Category Archives: Economy

May 2016 Jobs Number Revised Downward to 11,000

Jobs

Despite the preliminary June jobs report of 287,000the May jobs report of 38,000 (which was awful) was revised downward to 11,000 (even worse yet).

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There was not much change in economic conditions to explain the jump in the June numbers, so expect them to revised by the next jobs report.

 

Unemployment

May had awful jobs numbers (originally 38,000, revised downward to 11,000) and the U-3 unemployment rate dropped from 5.0% (April) to 4.7% (May).  June U-3 unemployment increased to 4.9%.  Notice what happened: bad jobs report in May caused unemployment to go down, and good jobs report in June caused unemployment to go up.

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People Not In The Labor Force

Continue reading May 2016 Jobs Number Revised Downward to 11,000

How Housing’s New Players Spiraled Into Banks’ Old Mistakes

MATTHEW GOLDSTEIN, RACHEL ABRAMS and BEN PROTESS | JUNE 26, 2016 | NYT

When the housing crisis sent the American economy to the brink of disaster in 2008, millions of people lost their homes. The banking system had failed homeowners and their families.

New investors soon swept in — mainly private equity firms — promising to do better.

But some of these new investors are repeating the mistakes that banks committed throughout the housing crisis, an investigation by The New York Times has found. They are quickly foreclosing on homeowners. They are losing families’ mortgage paperwork, much as the banks did. And many of these practices were enabled by the federal government, which sold tens of thousands of discounted mortgages to private equity investors, while making few demands on how they treated struggling homeowners.

The rising importance of private equity in the housing market is one of the most consequential transformations of the post-crisis American financial landscape. A home, after all, is the single largest investment most families will ever make.

Private equity firms, and the mortgage companies they own, face less oversight than the banks. And yet they are the cleanup crew for the worst housing crisis since the Great Depression.

Out of the more than a dozen private equity firms operating in the housing industry, The Times examined three of the largest to assess their impact on homeowners and renters.

Lone Star Funds’ mortgage operation has aggressively pushed thousands of homeowners toward foreclosure, according to housing data, interviews with borrowers and records obtained through a Freedom of Information request. Lone Star ranks among the country’s biggest buyers of delinquent mortgages from the government and banks.

Nationstar Mortgage, which leaped over big banks to become the fourth-largest collector of mortgage bills, repeatedly lost loan files and failed to detect errors in other documents. These mistakes, according to confidential regulatory records from a 2014 examination, put “borrowers at significant risk of servicing and foreclosure abuses.”

Continue reading How Housing’s New Players Spiraled Into Banks’ Old Mistakes

When You Dial 911 and Wall Street Answers

DANIELLE IVORY, BEN PROTESS and KITTY BENNETT | JUNE 25, 2016 | NYT

Since the 2008 financial crisis, private equity firms have increasingly taken over public services like emergency care and firefighting, often with dire effects.

A Tennessee woman slipped into a coma and died after an ambulance company took so long to assemble a crew that one worker had time for a cigarette break.

Paramedics in New York had to covertly swipe medical supplies from a hospital to restock their depleted ambulances after emergency runs.

A man in the suburban South watched a chimney fire burn his house to the ground as he waited for the fire department, which billed him anyway and then sued him for $15,000 when he did not pay.

In each of these cases, someone dialed 911 and Wall Street answered.

The business of driving ambulances and operating fire brigades represents just one facet of a profound shift on Wall Street and Main Street alike, a New York Times investigation has found. Since the 2008 financial crisis, private equity firms, the “corporate raiders” of an earlier era, have increasingly taken over a wide array of civic and financial services that are central to American life.

Today, people interact with private equity when they dial 911, pay their mortgage, play a round of golf or turn on the kitchen tap for a glass of water.

Private equity put a unique stamp on these businesses. Unlike other for-profit companies, which often have years of experience making a product or offering a service, private equity is primarily skilled in making money. And in many of these businesses, The Times found, private equity firms applied a sophisticated moneymaking playbook: a mix of cost cuts, price increases, lobbying and litigation.

