Tag Archives: economy

Fiscal Cliffmageddon!

President Obama & Speaker of the House John Boehner are the key players in the "fiscal cliff" negotiations.

President Obama & Speaker of the House John Boehner are the key players in the “fiscal cliff” negotiations.

In the summer of 2011 there was a rather productive conversation about the national debt and a previously simple Congressional procedure known as the raising of the debt ceiling. The conversation was productive in that it showed off how one of the two main political parties in the United States abjectly failed to comprehend how the United States spends money, borrows money, how debt markets work, and just what the effect of debt markets is on more tangible markets that you or I could touch via our paychecks or the unemployment line.

Whether on purpose or through their own embracing of anti-intelligence, the Tea Party wing of the Republican party managed to become the state personification of a crazed old person calling their credit card company daily and repeating “you know I’m really not sure if I feel like paying my bills anymore”. Stock markets reacted negatively. Businesses reacted by sharply curtailing spending and hiring since they really began to wonder just how far down the rabbit hole partisan politics were going to take us. Bond markets would have reacted negatively if there wasn’t even a larger continuous train wreck going on across the pond in Europe with their continued experiment of “let’s pretend to be a country up until the point we have to make a tough decision” with the Euro.

Eventually there was a deal, the debt ceiling was raised, and the Tea Party did not tank the fragile global economy. The deal, by the way, was to kick the can down to the end of 2011. Professional can kickers were anointed, known as the Super Committee. They proudly stood up and kicked the can even farther away, to the end of 2012. It is now December of 2012, and we’ve found the can.

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The Really, Really Long Road to Recovery Continues

53 months into the employment recession and you are here. You will remain here for a long time to come.

53 months into the employment recession and you are here. You will remain here for a long time to come.

It has now been more than 53 months since the start of the employment recession that precluded the full on economic one. Four years and five months ago the unemployment rate was hovering around 4.5% – still stubbornly high when viewed against the previous good times in the late 1990′s, when that number reached as low as 3.9%. Our sights seemed to be set so much higher back then. Back then, an unemployment rate north of 5% seemed like a bad thing, something that should be avoided. Economic collapse and a sluggish recovery later, getting back down to 5% unemployment would seem like the glory days personified. Heck, anything under 6% would feel like paving the streets in gold.

Some 53 months ago marked the start of this employment recession, and it very well might be another 53 months before things return to previous lows, if they ever do.

Hiring has slowed down in recent months, leading to an even slower and more anemic pace of recovery. All things considered, the amount of new jobs created has lagged the number of new people entering workforce eligibility, so job “losses” are actually on the increase again. For the past three months the number of new jobs have failed to crack the 100,000 per month level, with a minimum of 135,000 – 150,000 needed per month needed just to keep up with population growth. The last time those sorts of positive numbers were seen were back in March.

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The Slog of All Slogs: Election 2012 Begins

Quickly now, grab your split-panel Obama/Romney pictures. It's general election time!

Quickly now, grab your split-panel Obama/Romney pictures. It's general election time!

Like a band-aid you have to rip off but don’t want to, the time has come for the most modern of American traditions – the knock-out sports-for-non-sports-fan over-budgeted escapade that is an American Presidential Election. Two men enter (others pretend they do but never really count for anything) and one man wins the honor of being erected on a pillar as all that is wrong with the planet by the opposition for the next four years.

Some optional governance is possible.

Our returning champion, President Barack Obama, was last electorally seen cruising to a 365 – 173 Electoral College pasting of Senator John McCain – taking the national vote by 7.2%. It was the largest margin of victory since independent Ross Perot siphoned off enough Republican votes to help President Bill Clinton top Senator Bob Dole 379 – 159 on an 8.5% margin.

Since the 2008 election the Great Recession has ended. An anemic recovery has ensued, facing strong headwinds from a shattered real estate market that may take a generation to recover, relentless cuts to the public sector that have methodically chipped away at job growth, European trading partners held back by a widespread debt and currency crisis, and the continuing crippling debt brought on by two unfunded wars started in the dawning years of the last decade. Unfortunately for Mr. Obama it is exceedingly hard to prove a negative, so while it is within all fair assessment to assume that a President McCain administration continuing previous policies would have exasperated the bleak economic times in 2009, without a way to visit alternate realities one cannot confirm this.

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S&P Takes Hatchet to Europe, Germany Last Shining Light

The value of the Euro vs. the U.S. Dollar has fallen by 15% since May of 2011.

The value of the Euro vs. the U.S. Dollar has fallen by 15% since May of 2011.

