November 2010

Industrial Policy Can Work - Rethinking the Auto Bailout

Note: this is a cross-post from The Realignment Project. Follow us on Facebook!

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How NOT to Do It

 

Introduction:

When the first generation of historians begin their work on the Obama Administration, one of the more puzzling chapters will be the winter of 2010, when a major sea-change occurred in public policy that neither the administration nor the media were particularly eager to spend that much time trumpeting - namely, the revival of industrial policy after forty years or more beyond the pale of the Conventional Wisdom, as demonstrated by the success of the American automotive industry rescue.

While we wait for that generation of historians to get started being born, we can at least begin to learn some lessons about how and why the Big Three rescue worked when other industry bailouts have been such miserable failures.

Chicago ISM for November 2010

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The Institute for Supply Management Chicago has released a very positive report on business activity for November 2010, almost too positive versus the numbers. Their business activity index increased to 62.5, up from 60.6 in October. Below is their crappy graph, with the start date in 2000. The vertical line indicates 2010 and the middle line is 50. Above 50 is expansion and good, below 50 is contraction and bad.

Consumerist Christmas - Can it survive?

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By Numerian

It isn’t even important whether you or your family have a Merry or a Happy Christmas – the only important thing is whether corporations have a profitable Christmas. This is the true meaning of Christmas.

The mighty American marketing machine known as Christmas put on a brave front this weekend. Stores across the country opened up earlier than ever – some as early as 2:00 a.m. on Friday morning – and shoppers responded. Some consumers gave up their Thanksgiving Thursday altogether by using that day to stake their position on a sidewalk outside Best Buy, Wal-Mart, Target, or Sears. The rewards were high – those who were first in the store on Black Friday had the best shot at buying at deep, deep discounts. Flat screen HDTVs, which were otherwise priced at $1,000 minimum, were on sale for $300, but only on Black Friday and only to the earliest few into the store. (Image)

Obama to Freeze Federal Employee's Pay for 2 Years

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Surely this is a Populist move. The Obama administration is planning on Ordering Pay Freezes for Federal Workers.

The president’s proposal will effectively wipe out plans for a 1.4 percent across-the-board raise in 2011 for 2.1 million civilian federal government employees, including those working at the Defense Department, but the freeze would not affect the nation’s uniformed military personnel. The president has frozen the salaries of his own top White House staff members since taking office 22 months ago.

The pay freeze will save $2 billion in the current fiscal year that ends in September 2011, $28 billion over five years and more than $60 billion over 10 years, officials said.

Federal employees only make up about 2-3% of the total workforce. There was a USA Today article which got people's panties get all in a bunch about the low unemployment rate and much better pay for Federal employees versus private ones.

Some lawmakers are planning to use the lame-duck session that starts Monday to challenge the president's plan to give a 1.4% across-the-board pay raise to 2.1 million federal workers.

It seems this move by the Obama administration is to head 'em off at the pass. This stops the GOP wanting to make this an issue as well as avoids a 10% pay cut for Federal Employees. Instead of course, doing something to raise the pay of the private sector.

Here are some statistics from the USA Today article:

Personal Income, Consumption & Outlays for October 2010

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The BEA economic report personal income & outlays was released last Wednesday, but since PCE greatly affects GDP, it's worth reviewing, despite the tardiness of this piece.

Personal income increased 0.5% in October and PCE or personal consumption expenditures increased 0.3%. In September personal income was a big fat 0%. Below is the percent change in personal income and then the raw values.

Reduce the trade deficit; increase GDP & median wage

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Warren Buffett’s concept to significantly reduce USA’s trade deficit.

I’m a proponent of a proposal that was introduced to the Senate in 2006. Trade deficits are always detrimental to a nation’s GDP. Trade deficit’s detriment to the GDP exceeds the amount of the deficit itself. The GDP bolsters the median wage.

Decline and fall (maybe) … Nov 27, 2010

A purely subjective look at our chances to survive those who rule us

Michael Collins

It will be months if ever before trials to start for the targets of the FBI raids. In the meantime, Congress failed to extend unemployment benefits for four million workers set to go off the rolls in January.

Will we survive those who rule us and those who aspire to rule in their place, that bipartisan coalition known as The Money Party?

The parade of indictments on Wall Street is just beginning. On Tuesday the FBI raided three major hedge funds (very large private, highly exclusive, unregulated investment funds that generate huge returns for the lucky few). There are more raids on the way, twelve according to one source. Business Insider's excellent article made clear what has the Feds upset: "What's happened, it seems, is that the government has discovered a huge ring of friends or acquaintances who all know each other." Its called insider trading, taking advantage of information to make those huge profits the hedge funds offer. Ten years after the Wall Street Casino opened, they're finally regulating. It may be time for a scapegoat. The hedge funds will do, it appears. The defendants may wish to put in an early bid for a conveniently located federal penitentiary.

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