DOWNLOADS: (341)

PLAYS: (918)

Embed

Aren't Republicans getting a wee bit ahead of themselves here? Already they're speculating, as Neil Cavuto and right-wing historian Jane Hampton Cook did yesterday, that President Obama -- because he's had a downturn in the polls, and seems intent on passing his legislative agenda regardless of poll numbers (wow, what a concept) -- is actually planning just a one-term presidency and might even step aside for 2012.

Right. That's good for a low mordant chuckle or two, anyway.

Tell you what, folks -- let's check back on that in about three months, OK? Meantime, you all should get a napkin to wipe up the drool. It's unseemly.

This was so frustrating, talking to the Tea Partiers at their rally the other day: When I brought up this report, they defended the employers. They said employers were too afraid to spend money because of Obama's unpredictable anti-business policies. Oy. Here's Bob Herbert:

“I’ve never seen anything like this,” said Andrew Sum, an economics professor and director of the Center for Labor Market Studies at Northeastern University in Boston. “Not only did they throw all these people off the payrolls, they also cut back on the hours of the people who stayed on the job.”

As Professor Sum studied the data coming in from the recession, he realized that the carnage that occurred in the workplace was out of proportion to the economic hit that corporations were taking. While no one questions the severity of the downturn — the worst of the entire post-World War II period — the economic data show that workers to a great extent were shamefully exploited.

The recession officially started in December 2007. From the fourth quarter of 2007 to the fourth quarter of 2009, real aggregate output in the U.S., as measured by the gross domestic product, fell by about 2.5 percent. But employers cut their payrolls by 6 percent.

In many cases, bosses told panicked workers who were still on the job that they had to take pay cuts or cuts in hours, or both. And raises were out of the question. The staggering job losses and stagnant wages are central reasons why any real recovery has been so difficult.

“They threw out far more workers and hours than they lost output,” said Professor Sum. “Here’s what happened: At the end of the fourth quarter in 2008, you see corporate profits begin to really take off, and they grow by the time you get to the first quarter of 2010 by $572 billion. And over that same time period, wage and salary payments go down by $122 billion.”

That kind of disconnect, said Mr. Sum, had never been seen before in all the decades since World War II.

In short, the corporations are making out like bandits. Now they’re sitting on mountains of cash and they still are not interested in hiring to any significant degree, or strengthening workers’ paychecks.

Productivity tells the story. Increases in the productivity of American workers are supposed to go hand in hand with improvements in their standard of living. That’s how capitalism is supposed to work. That’s how the economic pie expands, and we’re all supposed to have a fair share of that expansion.

Corporations have now said the hell with that. Economists believe the nation may have emerged, technically, from the recession early in the summer of 2009. As Professor Sum writes in a new study for the labor market center, this period of economic recovery “has seen the most lopsided gains in corporate profits relative to real wages and salaries in our history.”

Worker productivity has increased dramatically, but the workers themselves have seen no gains from their increased production. It has all gone to corporate profits. This is unprecedented in the postwar years, and it is wrong.

Having taken everything for themselves, the corporations are so awash in cash they don’t know what to do with it all. Citing a recent article from Bloomberg BusinessWeek, Professor Sum noted that in July cash at the nation’s nonfinancial corporations stood at $1.84 trillion, a 27 percent increase over early 2007. Moody’s has pointed out that as a percent of total company assets, cash has reached a level not seen in the past half-century.

Executives are delighted with this ill-gotten bonanza. Charles D. McLane Jr. is the chief financial officer of Alcoa, which recently experienced a turnaround in profits and a 22 percent increase in revenue. As The Times reported this week, Mr. McLane assured investors that his company was in no hurry to bring back 37,000 workers who were let go since 2008. The plan is to minimize rehires wherever possible, he said, adding, “We’re not only holding head-count levels, but are also driving restructuring this quarter that will result in further reductions.”

There can be no robust recovery as long as corporations are intent on keeping idle workers sidelined and squeezing the pay of those on the job.

It doesn’t have to be this way. Germany and Japan, because of a combination of government and corporate policies, suffered far less worker dislocation in the recession than the U.S. Until we begin to value our workers, and understand the critical importance of employment to a thriving economy, we will continue to see our standards of living decline.

Personally, I think there should be a national campaign to shame these people into hiring. I remember a time not so long ago when companies took pride in employing people. Why not some White House leadership on this issue?

The wealthy are always demanding tax cuts is "because we create jobs." Uh, sorry, pal. When you're the only people left with cash, there's no one else left to tax.