After markets closed in the Americas for the end of the week, the rating agency Standard & Poors downgraded the ratings of nine European countries: Austria, Cyprus, France, Italy, Malta, Portugal, Slovakia, Slovenia and Spain. Austria and France find their selves down from the sterling AAA rating to AA+ – where the United States was cut to after the conclusion of the apocalyptic-for-no-good-reason debt ceiling ‘debate’. A few small European economies continue to maintain the highest possible rating: Finland, Luxembourg, and the Netherlands. The last country of any economic significance to be left unscathed as far as economic ratings are concerned is Europe’s central powerhouse – Germany.

While the S&P downgrades may be tantamount to issuing a tornado warning after one’s house has been swept away, it is still a rather important sign post on a pathway to reality – that reality being it is becoming much more difficult for Europe to continue to operate the spread-the-debt shell game when the headwind continues to be just so strong. The downgrade of France is significant as along with Germany it was one of the two towers of support for massive bailout and rescue funds that are designed to help the smaller perimeter countries – Greece, Portugal, Spain, Ireland, etc., that ultimately may be the key to saving the Euro as a strong and functional currency in the decades to come.

That the toll is finally starting to be exacted on France confirms to Germany and to its people the truth that they have been assuming for quite some time now – it’s going to be on them to orchestrate the salvation of the Euro. Increasingly though, Euro-skepticism has taken off in popularity in Germany and there have been rumors of dropping the Euro and bring back the deutschmark. While that would be great for Germany in the long run, in theory, it would be disastrous for the continent in the near term. The threat to the remaining Euro using countries of hyperinflation would set in, and an orderly transition would be difficult to execute, to say the very least.

Assuming the leadership position of the continent, German Chancellor Angela Merkel used the rate cut as an opportunity to remind everyone there’s a long way to go to solving Europe’s debt problems:

“The decision confirms my conviction that we in Europe still have a long road ahead of us before the confidence of investors is restored,” she said at a televised news conference in the north German city of Kiel, where her conservative party’s leadership was meeting.

“But I think it can be seen that we have set off with determination along this road (to) a stable currency, solid finances and sustainable growth,” she added.

Merkel stressed the importance of a new treaty enshrining tougher fiscal rules, for which Germany has pushed hard.

Most European Union leaders agreed in early December to draw up the pact, and Merkel has said the pact could be signed as early as the end of this month, and at the beginning of March at the latest.

“We are now called upon … to implement quickly the fiscal pact and implement it decisively — without trying to water it down everywhere,” Merkel said.

The “watering down” is what is being pushed for by the countries it is designed to “help”, because that help will ultimately come at the cost of massive forced austerity in the smaller countries at the expense of continuing to receive the monies of the more powerful European economies. We may have probably long since passed the point where the choice for such countries will be either accept austerity, or gamble in the world of a post-Euro continent, and the innumerable amount of uncertainties that would entail.

Also worth mentioning: the country at the leading edge of the plunge into economic abyss, Greece, saw talks break down on Friday on how to advert an eventual catastrophic meltdown of that country, and perhaps the Eurozone itself.

No More Dollar Coins, Again

Apparently not even our founding fathers can make dollar coins popular.

Apparently not even our founding fathers can make dollar coins popular.

A tradition that is as American as apple pie has been renewed once more as the Treasury Department and United States Mint will halt production of presidential-themed $1 coins. The series, which was supposed to run until 2016, debuted four deceased presidents per year – aiming for the collectors market that snatched up the 50-state quarters during the past decade.

Despite this latest attempt at introducing the $1 coin into common circulation, the U.S. public once again rejected it:

The United States Mint had been producing between 70 and 80 million coins per deceased president. But the lack of demand has resulted in nearly 1.4 billion coins — or 40 percent of those produced — being returned to the Federal Reserve.

Treasury Secretary Timothy Geithner said simply: “That costs money.”

The White House says the coin surplus will more than meet the demand for the coins for at least a decade. And the Mint will still be required by law to produce a small number of coins for collectors.

After steadily creating dollar coins from 1836 – 1904, stabs at bringing back the coin in one form or another were tried in 1921 – 1935, 1964, 1971 – 1981, 1999, 2000, and most recently from 2007 – now. Most other major currencies have and continue to use coins for their 1 or equivalent-to-US$1 denominations (British pound, Canadian dollar, Chinese ¥1, Euro, Japanese ¥100, etc.), but the popularity of the paper dollar continues to hold on strong in the United States.

