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Bridging climate science, citizens, and policy

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More Dismal Economic Numbers In January

The effects of failed Republican economic theories continue to make themselves known.  The latest numbers to come out:

Only 550,000 new housing starts (annualized) were started in December.

589,000 new jobless claims were filed last week.

The corporate welfare giveaway didn’t save the banks and now they want more.

The housing number ties together a number of issues.  The Fed’s record low rate cut hasn’t changed much with regard to new housing.  People are refinancing their mortgages like mad, but not many people are buying new houses.  So that policy failed.  (It also failed to get credit flowing through the system.)  Also hurting housing is unemployment.  13.5% unemployment translates to a populace that isn’t able to buy a house.  That effect is maintained by 589,000 new jobless claims.  Over 1 million people are losing their jobs every month.  How are they supposed to buy groceries, let alone new houses?

The solution does not lie with dispensing billions of dollars to mega-corporations.  It’s millions of people and small businesses that need the government’s help, not the tiny numbers of ultra-rich people and corporations.  Rich people are sitting on our billions, letting the economy slide further into recession toward depression; watching as workers lose their jobs and their houses; hoping the spread between them and the rest of the citizenry grows each day.  Which leads to the third article: banks are still “teetering on the brink”, as MSNBC put it, because they used the money to pay for bonuses and buyouts of smaller banks, not to improve their business standing.  Banks who received billions of taxpayer dollars with no oversight or transparency did things with that money that nobody can trace.  But they want more.  Excuse me?  That malfeasance was exactly why I opposed the TARP program from the beginning: the Bush “administration” pushed it through as fast as they pushed the mis-named patriot act through.  But they said the financial system would collapse without immediate assistance.  Well, the assistance went out and the system is still looking at a collapse.  Hopefully the new President and the 111th Congress tries to solve the real problems and not the made-up ones Bush peddled.

A little oversight and some bank-busting would be a darn good start to any implemented solution.  Smaller banks aren’t having the problems that the mega-banks are.  That’s for good reason: they didn’t bundle people’s risky mortgages and bet on them irresponsibly.  Those who did so should be held to account: executives should lose their jobs and be prosecuted (where applicable) and their corporations should be broken up.  Enforce the Sherman Anti-Trust Act.  Work out plans for troubled homeowners and help maintain foreclosures.  Get some of the TARP money back.  It wasn’t dispensed as dictated by law – it should be repaid in full with interest.  Or how about creating a national bank?  One that is transparent and has oversight.  Let it compete with the rest of the banks and let’s let the “free-market” decide which one does the best job.


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Official Pronouncements: Recession and Secretary of State

I’m back after some time away from blogging.  Lots of things were made official today.  We’re in a recessionSen. Hillary Clinton is President-elect Barack Obama’s nominee for Secretary of State.  There are others, but those two stand out in the news to me today.

It’s interesting to me that the National Bureau of Economic Research, the group charged with assigning official starts and ends to U.S. recessions, waited until Dec 1, 2008 to announce the beginning of this recession.  When did it begin?  December of 2007: one year ago.  What numbers did they look at in the past three months that didn’t exist in the previous nine that pushed them over the threshold?  I’m sure the 2008 election had nothing to do with the timing.  So George W. Bush presided over the worst economic downturn since the Great Depression.  Bush’s recession has been apparent to most Americans for most of this year.  Which is the biggest reason why John McCain didn’t win last month.

CNN’s recession article upset me with this:

Many people erroneously believe that a recession is defined by two consecutive quarters of economic activity declining.

I read article after article in the past six months on CNN’s website how it was unlikely a recession had started because economic activity hadn’t been negative for two consecutive quarters.  And CNN wasn’t the only corporate “news” source that dispensed that talking point.  The fact that they ignored their own reporting is very disappointing.  I also remember articles treating most Americans as idiots when American’s confidence fell through the floor.  Citing the misleading “two consecutive quarter” talking point, economists and reporters attempted to portray Americans as out of touch with America.  We just didn’t understand what was going on with the economy.  Our economic oppressors were wrong for months and the rest of us have suffered more because of it.

Onto Sen. Clinton’s nomination to be Obama’s Secretary of State.  I don’t think it’s a good idea.  I think Hillary and Bill Clinton are in politics for themselves first and for Americans second.  I didn’t trust Hillary to be President.  I don’t trust her to be Secretary of State.  I have no specific example of what I think she’ll do to subvert Obama’s agenda at this time, something a lot of liberals online and on the radio are asking for in response to people who don’t think this was the Greatest. Idea. Ever.  I’m not sure how this really qualifies as “change”, the amorphous feel-good motto of Obama’s campaign.  Do most Presidents nominate people that didn’t run against them for office?  I think so and I think that’s happened with good reason.  I can think of a number of candidates that I would have felt more comfortable with for Secretary of State.  Those candidates could have been characterized as change agents, whereas Hillary cannot.