They still don't seem to get it: It's not really a recovery without jobs. There was no recovery. There was only the federal government propping up the banking industry, and it didn't really fool anybody:

After showing signs of a fledgling recovery from the worst downturn in decades, the U.S. housing market appears to be heading back toward the doldrums, as the expiration of a lucrative tax credit for buyers and increased uncertainty about the economy cause home sales to plummet.

The sudden weakness in residential real estate has struck nearly every region of the country, according to recent government and industry data, driving down sales of new and previously owned homes alike in May. On Thursday, the National Association of Realtors said an index that measures sales contracts signed on existing homes plunged 30 percent in May, more than twice what analysts had forecast, to the lowest level since the group started tracking the numbers in 2001.

Those sharp declines come despite record-low mortgage rates and historically cheap home prices. The market's renewed fragility highlights concerns about whether the U.S. economy will hurtle back into recession and illustrates the impact of the nation's high unemployment rate, now at 9.7 percent. On Friday, the government will issue jobless figures for June that could signal what is in store for housing and economic growth.

As long as people are without jobs or fear losing their livelihoods, they are unlikely to commit to buying a home and saddling themselves with 30 years of mortgage payments.

"It sounds simplistic but it bears repeating: 'No job = No house,' " Mike Larson, an analyst with Weiss Research, wrote in a note to clients Thursday. "With so many Americans unemployed or underemployed, the housing market is going to keep hurting."

Gee, I wonder how much they pay Mike to come up with insights like that. Is Weiss Research hiring, I wonder?

And here's more bad news -- or maybe "good" bad news, because the administration will find this hard to ignore:

Payrolls declined by 130,000 last month, according to the median estimate of 82 economists surveyed by Bloomberg News. Private employment, which excludes government jobs, rose for a sixth consecutive month, the survey showed.

The pace of hiring signals it will take years for the world’s largest economy to recover the more than 8 million jobs lost during the recession that began in December 2007. The turmoil in financial markets brought on by the European debt crisis raises the risk that employment will slow, depriving American households of the income needed to maintain spending.

I wouldn't worry. After all, so many of the jobless are considering suicide, it should cut into the jobs-needed number considerably.

DOWNLOADS: (917)

PLAYS: (1162)

Embed

When reality catches up to Arizonans for their passage of their misbegotten police-state immigration law, it's going to be ugly and unpleasant. If other states really are considering passing similar laws, they will want to watch what happens to Arizona -- and they will inevitably wind up thinking twice.

We've pointed out previously -- as have the nation's police chiefs -- that the law is almost certain to in fact increase violent crime and dilute law enforcement's capacity to deal with it in Arizona.

And that will only be the first consequence (and a decidedly ironic one, since this law was sold as being a means to crack down on violent crime). The longest-lasting and most significant, however, will be the economic one: When the Latino workforce flees Arizona, their economy will suffer a dramatic downturn unlike any they've seen in decades.

It's already starting to happen:

Arizona’s hard-hitting immigration law is driving Hispanics out of the state weeks before the controversial law goes into effect.

Although concrete figures are not available, anecdotal evidence suggests Hispanics, both legal residents and illegal immigrants, are starting to flee.

Schools in Hispanic neighborhoods are reporting abnormal enrollment drops, and businesses that serve Hispanics also report that business is down, according to a USA Today report published Wednesday.

The report suggests that the immigration law is compounding demographic trends that have already significantly curtailed illegal immigration during the past two years. The bad economy has been the primary deterrent to many Hispanic immigrants seeking to enter Arizona, says Jeffrey Passel, a demographer at the Pew Hispanic Center in Washington.

“If you have a bad economy and a hostile environment, then that’s likely to cause people to think twice about coming, and possibly even to leave,” Mr. Passel says.

... Any loss, however, will be a loss for the Arizona economy, [David Gutierrez, a professor of immigration history, at the University of California San Diego] suggests.

“Latinos...are a highly flexible, highly exploitable work force, a buffer to economic downturns,” he says. “Many of the industries here – agriculture, service industries, low-end manufacturing, construction – are massively dependent on undocumented workers.

“If I were able to conduct an experiment and pay all of Arizona’s undocumented workers to not work for two weeks, the economy would come to a screeching, crashing halt instantaneously.”

This brought to mind a video forwarded to me from my friend Jimmy at McCranium, an Eastern Washington blog, of a Pasco immigration attorney named Tom Roach giving an informational talk to group of local citizens in Kennewick on May 29.

