Tag Archives: economic

A Recently Bankrupt Coal Company Is Being Honored at Mar-a Lago

by HermanHallock Posted on March 22, 2017

Mother Jones

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President Donald Trump’s Mar-a-Lago resort will host the opening reception Wednesday evening for a conference where a recently bankrupt coal company will be a guest of honor. The annual Distressed Investing Summit will bestow one of its “Restructuring Deal of the Year” awards to Arch Coal for clearing $5 billion in debt after it filed for bankruptcy in 2016.

“They emerged from bankruptcy in 2016 after shedding huge amount of debt, obligations to workers, and environmental cleanup,” Sierra Club’s Beyond Coal director Mary Anne Hitt says. “When a company is in bankruptcy, you don’t have a lot of leverage in there with all the lawyers and stakeholders. To have them feted at Mar-a-Lago as a turnaround is salt in the wound for workers and people representing the public interest.”

The summit, hosted by financial company The M&A Advisor, has held its opening cocktail reception at Mar-a-Lago for the past two years, ever since Trump emerged as a serious contender for president. In its invitation email, M&A Advisor names Arch Coal as one of its winners alongside a number of other firms, including energy companies Alpha Natural Resources, Midstates Petroleum Company, and Venoco, an oil and gas development company.

Here’s how the invitation describes Mar-a-Lago, “the new Winter White House”:

The agenda for roundtables that are held at a nearby hotel reads like a laundry list of Trump’s campaign themes: “Making America Great Again,” “Informing and Silencing The Media,” and the “Art of Dealmaking: Getting Deals Done In The New Economic Order.”

Not everyone agrees that Arch Coal’s 2016 bankruptcy deal warrants celebration. During the bankruptcy proceedings, environmental opposition forced the company to abandon its proposal that taxpayers should foot the entire bill to clean up its abandoned mines. The company also laid off hundreds of its miners that same year.

In the years before bankruptcy, United Mine Workers of America complained that Arch Coal moved 40 percent of its employees’ health care coverage to Patriot Coal, a volatile offshoot company. When Patriot went under, those health benefits were at risk and continue to be because of Arch Coal’s bankruptcy. Patriot and Arch Coal are only two examples of a larger problem. The union shop has been pressing Congress for a long-term solution for 22,000 miners’ benefits in jeopardy because of coal bankruptcies—an issue that won’t go away no matter what happens to federal environmental regulations.

The idea that the coal industry can recover is a cherished narrative for Trump. Earlier this week, at a campaign-style rally in Kentucky, the president claimed that he will “save our coal industry” and put miners back to work with executive orders that are expected any day. Trump likes to blame “terrible job-killing” regulations, but there are other pressures beyond federal regulation driving coal out of business, namely competitive natural gas.

Nonetheless, on Wednesday evening, a coal turnaround will be celebrated. Even though it might only be, as the Sierra Club’s Hitt notes, “one of many of the alternative facts they like to celebrate at Mar-a-Lago.”

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A Recently Bankrupt Coal Company Is Being Honored at Mar-a Lago

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Here Are the Churches Fighting Back Against Trump’s Immigration Crackdown

by BenitoStingley Posted on February 21, 2017

Mother Jones

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For the past eight years, Jeanette Vizguerra had shown up for every one of her required check-ins with US Immigrations and Customs Enforcement. Though Vizguerra, an undocumented immigrant from Mexico, had been issued a deportation order for two misdemeanors in 2011, ICE officials had previously granted her requests for a stay of removal and allowed her to remain in the country with her four children.

But last week, Vizguerra took a different route. Fearing deportation, she took refuge in the First Unitarian Society in Denver and declared sanctuary. The decision proved prescient: The day of Vizguerra’s scheduled check-in, ICE officials told her attorney that Vizguerra’s request to remain in the country had been denied.

Because ICE has a longstanding policy to not enter churches and schools, Vizguerra will be shielded from deportation. But that means that she’ll have to stay in the church indefinitely. “I did not make this decision lightly,” Vizguerra said through an interpreter, according to NPR. “I was thinking about it for weeks. But I think that I made the right decision in coming here.”

