Jobs Numbers Jimmied by Bush Admin

Last week the Bush Labor Dept released unemployment numbers nearly double what was expected. Now, this week, the NY Post’s John Crudele writes that the real number is – hang onto your hats – 147,000. The difference is pure smoke.

[T]he total loss was 147,000 when you include revisions that were made to previous months.

Not scared yet?

Well, the government kept last Friday’s reported loss at just 80,000 by adding 142,000 make-believe jobs to the count.

Those are positions that the Labor Department believes but can’t prove were created by newly formed companies that are beyond the surveying abilities of the government.

That little bit of razzle-dazzle is called the Current Employment Statistics Birth/Death Model, and you can look up that 142,000 number if you don’t believe me.

Previously the government added 135,000 jobs to the February job count, which lessened the loss in that month.

(emphasis added)

Ooooooh. So that’s how it’s done. Is there any reality at all in those…um…projections? Well, probably not.

A closer look shows why these birth/death assumptions are so preposterous.

According to the government, 28,000 jobs were quietly created – but couldn’t be officially counted – last month in the construction industry.

Construction! And that’s despite the fact that the homebuilding industry nationwide is flat on the seat of its Levis.

And through birth/death modeling the Labor Department would also like you to believe that 6,000 new jobs were created in “financial activities.”

Unless the government is talking about the hiring of a new crop of bankruptcy attorneys that’s absolutely crazy.

And then there’s the addition of 23,000 jobs in what the government calls “professional and business services” – in short, consultants.

People lose their corporate positions and go out on their own – and the Labor Department thinks this is actually a new job.

So the numbers – which we already knew were cooked because they don’t include people whose unemployment has run out, people who have taken part-time jobs because they can’t find full-time work, people who gave up looking for a job altogether, and people who had to take menial labor far beneath their training and previous pay-rate – are actually hopelessly skewed by the inclusion of tens of thoousands of fantasy jobs?

Well, um…yeah. So this is the Bush Administration. So what’d you expect? Honesty?

Job Losses This Year Far Worse Than Expected

It’s not my intention to load up my blogs with bad news but it just keeps coming, hand over fist, faster than I can write it down. This week the Labor Dept released employment figures that were far worse than anyone expected.

Joblessness soared and employers cut back in March, the deepest job losses in five years and strong evidence that the housing and financial market distress has spooked employers.

The Labor Department numbers released yesterday were far worse than economists had forecast. The unemployment rate rose to 5.1 percent from 4.8 percent in February and 4.4 percent in March 2007. Employers reduced their payrolls by 80,000 jobs in March, the third straight month of decline. And the department revised the previous two months’ employment levels down by 67,000 positions.

“We’re in recession,” said David Wyss, chief economist of Standard & Poor’s. “It’s hard to conclude anything else.”

Yes, well, when it gets to the point that professional Bush cheerleader and Fed Chief Ben Bernanke is forced to admit in front of Congress that the R-word is indeed in force, you know it’s beyond bad and heading for really really awful.

Mind you, the 80,000 jobs lost in March (don’t you just love that “reduced their payrolls” dodge? It’s like firing people and telling them they’re not really fired, they’ve been “involuntarily leisured”. That’s right-wing PC.) were on top of the 63,000 lost in February, making the grand total for just the last 2 months some 143,000 jobs down the Bush spout.

All of which makes the Admin’s prediction that job losses for the entire year will top out at 2-300,000 kind of, you know, rosy.

300,000 jobs lost is the upbeat projection??  Only in Bush’s America.

This wouldn’t be such a problem if new jobs were being created alongside the lost ones only in different fields, but that isn’t what’s happening. The economy is so bad right now (the Dow went in the tank again Friday) that businesses are reluctant to expand and no new industries have appeared (possibly because govt R&D, which corporate America generally feeds off of like sharks on minnows, has been cut to the bone for nearly a decade) to take their place.

Among the latest to cut jobs: GE Healthcare Information Technologies in Tampa notified the state this week that it was laying off 72 workers that helped design patient monitoring systems used in hospitals. Mercury Insurance Group in Clearwater said it is laying off 58 workers in its call center and billing departments.

In the meantime, few new jobs are being created, Brown said. “The problem here is a lack of new hiring, rather than job losses.”

The WaPo’s Neil Irwin & Michael Fletcher for a change do a pretty neat job of laying out the chain of effect.

The report shows how the problems in the housing and financial markets are rippling through other sectors, reflecting the deep connections between seemingly separate parts of the economy.