The talk is excellent, and I recommend watching the whole thing if you're interested. Because Roach effectively drills down to the heart of our dilemma with immigration -- namely, our current laws are so screwed up they have no chance of meeting the nation's economic needs or effectively dealing with natural immigration pressures that are driven by not just the economy, but the American Dream itself:

Continue reading »

(video h/t Oliver Willis)

Jim Cramer can hardly contain himself as the market falls nearly 1000 points in the span of a few minutes, and uses Procter & Gamble as an exemplar of how investors can turn a downturn to their advantage.

If ever there was a video that highlights the deficiencies in our 24/7 all-speculation-all-the-time cable punditry corps, this is it. As it turns out, the market drop was hastened, magnified and traders brought to their knees over this:

The selling was exacerbated by a huge drop in Dow component Procter & Gamble (PG, Fortune 500). There may have been technical glitches which caused it to plunge 37% in minutes. P&G's slump was responsible for 172 points of the 992.60 the Dow initially lost.

I have some real problems with this so-called glitch. Let's start with Jim Cramer using it as an object lesson for what to do with a steep market drop. If there was really a "glitch", it would have triggered sharp program trades and hedge fund transactions. Aren't we all glad we're taking Investments 101 this year so we know what those terms mean? As Cramer points out in the video, the price drop makes P&G a "completely different stock" with a completely different set of decision points around buying it.

Now add that reality to programmed trades. Those are trades set up far in advance by investors, executed by computers, and usually in large quantities. It turns into a cascade: The price triggers a programmed trade, which triggers a hedge fund trader's response, which triggers panic on the floor of the Dow, which triggers Cramer sitting at his desk speculating about how to profit from others' ruin.

There are some very real reasons for volatility in the market. A weak Euro, Greece's shaky economy, tightening credit in other European countries and the UK Elections have everyone on edge in a global market setting.

Still, a pricing "error" should not cause a 1000 point plunge in market indices in such a short period of time. I can't help thinking there are speculators out there who made a great deal of money on this.

Don't panic just yet. What will almost certainly happen Tuesday is that the Senate will return in full force and pass the extension, with some kind of retroactive coverage that will bridge the gap:

NEW YORK (CNNMoney.com) -- Depending on extended unemployment benefits to see you through the Great Recession?

You'd better not: The Senate failed to push back the Feb. 28 deadline to apply for this safety net.

Starting Monday, the jobless will no longer be able to apply for federal unemployment benefits or the COBRA health insurance subsidy.

Federal unemployment benefits kick in after the basic state-funded 26 weeks of coverage expire. During the downturn, Congress has approved up to an additional 73 weeks, which it funds.

These federal benefit weeks are divided into tiers, and the jobless must apply each time they move into a new tier.

Because the Senate did not act, the jobless will now stop getting checks once they run out of their state benefits or current tier of federal benefits.

Really, doesn't this whole thing have the feel of a show trial? "Let the people have their moment and then we can get back to business as usual." I figure, if this is what they're actually admitting, God only knows what else they were up to:

WASHINGTON — Goldman Sachs' chief acknowledged Wednesday that the investment bank engaged in "improper" behavior in 2006 and 2007 when it made huge bets on a housing downturn while peddling as safe more than $40 billion in securities backed by risky U.S. home loans.

Lloyd Blankfein, Goldman's chairman and chief executive, made the surprising concession at the opening hearing of the Financial Crisis Inquiry Commission, a 10-member panel that Congress created to investigate and lay out for the public the causes of the worst financial crisis since the Great Depression.

Blankfein and senior officers of three other of the nation's most prominent banks told the panel that serious flaws in their risk models and business practices contributed to Wall Street's meltdown and the massive taxpayer bailouts that followed. The commission also heard testimony that the banks and quasi-government mortgage giant Fannie Mae recklessly took on as much as 95 times more risk than they could cover, and that Wall Street excels "at pulling the wool over the eyes of the American people."

Blankfein faced the toughest questioning.

Commission Chairman Phil Angelides, a former California state treasurer, warned Blankfein that he'd be "brutally honest" in his questioning. He asked why Goldman thought it was necessary to take out protection against investment-grade mortgage securities it was selling by purchasing insurance-like contracts known as credit-default swaps. Angelides likened it to selling a car with knowledge it had faulty brakes and then taking out an insurance policy on the buyer.

"I do think the behavior is improper, and we regret . . . the consequence that people have lost money in it," Blankfein told Angelides.

I don't want Blankfein's feigned regret. I want him to have to live the rest of his life eating ramen noodles and living in a cardboard box on the street, just like the people who lost their life savings have to do.

