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How does an interconnected global economy avoid a global recession?

1:04 pm in Economy, Jobs, Unemployment by dakine01

(photo: athoshun/flickr)

(photo: athoshun/flickr)

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As I was surfing through various news sites this morning (April 2), I noticed a number of articles discussing problems with the European and US economies which lead directly to the question I have posed in the title of this post:

How does an interconnected global economy avoid a global recession?

Unfortunately, I do not know the answer but if I had to guess, it would be to say “It can’t.”

The first article I noticed was from tha AP via Yahoo titled, “Euro unemployment spikes to record 10.8 percent.” Reuters reported it as “Euro zone unemployment reaches near 15 year high“:

Unemployment in the euro zone reached its highest level in almost 15 years in February, with more than 17 million people out of work, and economists said they expected job office queues to grow even longer later this year.

Joblessness in the 17-nation currency zone rose to 10.8 percent – in line with a Reuters poll of economists – and 0.1 points worse than in January, Eurostat said on Monday.

Economists are divided over the wisdom of European governments’ drive to bring down fiscal deficits so aggressively as economic troubles hit tax revenues, consumers’ spending power and business confidence which collapsed late last year.

As a companion to these was this blog post from Reuters on youth unemployment across Europe: Read the rest of this entry →

It Is Impossible to Keep Up With All the Economic Cluelessness

12:36 pm in Uncategorized by dakine01

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I noticed yesterday that Reuters had an announcement of a Larry Summers editorial on “The Jobs Crisis.” Turns out, Summers had mostly the same editorial published at the Washington Post this morning as well. Scarecrow over at Firedoglake deconstructs the piece quite nicely, especially Summers own complicity with how we have reached this point of a probable “lost decade.”

Yet for every good article on the economy such as this one from Reuters that points out the disconnect of economists wanting people to cut down on debt yet increase spending or this opinion piece, also from Reuters, we have something like this opinion piece from the Washington Post yesterday where the author calls for “signing bonuses for people instead of Unemployment Compensation.

From the first Reuters piece:

Talk about getting it from all sides. Economists want Americans to cut down on debt and boost spending all at once, even as home values tumble and gasoline prices soar.

It may all be a bit too much for the average U.S. household, particularly with an already sluggish labor market stuttering again.

From the second Reuters piece:

The big mystery in the United States today is why the job crisis is not at the center of the political and economic debate. After all, the numbers — and the human tragedies they reflect — could not be bleaker.
Read the rest of this entry →

Just How Many Speeches Did Ben Bernanke Give Yesterday?

6:46 am in Uncategorized by dakine01

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Federal Reserve Chairman Ben Bernanke gave a speech yesterday (Tuesday, June 7) to the International Monetary Conference in Atlanta, GA. Only one speech. Yet looking around the Toobz at the various headlines at news sites on this speech, it must have been an all things to all people speech as I’ve found at least four different perspectives presented, some of them directly contradictory.

The most prevalent theme appears to be The Benbernank as cheerleader (links embedded in titles):

Then there are the deficit hawk headline writers:

AP via USA Today: Bernanke: We ‘urgently’ need to fix the debt problem (with the same AP article as MSNBC)

NY Times: Fed Wants Priority Put On Deficit

The almost cheerleader:

And finally, the seemingly contradictory:

So taken all together, it seems that things are bad but getting better except where they aren’t; everything is going to be just fine; we need a stimulus except where we don’t; and except for that pesky jobs thing, it’s all good.

Meanwhile, in today’s ‘water is wet’ articles, Jamie Dimon whines to the Benbernank about the new banking rules:

JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon asked Federal Reserve Chairman Ben S. Bernanke whether regulators have gone too far by reining in the U.S. banking system and are slowing economic growth.
Read the rest of this entry →

It’s Not the Bad Economic News that Surprises Me

12:08 pm in Economy, Government, Jobs, Unemployment by dakine01

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Unlike economists, I can in no way ever claim to be surprised at all the continuing bad news on the economy (and yeah, I will continue to link to and milk that schtick). Just today, we have the Initial Unemployment Claims report (via CNN):

In the week ended May 28, 422,000 Americans filed for their first week of unemployment benefits, the Labor Department said Thursday.