The number of construction jobs, which has declined steadily for 18 months, continued to fall. That sector shed 51,000 positions, as fewer homes are being built.

Fewer houses mean less construction and building materials; the number of manufacturing jobs fell 48,000, with some of the steepest losses among makers of lumber, drywall, and other materials. Automakers also cut jobs.

With their homes less valuable, U.S. consumers seem to be spending less, which means stores need fewer workers. The number of retail jobs fell 12,400, with the steepest losses in sellers of building materials and appliances, which are strongly tied to the housing business.

Financial firms cut 5,000 jobs, with the biggest losses in “credit intermediation” companies, which includes banks and mortgage brokers.

This has caused businesses that have little to do with housing to become less confident about the future. Professional and business services, a sector that had been keeping the economy afloat, trimmed 35,000 jobs.

Yup, that’s pretty much how she blows. Which is, no doubt, why Sen Chris Dodd – the guy we didn’t want to be president – is trying to pass a bill to do what the DLC/BD Alliance has so far refused to do: help the homeowners instead of the bankers.

The chairman of the Senate Banking Committee, reacting to criticism that a bipartisan housing bill would do little for homeowners facing foreclosure, vowed yesterday to move quickly on broader legislation to help troubled borrowers get cheaper mortgages backed by public funds.

Sen. Christopher J. Dodd (D-Conn.) said he will hold hearings next week on the measure, which is aimed at assisting distressed borrowers, particularly those who owe banks more than their homes are worth because of plummeting prices — an issue at the heart of the nation’s housing crisis. Under the proposal, the Federal Housing Administration would encourage lenders to forgive a portion of the loans and issue new, more affordable mortgages in exchange for the federal government’s financial backing.

Barney Frank is working on a similar bill in the House. The GOP/DLC/BD/Corporate Alliance is gearing up to torpedo both of them.

Hang onto your hat, everybody. It’s going to be a bumpy ride.

Conservatives & Their Economic Fairy Tales

It can’t get much plainer than this just how detached from reality conservatives are in their economic thinking: supply side economics is, through John McCain’s campaign, coming back despite its total failure.

[A]dvocates see broader economic benefits from lowering tax rates, which is one of the reasons the concept has reappeared as a point of contention in this year’s election campaign, in an amended form.

“What really happens is that the economy grows more vigorously when you lower tax rates,” said Kevin Hassett, an adviser to the presumptive Republican nominee, John McCain, and the director for economic policy studies at the conservative American Enterprise Institute. “It is beyond the reach of economic science to explain precisely why that happens, but it does.”

Except, of course, that it does no such thing and never has.

In the 1980s, though, during the initial era of supply-side tax cuts, per capita revenue from personal income taxes, adjusted for inflation, rose an average of just 0.7 percent annually throughout the Reagan presidency, according to the White House Office of Management and Budget.

That was far below what turned out to be an average annual increase of 6.5 percent in the eight years of the Clinton administration, when tax rates at the high end of the income ladder were raised.

Since 2001, the annual per capita revenue from income taxes fell 1 percent under President Bush even though tax collections picked up sharply starting in 2005. The budget surplus Mr. Bush inherited turned into a deficit.

The Stockman-born conviction of the Reagan years that tax revenues would magically grow after you cut taxes has never been seriously questioned by any conservative economist despite the acres of evidence over the past 3 decades proving that it’s all poppycock. We have been led into an economic dystopia by people who, like supporters of the Iraq war, have never been right about anything.

Why did we ever listen to these people? More importantly, why are we still listening to them when they’ve been so far off-base? We knew – people made jokes about it at the time – that Reagan’s contradictory formulation made no sense, that raising taxes by cutting taxes was a bonehead idea. Yet we voted for this peabrain twice, voted once for Peabrain II, got burned, and then came back to vote twice more for Peabrain the Third even though the guy wno came between P2 & P3 had pretty much proved that supply-side was applesauce.

“If you are cutting taxes without offsetting the cuts through reductions in spending, then all you are doing is increasing the debt and postponing the taxes,” said Jason Furman, director of the Hamilton Project at the Brookings Institution, and also a policy adviser to the Democratic presidential candidates.

Well, duh.

What in gawd’s name is wrong with us? Why don’t we – can’t we – learn?

It’s a puzzlement.

Inflation for the Poor, Stagnant Prices for the Rich

Beneath the mortgage crisis brought about by the deliberate systematic scamming of the poor by greedy lendersis the story of the disparity between the kinds of goods with steep mark-ups. The sector that has suffered the greatest inflation, it turns out, is the sector where low and middle class consumers spend most of their money. At the same time, wages have barely risen for the people hit hardest by inflation while luxury sectors have stabilized and incomes risen dramatically.