Vizguerra may be one of the first undocumented immigrants to seek this kind of refuge since Donald Trump’s election but, for months, churches have been preparing for exactly this possibility. Since the election, faith-based organizers and leaders have ramped up their work as part of the sanctuary church movement, a campaign among organizers and clergy to help undocumented immigrants facing deportation. More than 700 congregations have signed on to a sanctuary pledge, with the number of participating congregations doubling since the election, says Noel Andersen, a national grassroots coordinator at Church World Service, an international faith-based organization. New sanctuary coalitions have popped up in Ohio, Iowa, Wisconsin, and North Carolina.

In many ways, this has all happened before. Churches played a huge role in sheltering Central American migrants in the 1980s, when civil wars brought an influx of border crossings. They reached out to immigrants again in 2007, when workplace raids were a common tactic among ICE officers. During the Central American child migrant surge in 2014, congregations revived the movement, opening up their doors to children and families fleeing violence. Churches were able to offer a safe haven to immigrants facing deportation and, in some cases, help individuals win temporary relief from removal.

Now, organizers say, Trump’s anti-immigrant rhetoric and policies have spurred leaders to continue that movement and expand it to other communities targeted by the administration, such as Muslim and LGBQT communities. They’re also looking toward other types of community organizing, such as rapid-response and know-your-rights trainings.

Peter Pedemonti, director of the New Sanctuary Movement of Philadelphia, has focused his efforts on a “sanctuary in the streets” campaign, a rapid-response network of volunteers who are trained to peacefully disrupt ICE raids. In a raid in Philadelphia last week, Pedemonti says 70 people showed up outside an ICE office within 20 minutes of being notified. “The broader strategy is to shine a light on what ICE is doing,” he says. “We want ICE to know that if they come into our neighborhoods and try to drag away our friends and neighbors, we are going to be there to slow it down and disrupt it.”

In Los Angeles, Guillermo Torres, an organizer with Clergy and Laity United for Economic Justice, says that the group’s congregations have been working with the National Immigration Law Center to develop rapid-response trainings. They want to train people to film encounters, interview witnesses, and build prayer walls around ICE officers. CLUE is also trying to enlist faith leaders who would be willing to go to detention centers after raids to talk to ICE officers or to serve as a source of spiritual support to detainees.

Torres says he’s seen a “surge” in clergy leaders expressing interest in the movement, many of whom he’d never met before. “The darkness that’s coming out of the president and his administration has created a lot of pain and sadness in in the faith community,” says Torres, “and that pain is compelling leaders to move to a level they’ve not moved before.”

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Here Are the Churches Fighting Back Against Trump’s Immigration Crackdown

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Britain Will Spend the Next Decade Doing Nothing But Negotiating a Pointless Exit From the EU

by StewartOZX Posted on February 10, 2017

Mother Jones

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For a brief moment, let’s turn our attention away from Donald Trump and focus on another country’s woes. The folks over at National Review are no fans of the EU and have generally been pretty happy about the passage of Brexit. Today, however, Andrew Stuttaford—relying on Brexit expert Christopher Booker—is pretty scathing about prime minister Theresa May’s handling of the whole thing. First, here’s Booker explaining what he’s learned over the past 25 years about exiting the EU:

As I came to appreciate just how enmeshed we were becoming with that system of government, was that extricating ourselves from it would be far more fiendishly complicated than most people realised…Also, as I listened and talked to politicians, was how astonishingly little they seemed really to know about how it worked. Having outsourced ever more of our lawmaking and policy to a higher power, it was as if our political class had switched off from ever really trying to understand it.

That sounds sort of familiar, doesn’t it? Continuing:

On leaving the EU the UK becomes what the EU terms a “third country”, faced with all the labyrinth of technical barriers to trade behind which the EU has shut itself off from the outside world. Last week I read a series of expert papers explaining some of the mindbending regulatory hurdles we would then have to overcome in trying to maintain access to what is still by far our largest single overseas market.

