Archive for August, 2010

Just in case you thought yesterday’s housing news was the worst of economic news for the near future:

On Friday, the second estimate of Q2 GDP will be released. In the advance release, the BEA reported real GDP increased at a 2.4% annualized rate in Q2. However subsequent economic releases for construction spending, inventory and trade all suggest downward revisions in the second release. The consensus is for a downward revision to 1.3% real annualized growth.

And next week, the ISM manufacturing index will be released – and this will probably continue to decline based on the regional manufacturing reports (I’m tracking all the regional reports right now because I expect a slowdown in manufacturing).

And next Friday, the August employment report will be released. I expect another weak report – and I expect the unemployment rate to start ticking up.

BTW, if you don’t glance at Calculated Risk from time to time, you’re missing out on one of the best economic blogs on the web, particularly with regards to analysis of interesting and often ignored economic indicators.

One thing that CR points out that is worth mentioning:

Note: I still think the economy will avoid a technical double-dip recession, but the odds are uncomfortably high – and it will probably feel like a recession to millions of Americans. It will be especially discouraging – if I’m correct – when the unemployment rate starts increasing again, and when reported house prices start falling again.

To the average American, GDP growth of 0.5% will feel a whole lot like GDP contraction of 0.5%. The fact that the category for one is still weak growth and the other is recession won’t matter to Americans still out of work or trying to make ends meet. Whether the economy is “growing” or “shrinking” may mean a great deal to policymakers, but it won’t mean squat to the people who are suffering the most, particularly long-term unemployed.

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Kevin Drum has an amazing chart of the day in response to news that Americans still seem to believe that houses will magically increase their value over time, so that all you have to do is buy a home, and if you sell it at ANY point in the future, you will turn a profit. Of course, this is false. You would think that the housing bubble and subsequent market crash would have taught that to a few people, but perhaps not. So check it out; housing prices don’t generally change much when you account for inflation:

Drum goes on to suggest a few reasons for the misconception. The NYT reports how:

“In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10 percent a year for the next decade.”

Yglesias has a nice chart showing how fantastically absurd this expectation is:

Take the two charts in this post together and you can see the problem. If people actually think this will happen, then I don’t blame them for taking huge loans to buy houses they can’t afford. Now, my opinion on this matter is obviously biased. I am young, unmarried, without children, likely to move multiple times over the next decade as I take new jobs, and currently am employed an in area where almost every home is old and on a small lot and yet still, according to Zillow, fetch average prices of $700,000. Which is, you might guess, more than just a little out of my price range. But still, when you take all those factors together, it’s difficult for me to imagine buying a house for any reason.

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Moved in

Hey faithful Unpersons readers (all four of you),

I’ve successfully moved into my new home for the next three years of law school.

I’ve been unplugged from the internet for a while, but feel free to enjoy this song, which marks the glorious return of Cee-Lo.

A contender for “Song I Put On Repeat The Most.” (Rather NSFW… even the title)

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With all the noise over the Cordoba House, I read with sad resignation this letter sent to David Kurtz at TalkingPointsMemo . The Republicans run the symbolic issues every time, because they know they’ll lose on substance. So they use whatever symbolic wedge issues they can find — Swift Boats, gay marriage, elitism, “family values,” etc. — to win.

The key paragraph for me, though, came at the end:

I appreciate what you are doing in terms of bearing witness to conservative anti-Muslim bigotry, but really, we need to drag the political conversation back to the important issues. The real problems our county faces are too important to once again have ourselves get dragged down into a six month long fight on some manufactured non-issue that Frank Luntz thinks polls well.

I agree wholeheartedly. With about 3 months left until the election, it’s worth considering what’s at stake in this election. Sometimes, we need a reminder of exactly what a Republican Congress might mean.

Pretty much everyone agrees that the Republicans are going to run right over the Democrats, and the fragile economy is looking worse, which means more fodder for Republicans and more dissatisfaction with Democrats. It’s a tough break, but that’s just how it goes.

But I would point out that the Republicans will make the economy much worse, particularly if a double-dip recession occurs. Consider the words of Sen. Bob Corker (R-Tenn.), the “moderate, reasonable” Republican on new legislation in Congress, such as the health care reform bill:

“The best thing we can do is calm down,” he told ABC’s “This Week,” adding, “I sat down with a business this week — I’ll give you an example — and they’re looking at the healthcare bill, and they’re trying to decide, should they keep people under 30 hours? Smaller businesses are saying, should we stay under 25?”

OK, first of all, this is clear malarkey. Business was fine right after the passage of the health care reform bill, and banks are pulling in good profit numbers after the passage of the financial reform bill. It’s hard to argue that the reform bills “caused” “economic uncertainty.”

The solution the Republicans have? Reinstate the Bush tax cuts for the wealthy!

As many have pointed out, this is so ludicrous as to border on the pathological.

If Republicans win big in the fall, any chance for real stimulus in the event of a double-dip recession will be impossible. Republicans will spend their energy blocking all legislation that Democrats try to pass, and the logjam in the Senate will grow even worse. Even mild stimulus will likely meet with vociferous opposition, and we’ll have even worse political gridlock, preventing any and all action to deal with the deepening economic crisis.

With a Republican Congress, there would have been no stimulus package, no Cash for Clunkers, no auto industry rescue, no financial reform after the collapse of the banks, no attempt to rein in health care costs, no bailout for the states to keep hundreds of thousands of workers employed, no unemployment benefits for those out of work and still searching. Millions more Americans would be out of work, with nowhere to find work and no income. And that’s the future Republicans promise if they get into office.

The Republicans will play the distraction game all day, but it’s up to Democrats to change the conversation back to the issues that matter. The economy is in shaky shape, with mixed reports (increased industrial output here, decreasing home prices there, etc.) of health, but a push in the wrong direction and we could be looking at a new Long Recession.

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Wish Stendhal luck

And by the way, unless I missed it, the only mention Stendhal has made recently of his personal life is a quiet and probably unnoticed update on our “About us” page. But just so you know, in case he’s reluctant to tell, Stendhal is finishing teaching English in Chicago for now, and will embark on a new journey on the east coast this fall. (He’s going to a pretty nifty law school.) But fear not, dear reader, he will continue blogging.


Ah, he did post this a couple months ago.

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And it’s becoming increasingly clear with each passing day. Today the NYT reports on how there are already two mosques close to Ground Zero. One of them is 4 blocks away and the other is 12 blocks away. They have been there for decades, and both routinely turn people away for lack of space. Gee, wouldn’t it be nice if there were another nearby mosque to accommodate them?

Furthermore, all these mosques, whether they are 2, 4 or 12 blocks from Ground Zero, aren’t actually at Ground Zero. Distance does matter. Which is why it’s mostly rightwing nuts calling it the “Ground Zero Mosque” or, worse, “the mosque at Ground Zero” as though it were right there.

But wait, what if Muslims were actually practicing Islam directly on site at the “hallowed space” of the 9/11 attacks? Oh shit, they already do. Muslims have practiced their faith inside the Pentagon since 9/11. As has been noted elsewhere, this has gone on for years and has made appearances in media, but doesn’t become a “controversy” until the rightwing hate machine decides to make it their issue. And so it was initially with the Cordoba initiative. Once again, like Stendhal says, we are victim to a debate being hijacked by Braindead Megaphones. And the mainstream media goes along for the ride.

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(see here for context)

Also, great NPR story here about how the song is actually climbing the iTunes charts.

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