By some estimates, the cost for printing paper dollars is $10.11 per $1,000 whereas coins are $1.22 per $1,000. Still, it doesn’t help if no one uses the coins. The expected savings are $50 million per year, or roughly 7 minutes worth of the 2012 requested U.S. budget.

The Ignorance of the “Just Get A Job” Sentiment

Ignorance on parade. With media coverage, no less.

Ignorance on parade. With media coverage, no less.

Long before the Occupy Wall Street protests vaulted the canned response of “shut up and get a job” or “go occupy a job” into the quick response lexicon, there was a data-filled and depressing reality seemingly just out of range of day-to-day view: the jobs aren’t there, and they’re coming back far too slowly.

There have been eleven recessions since the end of World War II. Until our current recession, the worst seen was the recession immediately after World War II, in 1947. In a thirteen month period, the economy lost 5.2% of its jobs. These losses weren’t driven quite as much by a terrible economy as they were by minorities and women being displaced from the workforce as men returned from overseas theaters to go back to their normal lives. Still, the drop in demand from no more war production was a drag, and if it wasn’t for the Marshall Plan in Europe to reignite demand, it is possible the 1950′s could have played out a lot differently than they are romantically remembered in Americana. Employment had returned to pre-recession levels within 11 months.

In terms of length and depth though, the job recession that began in 2007 far exceeds 1947 and is truly the worst seen since the Great Depression. It took twenty-five months to get from the start to the recession low of 6.4% of jobs lost. Worst still, it has been a full twenty months since reaching that point, and we still sit at 4.7% jobs lost. So far in this “recovery”, the economy has only grown 125,000 jobs per month. If that rate is extrapolated on top of the data we already have, it will take an additional 52 months from now to reach pre-recession employment, or about February 2016. If the economy started picking up in a more meaningful way, say adding 200,000 jobs per month, it still won’t be until July 2014 – 33 months from now – until pre-recession numbers are seen.

Better put, you are here:

At the current rate jobs are being added to the economy, pre-recession employment will not be seen until February 2016. A more optimistic view still leaves that date in July of 2014.

At the current rate jobs are being added to the economy, pre-recession employment will not be seen until February 2016. A more optimistic view still leaves that date in July of 2014.

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Occupy Wall Street Isn’t Here Because There’s Nothing Better To Do

Early on the morning of November 15, the New York Police Department evicted hundreds who were maintaining a protest camp in Lower Manhattan's Zuccotti Park since September 17.

Early on the morning of November 15, the New York Police Department evicted hundreds who were maintaining a protest camp in Lower Manhattan's Zuccotti Park since September 17.

For well over two months the Occupy Wall Street movement – around-the-clock protests starting at Zuccotti Park in Lower Manhattan and inspiring like-protests in other cities across the nation, have struggled against well-entrenched headwinds that any longer-than-a-day movement against the status quo should expect to meet and then some. They’ve been called a group with no real stated set of demands or goals, in spite of a rather comprehensive list of grievances.

Pot shots have been taken from the indifferent and the vehemently against. Why should a protest do nothing but fail if it has its own faults, if it doesn’t have a perfect answer to all the world’s problems, if you don’t like the way some of the protesters are dressed, if the presence of hipsters and hippies gives you license to judge an entire group of people out of your own sense of superiority, if the left wing being present gives you a case of the willies, or if in order to have an opinion to state you must have a verified encyclopedia of facts, charts, posters, and data in-tow at all times that is bulletproof and infallible enough to be carved into a stone tablet. Or heck – maybe it’s just because the boat doesn’t need to be rocked. The boat is taking on water, listing, and a life jacket would be prudent, but I’m sure if you just wait long enough invisible forces will prevent this capsizing all on their own.

There is the other type of headwind – the headwind that doesn’t come from opinions of the online commentariat or the television heads of our punditocracy – but from the very real and physical resistance: a resistance that is delivered in the form of uniformed officers, batons, pepper spray, non-lethal rounds that literally crack skulls, military-grade sound cannons, buoyed by (among some) a joyous attitude looking forward to inflict pain on those taking part in a rite of democracy.

Our world is awash in causality. These protesters are not here because they’re bored, they don’t have anything better to do, or because everyone decided starting in September it would be a great idea to run a 24/7 protest just for the hell of it. The cause for these protests are readily visible when you consider the response. At its core, Occupy Wall Street protests the gigantic financial firms that threatened to obliterate the economy through derivatives-based Wall Street side-bets. When those side-bets, conducted in purely unregulated parts of the market, burned down around them the American people were asked for $700 billion straight up with no strings attached, or face an institutional collapse of the banking system. Firms got the money they needed and the economy has limped along ever since. As a result of that extraction of wealth from the American citizenry there have been no trials, no indictments, no trust busting, no criminal prosecution of any kind for the gross negligence needed to create this crisis in the first place. If the same amount of effort put into policing and suppressing Occupy Wall Street was turned on the outrageously irresponsible practices of the firms that got us into this mess, there would be no need for Occupy Wall Street. Plain and simple.

