Sunday, September 6, 2009

Last Call

Olbermann's deciding to take on Glenn Beck. Somebody has to, of course. But after Van Jones, all this is doing is making things worse.

On the other hand, we've pretty clearly established that not going after Glenn Beck makes things worse, too. Good luck're gonna need it.

Hungry For Answers

More and more working Americans are turning to food stamps to help them through tough times, and again, these are Americans with jobs who are resorting to food stamps, according to the Financial Times.
While the increase in take-up is often attributed to the sharp rise in unemployment – which on Friday hit 9.7 per cent – the Financial Times has learnt that some 40 per cent of the families now on food stamps have “earned income”, up from 25 per cent two years ago.

The agriculture department, which runs the programme, attributes this rise to workers having their hours cut back.

“I’m sort of stunned, it seems like a dire warning . . . that even the jobs people are retaining in this recession aren’t at the wage level and hours level that they need to provide for their families,” said Heidi Shierholz, economist at the Economic Policy Institute.

The pace of outright job losses in the US has started to recede, prompting hopes that the labour market could be stabilising. Official figures on Friday showed that non-farm payrolls dropped by a better than expected 216,000 in August, but still marked the 20th consecutive month that the US economy has shed jobs.

Less attention has been paid to those still in the workforce, whose incomes are also being squeezed. The average working week is now about 33 hours, the lowest on record, while the number forced to work part-time because they cannot find full-time work has risen more than 50 per cent in the past year to a record 8.8m. Wages and benefits have decelerated.

The food stamp data suggest that “the labour market problems are more significant than you would expect, given just the unemployment rate”, said John Silvia, chief economist at Wells Fargo. “For me it suggests the consumer is not going to rebound or contribute to economic growth for the next year, as the consumer would in a traditional economic recovery.”

Understand some 80% of America's entire economy is consumer based. If the American consumer is so tapped out that they are having to turn to food stamps because the average American is now working only 33 hours a week, there's something badly wrong with our economy right now. Who will lift us out of this mess? How can hard-working Americans work hard when they are asked increasingly to make do with 40 hours worth of work and getting paid for only 33? American workers continue to be the most productive in the world.

Think of how many things you do for your job off the clock. Millions of us check work email at home or on the road. We're expected to take care of work increasingly on weekends or nights. At the same time, companies are shedding employee benefits left and right in an effort to stay profitable. So again, if companies are now expecting workers that are left to start doing even more work in even less hourly time and do more work off the clock without being paid for it, how does that help our consumer driven economy?

The answer is simple: it doesn't.

What recovery?

[UPDATE 7:12 PM] California's effective unemployment/underemployment rate is 40% at this point.

A report released Sunday says two of five working-age Californians do not have a job, underscoring the challenges in one of the toughest job markets in decades. A new study has found that the last time employment levels among this group were this low was February 1977.

The study was done by the California Budget Project, a Sacramento-based nonprofit research group that advocates for lower- and middle-income families. The report said that California now has about the same number of jobs as it did nine years ago, when the state was home to 3.3 million fewer working-age people.

As bad as things are now, they're actually going to be worse next year. Count on it.

A False Alarm

Felix Salmon posits that this morning's NY Time article about securitizing life insurance the way subprime mortgages were bundled together and traded is actually much ado about nothing.
The NYT has an excellent article on the life settlement industry, explaining its pros and cons in a balanced and clear-eyed manner. If you’re interested in such things, you should read it: it was written by Charles Duhigg, and published in December 2006. He mentioned that Wall Street was getting interested in such things:

Trading in life insurance policies held by wealthy seniors has quietly become a big business. Hedge funds, financial institutions like Credit Suisse and Deutsche Bank, and investors like Warren E. Buffett are spending billions to buy life insurance policies from the elderly…

This nascent market illustrates one way that investors are hoping to make money from a large and wealthy generation of Americans as they reach retirement age.

Today, Jenny Anderson covers most of the same ground but adds little in the way of actual news. What she does add is a much more ominous tone:

Wall Street is racing ahead for a simple reason: With $26 trillion of life insurance policies in force in the United States, the market could be huge…

If a small fraction of policy holders do sell them, some in the industry predict the market could reach $500 billion…

Some financial firms are moving to outpace their rivals. Credit Suisse, for example, is in effect building a financial assembly line to buy large numbers of life insurance policies, package and resell them — just as Wall Street firms did with subprime securities.

If Wall Street is really “racing ahead”, it’s been doing so for well over a decade now, and doesn’t seem to have got very far. There have been people on Wall Street trying to securitize and trade life settlements for as long as I can remember, and nothing much ever seems to happen. Is anything different now? Not really: Anderson has managed to find exactly one securitization of life settlements, and even that one she only mentions in passing:

Standard & Poor’s, which rated a similar deal called Dignity Partners in the 1990s, declined to comment on its plans.

In fact, Dignity Partners launched in March 1995, and was the grand total of $35 million in size. “Could” the market “reach $500 billion”, as “some in the industry predict”? Well, anything’s possible. But so far it’s managed to go from $35 million to zero over the course of the past 14 years. Wake me up when something happens: for the time being there’s nothing at all.

None of the big three ratings agencies is involved right now: the closest thing to a news hook in Anderson’s story is that DBRS, which she describes as “a little known rating agency in lower Manhattan”, is thinking about applying ratings to these things. Is there any evidence that investors are going to trust DBRS on this one, in the event that anything gets off the ground? No.

