Tag Archives: economy

John Boehner Speaks Up For Main Street Republicanism

by Sybil0169hkc Posted on April 25, 2014

Mother Jones

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I’ve always felt a little sorry for John Boehner. In another era—a non-tea party era—he would have been your basic Main Street Republican, willing to cut compromises to keep the country moving along in a tolerably orderly way. The kind of guy who would have taken his cues from the Middletown Rotary Club.

Speaking of which, Boehner spoke to the Middletown Rotary Club yesterday and let his hair down. For most Republicans, this would have meant getting caught making some kind of incendiary remarks about Obama thuggery and class warfare against job creators. In Boehner’s case, it meant some incendiary remarks about the, um, unrealistic attitudes of the more excitable members of his caucus:

On immigration: “Here’s the attitude. Ohhhh. Don’t make me do this. Ohhhh. This is too hard,” Boehner whined before a luncheon crowd at Brown’s Run County Club in Madison Township. “We get elected to make choices. We get elected to solve problems and it’s remarkable to me how many of my colleagues just don’t want to … They’ll take the path of least resistance.”

On Obamacare: “(To) repeal Obamacare … isn’t the answer. The answer is repeal and replace. The challenge is that Obamacare is the law of the land. It is there and it has driven all types of changes in our health care delivery system. You can’t recreate an insurance market over night.”

On the tea party: “I don’t have any issue with the tea party. I have issues with organizations in Washington who raise money purporting to represent the tea party, those organizations who are against a budget deal the president and I cut that will save $2.4 trillion over 10 years….I made it pretty clear I’ll stand with the tea party but I’m not standing with these three or four groups in Washington who are using the tea party for their own personal benefit.”

This is all about pragmatism, a cri de coeur against the Foxification of the Republican Party. And I guess it means one of two things. Either Boehner doesn’t really care much about holding onto his leadership position anymore, or else he’s sensed that there’s a burgeoning Main Street backlash against the radicalism of the tea party wing of the modern GOP.

Boehner has always wanted to govern, and he’s never believed that compromise was surrender. That’s not the kind of pol he is. But he’s been hemmed in by the demands of the tea party, and now maybe he’s starting to think it’s time to bust out. The Middletown Rotary Club is probably more interested in keeping things on an even keel than in endless confrontation and hostage taking that does nothing except hurt the economy. They think immigration reform is good for business, and even if they don’t like Obamacare, they probably understand by now that it’s not a catastrophe and it’s time to make the best of it. Maybe they’re finally starting to find their voice.

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John Boehner Speaks Up For Main Street Republicanism

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My Life in the New American Minimum Wage Economy

by Dewey9573gnwoi Posted on April 24, 2014

Mother Jones

This story first appeared on the TomDispatch website.

There are many sides to whistleblowing. The one that most people don’t know about is the very personal cost, prison aside, including the high cost of lawyers and the strain on family relations, that follows the decision to risk it all in an act of conscience. Here’s a part of my own story I’ve not talked about much before.

At age 53, everything changed. Following my whistleblowing first book, We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People, I was run out of the good job I had held for more than 20 years with the US Department of State. As one of its threats, State also took aim at the pension and benefits I’d earned, even as it forced me into retirement. Would my family and I lose everything I’d worked for as part of the retaliation campaign State was waging? I was worried. That pension was the thing I’d counted on to provide for us and it remained in jeopardy for many months. I was scared.

My skill set was pretty specific to my old job. The market was tough in the Washington, DC area for someone with a suspended security clearance. Nobody with a salaried job to offer seemed interested in an old guy, and I needed some money. All the signs pointed one way—toward the retail economy and a minimum-wage job.

And soon enough, I did indeed find myself working in exactly that economy and, worse yet, trying to live on the money I made. But it wasn’t just the money. There’s this American thing in which jobs define us, and those definitions tell us what our individual futures and the future of our society is likely to be. And believe me, rock bottom is a miserable base for any future.

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My Life in the New American Minimum Wage Economy

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The Economy is Improving, But Not For Everyone

by ChandraP40 Posted on April 18, 2014

Mother Jones

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The BLS reported today that weekly earnings for full-time wage and salary workers rose 3 percent in the first quarter of 2014 compared to a year ago. Since inflation is running at 1.4 percent, that’s good news. Earnings are going up.

But wage gains are pretty unevenly distributed. Jeffrey Sparshott passes along a recent Labor Department note which concludes that all of the wage gains since 2009 have gone to the top 40 percent. The poor, the working class, and the middle class have seen no gains at all. This is reflected in the chart on the right, which shows weekly earnings for production and nonsupervisory workers. Weekly earnings for this group have been rising at a rate slightly above inflation for the past year, but not by much. Nor is that number getting better: In the first quarter of 2014, weekly earnings rose only 1.8 percent.