While that marked a 6,000 decrease from the revised 428,000 initial claims filed the week before, it was worse than economists’ expectations for 413,000 claims.

…snip…

Next up is the government’s monthly jobs report due Friday. Economists surveyed by CNNMoney say they’re expecting to see that 170,000 jobs were created in May and that the unemployment rate eased to 8.9% from 9% in April.

In case you’re wondering, that “revised” figure from last Thursday’s Initial Unemployment Claims report was revised upward from 424K. Given how woefully inaccurate the economists’ predictions have been, I will go out on a limb as I stated yesterday and predict that the BLS numbers for May will be much lower than 170K. I’m thinking more likely closer to a quarter of that (42.5K) but I do hope that I’m wrong. As far as the “unemployment rate” easing, this article from the AP (via Yahoo) this morning (Thursday June 2) goes a long way to explaining why the “official” unemployment rate may drop. Good way to make the figures look better by not counting those who get frustrated and give-up.

Now what does surprise me, still, even after all the evidence that has been provided these last few years, is the apparent drive to push most folks’ wages down to minimum wage (while trying to knock minimum wages down even lower). Back in December, I wrote a “what-if” post based on one person trying to survive living on minimum wage. Of course, the fallacy of my post is minimum wage jobs usually are not 40 hours per week, 52 weeks a year type jobs.

Read the rest of this entry →

Jobs, Salaries, Careers

9:35 am in Economy, Jobs by dakine01

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I’m thinking this must be the week for education related news stories. Sunday, I wrote this post on how Education issues were being spun in the TradMed. Today, there are a few articles related to how an undergrad major reflects earnings. The first I saw was this one from the AP (via MSNBC) then saw that the Washington Post also had coverage:

Over a lifetime, the earnings of workers who have majored in engineering, computer science or business are as much as 50 percent higher than the earnings of those who major in the humanities, the arts, education and psychology, according to an analysis by researchers at Georgetown University’s Center on Education and the Workforce.

“I don’t want to slight Shakespeare,” said Anthony Carnevale, one of the report’s authors. “But this study slights Shakespeare.”

The report is based on previously unreported census data that definitively links college majors to career earnings. Earlier studies have looked at salaries immediately after graduation, but the new report covers earnings across a person’s working life and is based on a much larger survey.

Bloomberg’s article on the study though offers a little bit more perspective:

As a group, engineering majors of all disciplines reported the highest median earnings at $75,000, the study showed. The lowest pay, at $42,000, came from two groups — education and psychology and social work, which includes such categories as clinical psychology and communications disorders.

…snip…

Race and gender play a role in salary, according to the report. African-Americans who graduated with finance majors earned an average of $47,000 per year, less than Hispanics and Asians at $56,000 and whites at $70,000, it showed.

While women hold the majority of degrees in many lower- paying fields, even those with specialties that command the highest pay, such as chemical engineering, earned $20,000 less per year on average than men with the same education, according to the study.

…snip…

About 41 percent of undergraduates with humanities and liberal arts majors — including history, English language and literature and foreign languages — went on to earn a graduate degree, the study showed.

All this leads me to one major question – which came first? Are the higher engineering salaries due to the preponderance of men in the field or are the lower salaries for fields such as Social Work and Education due to the preponderance of women in the field? Contrary to the beliefs of some people, jobs in Social Work fields and Education are not easy nor are they stress free. In fact, both fields can be among the more stressful jobs going. Last year I wrote this post on how I consider Child Welfare work as the Most Thankless Job and one of the most stressful jobs around. They work long hours for low pay and are demonized from all sides. These jobs also require skills albeit skills that are often categorized as “soft skills” – defined as skills that require the ability to deal with humanity, often in the worst possible moments. Skills that a lot of engineers have no hope of ever acquiring.

Even within fields and career choices that are considered upper level, there are more and more two tier wage systems coming into play. This is not limited to unions, although we all know the stories now of businesses trying to break the unions via this ploy. No, today’s (Tuesday May 24) NY Times had an article on how law firms were setting up “non-partner track” niches:

If It Sounds Too Good To Be True…

10:37 am in Economy, Financial Crisis, Jobs, Media, Unemployment by dakine01

i'll have some

i'll have some by dotpolka, on Flickr

I

assume that by now, many folks are aware of the hoax press release purportedly from GE declaring that they were going to be (“press release” from BusinessInsider):

…gifting its entire 2010 tax refund, worth $3.2 Billion, to the US Treasury on April 18, Tax Day, and will furthermore adopt a host of new policies that secure its position as a leader in corporate social responsibility.