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Newsbyte: U.S. Poverty to 16%, Coal Ash-Dumping Ferry As A Landmark, Viacom’s CEO Gets $50m Pay Raise

In today’s issue of Newsbyte:

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If economic data is constantly against you, just stop collecting it!

Census Bureau headquarters in Suitland, MD. Latest budget reduction proposals would strip 25% from the Bureau's funding, potentially preventing it from being able to adequately collect economic data.

Census Bureau headquarters in Suitland, MD. Latest budget reduction proposals would strip 25% from the Bureau's funding, potentially preventing it from being able to adequately collect economic data.

With the current slash-and-burn everything (that isn’t defense-related) going full steam in the current Congress, an agency who has the responsibility of informing us of just how good or bad our economy is doing just happens to be one of the agencies finding a significant portion of its budget on the cutting room floor.

The Census Bureau, which has other counting responsibilities outside of the once-a-decade population tallying, faces a budget reduction of 25% in the next fiscal year. Adverse effects on their operations include, most notably, the ability to continue to gather economic information from across the country which feeds into reports like the Gross Domestic Product:

“These cancellations would be irrecoverable and would force the complete abandonment of the economic census for the 2012 cycle,” the Bureau warned in an uncharacteristically strong statement leaked to The Huffington Post.

“We would hinder our nation’s ability to measure its economic growth and well-being,” the bureau said. “These statistics are critical to the competitiveness of U.S. businesses and industries.”

The economic census surveys some 85 percent of the country’s economy and provides the data for determining the Gross Domestic Product. The bureau also releases monthly, quarterly and annual reports on retail, trade, manufacturing, construction and other parts of the economy.

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Michigan government decrees that 48 months of welfare is enough for lifetime

Governor Snyder has presided over very conservative policies in his first half year in office, which have stripped money from business tax incentives, schools, and soon - welfare recipients.

Governor Snyder has presided over very conservative policies in his first half year in office, which have stripped money from business tax incentives, schools, and soon – welfare recipients.

The conservative government in the state of Michigan has decided to take a more… proactive… approach to dealing with financial shortfalls than other states or jurisdictions. It has already, in so many words and actions, wiped out the democratically elected government of the town of Benton Harbor (a move that is understandably wildly unpopular there). Additionally, despite Governor Snyder’s pledge to attract new businesses and jobs to the region, his policy of rescinding tax credits to a local movie industry that was in its infancy has already began to drive away new startups – leaving the state trying to figure out how to lure them back or keep whomever remains.

Since being sworn into office earlier this year, Michigan’s unemployment rate has remained essentially unchanged, but well above the national average – 10.4% in January, 10.3% in the most recent month’s data. The story is a bit different and worse in the Detroit metro area – 11.4% in January, 11.6% most recently. The story of joblessness, and the economy in general in Michigan, is a vastly different one than that of the rest of the country.  While the United States struggles with unemployment of 9.2% and has been in an employment recession since May of 2007 (when unemployment was a scant 4.4%), Michigan sits at statewide unemployment of 10.3% – down from the recession’s peak of 14.1% (September, 2009) – but far, far away from the start of this state’s unemployment recession, March of the year 2000 (3.3%).

For some of the most vulnerable families and individuals in Michigan, life is about to get worse. The state house and senate have passed a bill that Governor Snyder is expected to sign which will kick off 12,600 recipients off the rolls of welfare beginning on October 1st. The criteria of being kicked off will be simple – any individual filing for welfare will only be allowed 48 months of welfare for their entire life. Further, this new law will be retroactive on previous welfare recipients since 2006.

There is no grandfather clause in the measure, approved 24-12, which tightens the original 2006 benefits cap that allowed for benefit extensions if the recipient was in job training or unable to work. That means most recipients who are or will be past 48 months on Oct. 1 will be cut off.

Gov. Rick Snyder supports the bill that would save some $77 million. Recipients could no longer apply to the Department of Human Services for an extension beyond the 48 months. Nor could DHS make allowances for those it determines should be exempt from work requirements.

The Senate did add language that allows benefit extensions for those caring for a disabled spouse or child.

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