There are some positive signs that the labor market is tightening a bit—decent job creation rates, fewer unemployment claims, rising earnings for full-time workers—but not everyone is benefiting. This remains a pretty uneven recovery.

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The Economy is Improving, But Not For Everyone

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Invading Crimea May Have Cost Russia $200 Billion So Far

by BrandyCremor Posted on April 17, 2014

Mother Jones

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Russia’s military actions are costing it dearly:

Russia’s annexation of Ukraine’s Crimea region last month and the instability it created in Russian financial markets were cited by government officials for record capital flight and sharply downgraded growth forecasts for the country. Finance Minister Anton Siluanov said that instead of projected 2.5% growth this year, Russia’s economy might show no growth at all.

….U.S. and European sanctions to punish Russia for occupying and annexing Crimea have so far targeted only a few dozen officials and businessmen. But the prospect of broader penalties, such as a Western boycott of Russian oil and gas, have scared investors into cashing out their ruble-denominated assets for hard currency and taking their money abroad. Russia’s foreign exchange reserves were drained of a record $63 billion in the first quarter of the year, Economic Development Minister Alexei Ulyukayev said Wednesday in an address to the lower house of the parliament.

….Russian stocks fell 10% last month, wiping out further billions in capital. The ruble has lost 9% of its value since the start of the year, boosting prices for the imported food and manufactured goods on which the Russian consumer market is heavily dependent. “The acute international situation of the past two months” was the cause, Ulyukayev said, referring to the Ukraine unrest.

That’s a helluva big drop in economic growth. Just by itself, it represents a cost of $50 billion. Add in the flight of cash and the stock market decline, and you’re somewhere in the neighborhood of $200 billion.

Is that enough to make Russia blink? Maybe not. But it hurts, and the prospect of losing even more has got be enough to give even Vladimir Putin a few second thoughts.

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Invading Crimea May Have Cost Russia $200 Billion So Far

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An Economist Answers Some of My Questions About "Capital in the 21st Century"

by BoydWooreycu Posted on April 13, 2014

Mother Jones

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On Thursday I posted a couple of very rudimentary comments regarding Thomas Piketty’s blockbuster new book, Capital in the 21st Century. I had questions about Piketty’s estimates of r (return on capital) and g (economic growth) in the past and—much more importantly—how they were likely to play out in the future. But all I had were amateur musings because I am, after all, only an amateur.

However, yesterday Brad DeLong tackled some of the questions I asked in a far more rigorous and disciplined way, teasing out a lot of unstated implications along the way—including the importance of various measures of r and how they relate to the probability of increasing future wealth concentration in the real world. It’s a long post, and complex in places, but highly recommended. If you’re willing to work your way through it, DeLong provides a framework for thinking about Piketty’s model that helps you start to make sense of both the book and its conclusions.

POSTSCRIPT: I’ve gotten a couple of questions about why I seem unduly skeptical, or even harsh, about Piketty’s book. It’s obviously a landmark work, I don’t really mean to be unfair. But it’s a book with innovative and untested ideas that has obvious appeal to anyone left of center, and I think this is precisely the time to avoid unquestioning hosannas. Affinity bias makes us all sympathetic to Piketty’s arguments, and that’s why we should instead question it carefully and thoroughly.

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An Economist Answers Some of My Questions About "Capital in the 21st Century"

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Advanced biofuels grow the economy, lower gas prices and benefit the environment

by Posted on April 8, 2014

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Advanced biofuels grow the economy, lower gas prices and benefit the environment

Posted 8 April 2014 in

National

Today, the Senate Agriculture Committee held a hearing to examine the status of advanced biofuels in the US. The message was clear: advanced biofuels grow the economy, lower gas prices and are good for the environment – and we need the RFS to keep it that way.

“We’ve heard for years that advanced biofuels are just around the corner. Well, we’re here. We’re at the point where it’s actually happening,” said Chairwoman Debbie Stabenow (D-MI).

Jan Koninckx, the Global Business Director for Biorefineries at DuPont Industrial Biosciences reiterated this sentiment:

 

Koninckx went on to talk about the importance of the Renewable Fuel Standard (RFS) to the continued growth of advanced fuels, saying, “the bottom line here is that driven by the RFS, we have completely re-imagined how we fuel our planet. We do so with renewable resources without adding any additional CO2 into the atmosphere. It is a remarkable achievement. And when you look at this from the perspective of a science company – this has actually gone quite fast.”

The idea that advanced biofuels have arrived and that the RFS has been crucial in their development, and that a strong RFS is crucial to their future, is an idea shared by all of the witnesses.

 

Senator Stabenow further reiterated what the witnesses had shared by saying “Now we need to provide certainty through a strong Renewable Fuel Standard.”

