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Sacramento Tent City Reflects Economy’s Troubles

March 25, 2009 /

sacramento tent city

Job losses, home foreclosures and a deepening recession are sending scores of newly homeless people into a makeshift camp along the banks of the American River in Sacramento, Calif.

The tent city, spread over an area the size of several football fields, has local officials scrambling over how to handle the area’s homeless crisis.

More than a year ago, a handful of homeless people staked out the site on the northern edge of downtown Sacramento. Now there are more than 100 tents and anywhere between 300 to 400 people living without running water or sanitation. Their only protection from the elements is nylon tents and plastic tarps.

Full Story: NPR

(via Sloppy Unruh)

Where do laid off journalists go?

March 24, 2009 /

From an un-scientific survey of laid off reporters:

Many of the respondents have found new jobs. It’s too early to tell about those who lost their jobs within the past year, but for those who did so between 1999 and 2007:

• Just under 36 percent said they found a new job in less than three months. Add those who say they freelance full time, and the total jumps to 53 percent.

• Less than 10 percent say it took them longer than a year.

• Only a handful – 6 percent – found other newspaper jobs. The rest are doing everything from public relations to teaching to driving a bus and clerking in a liquor store.

While they’ve found work, many of the people with new jobs are making less money. The midpoint salary range for their old jobs was $50,000 to $59,000. Those who listed salaries for their new jobs were a full salary band lower – $40,000 to $49,000.

Of the people who volunteered their old newspaper salary, only 2 percent made less than $20,000 a year. Of the people who gave me their new salaries, that number shot up to 17 percent. The age of those at the bottom of the salary scale has changed surprisingly as well. The median age of those who made less than $20,000 at their old newspaper job was 24. The median age of those now making less than $20,000 is 48.

Full Story: American Journalism Review

Regarding bonuses, what did the press know and when did they know it?

March 23, 2009 /

But as we prepare to string up Messrs. Geithner, Dodd, and others, maybe those of us in the press need to be asking this: What did we know and when did we know it?

The AIG bonuses were not some covert operation in a faraway land. And the stimulus bill language exempting existing contracts from new limits on bonuses was not particularly hard to understand.

In short, the two key facts of the case were both out there — that the AIG bonuses were due to be paid and that they would go forward, unaffected by the limits in the stimulus.

As the mob circles, there’s an element of what the psychologists call transference in the media’s relentless focus on how Dodd and Geithner must be held to account for the “outrageous” bonuses. Easier to point fingers at them than at ourselves.

If the potential of these bonuses to trigger all-consuming public anger was plain as day, why was the press not collectively screaming from the rooftops about them?

Full Story: The Politico.

What about “citizen journalism” – was the story covered in the blogosphere?

(via Jay Rosen)

AIG bonus fiasco a smokescreen for where the money is really going?

March 17, 2009 /

I’d bet that the choreographers of this scam assume that the average person doesn’t know the difference between million and billion. That’s the first bet.

The second bet I’d make is that this entire spectacle has been concocted to shift the focus away from where the really big money is going. (Hint: Goldman Sachs.)

So, while the drama is happening over $165 million in bonuses, another roughly $30 billion goes down the gugrler.

Full Story: Cryptogon

Let them fail? I wish.

March 17, 2009 /

Douglas Rushkoff’s latest Arthur column has been making rounds in the blogosphere since it was posted yesterday. It’s a good read, but strikes me as naive for an old fogy like Rushkoff. I don’t have time to reply in depth, but briefly:

1. I question his claim that people made more money in the middle ages. Yeah, maybe if you landowner and not a serf. I think that was not the point of using this as an example, but it makes him sound like a silly back to the middle ages type.

2. It would be nice if it were a possibility to actually let the economy fail. But too many entrenched interests (backed up by guns and bombs) have too much riding on this. Just “letting it die” won’t be an option.

3. Even if it were, it wouldn’t be a very pleasant process (though it might be necessary to build something better). I think the financial sector does a lot more than Rushkoff is giving them credit for.

4. He’s assuming all trade can and should be local.

The real problem is how much we’ve come to rely on the FIRE sector of the economy – or actually, how much they’ve coerced us into relying on them. There are a number of movements afoot to create more resilient communities, less dependent on the FIRE sector, oil, and other things that exist outside the control of individuals. This is a good thing – but there are a few problems:

A. Will they be allowed to operate or will they be shut down by the police? Alternative currency is particularly vulnerable to government intervention. Grey water systems are illegal in most states and cities. And so on.

B. Can these systems be implemented fast enough to absorb the shock of the crumbling economy? Or will they be brushed aside by more aggressive, less democratic totalitarian movements?

C. Can they scale?

D. Can they avoid becoming just as corrupt as what preceded them?

Problems A. and B. are directly related to problem 2. above.

Solutions are always welcome at the Recession Hacking Wiki.

Gardening Industry Sees Boom as Families Grow Their Own Veggies to Save on Groceries

March 16, 2009 /

With the recession in full swing, many Americans are returning to their roots — literally — cultivating vegetables in their backyards to squeeze every penny out of their food budget.

