[This isn’t a typical radio commentary post. The broadcast version included material on the UAW’s role in the Chrysler deal drawn from earlier posts on this site. And the bits about the April employment report were written just for LBO News, since it came out about 15 hours after the show aired. The show itself was a fundraiser with no original content, so it won’t be posted to the radio archives. But please do contribute to WBAI if you can (specifying “Behind the News” as your favorite show!). The station is in desperate straits, but recent managerial interventions by the Pacifica national authorities are a cause for serious hope. There should be some new radio material for the archive next week, and the week after that, WBAI will still be fundraising, but I’ll do a new, KPFA-only show.]
claims, leading indicators
First-time claims for unemployment insurance continue to drift lower, as they’ve been doing for the last six weeks or so. Last week, the number of people filing for jobless benefits fell a sharp 34,000 to 601,000. 601,000 is still a very high number, so it’s not time to strike up “happy days are here again.” Still, the downtrend is a bit of good news in a landscape that’s been largely free of such.
But the number of people continuing to receive unemployment benefits rose by 56,000 to 6.4 million. That’s doubled over the last year, and is up by a third in just the last three months. That’s a dizzying rate of increase to a very high level-not an all-time record as a percentage of the labor force, but still very high. As I’ve been saying here for a couple of weeks, this combination suggests to me that while the pace of job loss is slowing, hiring remains in the doldrums.
Leading indicators are presenting a mixed picture. The weekly leading index from the Economic Cycles Research Institute, which tends to lead changes in the broad economy by three to six months, continues to look a little brighter-which basically means slighly less negative. Its recent behavior suggest that the economy might start bottoming out sometime this fall. But, and this is a very big but, the Conference Board’s leading index for the job market is still sinking, though at a slightly slower rate than in recent months. I see no reason to change my long-standing prediction that the abstraction known as the economy, as measured by GDP, will bottom out first, while the job market limps along for many months more.
historical excursus
Leaving aside all this micro-wonkery, what does history suggest lies ahead of us? In its latest World Economic Outlook, the IMF takes an extended look at the history of recessions—122 of them in 21 rich countries over the last 49 years—for a guide to what we might expect from this one. The news isn’t encouraging.
The Fund’s central conclusion is that recessions with heavy financial sector involvement are deeper and longer than those with none, and are followed by weaker recoveries. And recessions that are globally synchronized are deeper and longer than those that aren’t, and are followed by weaker recoveries. Since this is both finance-centered and global, this is not good news. Though there weren’t many such double-barrelled recessions in the IMF’s database, the ones that are suggest we’re not near the end of this one yet. Maybe near in time, but not in depth. The average decline in GDP in these downturns is about 5%, and we’re only halfway there so far. That would mean that the unemployment rate is likely to top out around 12%—well above April’s 8.9%.
stress-relieving tests
Speaking of which, how about those stress tests? The government has been running simulations of what would happen to our biggest banks should the recession take what they call a nasty turn—with unemployment rising to just over 10%, and the economy contracting this year by a bit over 3%, and not growing much at all next year. That’s hardly a worst-case scenario; from what I’ve just been saying, it looks highly likely, and maybe even on the bright side. To me, these stress tests, which have been reporting that some banks need to raise some capital, but not impossibly eye-popping amounts, are designed to reassure. That is, Washington’s aim is to restore confidence in the financial system before restoring the financial system to actual health.
And while all eyes have been focused on the 19 big banks that are the subjects of these stress tests, what about the other 7,000+ banks the FDIC covers? A new analysis of their state by Institutional Risk Analytics shows a sharp deterioration in the state of many of them in the first quarter of 2009, some to frightful levels. But this is being overlooked in all the attention paid to the big names.
April employment: somewhat less sucky
April’s headline job loss of 539,000 was actually about 100,000 less than Wall Street expected, so it qualifies as good news. But, before we get carried away on a wave of green shootiness, remember that a loss of over half a million jobs is still deeply recessionary—only less deeply so than in recent months.
The private sector lost 611,000 jobs—an improvement over the previous three months’ average of -710,000. Of course, that improvement was from a horrendous number to a merely awful number, but you take encouragement where you find it. Within the private sector, construction and manufacturing continued to bleed heavily, and private services took some major hits. There’s no sign of the stimulus cash yet in heavy and civil construction, where it should be showing up.
Average hourly earnings rose just 0.1% for the month, the smallest increase in almost three years. The yearly gain in average hourly wages is the weakest in several years.
Those figures come from a survey of employers. The corresponding survey of households also looks a little better than it has in recent months. Household measures of employment were steady, or even up slightly. The number working part time against their preference because that’s all they could find fell by 116,000, its first real decline in a year and a half. The share of the adult population working, the employment/population ratio, was unchanged, after almost a year of steady declines. The good news stops there, though: the unemployment rate rose 0.4 point to 8.9%, the highest level since September 1983. The broad U-6 rate, which adds unwilling part-timers and labor force dropouts, rose “just” 0.2 point to 15.8%. But that’s a lot less than the average monthly increase of 0.7 point in the previous six months.
The recession is hardly over. But this report suggests that maybe we can start talking about the beginning of the beginning of the end. Or maybe the beginning of the beginning of the beginning. Maybe.
