This graph shows job growth in our current downturn versus job growth in previous downturns. There is no comparison with that of previous recessions. In fact the rate of job growth has slowed down in recent months
Friday, February 4, 2011
Job Growth is Slowing Down
This graph shows job growth in our current downturn versus job growth in previous downturns. There is no comparison with that of previous recessions. In fact the rate of job growth has slowed down in recent months
Analysis of Ryan Plan to Reform Medicare
http://economix.blogs.nytimes.com/2011/02/04/restructuring-medicare-and-the-rivlin-ryan-plan/
The Ryan plan is consistent with other GOP approaches to reforming healthcare. He advocates a voucher plan that would be used to purchase healthcare. The value of the voucher would grow by GDP plus 1% annually. This transfers the risk of growth in healthcare costs from the government to the individual. The article provides information of healthcare cost growth in Oregon which shows that healthcare costs are growing faster than GDP plus 1%.
The Ryan plan is consistent with other GOP approaches to reforming healthcare. He advocates a voucher plan that would be used to purchase healthcare. The value of the voucher would grow by GDP plus 1% annually. This transfers the risk of growth in healthcare costs from the government to the individual. The article provides information of healthcare cost growth in Oregon which shows that healthcare costs are growing faster than GDP plus 1%.
Fox News Searching for Climate Change Deniers
http://www.huffingtonpost.com/2011/02/03/fox-news-posts-request-fo_n_818382.html
True to form, Fox News has decided to continue with its disinformation campaign on climate change. They understand that its customer base wants to remain critical of the science on climate change. All they need to do is find anyone on the fringe of the science to feed them red meat. Its not essential that they prove to their customer base that claims about global warming are false. They only need to convince their customer base that there is doubt in the scientific community. Since their customer base believes that the response to global warming may have some financial cost, they will not support efforts to limit climate change as long as there are any doubters in the scientific community. This is all that the Tea Party crowd needs. It fits in with their view of government. Cut taxes and limit the role of the federal government just as they believe the Constitution demands.
You may notice that I referred to those who watch Fox News as its customer base. Ruppert Murdoch has built his media empire by carefully cultivating the populist base in the UK, Australia and the US. There is a business purpose and a political purpose to his methods. One GOP politician commented that he believed that Fox worked for the party. He now believes that the GOP works for Fox News. It has become dependent upon yellow journalism to nurture its base.
True to form, Fox News has decided to continue with its disinformation campaign on climate change. They understand that its customer base wants to remain critical of the science on climate change. All they need to do is find anyone on the fringe of the science to feed them red meat. Its not essential that they prove to their customer base that claims about global warming are false. They only need to convince their customer base that there is doubt in the scientific community. Since their customer base believes that the response to global warming may have some financial cost, they will not support efforts to limit climate change as long as there are any doubters in the scientific community. This is all that the Tea Party crowd needs. It fits in with their view of government. Cut taxes and limit the role of the federal government just as they believe the Constitution demands.
You may notice that I referred to those who watch Fox News as its customer base. Ruppert Murdoch has built his media empire by carefully cultivating the populist base in the UK, Australia and the US. There is a business purpose and a political purpose to his methods. One GOP politician commented that he believed that Fox worked for the party. He now believes that the GOP works for Fox News. It has become dependent upon yellow journalism to nurture its base.
Global Warming Means Extreme Changes Climate
http://climateprogress.org/2010/12/13/more-snow-storms-warm-years-climate-change/
whenever I hear or read someone claiming that the extreme cold and snowy weather proves that global warming is nonsense I can only roll my eyes and despair. My despair is a response to ignorance. People tend to believe what they want to believe. If people who know nothing about climate science, like Rush Limbaugh, or people who do know climate science but have sold out to the energy companies, or to a political party, tell them what they want to hear, they will believe it. This article, informed by climate scientists, tells us that global warming is about CLIMATE CHANGE. We are seeing some of these changes today, and unfortunately, they will worsen as as our planet continues to warm.
whenever I hear or read someone claiming that the extreme cold and snowy weather proves that global warming is nonsense I can only roll my eyes and despair. My despair is a response to ignorance. People tend to believe what they want to believe. If people who know nothing about climate science, like Rush Limbaugh, or people who do know climate science but have sold out to the energy companies, or to a political party, tell them what they want to hear, they will believe it. This article, informed by climate scientists, tells us that global warming is about CLIMATE CHANGE. We are seeing some of these changes today, and unfortunately, they will worsen as as our planet continues to warm.
Thursday, February 3, 2011
The Wheel of Doom
This chart is from Meredith Whitney's presentation on the risk in state bonds. It has precipitated a large withdrawal from state bond funds and PIMCO, which is the largest bond fund has been critical of her report but the wheel of doom does make some sense.