Continue reading When You Dial 911 and Wall Street Answers

U.S. Economy is Shrinking: Unemployment Goes up, Wages Go Down, Living Standards Decline

Counterpunch | June 23 2016

The Slow Crash: When Global Economies are Run by Banks

I’m Bonnie Faulkner. Today on Guns and Butter, Dr. Michael Hudson. Today’s show: The Slow Crash. Dr. Hudson is a financial economist and historian. He is President of the Institute for the Study of Long-Term Economic Trends, a Wall Street financial analyst and Distinguished Research Professor of Economics at the University of Missouri, Kansas City, as well as at Peking University. His 1972 book, Super-Imperialism: The Economic Strategy of American Empire, is a critique of how the United States exploited foreign economies through the IMF and World Bank. His latest book isKilling the Host: How Financial Parasites and Debt Destroy the Global Economy. Due out soon, “J Is for Junk Economics.” Today we discuss in detail the concept of debt deflation; housing, student loan and automobile debt; the oil market; the stock market; negative interest rates; currencies; and the shrinking real economy.

Bonnie Faulkner: Michael Hudson, welcome.

Michael Hudson: It’s good to be here again, Bonnie.

Bonnie Faulkner: You have indicated that as a result of United States and European debt deflation, there is an economic slowdown. First of all, how would you define deflation?

Michael Hudson: There are two definitions of deflation. Most people think of it simply as prices going down. But debt deflation is what happens when people have to spend more and more of their income to carry the debts that they’ve run up – to pay their mortgage debt, to pay the credit card debt, to pay student loans.

Today, people are having to spend so much of their money, to acquire a house and to get an education that they don’t have enough to spend on goods and services, except by running into yet more debt on their credit cards and other borrowings.

The result is that markets are slowing down. Deflation means a slowdown of income growth. Markets shrink, new capital investment and employment also taper off, so wages decline. That is what’s happening as deliberate policy in Europe and the United States. Falling or stagnant prices are simply the result of having less income to spend.

Bonnie Faulkner: Well, thank you for that, because that is confusing, because I think a lot of people consider deflation simply a decrease in price. Does that have anything to do with it?

Michael Hudson: The price decline is a result of having to pay debts. That drains income from the circular flow between production and consumption – that is, between what people are paid when they go to work, and the things that they buy. Deflation is a leakage from this circular flow, to pay banks and the real estate, called the FIRE sector – finance, insurance and real estate. These transfer payments leave less and less of the paycheck to be spent on goods and services, so markets shrink. Some prices for some products go down when people can’t afford to buy them anymore. There are more sales, there’s shrinkage, but especially incomes go down. Real incomes in the United States have been drifting down for 30 years because there is slower and slower market demand.

That’s why Bernie Sanders and Donald Trump are getting so many votes. When Hillary Clinton said she’s going to do just what Obama does and we’re going to continue to recover, most people know that we’re not recovering at all. We’re shrinking.

Bonnie Faulkner: So then, deflation has more to do with disposable income than it does with prices.

Michael Hudson: That’s correct, and that’s what is rarely pointed out. People tend to think that paying a debt is like going out and buying a car, buying more food or buying more clothes. But it really isn’t. When you pay a debt to the bank, the banks use this money to lend out to somebody else or to yourself. The interest charges to carry this debt go up and up as debt grows. As you have to pay more interest and amortization on what you owe, you’re left with less and less money to buy goods and services – unless you borrow even more and go further into debt.

Continue reading U.S. Economy is Shrinking: Unemployment Goes up, Wages Go Down, Living Standards Decline

An Unexpected Sneak Peek of a Massive Downward GDP Revision for the U.S.?

Political Calculations | June 15 2016

Yesterday, the U.S. Bureau of Economic Analysis released its estimates of state level Gross Domestic Product through 2015-Q4. As it did, the BEA revised its previous quarterly GDP estimates for each state going back to at least 2005-Q1.

In doing that, the BEA’s data jocks may have provided an unexpected sneak peek of how its estimates of national GDP for the U.S. will be officially changed when the agency releases is annual revisions for that data during the last week of July 2016.

In the chart below, we show the potential magnitude of the pending revision to real GDP in the U.S. The green line is how the nation’s real GDP level is currently being reported by the BEA in the period from 2005-Q1 through 2015-Q4, while the black line shows how the BEA’s regional data for the real GDP of the entire United States, spanning all industries, has just been reported.

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There appears to be very little difference from previously reported real GDP figures from 2005-Q1 through 2006-Q3, but after that quarter, a widening gap opens up all the way through the end of 2015-Q4, at which point, the U.S.’ inflation-adjusted GDP is revised downward by $324 billion (in terms of inflation-adjusted constant 2009 U.S. dollars).

Stated differently, real GDP in the U.S. is 2.0% smaller than what the BEA previously reported it to be. In terms of the percentage change of the magnitude of the revision in U.S. real GDP, the BEA’s downward revision in 2016 looks to be more than double the size of 2014’s and 2015’s downward annual revisions.

