Glenn Greenwald’s recent missive on Salon, “Comparing the U.S. to Russia and Argentina.” With links to several favorites of this blog.
Posts Tagged ‘economic crisis’
Last Friday’s unemployment report for Jan. 2009 is bad old news by now — 598,000 jobs lost in January (worst one-month job loss since 1974); 3.6 million lost since the recession began in Dec. 2007, half of that in the last three months; an unemployment rate of 7.6% (worst since 1992). But as with most unemployment reports, the news beneath the surface is even worse.
For starters, the reported data, like most economic data, are seasonally adjusted, so they take into account the fact that economic activity is heavier in some months (like December) than others (like January). Seasonal adjustments are well and good as regards making valid comparisons across time, but it’s hard to seasonally adjust people. The not-seasonally-adjusted unemployment rate for January was an eye-popping 8.5%.
And, once again, the standard unemployment rate is only for people actively looking for a job and does not count discouraged job-seekers, involuntary part-time workers, etc. The BLS adds those into the “U-6 unemployment rate,” which is the one that shows the full amount of misery, and for January it was 13.9% (seasonally adjusted) or 15.4% (not seasonally adjusted).
Alan Blinder has long been both one of the best policy economists and one of the best writers in the profession, so it’s no surprise that his recent New York Times column, “Six Blunders En Route to a Crisis,” has great pith. He is fair-minded enough to “omit mistakes that became clear only in hindsight.” The list, in his words:
wild derivatives, sky-high leverage, a subprime surge, fiddling on foreclosures, letting Lehman go, TARP’s detour.
For quick insights on the current crisis, it’s a great resource.
(Note: The title I provide is the one from the print edition. The online edition employs a more prosaic title that does not allude to either Pirandello or Nixon.)
Yesterday (28 Jan. 2009) the House of Representatives passed an $825 billion stimulus bill on an almost-perfect party line vote (about 95% of Democrats voting yes, 100% of Republicans voting no). For a breakdown of the $825 billion, which is about two-thirds new spending and one-third tax cuts, go here. Absent from the new spending was an originally proposed plan to make contraceptive services reimbursable by the federal Medicaid program. (President Obama asked House Democrats to remove it after Republican leaders singled it out for ridicule.) My understanding is that the proposal did not have a specific price tag but was estimated to cost about $200 – $300 million.
House Minority Leader John Boehner (R-Ohio) was widely quoted as asking, “How can you spend hundreds of millions of dollars on contraceptives? How does that stimulate the economy?”
Methinks Rep. Boehner has a problem with contraception (or that some of his constituents and benefactors do), but just in case this was a serious question, here’s a serious answer: (more…)
. . . if you sing the praises of free markets while working for a public university.”
I forget who said that (Yoram Bauman?), but I thought of it again after seeing the Cato Institute’s full-page ad in today’s (Jan. 28 ) New York Times, against a fiscal stimulus package. It was signed by a few hundred economists, the overwhelming majority of whom teach at state schools (as do I). I didn’t have time to get an exact count, but the first ten were all at state schools, as were about eighty percent of those above the fold. Given that the gist of the ad was that we need to reduce the “burden of government,” maybe they could offer to help shrink or privatize their schools?
At least one person on the list, Jeffrey Miron, is consistent in opposing state-funded higher education (which he has done in past op-eds) while teaching at a private university. For most of the rest, I think the Disposable Heroes of Hiphoprisy said it better than I can.)
To many, the nation’s credit card debt seems a perfect symbol of America’s bubble economy. Business Week even speculated this past fall that credit cards might follow housing as the next meltdown in our financial system. It seems logical enough: just as securitized subprime mortgages wreaked financial havoc, revolving credit-card loans are almost inherently subprime, as credit cards are easy to get, charge high interest rates, and have much higher default rates than regular bank loans. And a good deal of credit-card debt has also been securitized into collateralized debt obligations and other such lipstick-on-a-pig formulations. Some of them may still even carry bogus AAA ratings.
Business Week‘s article has a graphic that indicates that the amount of bad credit card debt that banks had to charge off was steady at about 25% from 2001 to 2007 and then shot up in 2008, to an estimated 40%, and is projected to go to 90% in 2009. A Jan. 1 article from Reuters echoes the gloomy assessment, saying that U.S. credit card companies are anticipating possibly their worst year ever.
By the most recent measure, for Nov. 2008, total revolving credit-card debt in the U.S. was just under $1 trillion — granted, less than 10% of total mortgage debt and about 7% of GDP — but, like gas prices, credit-card bills are among the most visible reminders of one’s personal finances. And according to the Federal Reserve, nearly half of consumers have some credit-card debt, which averages $2,200. (Those numbers are from at least a year ago; very likely they’ve since gone up.)
My hunch is that in tough times, an unpaid credit-card balance weighs on a person a lot more heavily, even if that person is still gainfully employed. So credit-card debt could be a major inhibitor of consumer spending, and yet another rock in the ongoing economic landslide.