The debate over of how strong the RFS should be boils down to a simple question: Do we want a future with more advanced biofuel, which will provide economic and environmental benefits for us all, or do we want to become more reliant on oil and deal with the consequences of expensive fuel that degrades our earth more and more with each passing day?

Let’s protect the RFS.

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Advanced biofuels grow the economy, lower gas prices and benefit the environment

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In Defense of "Flash Boys"

by Ethel3847dlr Posted on April 7, 2014

Mother Jones

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Felix Salmon reviews Michael Lewis’s Flash Boys today, and he’s not impressed. I think Salmon’s basic criticism is on point: the big problem with high-frequency trading isn’t that small investors get ripped off, it’s that the system is so complex that literally no one really understands how it works or what kind of danger it poses:

By far the biggest risk posed by the HFT industry, for instance, is the risk of the kind of event we saw during the flash crash, only much, much worse. The stock market is an insanely complex system, which can fail in unpredictable and catastrophic ways; the HFT industry only serves to make it much more brittle and perilous than it already was. But in Lewis’ book-length treatment of HFT, he barely mentions this risk: I found just one en passant mention of “the instability introduced into the system when its primary goal is no longer stability but speed,” on Page 265, but no elaboration of that idea.

HFT cheerleaders like to brag that their algorithms increase liquidity. And that’s probably true. The problem is that HFTs don’t guarantee liquidity. In fact, it’s far worse than that: they displace other sources of liquidity during normal times, but there’s a good chance that during a crisis, at precisely the moment when liquidity is most important, HFT traders could suddenly and systematically exit the market because events have outrun the parameters of their algorithms. This could easily spiral out of control, turning a bad situation into a catastrophe.

Is this a real threat? Nobody knows. And that’s the problem. HFT is so complex that literally no one knows how it works or how it will react in a crisis. This is not a recipe for financial stability.

Unfortunately, that doesn’t make for a very entertaining book, so Lewis instead focuses on the ability of HFT shops to “front run” orders in the stock market—that is, to see bids a few milliseconds before anyone else simply by virtue of having computers that are physically closer to a stock exchange than their competitors. An HFT algorithm can then execute its own order already knowing the direction the price of the stock is likely to go. But even though this isn’t the biggest problem with HFT, I do think Salmon is a little too dismissive of it. Here he is on the subject of Rich Gates, a mutual fund manager who discovered he was being front run

Gates “devised a test,” writes Lewis, to see whether he was “getting ripped off by some unseen predator.”….Gates “was dutifully shocked” when he discovered the results of his test: He ended up buying the stock at $100.05, selling it at $100.01, and losing 4 cents per share. “This,” he thought, “obviously is not right.”

Lewis does have a point here: It’s not right….In Gates’ mind, what he saw was the 35,000 customers of his mutual fund being “exposed to predation” in the stock market. Between them, those customers had lost $40: 4 cents per share, times 1,000 shares. Which means they had lost roughly a tenth of a cent apiece, buying and selling $100,000 of Chipotle Mexican Grill within the space of a few seconds.

But there’s always going to be a nonzero “round-trip cost” to buying $100,000 of a stock and then selling it a few seconds later….But still, $40 for two $100,000 trades is hardly a rip-off. Especially when you consider the money that Gates himself is charging his 35,000 mom-and-pop customers.

When Gates was running his experiments, his flagship fund, the TFS Market Neutral Fund, had an expense ratio of 2.41 percent: For every, say, $100,000 you had invested in the fund, you would pay Gates and his colleagues a fee of $2,410 per year. That helps puts the tenth of a cent you might lose on Gates’ Chipotle test into a certain amount of perspective. TFS trades frequently, but even so, any profits that HFT algos might be making off its trades are surely a tiny fraction of the fees that TFS charges its own investors.

MORE: Is High-Speed Trading the Next Wall Street Disaster?

That’s true. But the whole point of HFT has always been to skim tiny percentages from a large number of trades. Nobody has ever suggested that individual traders are losing huge amounts of money to HFT shops. Nevertheless, that’s no reason to downplay it. In fact, that’s one of the things that makes HFT so insidious: it’s yet another way for Wall Street players to game the system in a way that’s so subtle it’s hardly noticeable. This is the kind of thing that permeates Wall Street, and I think Lewis is correct to aim a spotlight at it.

There are plenty of reasons to be very, very wary of HFT. I wish Lewis had at least spent a few pages on the potential instability issues, but let’s face facts. Front running is a perfectly legitimate problem to focus on, and it’s likely to generate a lot more public outrage than a dense abstract about the possibility of robots causing a financial crash sometime in the dim future. So if you’re the rare person who can attract a lot of attention to a legitimate financial danger, it makes sense to write a book that concentrates its fire on the most accessible aspect of that danger. That’s what Lewis chose to do, and I don’t really have a problem with that.

