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Here Is Class Warfare

11:20 am in Uncategorized by dakine01

"Class Warfare" Javier Hernandez-Miyares on flickr

"Class Warfare" Javier Hernandez-Miyares on flickr

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So apparently, the phrase of the week from Republicans is “Class Warfare!” as a response to President Obama’s proposal for a new Millionaire’s Minimum Tax. Paul Ryan and Lindsey Graham both used the phrase yesterday on the Bobble head shows. The proposed tax has also become known as the “Buffett Tax” in honor of billionaire investor Warren Buffett who has long noted the irony of his paying a lower tax rate for his investments (aka Unearned Income) than the rate paid by his secretary (Earned Income). Of course, the folks at Forbes Magazine and the Murdoch NY Post think it is a bad idea to do such a thing.

The reality is, and Buffett noted years ago, we are in a class war:

“There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.” 

Today as I was surfing through the various news sites, I saw a real example of the class warfare in action, although in a more subtle fashion than the whining about possible taxes on millionaires. It was this article from the NY Times on possible cuts to military retirement benefits.

Military pensions and health care for active and retired troops now cost the government about $100 billion a year, representing an expanding portion of both the Pentagon budget — about $700 billion a year, including war costs — and the national debt, which together finance the programs. 

…snip…

“We’ve got to put everything on the table,” Defense Secretary Leon E. Panetta said recently on PBS, acknowledging that he was looking at proposals to rein in pension costs.

One way to decrease those healthcare costs might be to end the occupations of Irak and Afghanistan and all the other adventurism around the world. Traumatic Brain Injury tends to have a significant increase to costs as does dealing with the need for prosthetic devices and rehab services. Read the rest of this entry →

The More Things Stay the Same

11:54 am in Uncategorized by dakine01

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Well, instead of being “surprised” by the June (lack of) Jobs Report, it seems the economists were “stunned” by the numbers (via Bloomberg):

Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said he was “stunned” by today’s U.S. employment report.

He wasn’t the only one.

Not a single economist among 85 surveyed by Bloomberg News correctly forecast the 18,000 increase in payrolls in June reported by the Labor Department. Estimates ranged from a low of 60,000 to a high of 175,000. The median was 105,000 — almost six times the actual number.

…snip…

It’s not unusual for payroll figures to fall outside of the range of economists’ forecasts. The same thing happened last month, as well as in October, November and December of last year.

That last paragraph should become a mantra for economists looking for excuses, but it most likely will not. As I’ve mentioned in earlier posts, there are always extraneous reasons for things happening within the economy. Like bad weather. And there will always be extraneous impacts that should be accounted for in any economic forecasting.

There have been a number of other articles/opinion pieces from yesterday and today that I have found interesting. While Bloomberg reported here that Warren Buffett is betting ‘very heavily’ against a “double-dip” recession (and that kinda scares me a little as I’ve predicted that there will be an official double-dip), the Wall Street Journal seems to be considering a double-dip quite possible.

Washington Beltway Villagers are still in the austerity mode with all the talk of the debt ceiling increase needing drastic cuts to accompany the increase. At least officially, although CNN points out that the GOP is once again claiming tax cuts as the route to employment Nirvana. But there are a few signs that the problems faced by millions just might be penetrating the consciousness of a few folks inside the Beltway. Today’s Washington Post had this opinion piece from Pete Peterson himself pointing out:

Immediate spending cuts and revenue increases could be counterproductive in the context of today’s grim employment outlook, but we need to reach a grand bargain fast to prove to the world that America is back in business.

Mr Austerity “how can we destroy save Social Security” himself recognizes that government does have a role and unfettered and unconstrained slashing is the worst thing that can be done.

Dave Leonhardt in the NY Times Economix points out the austerity trap by invoking Hoover, Roosevelt, and Japan:

In all kinds of ways — consumer demand, the federal deficit, even the weather — the medium-term future is highly uncertain. But this uncertainty, while the main problem, is not the only problem. We are also committing an unforced economic error. We’re cutting government at the same time that the private sector is cutting.

It is the classic mistake to make after a financial crisis. Hoover and even Roosevelt made a version of it in the 1930s. The Japanese made a version of it in the 1990s. Now we are making it.

Reuters has an analysis reaching the same conclusion:

Data on Friday showed hiring ground to a near halt last month, driving the jobless rate up to 9.2 percent and casting doubt on whether a sluggish U.S. recovery would soon pick up steam.