Industry surveys show double-digit growth in the number of home gardeners this year and mail-order companies report such a tremendous demand that some have run out of seeds for basic vegetables such as onions, tomatoes and peppers.

“People’s home grocery budget got absolutely shredded and now we’ve seen just this dramatic increase in the demand for our vegetable seeds. We’re selling out,” said George Ball, CEO of Burpee Seeds, the largest mail-order seed company in the U.S. “I’ve never seen anything like it.”

Gardening advocates, who have long struggled to get America grubby, have dubbed the newly planted tracts “recession gardens” and hope to shape the interest into a movement similar to the victory gardens of World War II.

Full Story: AP

(via Cryptogon)

Jon Stewart’s smack down of Jim Cramer and CNBC’s failure as a watchdog

March 16, 2009 /

Yeah, I’m pretty late to the table with this, but I just got around to watching it, and it’s worth while if you haven’t watched it yet:

Full un-edited version directly from Comedy Central – uncensored and even better:

Part 2:

Part 3:

Background:

Capitalists on the defensive

March 12, 2009 /

If you ask a staunch capitalist about the global economic meltdown and the state of the system that brought us to this point they say “that isn’t really capitalism.” This sounds a lot like the socialists they’ve always criticized who defend their ideology by saying that the Soviet Union and China aren’t REALLY communist.

In the afterword of the copy of Anthem I read years ago, Ayn Rand wrote that if collectivists were successful in the political agenda, we would end up with a world much like Rand described in Anthem and the well-meaning commies behind it all would stand up and say “But this isn’t what we MEANT.”

Today, it is the those free market ideologues who are left to say “this isn’t what we MEANT.”

The current global economic crisis should lay rest to the notion that markets or the invisible hand or whatever can produce the “least bad,” let alone “optimal,” economic results. None the less, there are still those who would try to blame government intervention, rather than market failure, for the situation. In January, Reason Magazine ran a few articles on the subject, notably:

Is deregulation to blame? by Katherine Mangu-Ward

and

Anatomy of a Breakdown by Michael Flynn

This is a great pair of articles – they provide a clear, easy to understand insight into what went wrong. But they fail to make the case the authors are trying to make: that not only is deregulation not to blame, but that government policy is to blame.

Weirdly, Katherine Mangu-Ward finds case by case that the arguments that deregulation are to blame are in fact correct (with the exception of blaming the Glass-Steagall Act), and then concludes the exact opposite. She admits the The Commodity Futures Modernization Act of 2000, a loosening of debt rules in 2004, and the lack of oversight of Fannie and Freddie caused the meltdown. Her essential argument, however, is that the debt rule change and the lack of oversight of Fannie and Freddie are not technically deregulation but misregulation. This semantic argument does nothing to support the idea that banks (and by extension “the market”) can self-regulate. In fact, Mangu-Ward’s examination of the facts should lead to the exact opposite conclusion: left to their own devices, banks make stupid, stupid mistakes like taking on too much debt and trading in crazy derivatives.

Michael Flynn meanwhile makes the case that the government’s home ownership evangelism is to blame for the crisis. He says that the poor banks were bullied by the government into making bad loans, but all that would have been fine if not for the ripple effects caused by Fannie and Freddie’s stupid moves. And the fact that Fannie and Freddie were allowed to go hog wild? That wasn’t “deregulation” since they were government agencies (semantics again). Which is all more or less correct, but doesn’t address a few small problems: none of this proves that there wasn’t a market failure.

No one had to take out subprime loans. They could have read the fine print and then walked away. Banks could have found other ways of dealing with subprimes loans, recognizing the problems with Fannie and Freddie. Nothing suggests to me that Fannie and Freddie would have acted differently had they been private banks (except that they would have been more regulated as private banks). In other words: the government may have started the problem in motion. They definitely failed to stop the problem when they could have, and they seem to have made it worse. But they never did did anything that the market could not have stopped had the industry been “self-regulating.”

The two Reason articles are good, but they miss a big piece of the puzzle: the preemptive squashing of derivatives regulation in the 90s. In this case it is again not “deregulation” that was the problem – it was the lack of existence of regulation in first place. We were warned by congress, in no uncertain terms, what would happen back in 1994 but concerns were shouted down by anti-regulation ideologues in government, the industry, and the press. We were warned again in 2003 by Warren Buffet and still took no action.

None of this bodes particularly well for the government’s ability to regulate markets. But the idea that the financial industry can regulate itself has proven completely wrong, and no amount of spin and semantic games can change that. Unregulated free market capitalism has failed as socialism (or as some call it, “state capitalism”) is looking stronger than ever.

Meanwhile, the idea that economic freedom brings with it individual freedom has also been discredited by the persistent human rights abuses in Singapore (one of the most “economically free” places in the world) compared to the more economically regulated nation of Norway. You can’t make a convincing argument that strong civil liberties make for a strong economy, nor that economic liberty will necessarily result in civil liberty.