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In Defense of "Flash Boys"

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March Jobs Report Shows a Spring Pick-Up

by Ernest Ricafort Posted on April 4, 2014

Mother Jones

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The US economy added 192,000 jobs in March, according to new numbers released Friday by the Department of Labor (DoL). The unemployment rate remained steady at 6.7 percent.

The number of jobs created last month was an improvement on the more moderate job gains seen in recent months—113,000 in January, and 175,000 in February. And even those numbers were revised upwards in March by a total of 37,000 jobs.

There’s more good news. Six years after the financial crisis, private employers have finally regained all the jobs lost during the recession, and then some. The private sector lost 8.8 million jobs during the economic slump, and has since hired 8.9 million.

The portion of Americans who either had jobs or were looking for jobs—this is called the labor force participation rate—ticked up to 63.2 percent after a half-million Americans began looking for work again last month. And the number of long-term unemployed—those Americans who have been jobless for 27 weeks or more—has fallen by 837,000 since last year.

Economists predict that the positive March jobs numbers mean that the Federal Reserve, the US central bank that sets monetary policy, will likely continue to pull back on the massive economic stimulus measures it put into effect in September 2012.

Now for the sour news. The number of jobs added to the economy last month was still fewer than many economists had expected. “Everybody who said ‘ah we finally turned the corner, we’re going to be booming like crazy’—I think they’re going to have to hold off for a few months,” Austan Goolsbee, President Barack Obama’s former top economic adviser, said on CNBC Friday.

And the jobs gained last month are not necessarily good middle-class jobs. The professional services sector posted the largest gains in March, but of the 57,000 new jobs added, most were in temp work. Food services added 30,000 jobs. The healthcare sector took on 19,000 jobs, and construction added 19,000.

The disparities in unemployment by race changed little in March. The jobless rate was 5.8 percent for whites, 12.4 percent for blacks, 7.9 percent for Hispanics, and 5.4 percent for Asians.

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March Jobs Report Shows a Spring Pick-Up

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George W. Bush Is a Far Better Painter Than He Was a President. Here’s His Portrait of Vladimir Putin.

by SuzannaMoloney Posted on April 4, 2014

Mother Jones

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On Friday, NBC aired an interview with former president and aspiring painter George W. Bush. The president—talking to his daughter Jenna Bush Hager on Today—unveiled 24 portraits of world leaders.

It was only a little over a year ago that we learned of Bush’s second act painting passion. Some people hate the paintings. Some people love them. Some people don’t spend that much time thinking about them. Still others can’t consider them without remembering that, you know, he was an awful president. I, for one, consider George W. Bush’s public painting career to be endearing. He’s not the best painter in the whole wide world, but he’s not the worst. There’s some skill on display, which is more than could be said for much of his presidency. Do I want to hang them in my house and look at them everyday? Of course not. But I’ve seen worse paintings. More than that, I’ve seen worse paintings painted by actual professional painters. I’m no expert, but Bush’s Putin looks pretty not-the-worst-thing-in-the-world to me.

NBC

The Tony Blair painting on the other hand is a little splotchy, but nobody can be perfect all the time.

NBC

4,486 American servicemen and women, and more than 100,00 Iraqis lost their lives as a consequence of the war in Iraq. Here is a clip of the president who led us into that war talking about his painting career with his daughter on NBC.

Visit NBCNews.com for breaking news, world news, and news about the economy

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George W. Bush Is a Far Better Painter Than He Was a President. Here’s His Portrait of Vladimir Putin.

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Yep, Most of Paul Ryan’s Budget Cuts Come Out of Programs for the Poor

by Arkady549e Posted on April 4, 2014

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A few days ago I guessed that 80+ percent of the cuts in Paul Ryan’s latest budget blueprint came from programs for the poor. Today, CBPP dives a little deeper and puts the number at 69 percent. The cuts come in five categories: health care; food assistance; college grants; other mandatory programs such as SSI, school lunches, and EITC; and miscellaneous discretionary cuts. However, CBPP warns that its 69 percent number is very likely conservative:

In cases where the Ryan budget cuts funding in a budget category but doesn’t distribute that cut among specific programs — such as its cuts in non-defense discretionary programs and its unspecified cuts in mandatory programs — we assume that all programs in that category, including programs not designed to assist low-income households, will be cut by the same percentage.

That’s definitely a risky assumption. In real life, two-thirds of those cuts would almost certainly end up coming out of programs for the poor. We’ll never know for sure because Ryan never has the guts to specify where his cuts would go, but I’m willing to bet that if Republicans were forced to provide line items for all of Ryan’s broad categories, we’d end up back at 80 percent of the cuts hitting those with low incomes.

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Yep, Most of Paul Ryan’s Budget Cuts Come Out of Programs for the Poor

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