opposes in the immigration bill the Senate is expected to take up next week.
Instead of hiring young Americans looking for work as lifeguards or ski instructors, Sanders said too many businesses would rather pay less to foreigners. “At a time when the youth unemployment rate is more than 16 percent and the teen unemployment rate is over 25 percent, many of the jobs that used to be done by young Americans are now being performed by temporary guest workers,” Sanders said.
Sanders also opposes a provision that would greatly expand the number of foreign workers allowed to take jobs at high-tech companies in the U.S. at a time when the American middle class is disappearing and corporations are posting record profits. Sanders noted that half of all recent college graduates majoring in computer and information science in the United States did not receive jobs in the information technology sector.
Labor Be Damned Say Democrats
With the Senate ramrodding immigration down the throats of America comes this revelation, Democrats are hell bent on selling labor, including organized labor, down the river.
Senators Richard Durbin and Charles Schumer, with long records of supporting labor unions, gay rights and gun restrictions, are ready to vote against these constituencies to win passage of an immigration law.
The second- and third-ranking Democrats in the chamber helped craft the bipartisan immigration bill the Senate will consider this week. They warn that attempts to amend the legislation for unions, gay-rights activists and gun control advocates could scuttle the most significant revision of U.S. immigration policy in a generation.
In the early 18th century, North America held a role in the British Empire that was similar to the one occupied by Cyprus or Slovenia in the euro area today. Americans were slavers, smugglers, rumrunners and fanatics -- as “opulent, commercial, thriving” as they were irresponsible and fiscally profligate. But as the empire struggled to stay solvent after the Seven Years War, the government of Prime Minister George Grenville attempted to bring the colonists to heel in the name of fiscal austerity.
“The Circumstances of the Times, the Necessities of the Country, and the Abilities of the Colonies, concur in requiring an American Revenue,” wrote Thomas Whately, a Grenville ally, in 1765.
To be sure, the 18th century British Empire and the euro area are very different. But the similarities are still worth noting: A central unelected body (at least not by North Americans), attempted to solve a fiscal problem by inflicting misguided pain on the periphery.
BIS Warns Central Banks Setting up the Next Big Financial Bang
The Bank of International Settlements warned Central Banks are setting up the next financial crisis:
Markets are “under the spell” of the world’s central bankers, with cheap money driving stock prices to record highs despite a lack of good economic news, the Bank for International Settlements has said.
The BIS, the so-called central bankers’ bank, on Sunday became the latest high-profile financial institution to warn that low rates and a plentiful supply of cash from quantitative easing had prompted investors to drive asset prices to record highs in spite of signs that a meaningful recovery continues to elude the global economy.
If that wasn't bad enough, the Central Banks are also ignoring a big, fat correlation to predict the next crisis.
Regulators may be overlooking a signal that could give them an opportunity to identify a new financial crisis, according to the Bank for International Settlements.
By focusing only on the gap between the size of an economy and the amount of bank credit within it, policy makers are ignoring contributions that foreign and non-bank lenders make to credit booms that typically precede systemic banking crises, according to Mathias Drehmann, a senior economist at the Basel-based institution. That role can be “significant,” as shown by a new BIS database that shows domestic banks currently supply only 30 percent of credit in the U.S. economy.
More Revolving Door, Ignore the Law
Seems the SEC could care less that their new chief council has a pending legal case against him.
The Financial Times has caught a significant revolving door that its business press peers have largely overlooked.
In a front page story, the pink paper points out that the incoming chief counsel for the SEC has an outstanding suit against him from his last incarnation, as head of compliance for the Americas for Deutsche Bank. An overview:
"Robert Rice joined the SEC last week, working directly for Mary Jo White, the new SEC chairman. He moved from Deutsche where he was head of governance, litigation and regulation for the Americas.
Eric Ben-Artzi, a former Deutsche risk manager, filed a discrimination complaint with the US Department of Labor last year, alleging he was fired after telling the SEC that Germany’s biggest bank had hidden billions of dollars of losses with mismarked derivatives positions.
In this complaint, seen by the Financial Times, Mr Ben-Artzi named Mr Rice, along with four other Deutsche executives, as a respondent. The complaint describes several meetings with Deutsche officials, including Mr Rice…
Mr Ben-Artzi, along with at least two other former Deutsche employees acting independently, went to the SEC with a range of allegations against the bank during the past three years. The common thread was a claim that Deutsche executives reduced their losses during the financial crisis by not properly marking derivatives positions known as leveraged super senior trades. The former employees estimated Deutsche should have recognised losses of $4bn-$12bn during the crisis."