This all but ensures the Federal Reserve will keep interest rates at record lows well into 2012. But help probably won’t be as forthcoming from Congress and the White House, which are locked in battle over cutting a $1.4 trillion budget deficit.

The problem is one of timing: Economists and investors fear that with weak labor and housing markets causing consumers to tighten their own belts, the last thing the economy needs is an aggressive dose of austerity from the federal government.

Ezra Klein at the Washington Post had this blog post on long term effects of unemployment including:

It makes you permanently poorer: In 2009, Till von Wachter, Jae Song, and Joyce Manchester released a study on what happened to the long-term earnings of laid-off workers after the 1982 recession. Immediately, laid-off workers experienced annual earnings 30 percent lower than those of workers who hadn’t lost their jobs. But even 15 to 20 years on, these workers experienced 20 percent lower wages than people who had kept their jobs decades previous

…snip…

It makes you sicker: Being laid off has serious long-term health effects. William Gallo of Yale Medical School has found that people who are laid off near retirement are twice as likely to have a stroke or heart attack. Gallo, along with Jennie Brand and Becca Levy, have also found that being laid off or part of a branch closing increases one’s likelihood of depression.

So here we sit with more than 14M unemployed and between 25M – 30M (at least) un and underemployed, watching as the White House and Congress continue to dance in their stylized way around the real economic needs, here are a few other articles, pointing out some rather obvious things. However, as one who has seen obvious points be ignored by the folks in the bubble, it can’t hurt to point things out for even the most willfully obtuse politicians. Things such as “Wages fall in sagging job market.” Or “Job seekers get left out of the recovery.” “More consumers getting behind on their bills” and “After ‘mancession,’ women getting left out of recovery.”

The recovery has rolled into Wall Street and corporate profits. It has lifted the financial industry which created much of the original problem. But for those who aren’t MOTU or Members of Congress able to pop for a $350 bottle of wine, we keep falling further and further behind. Which I guess, just means we get to sacrifice more rather than those poor poor rich people.

And because I can:

Cross posted from Just A Small Town Country Boy

Life in an Alternative Universe

2:24 pm in Economy, Jobs, Unemployment by dakine01

I am becoming more and more convinced that there are multiple parallel universes occupying life on this one planet we call Earth. It is seemingly the only even remotely rational explanation for the disconnect between the views of most people in the United States (and the World) versus the views of the Beltway Villagers, Media Courtiers, and the excessively affluent.

Friday’s NY Times presented the results of a poll of the “Nation’s Mood”:

Americans are more pessimistic about the nation’s economic outlook and overall direction than they have been at any time since President Obama’s first two months in office, when the country was still officially ensnared in the Great Recession, according to the latest New York Times/CBS News poll.

Amid rising gas prices, stubborn unemployment and a cacophonous debate in Washington over the federal government’s ability to meet its future obligations, the poll presents stark evidence that the slow, if unsteady, gains in public confidence earlier this year that a recovery was under way are now all but gone.

Capturing what appears to be an abrupt change in attitude, the survey shows that the number of Americans who think the economy is getting worse has jumped 13 percentage points in just one month. Though there have been encouraging signs of renewed growth since last fall, many economists are having second thoughts, warning that the pace of expansion might not be fast enough to create significant numbers of new jobs.

So what are the Media Courtiers reporting on? The Washington Post had this report on the “Biden deficit task force”:

A congressional task force launched by President Obama last week to help cut the federal deficit is off to a rocky start, with some members complaining that the agenda is destined to provide political theater, not a sweeping rewrite of spending and tax policy.

Set to begin discussions May 5, members already hit a dispute this week, disagreeing over how many people should have seats at the table. Some are asking what’s the point of meeting at all.

“I’m at a loss to understand what the purpose is,” House Majority Leader Eric Cantor (R-Va.) said Thursday in an interview. He said Obama had not set a timeline for any decisions, although lawmakers from both parties are calling for some agreement on deficit reduction before the government reaches a limit in the coming months on how much money it can borrow.

We have 14M to 15M unemployed, roughly 25M to 30M un and underemployed combined, millions more who are now “self-employed/independent contractors” or who have just given up and when they become eligible, are taking early Social Security and politicians are arguing over how many people will be “at the table?” This shit reminds me of nothing so much as the stories of the early negotiations on the Korean War where supposedly they had to vote on the size of the fucking table used for the negotiations before they could actually negotiate an end to the fighting.
Read the rest of this entry →