Tagrecession

SEC hires Goldman vice president for enforcement

Talk about putting wolves in charge of protecting sheep…

A former Goldman Sachs (GS.N) vice president has been named the chief operating officer of the U.S. Securities and Exchange Commission’s enforcement division, the regulator said on Friday.

Adam Storch, who was a vice president in Goldman’s “business intelligence group,” will be responsible for managing projects and other operational aspects of the SEC’s enforcement division, the agency said.

Reuters: US SEC hires Goldman vice president for enforcement

Washington Fiddles as Infrastructure Crumbles

The Surface Transportation Authorization Act, draws both fanfare and trepidation and is widely considered a turning point in American transportation.

The bulk of the bill is dedicated to maintenance rather than highway expansion and construction. Fully $100 billion was set aside for building and expanding mass transit. Another $50 billion is allocated for high-speed rail, dwarfing the $8 billion included in the stimulus package. The bill gives local authorities greater say in how their federal transportation dollars are spent. And our transportation policy would be legally tied to climate protection. The total tab comes to at least $450 billion, twice that of Safetea.

Unfortunately, nobody has quite figured where that money will come from.

Wired: Washington Fiddles as Infrastructure Crumbles

Tax credit fail

Dean Baker:

The NYT reported on discussions in the Obama administration to implement a tax credit of $3,000 for companies that hire additional workers. The hope of course is that this will be a spur to job growth.

Most studies show that labor demand is highly inelastic (this is why increases in the minimum wage have little effect on employment), so a tax credit that modestly decreases the cost of labor is unlikely to have much effect on employment. On the other hand, there would be many opportunities for employers to game this tax credit.

The most obvious is simply bringing some jobs on payroll that are currently contracted out. For example, if a company currently contracts out its custodial services it can instead hire people on its payroll to do this work and get the $3,000 tax credit. This would lead to no net gain in jobs. It would have been helpful if this piece had included some analysis of this tax proposal.

Baker continues on to examine some problems with the $8,000 first-time home buyer tax credit and concludes “There was an enormous amount of misinformation about home prices distributed by the housing industry and the media during the bubble years. It would be helpful if the media tried to do a better job informing the public about predictable movements in house prices now.”

Prospect: The Easy Way to Game the New Hire Tax Credit: Hire Your Contractors

(via Jorn Barger)

Daily Doom: U.S. Job Seekers Exceed Openings by Record Ratio, Unemployement Rate for Young People at 52.2%

Job seekers now outnumber openings six to one, the worst ratio since the government began tracking open positions in 2000. According to the Labor Department’s latest numbers, from July, only 2.4 million full-time permanent jobs were open, with 14.5 million people officially unemployed.

New York Times: U.S. Job Seekers Exceed Openings by Record Ratio

The number of young Americans without a job has exploded to 52.2 percent — a post-World War II high, according to the Labor Dept. — meaning millions of Americans are staring at the likelihood that their lifetime earning potential will be diminished and, combined with the predicted slow economic recovery, their transition into productive members of society could be put on hold for an extended period of time.

New York Post: The dead end kids

(both via Cryptogon)

F.D.I.C. May Borrow Funds From Banks

Not from the Onion:

Tired of the government bailing out banks? Get ready for this: officials may soon ask banks to bail out the government.

Senior regulators say they are seriously considering a plan to have the nation’s healthy banks lend billions of dollars to rescue the insurance fund that protects bank depositors, The New York Times’s Stephen Labaton reports. That would enable the fund, which is rapidly running out of money because of a wave of bank failures, to continue to rescue the sickest banks.

The plan, strongly supported by bankers and their lobbyists, would be a major reversal of fortune.

New York Times: F.D.I.C. May Borrow Funds From Banks

Nassim Nicholas Taleb: ‘We still have the same disease’

Easier said than done:

My whole idea is to lower risk in society by developing a system that can resist human error, rather than one where human error rules. The first step is to make sure that no financial institution is too big to fail. Next, make sure governments don’t favour big companies. Governments should also decrease the role of economists – they’re no more reliable than astrologers, and they do more damage. […]

My advice is that instead of investing in medium-risk securities, you should put most of your money in very low-risk securities, and a little bit in high-risk securities. Then you might get a good black swan. Also, it’s good to have more than one profession, in case your own profession goes out of style. A Wall Street trader who’s also a belly dancer will do a lot better than a trader who winds up driving a taxi.

Globe and Mail: We still have the same disease

Note: article contains error, Black Swan was published in 2007, not 2008.