The real problem is still regulating the existing derivatives market, still orbiting in the hundreds of trillions of dollars category, far outpacing anything here. Salmon is right: for once, the financial sector's seemingly evil ways mean squat, there's no way for the financials to make money off of trading insurance when the actuarial nerds over at the actual insurance companies are already squeezing out a much profit as possible for the numbers. Insurance is supposed to be low risk and stable for a reason, there's just not any way to leverage something like this into a highly speculative market when the entire industry is built on predictability. The banks aren't going to outsmart the insurance companies here, if there was billions of dollars to be made off a market like this, the insurance companies would already be doing it. The banks have been trying to do so for decades now, and with no luck.

Like A Troubled Bridge Over Water

Turns out the San Francisco-Oakland Bay Bridge may be closed for a lot longer than just this weekend.
During inspection of the east span of the bridge, workers found a crack in one of the eyebars on the side of the structure, said Bart Ney, spokesman for the California Department of Transportation.

"It's a significant crack -- significant enough to have closed the bridge on its own," he said in a news conference aired on the agency's Web site Saturday night.

Ney said the crack has to be repaired immediately and acknowledged that the work may stretch past Tuesday when the bridge was scheduled to reopen.

"I want to assure everyone that this repair will be made and we will return the Bay Bridge safer than when we took it out," he said.

Nice. Wonder how much that'll cost the state...or how much the cuts caused the crack to be missed until now.

Or how many other bridges have cracks. Remember Minneapolis 2 years ago?

Mr. Jones And Me

Chalk one up for the Wingers, Obama's "Green Jobs Czar" Van Jones has resigned his post after it was discovered Jones signed a 9/11 truther web petition in 2004.

Jones, who denied agreeing with the petition and issued an apology last week, said he was a victim of health-care reform opponents.

"On the eve of historic fights for health care and clean energy, opponents of reform have mounted a vicious smear campaign against me," Jones said in the statement. "They are using lies and distortions to distract and divide."

"But I came here to fight for others, not for myself. I cannot in good conscience ask my colleagues to expend precious time and energy defending or explaining my past. We need all hands on deck, fighting for the future," Jones said.

The Jones controversy centers on a 2004 petition he signed on a Web site that said: "A call for immediate inquiry into evidence that suggests high-level government officials may have deliberately allowed the September 11 attacks to occur."

An administration source told CNN that Jones did not carefully review the language on the petition.
The truth is Van Jones didn't go down because of health care reform, but because the activist group he founded, Color of Change, went after Glenn Beck's advertisers on FOX News. It didn't matter that Jones left the group two years ago. The Wingers set out to destroy him, found their avenue of attack, and got their pound of flesh.

The bad guys won here, certainly. You go after the hate merchants like Glenn Beck or El Rushbo, you'd better bring an ironclad defense and your top game, otherwise you end up like Van Jones. That's how the game is played. They're not above destroying a man's career or life over something like an advertising boycott, especially if the person is related to the Obama administration.

As you can imagine, the usual suspects are crowing over their victory. With Jones folding within a couple of weeks, Dave Weigel goes over the next group of heads that the Wingers are looking to collect:
As he makes a real impact in pushing conservative fringe attacks on Obama administration officials into the mainstream, Glenn Beck’s Twitter feed has become a must-read. In a message from last night, Beck told his followers to “FIND EVERYTHING YOU CAN ON CASS SUNSTEIN, MARK LLOYD AND CAROL BROWNER.” They are, respectively, the nominee to head the Office of Information and Regulatory Affairs, the Associate General Counsel and Chief Diversity Officer of the FCC, and the Assistant to the President for Energy and Climate Change. Browner was also administrator of the EPA for all eight years of Bill Clinton’s presidency.

Beck’s ostensible purpose here is to expose the “czars” who’ve been appointed by the president. Sunstein stands out like a sore thumb, as he’s been tied up by holds and filibusters for months, and Sen. Harry Reid (D-Nev.) only filed for cloture on his nomination at the start of August.
While Sunstein definitely will be attacked, my money's on the next target being Mark Lloyd, as he's the guy that represents the most paranoid threat that the Wingers have: that Obama is going to shut down right wing talk radio.

You smell that? It's 1994 and the chum's in the water. The sharks are circling. The Obama Derangement level just kicked up a notch.

[UPDATE 11:25 AM] As Digby sums up:
Wow. "Extremist views and coarse rhetoric" have no place in the public debate? Some people don't seem to have gotten the memo.

I certainly hope this makes it quite clear that consistency is not something Obama should count upon from his enemies. Indeed, I fully expect that the next time the Republicans take office they will launch several investigations of the previous Democratic administration (assuming they haven't already taken over congress, in which case they will begin while he's still in office.) They do not observe the self-imposed rules the Democrats put upon themselves. That should be obvious by now.

As for Jones, he says he signed that Truther petition without really reading it and thought he was signing something that merely requested further investigation. Who cares? We have people in the congress right now who assert that the president is an illegal alien and that the Democrats are going to euthanize old people. it's hard for me to give a damn about some stupid petition from a few years ago.
Doesn't matter. Attack Democrats for doing what you have done yourselves. The Republican attack plan hasn't changed since Newt Gingrich.
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