Actually, while I’m on the subject, what about Secretary of War Robert Gates?  Who nominated him?  George Bush!  Obama is going to keep him in place.  The main reasoning I’ve heard behind this makes even less sense than the Clinton nomination.  It seems the War Secretary needs to stay on to provide an effective transition between Bush’s policies and Obama’s policies.  Say what?  In nearly every arena, Obama’s policies will be a U-turn from Bush’s policies.  What is so challenging about the War Department that requires a continuation of failed policy enactment?  No, the truth is likely to be that Obama came under tremendous pressure to stay the course with respect to the Iraq occupation.  I expect Obama to continue to call for a reasonable cessation of the occupation of Iraq.  I would not be surprised however to hear about a change in his plans.  I hope that Iraq’s recent call for occupation forces to leave by Jan. 1, 2011 will provide strong pressure to maintain his campaign’s occupation cessation talk.  The American people voted to move in a different direction than the one we’ve been on under Bush.  Gates was a part of Bush’s direction.  There is no reason to keep him as War Secretary under an Obama administration.

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And the Bad Economic News Just Keeps Piling Up

I’m so glad the Cons got to show us how magical their economic theories could be in real-life!  Americans are making so much more money than they were 8 years ago, they’re so much happier, everyone is employed, and ….  Okay, the snark is going to be put away.  I do need a dose of it every now and then, especially with economic numbers that get worse by the week.  And did the morons running things ever blow their perpetually rosy forecasts, or what?  Let’s make the rounds and see what records are being broken, shall we?

Jobless claims totaled the high last seen 16 years ago.  Let’s see – that would be … 1992.  Oh, the end of the Bush I presidency, when we were leaving yet another Con-serative recession.  Could it be coincidence that the number was matched by his son?  I don’t think so.  The historical basis has been laid.  What was the magical number?  542,000.  So between last week and this week … that’s over 1,000,000 jobless claims.  Unemployment insurance claims jumped to 4,000,000 last week.  That’s the highest since 1982, when St. Ronnie was happily enacting Con economic policies.  October’s unemployment rate (under-calculated) was 6.5%  Does anybody want to guess what November’s will be?  7%?  7.5%?  8%?

The Big 3 American auto manufacturer CEO’s went to Washington D.C. this week to “beg” Congress for a loan.  How did they get to D.C.?  Aboard multi-million dollar private jets.  I have an idea where they can get some money….  The Democratic-led Congress wisely didn’t buy into their cock-and-bull story.  It seems they want more assurance that the auto corporations will viably restructure for 21st century business.  I have another idea – how about requiring the dismissal of said executives with no compensation.  They ran their businesses into the ground – they shouldn’t get to walk away with a golden parachute at taxpayer expense.  GM shares sank to their lowest value since the Great Depression.

Wall St. almost found a consolidation point in the past few weeks.  The Dow broke through the 8,000 level yesterday and continued it’s rapid descent again today by closing at 7,552.  The S&P 500 closed at an 11.5 year low of 752.  The S&P has lost 52% from its all-time high last Oct 9th.  The Dow has lost 47% since then.  The NASDAQ has lost 54% from its all-time high since last Oct 31st.

Inflation fell by a record 1% in October from September.  The Consumer Price Index fell to 3.8% year over year, down from 4.8% the previous month.  The drop is the largest since seasonal records were started in 1947.  While inflation easing would normally be considered a good thing, it could portend very, very bad things moving forward.  The problem?  Deflation.  Consumers will likely continue holding off making purchases, as they expect future prices to be lower than today’s prices.  That reduces overall economic activity.  Capacity idles, investment falls, and aggregate demand falls in a cyclical fashion.  Deflation is incredibly difficult to battle, as 1990s Japan can attest.  The current state of government actions make it even more difficult: the Fed can’t cut rates more than they are since their effective interest rate is nearly 0%.  A negative interest rate doesn’t make sense.  So far, we’re only seeing disinflation.  We’d better hope that’s all we see.

Those aren’t the only numbers out there, but the bottom line is this: the Bush recession is well underway.  When will it end?  Your guess would probably be as good as mine.  I’m thinking sometime in the first half of next year.  A lot of interconnected gears have to change directions for it to happen.  Meanwhile, the Cons are running around the country (and world) telling anyone who will listen that unregulated capitalism is still the preferred path to be on.  Just like their refusal to look in the mirror when considering why they lost so many 2008 elections, their refusal to look at their failed economic policies threatens to doom the country to a longer, deeper recession.