Hundreds of shipping vessels sitting idly

I was just burned by a Daily Mail story and not eager to get hoaxed again, but this is interesting if true. A commenter at Cryptogon notes:

There is indeed a massive amount of shipping sitting idle around here. You can clearly see them off the southern coast of Singapore (where the main container ship harbour is), where they’re scattered across the horizon and on a recent flight to Malaysia, there is a large amount of shipping in the Johor Straits on the northern tip of Singapore, though its hard to say if they’re moving or not.

They won’t come into harbour (which incurrs fees) because there’s nothing to ship. The Western demand for consumer goods has tanked.

From my vague memory of a news report there are supposed to be about 750-800 ships out there.

It’s probably not the biggest congregation ever, but its certainly unprecedented for this neck of the woods.

Cryptogon: The Ghost Fleet of the Recession

Trevor Blake remarks that these idle ships are ripe to be remade into pirate utopias.

Paul Krugman: How Did Economists Get It So Wrong?

Economics, as a field, got in trouble because economists were seduced by the vision of a perfect, frictionless market system. If the profession is to redeem itself, it will have to reconcile itself to a less alluring vision — that of a market economy that has many virtues but that is also shot through with flaws and frictions. The good news is that we don’t have to start from scratch. Even during the heyday of perfect-market economics, there was a lot of work done on the ways in which the real economy deviated from the theoretical ideal. What’s probably going to happen now — in fact, it’s already happening — is that flaws-and-frictions economics will move from the periphery of economic analysis to its center.

There’s already a fairly well developed example of the kind of economics I have in mind: the school of thought known as behavioral finance. Practitioners of this approach emphasize two things. First, many real-world investors bear little resemblance to the cool calculators of efficient-market theory: they’re all too subject to herd behavior, to bouts of irrational exuberance and unwarranted panic. Second, even those who try to base their decisions on cool calculation often find that they can’t, that problems of trust, credibility and limited collateral force them to run with the herd.

New York Times: How Did Economists Get It So Wrong?

Incidentally, here is a free behavioral economics course from the previously mentioned Peer2Peer University.

Forty Percent of Working-Age Californians Unemployed

Another sobering statistic to brighten your Labor Day:

It’s been said that official unemployment numbers undercut the true unemployment numbers, with many dropping off the radar as their unemployment benefits expire, and with many taking jobs that “underemploy” them. Still, this study comes as a shock, saying that 2/5 of Californians of working age are out of work.

The report, “In the Midst of the Great Recession: The State of Working California 2009,” by the California Budget Project, states that less than 3/5 of California’s working age adults had jobs in July 2009.

That contrasts to the official unemployment rate, which says that California’s jobless rate is 11.9%.

Huliq: Forty Percent of Working-Age Californians Unemployed

Why the Republicans are (still) winning

This Labor Day weekend we learned that unemployment shot up again in August, after the false hope of an artificially low rate reported for July. And we learned that 1/9 of Americans are receiving food stamps.

And, in a major victory in their apparent quest to turn all of the United States into the town from Gummo, Republicans pressured the nation’s “green jobs czar,” into resigning for not being nice enough to the people who got us into this mess.

That professional Republican propagandists can paint Jones as an uncivil and racially insensitive conspiracy theorist is a major coup for them, and that these matters are more important than the state of our ever crumbling economy is telling.

How is that with a minority in both the house and senate, having lost the presidency, and with its political leadership in disarray the Republicans are still setting the agenda and winning political battles? Why are the Democrats bending over backwards to accommodate these swine that so cynically sold the nation up the river?

The easy answer is that there isn’t really much difference between the two parties. But that answer doesn’t tell the whole story.

To say “there’s no difference between the Democrats and Republicans” is to drastically over simplify. The worst Democrats in recent history (ex: Joe Biden and Joe Lieberman) are nowhere near as bad as the worst Republicans in recent history (ex: Jesse Helms and Strom Thurmond). The best Republican senators in recent history (ex: Arlen Specter) are no where near as good as the best Democratic senators in recent history (ex: Russ Feingold) George W. Bush was clearly a worse president than Bill Clinton.

But there is no denying that both parties serve the same corporate masters. The Democrats and Republicans are engaged in a perpetual game of “Good Cop, Bad Cop.” And this latest election cycle, and the first few months of Obama’s presidency, has made their pattern of action clear: 1) Get a conservative president or two (Reagan, Bush) into office, let them run the country into the ground. 2) Let the Dems take over for a while, but perpetuate Republican policy 3) Even though the Dems are essentially only maintaining previous Republican policy, attack, attack, attack 4) Get an even more conservative president into office. 5) Loop back to step 2.

At this stage of the process, the Republicans don’t need a strong political leader as long as their propaganda force -the Limbaughs and Becks – is in full effect. The Democrats evidently have no will to stand-up to these attacks, meaning we can expect a further rightward march off the cliff for the foreseeable future.

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