We all knew that but a new study of govt data by WaPo reporters (doing some actual investigative journalism for a change) proves it.

Inflation is walloping Americans with low and moderate incomes as the prices of staples have soared far faster than those of luxuries.

The goods and services Americans consumed in February were 4 percent more expensive than they were a year earlier. But there is a big divide in how much prices are climbing between the basic items people need to live and get to work, and those on which they can easily cut back when times are tight.

An analysis of government data by The Washington Post found that prices have risen 9.2 percent since 2006 for the groceries, gasoline, health care and other basics that a middle-income American family has little choice but to consume. That would cost such a family, which made $45,000 on average in 2006, an extra $972 per year, assuming it did not buy less of such items because of higher prices. For a broad range of goods on which it is easier to scrimp — such as restaurant meals, alcoholic beverages, new cars, furniture, and clothing — prices have risen 2.4 percent.

Wages for typical workers, meanwhile, have been rising slowly. In that same time span, average earnings for a non-managerial worker rose about 5 percent. This contradiction — high inflation for staples, low inflation for luxuries and in wages — helps explain why American workers felt squeezed even before the recent economic distress began.

(emphasis added)

So, once again, if you’re rich, the expensive trinkets you buy cost little more than they did a few years ago. If you’re poor, a much bigger part of your budget goes for basics like food, transportation, and heat. The reporters – Neil Irwin and Alejandro Lazo – claim that the culprit is foreign market pressure.

Inflation is not occurring because labor markets are tight or because the U.S. economy has been overstimulated; if that were the case, wages would be driving inflation up, leaving ordinary households in decent shape and doing more damage to those who lent money at fixed interest rates.

Instead, this inflation is driven by global commodity markets. China, India and other developing countries’ thirst for oil has been growing faster than producers can quench it, sending the price of oil up about 60 percent since 2006. Prices for oil and other commodities fell yesterday though they remain very expensive by any historical standard.

Expensive crude oil has translated into higher costs to heat a house or drive to work. The average middle-income household must spend $378 more per year on gasoline than it did in 2006 if it consumes the same amount, and an extra $38 on fuel oil.

Apparently the pro-war WaPo decided to skip over the pressure on oil prices caused by the second Gulf War and the obscene profits netted by oil companies the last few years. “It’s all China’s fault.” But at least they didn’t gloss over the difficulties caused by a Two Americas economy.

The rise in the basic cost of living means that inflation disproportionately affects those with modest incomes. For example, in 2006, the top 20 percent of households by income spent about twice as much on staples as households in the lower-middle bracket. But the top-earning families had almost six times as much income.

***

The pinch of inflation from energy, food and health care is a significant factor in softening consumer spending, which in turn is the reason economic growth is slowing sharply this year. It is not the only reason consumers are pulling back, however. Lower home prices, less credit availability and dropping stock market values are other likely factors.

Those different sources of weakness are affecting different groups of consumers. Poor and middle-income people are suffering the worst from inflation, middle- to upper-middle-income families are bearing the brunt of the softer real estate market, and the affluent are pinched the most by problems in financial markets.

Poor babies. But don’t worry. The Fed just promised them another $$$30BIL$$$ to help stabilize the market and it worked. For a couple of days.

Of course, that’s the fourth time $$$20-30Bil$$$ has been thrown at the investor class in an attempt to chivvy them into some semblance of sanity (the Bush Admin tossed them almost $$$200BIL$$$ just a couple of months ago) and each injection of cash calmed nervous investors for, like, a week before the next batch of bad economic news sent them into a tizzy of fret and foreboding, and Wall Street took another nose dive. It isn’t news that the effect of this latest give-away had just as temporary an effect.

Meanwhile, absolutely NO ONE is suggesting that maybe wages should be raised past the level of inflation or that maybe prices on staples should be frozen for a while, and the price of oil fixed. Or all three. None of those would chill weak investor nerves or put money in their pockets. So, even though such moves would be far more likely to stimulate a recessed economy than pouring more money down the financial sector rat hole, they won’t be coming our way any time soon.

The people who caused this disaster with their greed and unscrupulous, predatory practices are focused on saving their own asses at our expense.

And as usual, the Bush Administration is happy to oblige.

Bush Lies…Again

Another NYT editorial does a much better job of catching Bush in the act: in a speech about the economy, virtually everything he said was a lie.