The Mysterious New Housing Bubble
Wondering why prices are soaring when everyone is broke? You're not alone:
Housing is arguably the most maligned and manipulated market of all time. Mortgage rates are artificially low due to Fed intervention (QE3). Inventory is artificially low due to the banks withholding of distressed backlog. Down payments are so minuscule (FHA=3.5%) that homebuyers end up leveraged at a 30 to 1 ratio, the same as the big Wall Street investment banks prior to the Crash of ’08. And, finally, government-backed mortgage modifications (HAMP) provide generous refinancing to high-risk “underwater” applicants with LTV at 125%, a process that makes subprime mortgages look like a model of prudent lending. So much is fake about today’s housing market, that it’s a stretch to call it a market at all.
Lehman Back From the Dead
This is an amazing story where defunct Lehman Brothers has managed to raid nonprofits:
Almost five years after Lehman Brothers Holding Inc (LEHMQ). filed for bankruptcy and set off the global financial crisis, managers of the bank’s estate are demanding millions of dollars from retirement homes, colleges and hospitals.
After selling most of its assets, Lehman now says it was shortchanged by scores of nonprofits that were forced to pay to exit derivatives that were unwound after the firm filed for Chapter 11 protection.
The Buck Institute for Research on Aging in Novato, California, gave Lehman $2 million in October 2008 to cancel a swap contract used to manage fluctuating interest rates. Lehman says it wants $12.1 million more and has assessed at least an additional $4.7 million in interest, the research center said in its most recent financial statement. The amount Lehman is seeking is more than half of what Buck spent last year researching Alzheimer’s, Parkinson’s and other diseases.
“Lehman is sort of a zombie-like bankruptcy entity: Instead of looking for brains, it’s looking for cash,” said Chip Bowles, a bankruptcy lawyer with Bingham Greenebaum Doll LLP in Louisville, Kentucky.
Austerity Built Off Of A Lie
It is over five years since Europe first started implementing their austerity and we see the results. Reinhart And Rogoff Harvard econ professors Carmen Reinhart and Ken Rogoff that claimed countries with debt to GDP above 90% experience much lower growth. University of Massachusetts grad student Thomas Herndon. Herndon debunked this paper and an insuring firestorm erupted. Herndon responded to the attacks, as did his adviser his adviser . While we suggest you read Dube's analysis in full, here is the meat of his conclusion, Reverse casualty, means instead of high debt killing the economy, low growth causes high debt. Felix Simon also helps explain.
The raw correlation between debt-to-GDP ratio and GDP growth probably reflects a fair amount of reverse casualty. We can’t simply use correlations like those used by RR (or ones presented here) to identify causal estimates.
Food Less Nutritious
In this OpEd is a startling fact, our food is less nutritious.
tudies published within the past 15 years show that much of our produce is relatively low in phytonutrients, which are the compounds with the potential to reduce the risk of four of our modern scourges: cancer, cardiovascular disease, diabetes and dementia. The loss of these beneficial nutrients did not begin 50 or 100 years ago, as many assume. Unwittingly, we have been stripping phytonutrients from our diet since we stopped foraging for wild plants some 10,000 years ago and became farmers.
These insights have been made possible by new technology that has allowed researchers to compare the phytonutrient content of wild plants with the produce in our supermarkets. The results are startling.
Wild dandelions, once a springtime treat for Native Americans, have seven times more phytonutrients than spinach, which we consider a “superfood.” A purple potato native to Peru has 28 times more cancer-fighting anthocyanins than common russet potatoes. One species of apple has a staggering 100 times more phytonutrients than the Golden Delicious displayed in our supermarkets.
Cheap Labor Advocate Tells Americans to Become Plumbers
Become a plumber and skip college! So says uber-rich Mayor Bloomberg and unfortunately, he is right. Not only do plumbers make enough money to support a middle class life, these days they get more respect than the typical PhD. Overflowing toilets cannot be offshore outsourced. Bloomberg has been a major advocate of flooding the United States with cheap labor, so this is the ironic considering he is part of the problem which caused the current crisis for College grads not being able to get a job.
Compare a plumber to going to Harvard College — being a plumber, actually for the average person, probably would be a better deal,” he reportedly said. “You don’t spend ... four years spending $40,000, $50,000 in tuition without earning income.
Pretty clear corporate America has offshore outsourced everything but the kitchen sink. While new college graduates cannot find jobs, Congress is busy preparing to give away even more American jobs through Comprehensive immigration reform.
Tax Haven Corporate America
While Congress blasted Apple for paying no taxes, there are 18 more which cost the U.S. $92 billion.
At least 18 companies, including Nike, Microsoft and Apple, are stashing profits in offshore tax havens likely in a bid to avoid paying taxes, according to a new report from the Citizens for Tax Justice, a left-leaning research group. If the companies brought that money home, they would pay combined more than $92 billion in U.S. taxes, the report found.
“It’s misguided to say it’s some unique thing that Apple has created," said Matthew Gardner, the executive director of the Institute on Taxation and Economic Policy, a research partner of CTJ. "A lot of big companies are very likely doing it.”