If you are unaware of the source of the $3.2 Billion figure, this NY Times story from March explains things.

Now, as soon as I saw this “press release” I started looking for the “April Fools” tag. For me, the tells were:

Immelt acknowledged no wrongdoing. “All seven of our foreign tax havens are entirely legal,” Immelt noted. “But Americans have made it clear that they deplore laws that enable tax avoidance.

and

In tandem with the gift, the company is also announcing a host of new policies to restore public faith in the GE brand, including a commitment to keep American jobs in America, and to create one U.S. job for each new job created abroad.

Other folks (like emptywheel) who saw it had their own tells of course but those two really jumped out at me. Earlier this month (April 4) the NY Times Economix blog had a post on Tax Havens…

Our budget deficit would be smaller – and pressure to cut social programs lower – if corporate tax revenues had not declined over time relative to gross domestic product and relative to individual income tax revenues.

Corporate America is a world leader in creative tax minimization. As David Kocieniewski reported in The New York Times, General Electric used some particularly innovative strategies to take advantage of overseas tax havens, including “offshore profit-shifting.”

The Boeing Corporation, a major federal contractor, has had a net rebate in federal taxes over the last three years, and a total tax rate of 4.5 percent over the last five years, though the company points to pension contributions and research credits that have reduced the bill.
Read the rest of this entry →

January Jobs Report(s) Part II

8:20 am in Economy, Financial Crisis, Jobs, Unemployment by dakine01

graphic: Mike Licht, NotionsCapital.com via Flickr

The official Department of Labor Bureau of Labor Statistics employment numbers for January 2011 are out and guess what? Same shit, different day.

According to the report (via Reuters) the jobs increase for January 2011 is 36K. This is compared to Wednesday’s report from ADP (from my post on Wednesday), that the private sector created 187K jobs in January. Since the BLS number includes public sector as well as private sector, it looks like governments at all levels shed approximately 150K jobs. The same thing as happened last month, where the number of private sector jobs was initially reported as 297K (later downgraded to 247K) while the overall number from BLS was 103K.

Of course, what will be reported heavily is that the “unemployment rate” has “dropped” to 9% from 9.4%:

There was some good news in the employment report as the jobless rate fell to 9 percent from 9.4 percent in December. The household survey from which the unemployment rate is derived showed the number of unemployed dropped by about 600,000 last month.

The unemployment rate had previously declined largely as a result of people giving up the search for work, but in January the labor force was unchanged, even after adjustments for updated population controls.

The reality appears to me to be that all the numbers are probably fudged and no one in any position to do anything or comment on it has a clue. As I said, same shit, different day.  . . . Read the rest of this entry →

Cluelessness or Cognitive Dissonance?

10:37 am in Uncategorized by dakine01

My apologies for not writing any posts for a while but I do get tired of having to repeat myself so frequently.

Once again we see the cluelessness of the financial reporters in a couple of articles from the past few days. First up was an AP story (via MSNBC) which reported on an analysis from Fidelity Investments on people raiding their 401Ks due to "hardships." This came on top of the Weekly New Unemployment claims report showing (Reuters via CNBC):

New U.S. claims for unemployment benefits unexpectedly climbed to a nine-month high last week, yet another setback to the frail economic recovery.

Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000 in the week ended August 14, the highest since mid-November, the Labor Department said on Thursday.

Analysts polled by Reuters had forecast claims slipping to 476,000 from the previously reported 484,000 the prior week, which was revised up to 488,000 in Thursday’s report.

But today’s (Sunday, August 22) NY Times really steps in it.

Renewed economic uncertainty is testing Americans’ generation-long love affair with the stock market.

Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds.

If that pace continues, more money will be pulled out of these mutual funds in 2010 than in any year since the 1980s, with the exception of 2008, when the global financial crisis peaked.

Small investors are “losing their appetite for risk,” a Credit Suisse analyst, Doug Cliggott, said in a report to investors on Friday.