(Via Kevin Hayden at The American Street)

How the Mortgage Crisis Got to be a Crisis….(1)

There’s a certain irony in the mortgaghe crisis, and a certain justice, though that justice is about to become, as always, injustice in order to protect the Usual Suspects. The ironic justice of it was put succinctly today by one Edmund Andrews in one of the Grey Lady’s patented business stories. Whether he meant to or not is another question.

Over the last two decades, few industries have lobbied more ferociously or effectively than banks to get the government out of its business and to obtain freer rein for “financial innovation.”

But as losses from bad mortgages and mortgage-backed securities climb past $200 billion, talk among banking executives for an epic government rescue plan is suddenly coming into fashion.

A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.

I guess he did.

Yes, it’s that old Round Robin of Yesteryear:

Deregulation -> Speculation -> Collapse -> Govt Bail Out

I know. You said that would happen when the Dereg Boys came around selling their snake oil with high-falutin’ promises and their fingers hovering bare inches from the pocket you keep your money in. And you were right. So was I. Who could have predicted that business would use deregulation as an excuse to bring back all the old scams (along with a few new ones) that created the last economic collapse?

You could. So could I. In fact, WE DID.

Who could have predicted that when the shit hit the fan and the greed, the wild speculating, the lying, false annual reports, phony accounting tricks, and outright scamming of both customers and their own investors threatened to bring down the whole House O’ Cards, the very same con artists who’d created the mess would be banging on the Treasury’s doors with both fists and demanding our tax money, screaming, “Save us! Save us!”

Well, you could have. So could I. In fact, WE BOTH DID.

Despite our predictions (pretty easy, not-too-hard-to-figure-out kind of predictions, sort of like, you know, predicting that the sun will rise in the east), y’all just went ahead and listened to the Siren Song of Greed thinking they (The Great They) was gonna make y’all rich. Despite many warnings, signs, and signals that what they wuz gonna do wuz make theirselfs rich by skimming your money, y’all went ahead and decided that De-regulation wuz a Good Thang. And now they’re gonna make you – all of us – pay through the goddamn nose to save their sorry asses.

See, E Andrews misses something kind of key.

Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.

“We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,” the financial institution noted.

In practice, taxpayers would almost certainly view such a move as a bailout. If lawmakers and the Bush administration agreed to this step, it could be on a scale similar to the government’s $200 billion bailout of the savings and loan industry in the 1990s.

(emphasis added)

Not really. Unfortunately, more than $$$200BIL$$$ has been thrown at the banks to solve this problem already, more than half from the govt and it ain’t done shit except buy the investor class and the financial class a li’l more time before it all caves in, like propping up a sagging, rotten roof with toothpicks – A LOT of toothpicks. Another $200BIL$$$ wouldn’t fix it, either, but if such a package does get aimed at aiding the borrowers (the victims) rather than the lenders (or “perps”), it would actually do more to limit the damage than the so-far followed policy of having banks and govts “lend” $$$BILLIONS$$$ to, you know, each other.

It would mostly benefit banks and Wall Street firms that earned huge fees by packaging trillions of dollars in risky mortgages, often without documenting the incomes of borrowers and often turning a blind eye to clear fraud by borrowers or mortgage brokers.

A rescue would also create a “moral hazard,” many experts contend, by encouraging banks…to take outsize risks in the future, in the expectation of another government bailout if things go wrong again.

If the government pays too much for the mortgages or the market declines even more than it has already, Washington — read, taxpayers — could be stuck with hundreds of billions of dollars in defaulted loans.

Uh, yeah. And where have we heard that before?

Oh yeah: every time deregulation goes smash, here come the perps and the con men and the bankers and their lobbyists with their hands out.

Will we EVER, you know, learn? These people haven’t changed since Cato was a Roman slumlord. Enough is never enough and they don’t care who pays for their folly and greed as long as it isn’t them. (Which means it’s always, you know, us.) Can we just stop believing their lies now, please? Pretty please?

Oy.

The Rich Got Richer

I’ve written pretty much the same thing so many times my head hurts, but it a) bears repeating, and b) is nice to see in a major media outlet. Otherwise, I have nothing to add.

NYT Editorial
It Didn’t End Well Last Time

Published: April 4, 2007

Not since the Roaring Twenties have the rich been so much richer than everyone else. In 2005, the latest year for which figures are available, the top 1 percent of Americans — whose average income was $1.1 million a year — received 21.8 percent of the nation’s income, their largest share since 1929.