Continue reading An Unexpected Sneak Peek of a Massive Downward GDP Revision for the U.S.?

To Pay for Subsidies to Massive Corporations, States Are Waging War on Poor Families

Jake Johnson | Jun 02 2016 | Common Dreams

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‘As wealthy CEOs and their politically influential companies gain unrestricted access to the Treasury,’ writes Johnson, ‘the most vulnerable are increasingly locked out.’

To witness the consequences of a political system captured by and utterly subservient to the interests of organized wealth, take a quick look at the state of Oklahoma.

There we see the embodiment of the economic trends that have, over the past several decades, harmed working families and lifted the wealthiest: While providing a windfall of cash to special interests, particularly big oil, the state is cutting education and slashing funds allocated for the earned income tax credit, widely recognized as one of the more effective anti-poverty programs.

As the state cuts benefits for the poor, “Oklahoma’s tax breaks for the oil and gas companies — among the most generous in the nation — gave the industry $470 million in tax relief last year,” a recent New York Times editorial observes.

“It’s despicable to balance the budget on the backs of the most vulnerable population” while refusing to push any of the burden onto the wealthiest, lamented State Representative Emily Virgin.

One can look, also, to Wisconsin, where the Koch-backed governor Scott Walker achieved political prominence on the basis of his record of “taking on” unions and his philosophical approach to governance, which, though shrouded in libertarian garb, largely consists of socialism for the rich and austerity for everyone else.

Continue reading To Pay for Subsidies to Massive Corporations, States Are Waging War on Poor Families

Obama’s Jobs Fig Leaf Falls to the Ground

Paul Craig Roberts | Jun 03 2016

Employment Lies

Today the Bureau of Labor Statistics announced that the US economy only created 38,000 new jobs in May and revised down by 59,000 jobs the previously reported gains in March and April.

Yet the BLS reported that the unemployment rate fell from 5.0 to 4.7 percent, a figure generally regarded as full employment.

The May jobs increase only covers a small fraction of the monthly growth in the labor force and, therefore, cannot account for the drop in unemployment.

Moreover, the BLS reported that the labor force participation rate fell by 0.2 percentage points, bringing the decline to 0.4 percentage points over the past two months. Normally, a strong labor market, such as one represented by a 4.7% unemployment rate, causes an increase in the labor force participation rate.

The question becomes: How real is the 4.7% rate of unemployment?

The answer is: Not at all.

Continue reading Obama’s Jobs Fig Leaf Falls to the Ground

THE BANALITY OF NEOLIBERALISM (AS EXEMPLIFIED BY THE CLINTONS)

by Evert Cilliers aka Adam Ash | May 30 2016 | 3QuarksDaily

If it hadn’t been for the disaster that was George W. Bush, the worst president of our time would be that arch-neoliberal serial philanderer Bill Clinton.

Clinton was almost as crappy an a-hole as W.

George W killed hundreds of thousands of innocent Iraqi women and children in a monstrous war crime. Bill Clinton merely made the lives of millions of Americans utterly miserable.

1. How Bad Was Bill Clinton?

Breath in the stench from the pile of crap that Slick Willy stuffed up our nostrils.

He destroyed thousands of good American jobs by exporting them with NAFTA.

He created the 2008 Wall Street crash and the Great Recession when he signed the two laws that repealed Glass-Steagall and removed financial derivatives from all oversight — the two worst laws signed by any president ever.

Internationally, he refused to intervene in Rwanda, and allowed 800,000 Tutsis to be brutally genocided.

He exploded the size of our Black and Latino prison population with his harsh 1994 crime bill and the building of many privatized prisons.

He doubled the number of our poor with his welfare reforms (today 47 million Americans live in poverty, and over 20% of our kids are poor, a higher rate than any other developed nation).

Clinton’s presidency left Americans jailed, poorer, and brutally screwed in every sensitive orifice. He forced many of us to eat an eternal shit sandwich, a record of destruction topped by George W. only because W committed the satanic war crime of the Iraq War.

2. What made Bill Clinton so bad?

It’s all because Clinton was a consummate neoliberal, whose agenda favored anti-labor-union big business (via the right-leaning Democratic Leadership Council), with its faith in a fundamentalist global “free market” ideology that wants to privatize all economic activity and drown government in the bath tub. This fundamentalist global religion, devoted to a “free market” God, comes down to a peculiar un-christian heartlessness: cut government regulations to the point that corporations are free to screw us every which way.

Continue reading THE BANALITY OF NEOLIBERALISM (AS EXEMPLIFIED BY THE CLINTONS)