The battle between market economics and total state control (as played out between the US and the USSR) was only the beginning of a much longer struggle between many different economic policies that are neither strictly capitalist nor strictly socialist.

Those who still believe, as I do, in the virtue of open societies can no longer rely on practical arguments against the sort of extreme market regulation and lack of civil liberties found in countries like China. China’s technocracy has been too successful and the US’s dependence on markets too disastrous. We now must ask harder questions such as “what specific regulations make sense?”

Further reading:

Economic freedom? It depends where you stand

Who’s Afraid of Friedrich Hayek?

Markets and Anti-Markets in the World Economy

Why you should be optimistic about Portland’s future

March 11, 2009 /

It could be worse

We think we have it bad here in Portland, but many cities have it much worse. According to this BLS report, Portland clocks in at 269/369 in employment rates – ahead of struggling cities like Los Angeles and Las Vegas. Not to mention economically crippled cities Detroit and Flint.

Inventive City

According to the Wall Street Journal, Portland ranks 13th in number of patents filed, trailing Silicon Valley but beating Seattle and New York. Why is this important? As the article says “New patents often lead to the creation of new companies, which in turn mean more jobs.” Whatever your position on patents and intellectual property, having a large number of inventors in town bodes well.

Renewable Energy Leadership

The announcement that wind turbine manufacturer Vestas is expanding their North American head quarters in Portland was overshadowed by gloomy layoff announcements by OHSU. That, combined with the fact that the Pacific Northwest has a clean power surplus paint a bright picture for Portland’s future in the “green economy.”

Portland’s also been ranking as one of the cities best prepared for Peak Oil.

Creative economy

I’ve talked off and on here about Richard Florida and his creative economy ideas (the patent thing plays into this as well). Portland’s home to apparel heavy-weights like Nike and Columbia (and is the regional headquarters for Addidas) and start-ups like Nau and Ryz.

We also just saw the release of Coraline from Portland animation studio Laika, and the release of Hellboy 2 based on the Milwaulkie, OR based Dark Horse Comics series. Portland is also home to Top Shelf Productions, publishers of Alan Moore‘s League of Extraordinary Gentlemen and From Hell comics, and Oni Press.

Portland’s also become a hub for marketing and design companies, most notably Wieden+Kennedy.

Intel upgrading during the recession

Intel, the areas largest employer, is closing some locations in Hillsboro. But they’re also investing in upgrading other local plants. Intel bet on their higher end processors, missing the better opportunity in lower end (but more innovative) processors for netbooks. Intel is investing in their future during the recession, preparing to produce more chips for netbooks and smartphones.

Conclusion

Incidentally, none of this depends on government stimulus spending, though that certainly won’t hurt the green energy part. Portland is a strong position ecologically – we’re able to subsist on a comparably low amount of oil, and are positioned within a region producing an excess of electricity. We also have a wealth of visionary talent, complemented with the resources to design, manufacture, and market their creations. Most importantly: we don’t have all our economic eggs in one basket. Things are tough right now, but there are few places in a better position for the future.

The press’s role in difusing financial warnings leading up to crisis

March 10, 2009 /

Includes some notes about who got it right.

The Audit wants to know. What role did the press play in diffusing financial warnings in the years leading up to the current crisis?

We can’t answer that question in its entirety—especially not in one post—but we can offer an example for your consideration: the press’s supremely insufficient response to an important 1994 report by the Government Accountability Office, the investigative arm of Congress, warning about the dangers of derivatives—those largely unregulated financial instruments that have played such a central role in the current collapse.

The two-hundred page report, two years in the making, could have resulted in tough derivatives legislation, which is to say needed regulation. But it didn’t. The reasons why are complicated, and the press is certainly not the only culprit here, but it did play a key role. What happened is this: A triumvirate of the financial industry, misguided regulators and a passive press relegated the report to the dustbin almost as soon as it came out.

This despite the fact that the report was remarkably prescient in its strong warning about derivatives—almost a decade before Warren Buffet’s now-famous derivatives-as-WMD comment. […]

Where was the press in all of this? Generally abdicating its imperative to shape the story—to sift through disparate pieces of information and put them in their places—and employing instead a false evenhandedness.

Let us explain.

Some articles merely summarized the report, avoiding the issue of significance entirely. But often reporters brought in opposing voices. That is standard, of course, and not a problem in and of itself. The problem is that reporters seemed at a loss over what weight to give opposition to the report. The result was that they gave it equal time—or more. And so the GAO, which had spent two years making itself an expert on derivatives, became just one voice among many, only to be gradually shouted down by a persistent opposition.

In reality, the GAO was the authority here, and unlike many of its opponents, didn’t have a horse in the race. Some opponents of the bill called the document politically biased in an effort to discredit it. But the problem with that accusation, which seems to have been aimed at Democrats, a few of whose members were at the forefront of the call for legislative action, is that—while solutions may have differed across party lines—concern over derivatives was not entirely limited to one party.

Full Story: Columbia Journalism Review

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