Take, for instance, our chemicals and pharmaceutical industries, which currently account for a quarter of all our exports to the EU, which currently account for a quarter of all our £230 billion a year exports to the EU. By dropping out of the EU, these would lose all the “authorisations” which give them what Mrs May calls “frictionless” entry to its market, and the process of negotiating replacements for them would be so complex that it could take years.

And now Stuttaford:

Booker observes that these aspects of Britain’s divorce from the EU “could have been achieved infinitely more easily if Mrs May had not slammed the door on our continued membership of the EEA the European Economic Area, which would guarantee us much the same “frictionless” access we enjoy now”.

That would be the ‘Norway option’ that you may have read about a few times in this very Corner, an option rejected by May for reasons so unclear that I cannot keep thinking the (doubtless unfair) thought that she has very little idea of what it actually is.

And then, Booker frets, there is May’s “terrifying” threat “that, if she is not given what she wants, she will simply “walk away”.” He’s right to worry. May has said that “no deal for Britain is better than a bad deal for Britain”, an elegant but false dichotomy: “No deal” for Britain would be a “bad deal”, a very bad deal indeed.

This has all the signs of becoming an unbelievable cockup. By a slim 52-48 vote, Britain has doomed itself to many, many tortuous years of negotiating dozens or hundreds of separate agreements with the EU. Switzerland has done the same, and it’s taken them the better part of 20 years.

If there were any real advantage to this, it might be worth it. But just to keep Polish immigrants out? This might be one of the dumbest things any country has ever voluntarily subjected itself to.

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Britain Will Spend the Next Decade Doing Nothing But Negotiating a Pointless Exit From the EU

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Chart of the Day: Obama Era Ends With 152 Million People at Work, an Increase of 9.9 Million

by MelinaBivins35 Posted on February 3, 2017

Mother Jones

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The American economy added 227,000 new jobs last month. Unemployment ticked up slightly from 4.72 percent to 4.78 percent, so the headline rate increased from 4.7 percent to 4.8 percent. The whole jobs report was a little strange, though, due to a whopping revision in BLS’s estimate of the total population of the country. Without the controls, 413,000 people re-entered the labor force and the total number of people employed rose by 457,000. Those are both excellent numbers, even if they did cause the official unemployment rate to rise slightly. The labor participation rate rose from 62.7 percent to 62.9 percent regardless of the population revision.

Hourly earnings of production and nonsupervisory employees went up at an annual rate of 2.3 percent. By coincidence, that’s also the average annual increase for the entire Obama presidency. In an era of low inflation, that’s OK but not great. Altogether, this is the last jobs report of the Obama era and the starting point for judging the economic policies of the Trump era:

Headline unemployment rate: 4.8 percent
U6 unemployment rate: 9.4 percent
Labor participation rate: 62.9 percent
Hourly earnings of production and nonsupervisory employees: $21.84

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Chart of the Day: Obama Era Ends With 152 Million People at Work, an Increase of 9.9 Million

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Here’s a New, Simpler Unemployment Rate For Our New, Simpler President

by BonnyMcclellan8 Posted on January 26, 2017

Mother Jones

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Donald Trump thinks the official unemployment rate is “fiction,” so Jordan Weissmann suggests we judge him by a different metric. Instead of a complicated measure that tries to divine whether someone “wants” to work, or whether they “want” full-time work but can’t get it, or any of that nonsense, let’s use a simpler measure for this new, simpler era:

The BLS even produces a data point that Trump himself might like: The employment-to-population ratio for adults between the ages of 25 and 54—or “prime-age EPOP.”…It gives us a raw look at the employment rate, without any fancy caveats about who is and isn’t part of the labor force. And because it only tracks workers 25 to 54, it isn’t really distorted by the wave of retiring boomers or growing college attendance. It’s a simple snapshot of the portion of the population we most need to worry about….Best of all, from Trump’s perspective at least, prime-age EPOP has plenty of room for improvement….If Trump wants to argue that Obama left him an economy that was still hurting, this is one stat that will easily help make the case.