Now, there is obviously some validity to this but buried three quarters of the way down in the article is a far more likely reason:

And the flight from stocks may also be driven by households that are no longer able to tap into home equity for cash and may simply need the money to pay for ordinary expenses.

Five hundred thousand new jobless claims the past week. The rolling four week average at 482.5K (highest since December ’09). Unemployment hovering between 9.5 and 10%. Underemployment added in basically doubling that.

I’m one of the lucky ones as I’ve mentioned before. I cashed out my 401K/SEP-IRA and such in order to survive a few years ago. Even with paying the early cash out penalties, I still got to spend more of it on myself than those folks who watched theirs swirl down the drain as the market crashed in 2008.

So as we watch the politicians come scrounging for votes this November, here’s a few things to think about.

1) President Obama’s "Deficit Commission" is looking at things such as raising the retirement age and use "Social Security’s in crisis" as a theme to avoid paying back Special US Treasury Bonds.

2) People like Mitch McConnell like to go on shows like Meet the Press and talk about how Social Security is in crisis even though those Special Treasury bonds are "pieces of paper sitting in a filing cabinet somewhere."

3) Raising the retirement age keeps older people (those still fortunate to be employed that is) in the work force longer

4) Keeping older people in the work force longer keeps younger people from getting the entry jobs in the work force.

The economic world in the United States and worldwide is not a vacuum. All the pieces of it intersect and interact. At some point the so-called political, business, and TradMed elites are going to have to admit to themselves that the world is not as they envisage it. People all over the country are scared and angry. They see bleak futures for themselves and their children and grandchildren. Empty platitudes and simplistic slogans are not going to mollify people any longer. We see it in the demonizing of the "others," be they brown people, gays, or whatever the minority group du jour.

And because I can:

Cross posted from Just A Small Town Country Boy

It’s Not Just That It’s Spin, It’s Bad Spin

1:57 pm in Uncategorized by dakine01

A couple of days ago, I saw this headline from the AP (via MSNBC):

Layoffs of census workers will distort jobs data

I found the headline a bit dishonest but considering that it was the AP, I was not all that surprised since the AP has moved far from the days when it was a premier news gathering and reporting agency. Unfortunately for a lot of folks, though, as the AP has gotten worse, more and more newspapers and news sites rely on it because they’ve cut their own news gathering staff to a minimum.

Then this morning, I saw this article from today’s NY Times where the reporter used the same dishonest framing in her lede:

The June jobs report, which comes out on Friday, will probably look very bad, reinforcing worries that the recovery is teetering. But first impressions might be deceiving.

Folks, the "distortion" in the jobs data was not due to the lay-off of Census workers. It was due to the admittedly temporary nature of the Census hiring in the first place. So when the economy loses 125K jobs and the private sector has created only 83K according to today’s Jobs Report, that is a more accurate reflection of the official numbers.

Now, I personally believe the official numbers are woefully understated. While the official Unemployment rate is showing at 9.5%, my gut tells me it is probably a third again higher. Especially when

The unemployment rate fell as 652,000 people gave up on their job searches and left the labor force. People who are no longer looking for work aren’t counted as unemployed.

All told, 14.6 million people were looking for work in June. Counting those who have given up their job searches and those who are working part time but would prefer full-time work, the underemployment rate edged down to 16.5 percent from 16.6 percent in May.

I’m just stubborn enough that I refuse to give up. But I can understand why people do. The frustrations when you know you can do a job as listed by the requirements yet you can’t even get a phone interview, much less a face-to-face talk. I have to take very deep breaths and try to not bite the head off recruiters when they ask me why I’ve been out of work for such a long time. And I do list that I’ve had a few part-time contract positions and have a part-time position right now, although not in my chosen field.

There are millions of us out here, looking for work, wanting to work, and putting up with the insults from elected officials, office seekers, and pundits who claim that we’re all just lazy bums looking for a life on the dole.

We are not lazy bums. We are not looking for a free ride. We are able to work in our fields. We want to work in our fields. We’d like to earn an honest wage for our efforts. This is not too much to ask (unless the goal is to destroy the US, which it seems just might be the case).

And because I can:

Cross posted from Just A Small Town Country Boy