There are times that I begin to despair a bit about all the crap going on all over. I can’t do anything about earthquakes, tsunamis, and nuclear disasters (all in one) but I can address some of the reporting I’ve seen in the TradMed the last couple of days.
Apparently the Beltway Village
Idiots Pundits are anxious to stop writing all those bummer articles about the un and underemployed and the destruction of the global economy. I guess it’s just too Debbie Downer for them. So they’ve started the “Everything’s Getting Better” articles. The NY Times and Floyd Norris started with this headline:
Crisis Is Over, but Where’s the Fix?
Of course, without anything being fixed, it’s rather difficult for the “crisis” to be over. And to be fair, Norris does address some of this in the article:
When the financial system began to crumble more than three years ago, the world rushed to rescue it. Country after country went deeply into debt to keep banks afloat and prevent a deep recession from turning into something worse.
But the world has changed since then. The economic recovery in most developed countries is stuttering at best, and governments are struggling with their own finances. It is time for remorse and second-guessing.
A surprising citadel of that second-guessing is at the International Monetary Fund, where researchers this week concluded that the rescues “only treated the symptoms of the global financial meltdown.”
The researchers, Stijn Claessens and Ceyla Pazarbasioglu, warned that “a rare opportunity is being thrown away to tackle the underlying causes. Without restructuring financial institutions’ balance sheets and their operations, as well as their assets — loans to over-indebted households and enterprises — the economic recovery will suffer, and the seeds will be sown for the next crisis.”
In retrospect, it is clear that the bailouts came with too little pain for those responsible. Bondholders who financed banks that failed largely escaped pain. That was true even in Ireland, where the bailout would have led to a default of government debt had Europe not stepped in. It is still not clear how Ireland will pay its national debt, but the bank bondholders did fine.
Norris goes on to point out that one of the problems is the lack of accountability. Imagine that?
Next up with the Let’s Declare
Victory Recovery crowd is Ben Smith at Politico, though he projects it on to President Obama as the President’s “dilemma” about when to declare Recovery:
The economy has been growing for 18 months after the longest recession since the Great Depression – but public opinion has yet to fully reflect what economists generally agree are incipient signs of hope. One truism of presidential politics that actually happens to be true is that voters’ perception of the economy trumps just about any other issue, so Obama, acutely aware of both the need to present a successful economic record and the dangers of prematurely declaring victory, is treading very, very carefully.
Yet despite several quarters of real — if uninspiring — growth, the pessimism remains deep. A Bloomberg National Poll conducted in early March found that more than a third of Americans continue to believe that the U.S. is in a recession, more than a year after it ended, and 63 percent of Americans say the nation is on the “wrong track.”
Yeah. Gee. Now why ever would folks not be inspired with unemployment still hovering around 9% and un and underemployment nearly double that? There are still nearly five applicants for every job opening. But that’s only because all the people without jobs just lack the pertinent skills right? Well, no, that is not right:
Structural unemployment – unemployment stemming from a mismatch of workers’ skills and job requirements – has been cited in mainstream media as the main cause of current, high unemployment. Data from the National Federation of Independent Business (NFIB), however, suggest that structural unemployment is not what is ailing the economy. The graph below draws on data from the NFIB’s monthly survey from December 2007 (the official start of the recession) to January 2011. Each month, the NFIB asks its sample of small businesses to state the single most important problem facing their business today. Since the recession began, respondents overwhelmingly have cited “poor sales,” suggesting that today’s unemployment is primarily due to a lack of demand. “Quality of labor,” the factor most consistent with structural unemployment, barely made the list.
Why the shortage? Many of the people who were laid off from factory jobs and are looking for work don’t have the specialized skills companies are looking for, manufacturing execs say. And they’re not eager to acquire them, because, having been laid off from one manufacturing job, they’re convinced that the whole sector is on the decline. So they don’t want to spend time retraining for jobs that they fear could soon be shipped overseas.
Some say those fears are misplaced, arguing that skilled manufacturing jobs are difficult to outsource. But the numbers tell a different story. As we’ve reported, middle-wage, middle-skill jobs — a category that includes both skilled manufacturing jobs and white-collar clerical work — are shrinking rapidly as a percentage of total U.S. jobs, thanks to the effects of offshoring and mechanization. So it may make sense for a worker to decide against spending a year retraining himself to learn these skills.