Over all, the top 10 percent of Americans — those making more than about $100,000 a year — collected 48.5 percent, also a share last seen before the Great Depression.

Those findings are no fluke. They follow a disturbing rise in income concentration in 2003, and a sharp increase in 2004. And the trend almost certainly continues, spurred now as then by the largess of top-tier compensation, and investment gains that also flow mainly to the top. For the bottom 90 percent of Americans who are left with half the pie, average income actually dipped in 2005. The group’s wages picked up in 2006, but not enough to make up for the lean years of this decade.

Sensing a political problem, administration officials from President Bush on down have begun acknowledging income inequality. But in their remarks, they invariably say it has been around for decades and is largely driven by technological change. Translation: “We didn’t cause it, and trying to do something about it would be silly.”

Let’s get a few things straight:

Minimum Wage Bill Tied to Iraq Funding (2 Updates)

Nancy Pelosi gets more interesting by the minute. Refusing to sit still for a threatened Republican filibuster of the minimum wage bill because the House cut $$$7Billion in corporate tax breaks out of the Senate version, she has come up with a whole new tactic: she’s tying it to the war appropriations package.

House leaders have added legislation raising the federal minimum wage to an emergency spending bill for the Iraq war. They hope to break a logjam with the Senate over the wage bill, a top Democratic priority that was once seen on Capitol Hill as a relatively easy compromise.

House leaders also hope the addition of the wage provisions will induce House liberals to vote for the $105 billion war package, which authorizes funds for Iraq while setting a timeline for withdrawal that would require combat operations to end by August 2008.

House Democrats unveiled the plan yesterday but did not release a draft of the legislation, saying that details were being worked out. According to Democratic aides, the proposal would increase the minimum wage to $7.25 an hour from $5.15 over two years and grant $1.3 billion in tax breaks for restaurants and other affected businesses.

Those provisions have already passed the House. The Senate also approved the wage increase, but added $8.3 billion in business tax breaks to placate Republicans in that chamber. House leaders oppose such a large tax package and hope to force a smaller one through the Senate by tying the minimum-wage increase to the Iraq bill.

The Republics, of course, have been furious because she wouldn’t let them turn a bill to raise the minimum wage for ordinary workers into a huge barrel of corporate pork.

Homelessness: The Invisible Epidemic

A couple of years ago at The Revolution, I wrote about accusations that some hospitals in Los Angeles had been dumping indigent and homeless patients on Skid Row but couldn’t be charged with anything because it wasn’t actually a crime to do that. Yesterday, a bill was introduced in the California State Senate that would require hospitals to discharge homeless patients to any place they designate as “home”.

For a year, reports have surfaced that hospitals here have left homeless patients on downtown streets, including a paraplegic man wearing a hospital gown and colostomy bag who witnesses say pulled himself through the streets with a plastic bag of his belongings held in his teeth.

***

Advocates for the homeless said it was common in many cities for homeless people still requiring medical treatment to end up on the street or at the doors of shelters ill prepared for their medical needs.

“Hospitals don’t know what to do with them, and they think it’s the homeless agencies’ responsibility,” said Michael Stoops, executive director of the National Coalition for the Homeless, a Washington advocacy group.

Mr. Stoops said local and federal laws were murky, at best, over where homeless patients should be discharged.

The proposed California law, written by members of Mr. Delgadillo’s staff and introduced by Senator Gilbert A. Cedillo, a Democrat from Los Angeles, would require hospitals to transport discharged patients to their residence or, if they lack one, to the place they identify as their home, typically a shelter.

“There currently is no law making dumping homeless hospital patients on Skid Row a crime,” Mr. Delgadillo said Thursday at a news conference. “What we really need is legal clarity that specifically prohibits it.”

This is canary-in-the-coal-mine stuff, to some extent. Though you won’t read it in the press, naturally, the homeless problem has been growing by leaps and bounds the last 6 years.

Joblessness Falls Slightly. Maybe.

At first blush, this looks like good news.

The number of laid-off workers filing for unemployment benefits dropped sharply last week after having been driven higher the previous week by storm-related layoffs.

The Labor Department reported that applications for jobless benefits totaled 332,000 last week, down by 27,000 from the previous week.

The prior week jobless claims had jumped by 46,000, the biggest one-week increase since September 2005 in the aftermath of Hurricane Katrina. Part of that big increase occurred because of winter storms that boosted layoffs in such industries as construction.

The four-week moving average for claims edged up from 326,700 to 328,000, the highest level for this average since early December.

The problem is, it may not mean anything.