Auto Industry Bailout

The Democratic-led Congress continues to push for an auto industry bailout of at least $25 billion.  When this was first proposed, little was mentioned about executive pay or ensuring American automakers would change how they do business.   The original $25 billion offer was a giveaway, just as much as Bush’s Bailout has been a giveaway to banks.  Remember, the portion of the $700 billion given away so far hasn’t been used to buy bad assets, it’s been used to buy other banks.  Actions taken in countries around the globe has done more to thaw the frozen credit markets than the obscene corporate welfare check Bush’s government wrote.  So the original $25 billion corporate welfare check everybody in Washington wanted was as immoral as Bush’s Bailout.

A few more things about this auto bailout.  I don’t care as much as most other people do how bad it would be for a company like GM to fail.  I am keenly aware that thousands of jobs would be lost in multiple industries across the nation.  I have a two-part response to the “too big to fail” argument.

First, GM made this bed.  They did so deliberately, with full knowledge that foreign car makers were shifting their approach in America.  GM and others have fought against universal health care for decades, which has only multiplied the amount they are forced to spend on their own employees health coverage each year.  Their operating expenses are higher because of their actions.  GM and others also fought against increasing CAFE standards for decades.  They worshipped at the free-market altar, convinced some magical hand would take care of everything.  Obviously, they were wrong.  Meanwhile, GM has been making cars with better fuel efficiency in every other market across the world because foreign governments were adult enough to mandate those efficiencies.  GM squashed every technology that would wean the industry off fossil-fuels.  So when GM says they need billions of taxpayer dollars to retool everything in America, I don’t have a whole lot of sympathy.  They made business decisions to build inefficient vehicles so they could maximize their profits.  Did they pass those profits along to their workers or to America as a whole?  No, the profits were privatized, as was their right.  Now that GM is in trouble, what do they do?  They ask for a handout from the government they spurned for decades.  They ran a bad business model and want their losses socialized.  Did they make their request with an offer to change their business model?  No.  It’s only being discussed because millions of Americans correctly viewed GM’s request as the stinking pile of manure it is.  Here’s where the politics comes in: the auto industry has spent millions of dollars on lobbying Congress for decades (instead of using the money for improved technologies).  That wallet padding has corrupted a number of elected officials, Democrats and Republicans alike.  Instead of making more objective decisions, lawmakers are willing to bend the American taxpayer over the table for GM’s sake.  That’s immoral.

Which leads to my second point.  Thousands of jobs will be lost if GM fails.  That’s beyond dispute.  But what about the millions of jobs already lost this year?  And more to the point – what about Americans?  Where is our bailout?  Industries across the board have constructed unfair playing fields Americans are forced to play on.  Where is our bailout?  Where is our relief?  Why don’t we have living wages?  Why don’t we have universal health care?  Why don’t we have the most technologically advanced vehicles on Earth?  Why has American ingenuity been kicked to the curb time and time again?  Where is the talk of capping executive compensation, of closing the loopholes corporations have generated to get around what little control there is?  Where is the talk of splitting the Big 3 automakers up to increase competition?  Both parties are too willing to give corporations whatever they damn well please and every time they do, it’s living, breathing Americans that suffer because of it.

News came this morning that House Speaker Pelosi wants some of the appropriated $700 billion to go to the auto corporations.  Not surprisingly, Bush is pushing back, saying that if Democrats want money for the autos, they need to do it in a brand new appropriation.  This makes sense for two reasons.  Bush’s cronies want all the $700 billion to go to themselves.  There has been zero oversight or transparency that the money is actually going to where Congress authorized it to go (I don’t see much mention of oversight or transparency with respect to the auto bailout either, surprise, surprise_.  That’s a scandal by itself, but I think Americans are incredibly scandal-fatigued by this “administration”.  That $700 billion is sitting on top of an already large pile of debt America possesses.  Bush’s cronies are going to walk away with most or all of it and the rest of us will be left holding the bill.  Bush and the Cons also want to destroy more unions.  They’ve been very efficient at doing so over the past 8 years, neatly continuing what St. Ronnie started in the 1980’s.  The longer the automakers go without any assistance, conditional or not, the more likely they are to fail.  If they fail, thousands of union jobs will be lost.  It will be harder to get those back than it will be to create new jobs period.  That’s another big reason why Pelosi’s crew is working so hard to hand the auto corporations cash quick.  Unions will be rightfully upset that not enough was done to save their employers.  I definitely support those unions, but I don’t see a viable long-term solution being discussed in Washington.

