June 2010

Must Read Posts for June 13, 2010

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On The Economic Populist you might have noticed the right column. We try to list other sites and blogs who have exceptional insight and writing on what is happening in the U.S. economy.

Sometimes though, one cannot say it better but miss those who did.

Must Read Post #1

Doctors are back to business as usual, putting patients lives at risk by taking kickbacks. Bloomberg investigates in New Hips Gone Awry Expose U.S. Kickbacks in Doctors’ Conflicts.

Must Read Post #2

Should people who cannot answer 150 ÷ 2 = ? be able to take out a home mortgage? A new study, overviewed by the New York Times, shows there is a correlation to being foreclosed on and not being able to answer simple arithmetic questions. No duh.

Must Read Post #3

Paul Krugman calls cash on the claim markets like ripping to shreds wages and social safety nets, as touted by the IMF.

Must Read Post #4

Trade Reform says it all (and why we need country of origin labels on food), in Chinese Organic Food, are you Kidding me?

Must Read Post #5

Sunday Morning Comics - What About Jobs Edition

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Brought to you by that Thing-A-Ma-Jig - All we need is a $1 billion retainer from BP and we can surely clean up that oil mess.
Cup O' Joe

 

Good Morning! Rise and Shine! Get that Cup O' Joe...
break out the O.J....hang out with the pooch...time to check out the Funnies!

 

The Spilling Fields

 


Cartoonist: Daryl Cagle

 

BP Spills Coffee

 

Enduring Ado About Oil

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With the new estimates on oil gushing into the gulf, currently at 4300 to 24,300 barrels a day, more economic impact studies are being released on the BP Deepwater Horizon disaster. Spillonomics estimates currently range from $29 billion to over $70 billion in direct costs for the spill and clean up. A study on the spill's economic impact on Florida estimates losses at $11 billion and 195,000 lost jobs. There are 2.8 million jobs associated with tourism alone in the gulf region. The fishing industry in Louisiana is estimated at $2.4 billion.

Earth Economics estimates the Mississippi Delta to be worth $330 billion and $1.3 trillion and provides an economic annual benefit of $12-$47 billion per year.

There is now a residential real estate estimate of a 10% decrease in gulf coast property values as a result of the spill. These losses alone are estimated at $4.3 billion dollars.

Bank Failure Friday - Just One This Week

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This week has just one bank failure, this time in Seattle Washington. This one will cost the deposit fund $158.4 million. FDIC:

Washington First International Bank had approximately $520.9 million in total assets and $441.4 million in total deposits. East West Bank will pay the FDIC a premium of 0.5 percent to assume all of the deposits of Washington First International Bank. In addition to assuming all of the deposits of the failed bank, East West Bank agreed to purchase approximately $501.0 million of the failed bank's assets.

The FDIC is unloading the bad mortgages and other assets by requiring the banks which take over the deposits to take on the bad stuff too.

The Federal Deposit Insurance Corp. closed down three more failed banks last week, pushing the total amount of dud mortgages and other assets the regulator must dispose of to more than $600 billion.

Rather than try to sell most of the assets itself, as the U.S. government did during the savings and loan crisis two decades ago, the FDIC is passing a large majority of the commercial mortgages and other delinquent debts on to the private institutions that it signs up to take over the failed banks.

Manufacturing & Trade Inventories & Sales for April 2010

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The Manufacturing, Trade, Inventories & Sales for April 2010 is out. Sales were up 0.6% and inventories up 0.4% for the month. Last month sales were up 2.5% for all business.

Below is a graph of the sales to inventories ratio. As you can see the ratio has become flat, which implies businesses are simply keeping on hand what they believe they can sell. It represents only a 1.23 months supply of inventories, given the current sales rate.

 

 

Below is a graph of raw inventory changes. Notice inventories are nowhere near pre-recession levels.

 

In BP We Trust

During the recent weeks, when we learned that the National Oceanographic and Atmospheric Administration (NOAA) is refused access to research and measure the spill by British Petroleum (BP), and the US Coast Guard warns reporters, research scientists and engineers away from the area, stating that they are simply following orders --- from BP --- one might surmise the sovereignty of the United States of America has been ceded to an oil multinational.

It would certainly appear that way. Many complaints have been heard from a variety of scientists and engineers, eager to monitor, research and learn from this catastrophe, in order to better prepare, and avoid, future such occurrences.

But what of the past decade and BP's other adventures?

Well, in this study by the GAO from October of 2007 (p.54):

In another case, on June 28, 2006, CFTC brought an enforcement action against BP Products North America, Inc., alleging, among other things, that BP cornered the physical propane market and manipulated the price of propane in February 2004.63 Also on June 28, 2006, DOJ announced that a former BP trader had pled guilty to conspiracy to manipulate and corner the physical propane market.(emphasis added - JW)

Hmmm......interesting stuff here!

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