Fine. But we don’t really want to know how many people are working, we want to know how many people aren’t working. So here’s the inverse prime-age EPOP, since 1990:

IPA-EPOP1 fell steadily during the postwar period as more and more women left the (unpaid) household workforce and entered the (paid) market workforce, but it’s been relatively stable since 1990. That means we can think of the period from 1990 until the start of the Great Recession as sort of a baseline for normal. The average during this period was 20.2 percent, and right now we’re still 1.6 percentage points away from that. As Weissmann says, this gives Trump some room to show improvement.

Now, naysayers are going to complain that this doesn’t really make sense. After all, this number includes lots of people who don’t want to work, mostly stay-at-home mothers and fathers. Shouldn’t we take them out of this calculation? Sure, we should, but then we’re back to that whole tedious discussion of who’s in the labor force and who’s just given up and all that stuff. We want simple: working or not working, end of story. And in fairness, when the economy is hot, wages go up and more stay-at-home parents are drawn back into the workforce. That makes this an OK measure of economic hotness.

So there you have it. Trump’s starting point is an IPA-EPOP of 21.8 percent. In four years we’ll see if he’s managed to bring that down.

1Rolls right off the tongue, doesn’t it?

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Here’s a New, Simpler Unemployment Rate For Our New, Simpler President

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Trump Eyes Ex-Agrichemical Exec to Fill His Final Cabinet Post

by GudrunLevin19 Posted on January 13, 2017

Mother Jones

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When Indiana’s then-governor Mike Pence needed to appoint a new director of his state’s agriculture department back in 2013, he dipped right into the corner offices of the global agrichemical industry. His pick, Ted McKinney, then the director of global corporate affairs for Elanco Animal Health, a division of pharma giant Eli Lilly, had previously been an executive on the government-affairs team for seed/pesticide giant Dow AgroSciences.

Now Pence is the vice president-elect for the incoming Trump administration, which sorely needs to appoint a secretary of the US Department of Agriculture, the only open cabinet slot. And McKinney, recently re-appointed as director of Indiana’s agriculture department, has emerged as the latest in a long line of contenders du jour for the job, Politico reports.

And now the USDA post is really open: Tom Vilsack, the outgoing USDA chief, abruptly quit Friday, informing employees in an email he had served his final day, ABC News reports. Vilsack added some damning commentary on Trump’s delay in choosing his successor: “When that individual is named, he or she will be at a tremendous disadvantage, in terms of getting up to speed on all this department does,” Vilsack said in a statement, according to ABC.

Will McKinney be the one Trump chooses for the burden? In his capacity as an Indiana government official, McKinney—who also serves as director of agribusiness development at the Indiana Economic Development Corporation—is perhaps best known for helping lead an ultimately unsuccessful but “very aggressive” effort to entice DowDuPont to choose Indianapolis as the corporate HQ of its agrichemical arm. McKinney has a well-earned perspective on the advantages of doing agribusiness in Indiana, which sits in the heart of the US corn belt. His most recent private-sector employer, Elanco, is headquartered in the state, as was Dow AgroSciences, until its parent company merged with DuPont last year.

The seed and pesticide industries would certainly have a major ally at the helm of the USDA if McKinney gets the nod. In addition to having worked for Dow for nearly two decades, Mckinney was a co-founder and served as interim executive director for the Council for Biotechnology Information, a group funded by BASF, Bayer, Dow AgroSciences, DuPont, Monsanto, and Syngenta, to promote agriculture biotech. These companies need USDA approval to move novel genetically modified seeds from lab to market. And apparently they have Trump’s ear—on Wednesday, Bayer CEO Werner Baumann and his Monsanto counterpart Hugh Grant scored an audience with the incoming president to promote the pending merger, which will need to pass antitrust vetting from Trump’s justice department.

But McKinney isn’t purely an agri-tech nerd. In an address before an annual meeting of an Indiana pork industry group soon after taking the Indiana department of agriculture job, McKinney cited “divine intervention” as one of the main reasons for his move from the corner office to the state bureaucracy. After getting the call from Pence, he explained, “my wife and I prayed about it, it just seemed right. I took the plunge, and here we are…and I’m having a ball!”

Like former Georgia Governor Sonny Perdue, McKinney appeared on early versions of Trump’s USDA short list, disappeared from discussion for weeks, only to re-emerge with a headline-grabbing visit to Trump Tower, Politico reports.

