manfrommiddletown's blog

23.4% Unemployment in Michigan?

Unemployment is a malleable thing. The official unemployment rate released by the BLS (Bureau of Labor Statistics) excludes those individuals who have not looked for work in the last month and those forced to work part time for economic reasons. In short the official rate (U-3) tends to vastly understate the unemployment rate, creating the impression that things are better than they actually are. For many, years the BLS has released what it calls alternative measures of labor underutilization that provide details of the percentage of workers who would like to work (but haven't actively sought it in the last month) and those working part time for economic reasons at the national level.

However, until very recently, the BLS has not released this data at the state level. That has changed. When we look at this broader unemployment rate at the state level, the picture isn't pretty.

This isn't a conspiracy. The problem is small sample size. The BLS uses surveys with a very large number of participants to drive down the marign of error. So the number that we get at the national level is basically the same that you'd get if you called everyone in the US. But, when you go to the states, the number of participants shrink, and when you include a large number of categories, the margin of error goes up. It's still quite low, just not the gold standard that the BLS has set for national unemployment figures.

Corruption in Higher Education

For those of us here, I imagine that this will come as no great surprise:

At a time when it's more competitive than ever to get into the University of Illinois, some students with subpar academic records are being admitted after interference from state lawmakers and university trustees, a Tribune investigation has revealed.

Hundreds of applicants received special consideration in the last five years, according to documents obtained by the Tribune under the state's Freedom of Information Act. The records chronicle a shadow admissions system in which some students won spots at the state's most prestigious public university over the protests of admissions officers, while others had their rejections reversed during an unadvertised appeal process.

Stimulus Not Targeting Job Loss States

Often times, non-economists attribute much more confusion to the ideas of Keynesian economics than is really the case. Take for example the idea of smoothing out business cycles. Anyone who's ever tried to keep to an exercise regime understands the concept intuitively. The fancy graph way of making the case looks like this:

The idea here is simple. The black line is the boom and bust cycle that characterizes un-managed markets. The red line is what happens when the government or private actors step in to manage the economy to smooth out these business cycles. Note that while at any one point, the black line may show a much higher rate of growth than the red over the long run, it ends higher.

GM Layoffs will Boost Unemployment Through the Roof

I just has a truly frightening experience. During a conversation about the auto industry one of my colleagues who researches the auto industry told me that according to his calculations, the GM shutdown is going to send 250,000 off the job in Ohio.

This includes only the multiplier effect at auto suppliers, not any macro economic effect. For example, job losses at retail stores resulting from drops in spending are not included, nor are any further drops from other problems.

As it stands now Ohio unemployment stands at 9.7%.

Overall, the Ohio labor force stands at 5.95 million.

Currently, 578,000 are out of work, up from 409,000 in October of 2008.

Adding another 250,000 to those out of work, bumps the total number of unemployed to 838,000.

Divide this number by the labor force, and you get an unemployment rate of 13.9%, a 44% increase over the present rate.

GM Hummer Division to be Sold to Chinese Defense Contractor?

GM is talks with a Chinese firm to sell off its Humvee division with financing from a private equity firm.

A Chinese company is said to be in advanced talks with General motors over the $100million (£69.4million) takeover of Hummer - the fuel-thirsty, four-wheel-drive vehicle modelled on the US military's Humvee.

News of the unnamed bidder's interest came days after it emerged that another big Western carmaker, Volvo, may be sold to the Chinese.

Ford is in talks to sell Volvo to Chinese tycoon Li Shufu's Geely carmaking business. insiders say a private-equity firm is also involved in the proposed Hummer deal but would not reveal its identity.

The buyer is likely Dongfeng Motor Company, a Chinese defense contractor.

We Need a Revolution..... A Labor Rights Revolution

Help is on the way. Or so we've been told.

The stimulus legislation also extends the social safety net for those who are already unemployed by extending and improving unemployment benefits.

Under the terms of the deal, laid-off workers are eligible for as much as 33 weeks of extended unemployment benefits, including a $25 increase in weekly benefits.

NY Times: "You Try to Live on 500K in This Town"

In many ways, the past forty years of Anglo-American history have been marked by a revolution of a few who live by wealth upon the many who live by labor. If the first half of the 20th century can be seen at the revolt of the masses, this latter half has been a revolt of the elites. Nowhere is this more apparent than in delinking of increases in labor productivity from growth in real wages. I think that this graphic illustrates what's been happening pretty clearly.

Given this the plea to "Save the Bankers" which will appear on the front page of the style section of tomorrow's New York Times is all the more galling.

The article begins by explaining how $500,000 a year (the CEO salary cap propose by the Obama administration) is simply not enough to keep them in the manner to which they have become accustomed.

Goldman Sachs Buying up Energy Speculation Firm

Earlier this week I wrote a piece on how bailed out banks have been speculating in oil markets.

Today, more evidence that the banks haven't learned that in the end speculation is a zero-sum game has emerged. At the same time that Goldman Sachs has been taking TARP funds, the bank is purchasing foreign firms involved in energy speculation.

Banks Using TARP Funds to Speculate in Oil Markets

Prepare to be deeply offended. Banks to who the US government has given billions of dollars of loans are using this money in order to speculate in global oil markets. First, let's start off with the news brought up yesterday on Daily Kos by Scout Finch. Around 80 million barrels of oil are being stored at sea.

Norway's Frontline (FRO.OL: Quote, Profile, Research), one of the world's biggest oil tanker owners, said on Friday oil firms were storing "about" 80 million barrels of crude oil at sea, possibly the highest in a quarter of a century....

30 to 35 Very Large Crude Carriers (Very Large Crude Carriers) capable of carrying two million barrels each and 10 Suezmaxes with a capacity of a million barrels each were being used by oil firms for floating storage in the last few months.