Until Wednesday, Goldman had insisted that it was merely managing its risks when it placed "hedges," in the form of wagers against the housing market, various venues including in secret offshore deals, with insurance giant American International Group and on a private London exchange.

In November, McClatchy reported exclusively that Goldman failed to tell investors about its contrary bets while selling $39 billion in risky mortgage securities it had issued, and another $18 billion in similar bonds issued by other firms. The Securities and Exchange Commission and Congress are investigating Goldman's swap dealings, said knowledgeable people who asked not to be identified because of the sensitivity of the issue.

While conceding that its contrary bets were improper, Blankfein said that in most cases Goldman took those positions to offset bets it had underwritten for clients seeking to wager on a housing downturn.

Another year has come and almost gone. It's been a tough one for the entire country, but I think we're doing our best, and so has our entire Team Crooks. I've also been a volunteer for Blue America and the support you have shown our Campaign for Health Care Choice and the many great progressive candidates we've endorsed like Alan Grayson has been incredible.

We're reaching out to our readers again and asking for help so that the MSM doesn't overrun the blogosphere. They are pouring millions of dollars in to try and compete with bloggers. Their new twist to fool America is that they have the nerve to call themselves "bloggers." Paid journalists from corporations are trying to co-opt the term.

C&L has been expanding and improving the site and we need your help to continue to make improvements. We're almost finished with a new design that will also include a "diaries" function for people that are registered C&L users which will have a neat video format that will be open to you also. More shall be revealed when we unveil the new design. We hope to have it ready in January. This has taken a lot of time and a lot of dedication from many, many people. Please donate what you can.

In the coming year we're also trying to reach out into the blogosphere to hire more people to make C&L an even better site. We'll be looking for video bloggers, a researcher, site monitors an investigative journalist and interns as well, but we can't do it without your help. (You can email resumes at crooksandliars@gmail.com) I'll post more about that soon.

In 2009, TIME Magazine called us one of the Top 25 Blogs of the year.

In 2008, C&L won the Web Blog award for Best Political Blog on the net.

Dean Baker makes an astute observation:

Okay, I'm not on vacation, but this is a BTP flashback. My original write-up of this NYT news article was way too positive. This article was essentially a diatribe against Germany's welfare state. To make its case, it turned an incredible success story -- Germany's relatively low unemployment rate -- into a failure.

The basic deal is that Germany adopted an explicit policy of encouraging employers to shorten work hours rather than lay off workers. The government allows unemployment benefits to be used to pay workers to cover most of the loss in wages due to the shorter workweek.

As a result, Germany's unemployment rate has barely changed in the downturn. Its unemployment rate at present is 7.7 percent. This is down from 7.8 percent earlier in the year. Germany's unemployment rate in 2007 was 8.4 percent, 0.7 percentage points higher than the current level.

This is an incredible success story. Imagine Barack Obama's approval rating if the unemployment rate today was anywhere close to its 4.7 percent average for 2007. Think of the millions of unemployed workers who would not be struggling to pay their rent or mortgages or meet other bills if only our leaders were as smart as Germany's leaders. We could do something along the same lines in the U.S.

But NYT readers will be spared such thoughts because the article described the policy as a complete failure. To make its case, the NYT even used the German government's measurement of unemployment (which counts part-time workers as being unemployed) rather than the harmonized OECD measure that is directly comparable to the unemployment data in the United States.

This was not news reporting.

Dean is one of the best economists we have.

Last night, before select audiences in places like Los Angeles and Chicago out to see other films, Michael Moore played a special trailer for his new movie about the financial meltdown. But this wasn't just any trailer:

Hi, I’m Michael Moore. Instead of using this time to tell you about my new movie I’d like to take a moment and ask you to join me in helping our fellow Americans. The downturn in the economy has hurt many people, people who have had no choice but to go on government assistance. Yet our welfare agencies can only do so much. That’s why I’m asking you to reach into your pockets right now and lend a hand. Ushers will be coming down the aisles to collect your donations for Citibank, Bank of America, AIG, Goldman Sachs, JP Morgan and a host of other needy banks and corporations. Won’t you please give generously? Now, I know what you’re thinking - I already gave at the bailout. And I know you did, but even if you’ve given in the past, give some more. It will make you feel… good.

Sure enough, ushers came down the aisles:

And started passing out the collection cans:

More to the point, audiences laughed and gave:

A writer for FirstShowing was taken aback, and called it "pretty damn crazy." Slashfilm's writer wondered what would happen to the money.

We're told that it actually will be donated to local food banks in the donor cities.

[H/t Jonathan for the pics.]