Fun fact: McKinney’s son, Brad McKinney, works for Mike Torrey, the DC Big Food lobbyist who for a couple of weeks in November led Trump’s USDA transition. Torrey abruptly quit after Trump announced a ban on lobbyists serving in the transition.

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Trump Eyes Ex-Agrichemical Exec to Fill His Final Cabinet Post

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Kansas Governor Sam Brownback Wants to Wreck the US Economy Too

by HaiHeckel2 Posted on December 23, 2016

Mother Jones

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Oh man:

Sam Brownback, the Kansas governor whose tax cuts brought him political turmoil, recurring budget holes and sparse evidence of economic success, has a message for President-elect Donald Trump: Do what I did.

….“My critics, which are many, they only want to look at the budget,” Mr. Brownback said in an interview. “They won’t look with any depth or detail at the impact on small-business growth or private-sector job growth. That’s the target, that’s what we’re after.”

….Mr. Brownback said a number of states face budget problems and said Kansas has “never had more private-sector jobs.”

It’s technically true that Kansas has “never had more private-sector jobs.” What that really means, however, is that despite five years of population growth and economic expansion under Sam Brownback, Kansas has only barely passed its previous peak from 2008—while the rest of the country passed that mark long ago. The chart on the right shows total Kansas private-sector employment vs. US private-sector employment starting in January 2011, when Brownback took office. His tax-cutting policies didn’t work from the start, and the longer he’s stayed in office the worse they’ve done. Kansas is the poster child for the failure of betting on tax cuts for the rich to supercharge the economy.

If you want a more sophisticated analysis that takes into account all the excuses people will toss at you (drought, airplane manufacturing, etc. etc.), check out Menzie Chinn. His latest is here, and you can search Econbrowser for all the gory details you want. Spoiler alert: None of them change the picture on the right.

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Kansas Governor Sam Brownback Wants to Wreck the US Economy Too

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Business Community Shocked That Trump Might Impose Import Tariffs

by Melody56Xyn Posted on December 22, 2016

Mother Jones

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CNN reports that the business community is shocked at the idea that Donald Trump might impose import tariffs when he takes office:

Two sources who represent business interests in Washington tell CNN that the man in line to be White House chief of staff, Reince Preibus, has told key Washington players that one idea being debated internally is a 5% tariff on imports….Priebus, the sources said, was warned such a move could start trade wars, anger allies, and also hurt the new administration’s effort to boost the rate of economic growth right out of the gate.

One of the sources said he viewed the idea as a trial balloon when first raised, and considered it dead on arrival given the strong reaction in the business community — and the known opposition to such protectionist ideas among the GOP congressional leadership. But this source voiced new alarm Tuesday after being told by allies within the Trump transition that defending new tariffs was part of the confirmation “murder board” practice of Wilbur Ross, the President-elect’s choice for commerce secretary.

You know, I mostly feel kind of sorry for all the working-class folks who voted for Trump because they fell for his con. But you know who I don’t feel sorry for? The business community, which largely supported Trump because they thought they were too smart to be conned. He won’t really impose tariffs. He won’t really take revenge on companies that move jobs overseas. He won’t really crack down on all those illegal immigrants we give our dirtiest jobs to.

They just wanted their tax cuts and their pet regulatory changes. They didn’t care about all that racist, nativist, protectionist blather. It was just for show, anyway, wasn’t it? Ha ha ha. Right?

Well, Paul Ryan may save them in the end. We won’t know for a while. But these are rich, educated folks. They knew who Trump was. They knew he was spectacularly unqualified. They knew he was thin-skinned. They knew he was unstable. They knew he was egotistical. They knew he was vengeful. They knew he was dangerous. But they supported him anyway because they wanted their tax cuts. If they eventually find themselves on the business end of Trumponomics, I’m just going to lie back and snicker at them.