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Companies Making Economy Worse

I wrote about this late last month – companies are going to make the recession deeper and longer.  It’s not hard to figure out why.  Two-thirds of the U.S. economy is made up of consumer spending.  In order for people to spend money, they need access to money.  Instead of increasing wages, Cons decided to make credit more available via credit cards since the 1980s and mortgages in the past decade.  Households owe more than they make on a yearly basis: credit card debt is massive, which led to people borrowing against their equity in order to keep buying stuff.  Now, housing values are less than what people owe on them.  They only thing left is wages, which haven’t increased for a super-majority of Americans in 30-some years.

In order to continue making profit so shareholders and executives can be paid enormous sums of money, corporations are laying people off.  That means … people won’t make money.  That means they can’t pay their bills or buy stuff.  Let’s see.  If people aren’t employed, one of the things they can’t pay every month is … their mortgages.  When people don’t pay their mortgages … they get foreclosed on.  Sure enough, the trend is being picked up and is being reported.  Job losses are now fueling more foreclosures.

In order to minimize the recession we’re already in, companies need to be hiring people.  Americans making an income can pay their bills and buy things, keeping the economy afloat.  Companies have initiated a negative-feedback system.  As more people have less money, they’ll buy fewer things.  Companies looking only at their quarterly numbers will fire more workers so they can continue to pay stockholders and executives.  And so on.  Companies will have to wait until their actions are countered by other economic forces.  But how many Americans will lose their jobs in the interim?

President-elect Obama is inheriting an incredibly challenging economy.  It will take visionary work, of the style he has, to lead the country to a better economic future.

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Bush Deregulates Industries, Economic Downturn Worsens & more

Bush pushes new deregulation rules, or as I talk about at SquareState, Bush Launches Last Attacks on Americans.

The economic downturn speeds up. Among the new problems, consumer spending is down by the largest amount in four years.  Consumer spending accounts for 70% of U.S. economic activity.  I expect that number to continue to decrease.  After all, home equity is tapped, credit cards are tapped, wages remain stagnant, workers are being laid off, and the Bush administration bails out industries.  Where are consumers supposed to get the money to buy their crap?

Another story has received almost no attention in the glare of the 2008 election: refugees from Ike.
The 2008 Atlantic hurricane season caused a lot of damage and death this year.  Do we have disaster fatigue?  If so, it doesn’t bode well for the future.  Extreme weather events are likely to become more common.

Early voting numbers look strong.

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In The News 10/27/08

Could waves (from storms or even tsunamis) pass by off-shore drilling platforms or even very small islands?  French and British physicists think so.  Their work needs to be taken from the lab to a more realistic situation before viability can be assessed.

Companies are going to make the recession deeper and longer.  They’re cutting wages and jobs as the economy continues to weaken.  It protects shareholders and executives, but prevents short- to medium-term economic growth.  You want consumption to pick back up?  It’s easy: increase wages.  When lower- and middle-class workers earn more, they buy more.  The past 8 years have clearly shown that when the upper-class makes more, they save more.  They don’t spend their money.  They don’t increase the size of business or create enough jobs.

The Bush doctrine is still in full effect.  U.S. commandos executed a strike into Syria over the weekend.  A couple of questions spring to mind.  First, don’t we have a Secretary of State?  Or is she too busy shopping for shoes to actually do her freaking job?  Second, do Americans realize that these kinds of actions solidify our wrecked image abroad?  The U.S. strikes with impunity into sovereign countries that it considers weak.  Actually, I think Americans do understand what’s going on: it’s one reason why Obama continues to lead McCain.  Unfortunately, this insane policy ensures that there will be future tension between the U.S. and interests in and around the Middle East. Anything to justify the War budget.

Corrupt Alaska Sen. Ted Stevens has been found guilty of lying about gifts he received and never reported.  An interesting facet of this case: if Stevens wins his re-election campaign this year, he can serve in Congress even though he is a convicted felon.  Why is that interesting?  Republicans have passed laws around the country denying convicted felons voting rights because they tend to vote Democratic.  The hypocrisy is disgusting, though unsurprising.  Stevens should be allowed to serve again once he pays his debt back to society, just like voters should be allowed to vote again once their debts have been repaid.  Stevens certainly shouldn’t be allowed to take part in any further Senate proceedings until his sentence has been served in full.  [Update]: Irony strikes in this case.  According to Alaska state law, Sen. Stevens can’t register to vote due to his felon status.  Which means he can’t vote for himself.  It’s only one felon, but it is interesting to see a Republican get caught up in conservative voter suppression strategies.