Simon Johnson's Testimony to Senate Banking Committee
http://baselinescenario.files.wordpress.com/2011/02/sj-testimony-to-senate-budget-jan-31-2011-final.pdf
I have highlighted some of the statements by Johnson in his testimony on Tuesday:
Employment recovery from the Great Recession is very different from previous post war recessions. Employment fell 3-5% from its peak and returned to peak in 12-24 months during recovery in prior recessions. The 2001 recovery was an exception with employment falling 3% and recovery to peak taking 4 years. Employment fell 6% in the Great Recession but it is still down 5% after 3 years.
Non-financial corporate profits fell 20% from peak to trough during the Great Recession. By Q3 2010 they returned to the 2006 peak. There seems to be little incentive for corporations to resume hiring in the US. They see better opportunities in emerging markets.
The slowdown in new household formation may have an impact on the housing market. In the decade before the crisis 1.1 million new households were formed per annum. Since the crisis, new household formation has dropped to 600,000 per annum.
The largest 6 banks in the US are bigger than they were before the crisis. Their assets as a percent of GDP have increased from 56% before the crisis to 64% after the crisis. They were only 15% of GDP as recently as 1995. These banks have implicit support from the US government which lowers their cost of capital and has improved their credit ratings. They may becoming to big to save. Ireland provides an example of being to big to save. Loans from European banks to the three largest Irish banks fueled the housing bubble in Ireland. The European banks assumed that the Irish government would not permit them to fail. It turned out that the bail out of the Irish banks exceeded the capacity of the Irish government's finances. The IMF and the European Central Bank had to finance the rescue operation.
Fannie Mae and Freddie Mac failed as a result of poor risk management and they required a government rescue. They were not, however, the principle causes of the financial crisis. They were marginalized by the Wall Street Banks which captured the major portion of the mortgage backed securities market from them by bringing riskier products to the market.
Research indicates that US politicians share the values of America's wealthiest citizens and that lower and middle income Americans are not being heard. There are many reasons why this might have happened but the consequences are uncertain.
I have highlighted some of the statements by Johnson in his testimony on Tuesday:
Employment recovery from the Great Recession is very different from previous post war recessions. Employment fell 3-5% from its peak and returned to peak in 12-24 months during recovery in prior recessions. The 2001 recovery was an exception with employment falling 3% and recovery to peak taking 4 years. Employment fell 6% in the Great Recession but it is still down 5% after 3 years.
Non-financial corporate profits fell 20% from peak to trough during the Great Recession. By Q3 2010 they returned to the 2006 peak. There seems to be little incentive for corporations to resume hiring in the US. They see better opportunities in emerging markets.
The slowdown in new household formation may have an impact on the housing market. In the decade before the crisis 1.1 million new households were formed per annum. Since the crisis, new household formation has dropped to 600,000 per annum.
The largest 6 banks in the US are bigger than they were before the crisis. Their assets as a percent of GDP have increased from 56% before the crisis to 64% after the crisis. They were only 15% of GDP as recently as 1995. These banks have implicit support from the US government which lowers their cost of capital and has improved their credit ratings. They may becoming to big to save. Ireland provides an example of being to big to save. Loans from European banks to the three largest Irish banks fueled the housing bubble in Ireland. The European banks assumed that the Irish government would not permit them to fail. It turned out that the bail out of the Irish banks exceeded the capacity of the Irish government's finances. The IMF and the European Central Bank had to finance the rescue operation.
Fannie Mae and Freddie Mac failed as a result of poor risk management and they required a government rescue. They were not, however, the principle causes of the financial crisis. They were marginalized by the Wall Street Banks which captured the major portion of the mortgage backed securities market from them by bringing riskier products to the market.
Research indicates that US politicians share the values of America's wealthiest citizens and that lower and middle income Americans are not being heard. There are many reasons why this might have happened but the consequences are uncertain.
Tuesday, February 1, 2011
Corporate Tax Rate and Efficiency
http://www.nytimes.com/2011/02/02/business/economy/02leonhardt.html?src=ISMR_AP_LO_MST_FB
The GOP complains about the corporate tax rate which is higher than many countries. However, few companies pay the 35% tax rate. They find lots of ways to legally avoid taxes. One of the problems, other than the falling contribution to taxes by corporations, which shifts the burden elsewhere, is that many corporations make bad business decisions because they are trying to cut taxes rather than thinking about the business decision.
The GOP complains about the corporate tax rate which is higher than many countries. However, few companies pay the 35% tax rate. They find lots of ways to legally avoid taxes. One of the problems, other than the falling contribution to taxes by corporations, which shifts the burden elsewhere, is that many corporations make bad business decisions because they are trying to cut taxes rather than thinking about the business decision.
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