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Business Community Shocked That Trump Might Impose Import Tariffs

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ERP Blogstorm Part 3: Banking

by GrantBramlett Posted on December 18, 2016

Mother Jones

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Part three of our series of charts from the Economic Report of the President is all about banking. Mostly, it’s a trip down memory lane. Here’s a look at the worldwide market in derivatives over the past couple of decades:

The volume of derivatives went from $10 trillion to $35 trillion in two years starting right before the market crashed. Here’s another perspective on that:

In 1990, shadow banking was about the same size as the traditional banking sector. By 2007 it was more than twice as big. Just before the crash, shadow banking comprised two-thirds of the entire banking industry and it was almost entirely unregulated. This is why I was happy that Hillary Clinton at least mentioned shadow banking during the campaign.

Here’s how all this affected tradition banks:

In 2007, losses from trading amounted to about $30 billion. By 2009 that had skyrocketed to about $100 billion—and that’s in addition to about $40 billion in traditional loan losses. This is what happens when you start with a housing market that’s already in bubble territory and then egg it on with insane levels of rocket science derivatives, most of them unregulated bastard offspring of the shadow banking sector.

So what’s happened since then? We had a huge crash, the Fed instituted higher capital ratios for “systemically important financial institutions,” and we passed the Dodd-Frank reforms. Here’s what banks look like now:

Before the Great Recession, the biggest banks (green line) had Tier 1 equity ratios of about 7 percent. That’s why they couldn’t weather the crash. Today they’re above 12 percent. Is that enough? Maybe not. But it’s a helluva lot better than it used to be.

Finally, here’s an intriguing chart that shows one of the specific consequences of Dodd-Frank:

Most single-name derivatives are now cleared through a central clearinghouse, which makes it easy for traders to cancel out mirror-image positions they hold. This is called “compression,” and it reduces the total volume of derivatives and increases the safety of the financial system. Today, derivatives worth $200 trillion (notional) are compressed out of existence each year.

Needless to say, Republicans are hellbent on repealing Dodd-Frank. Sure, it makes the banking system safer and helps protect consumers, but big banks don’t like it, so that’s that. The party of Donald Trump, the working man’s president, will do whatever Wall Street tells them to do. Funny how that works, isn’t it?

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ERP Blogstorm Part 3: Banking

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ERP Blogstorm Part 2: Education

by GilbertRied Posted on December 18, 2016

Mother Jones

Part two of our series of charts from the Economic Report of the President is all about higher education. First off, here’s the college premium over time:

When I graduated from my local state university in 1981, I had no debt because attending public universities was practically free. On the other hand, my earning prospects were only about 20 percent higher than a non-college grad. Today, college grads often have tens of thousands of dollars in debt, but their earning prospects are 70 percent higher than non-college grads. So who got the better deal? That’s not entirely obvious.

Next up is a different measure of the value of a college education:

This helps answer the question, “How high can university costs go?” The answer is, “Pretty high.” Even with higher tuition, college is still a great deal. A bachelor’s degree, on average, pays off nearly 10:1. That means there’s a lot of room to raise tuition and still provide enough of a bargain that anyone who’s qualified will be willing to pay. Treating higher education this way may be a bad idea, but nevertheless, this chart suggests that states can continue to raise prices if they want to.

The first two charts have been all about nonprofit schools: community colleges, state universities, and private universities like Harvard and Morehouse. But for-profit institutions—which are typically trade schools—have exploded over the past three decades:

The number of trade schools has skyrocketed since 1987, from about 300 to well over a thousand. And that brings us to our final chart:

At first glance, this chart seems odd: the students with the smallest debt have the highest chance of defaulting. There are multiple things going on here, but the biggest one is that a lot of these students attended trade schools for a semester or a year and then dropped out. Their debts aren’t the biggest, but with not even a trade school certificate they can only get low-paying jobs that make it very hard to pay back their loans.

Too often, for-profit schools cajole people into signing up with promises that the government will pay for everything. Unfortunately, a lot of their students just aren’t suited for further schooling, so they drop out and end up with less than nothing: no certificate, and a big chunk of debt. The trade schools themselves don’t care much, since they get paid whether anyone graduates or not, but it’s a helluva bad deal for the students who end up broke. This is why President Obama’s recent crackdown on the worst offenders among for-profit trade schools is so welcome.

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ERP Blogstorm Part 2: Education

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