My bold. Today’s (Saturday, March 11) Hartford Courant had three articles that reflect the reality of things today.
Links to the articles are embedded in the titles but there we have it. UTC is laying off workers and moving the jobs elsewhere. They are doing it because they can (profitable but want more profits) and they reward the CEO with $24M in compensation to oversee these cuts and outsourcing. And the CEO likes to brag about it (from prepared remarks delivered in Mumbai to NASSCOM):
Today, we have almost 5,000 employees in India. Our Otis factory in Bangalore has produced more than 30,000 elevators since the 1990s. Our Carrier factory in Gurgaon produces 200,000 air conditioning systems per year. In addition, Pratt & Whitney engines power the aircraft of many Indian airlines, including Air India, Kingfisher, and Indigo – as well as more than 225 turboprop aircraft, business jets and helicopters in India.
From our perspective, this is really just the beginning of our relationship with India. Before talking about some of the big macro forces that will shape the global economy over the next decade, I’d like to share just a little data that highlights the size of the opportunities in both the infrastructure and aerospace markets. Last year, UTC’s sales in India were $500M. We expect this to grow to $2.5B by 2015. I’m confident in this level of growth based, in part, on the current per-capita consumption rates. As countries like India become more urban, consumption levels for air conditioners, security systems and air travel will increase toward the levels seen in more mature markets.
But surely there are folks in the US working to see US workers employed, building things useful to all citizens, right? Just today there were two more articles on Republican governors attempting to justify killing rail projects within their states. First up is John Kasich in Ohio refusing to put up $52M for a project estimated to cost $128M for streetcars in Cincinnati:
Gov. John Kasich said he can’t justify spending $52 million in state money for Cincinnati’s streetcar – the new governor’s most emphatic statement on what Cincinnati leaders consider a major economic development project.
Without the state money, the project could be up to $30 million short of the $128 million needed to build a streetcar route from Downtown’s central riverfront to the Uptown communities near the University of Cincinnati. The city could seek that money from Washington or other sources, say backers.
Then the NY Times tried to paint Florida Governor Rick Scott’s rejection of high speed rail funds as a rejection of President Obama’s planning:
The federal government had agreed to pay $2.4 billion of its estimated $2.6 billion in construction costs, railroad companies were vying to build and operate it, and state transportation planners had even dummied up proposed timetables: Train 7092 would depart Tampa at 8:10 a.m. and arrive in Orlando at 9:04 a.m.
The fast train was sought, and won, by Florida’s former Republican governor, Charlie Crist. But it was killed last month by his successor, Rick Scott, who joined several other Republican governors in spurning federally financed train projects over fears that their states could be on the hook for future costs. The final nail in its coffin came last week when a Florida court ruled that the new governor could not be forced to accept the federal money and start building it.
Of course, buried w-a-y down in the Times article is this little nugget that negates the article’s premise (and Scott’s justification for canceling):
Last month, Mr. Scott decided to scuttle the project after reading a report by the Reason Foundation that questioned its ridership estimates. The foundation is a prominent libertarian policy research organization that employs several respected transportation analysts, but it gets some of its funding from donors with ties to the oil industry, including foundations related to Koch Industries, which owns oil refineries.
“The truth is that this project would be far too costly to taxpayers, and I believe the risk far outweighs the benefits,” Mr. Scott said.
But a state-sponsored ridership study, which was released this week, concluded that the proposed line would actually have been a money-maker from the start.
Regardless of the complaints that Tampa and Orlando are too close together and as cities are “virtually unnavigable without cars,” the line would have been a money maker. It would have eventually been extended south to Miami as well.
So here we sit. Private industry destroys jobs because they can. Governors destroy jobs because of ideology even though those jobs could eventually help people get around cities and states without buying gas, contributing to pollution and auto gridlock. Saving gasoline that has spiked in price once again, chewing up more financial resources that the long term un and underemployed could use on things like, oh food or medical care.
Let’s let the Village
Idiots Pundits declare Victory Recovery and move on so they can cover such news as Newt Gingrich’s Patriotic Affairs.
And because I can:
Cross posted from Just A Small Town Country Boy