LBO News from Doug Henwood 
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Posted on May 8, 2009 by Doug Henwood
Radio commentary, plus and minus, May 7, 2009
[This isn’t a typical radio commentary post. The broadcast version included material on the UAW’s role in the Chrysler deal drawn from earlier posts on this site. And the bits about the April employment report were written just for LBO News, since it came out about 15 hours after the show aired. The show itself was a fundraiser with no original content, so it won’t be posted to the radio archives. But please do contribute to WBAI if you can (specifying “Behind the News” as your favorite show!). The station is in desperate straits, but recent managerial interventions by the Pacifica national authorities are a cause for serious hope. There should be some new radio material for the archive next week, and the week after that, WBAI will still be fundraising, but I’ll do a new, KPFA-only show.]
claims, leading indicators
First-time claims for unemployment insurance continue to drift lower, as they’ve been doing for the last six weeks or so. Last week, the number of people filing for jobless benefits fell a sharp 34,000 to 601,000. 601,000 is still a very high number, so it’s not time to strike up “happy days are here again.” Still, the downtrend is a bit of good news in a landscape that’s been largely free of such.
But the number of people continuing to receive unemployment benefits rose by 56,000 to 6.4 million. That’s doubled over the last year, and is up by a third in just the last three months. That’s a dizzying rate of increase to a very high level-not an all-time record as a percentage of the labor force, but still very high. As I’ve been saying here for a couple of weeks, this combination suggests to me that while the pace of job loss is slowing, hiring remains in the doldrums.
Leading indicators are presenting a mixed picture. The weekly leading index from the Economic Cycles Research Institute, which tends to lead changes in the broad economy by three to six months, continues to look a little brighter-which basically means slighly less negative. Its recent behavior suggest that the economy might start bottoming out sometime this fall. But, and this is a very big but, the Conference Board’s leading index for the job market is still sinking, though at a slightly slower rate than in recent months. I see no reason to change my long-standing prediction that the abstraction known as the economy, as measured by GDP, will bottom out first, while the job market limps along for many months more.
historical excursus
Leaving aside all this micro-wonkery, what does history suggest lies ahead of us? In its latest World Economic Outlook, the IMF takes an extended look at the history of recessions—122 of them in 21 rich countries over the last 49 years—for a guide to what we might expect from this one. The news isn’t encouraging.
The Fund’s central conclusion is that recessions with heavy financial sector involvement are deeper and longer than those with none, and are followed by weaker recoveries. And recessions that are globally synchronized are deeper and longer than those that aren’t, and are followed by weaker recoveries. Since this is both finance-centered and global, this is not good news. Though there weren’t many such double-barrelled recessions in the IMF’s database, the ones that are suggest we’re not near the end of this one yet. Maybe near in time, but not in depth. The average decline in GDP in these downturns is about 5%, and we’re only halfway there so far. That would mean that the unemployment rate is likely to top out around 12%—well above April’s 8.9%.
stress-relieving tests
Speaking of which, how about those stress tests? The government has been running simulations of what would happen to our biggest banks should the recession take what they call a nasty turn—with unemployment rising to just over 10%, and the economy contracting this year by a bit over 3%, and not growing much at all next year. That’s hardly a worst-case scenario; from what I’ve just been saying, it looks highly likely, and maybe even on the bright side. To me, these stress tests, which have been reporting that some banks need to raise some capital, but not impossibly eye-popping amounts, are designed to reassure. That is, Washington’s aim is to restore confidence in the financial system before restoring the financial system to actual health.
And while all eyes have been focused on the 19 big banks that are the subjects of these stress tests, what about the other 7,000+ banks the FDIC covers? A new analysis of their state by Institutional Risk Analytics shows a sharp deterioration in the state of many of them in the first quarter of 2009, some to frightful levels. But this is being overlooked in all the attention paid to the big names.
April employment: somewhat less sucky
April’s headline job loss of 539,000 was actually about 100,000 less than Wall Street expected, so it qualifies as good news. But, before we get carried away on a wave of green shootiness, remember that a loss of over half a million jobs is still deeply recessionary—only less deeply so than in recent months.
The private sector lost 611,000 jobs—an improvement over the previous three months’ average of -710,000. Of course, that improvement was from a horrendous number to a merely awful number, but you take encouragement where you find it. Within the private sector, construction and manufacturing continued to bleed heavily, and private services took some major hits. There’s no sign of the stimulus cash yet in heavy and civil construction, where it should be showing up.
Average hourly earnings rose just 0.1% for the month, the smallest increase in almost three years. The yearly gain in average hourly wages is the weakest in several years.
Those figures come from a survey of employers. The corresponding survey of households also looks a little better than it has in recent months. Household measures of employment were steady, or even up slightly. The number working part time against their preference because that’s all they could find fell by 116,000, its first real decline in a year and a half. The share of the adult population working, the employment/population ratio, was unchanged, after almost a year of steady declines. The good news stops there, though: the unemployment rate rose 0.4 point to 8.9%, the highest level since September 1983. The broad U-6 rate, which adds unwilling part-timers and labor force dropouts, rose “just” 0.2 point to 15.8%. But that’s a lot less than the average monthly increase of 0.7 point in the previous six months.
The recession is hardly over. But this report suggests that maybe we can start talking about the beginning of the beginning of the end. Or maybe the beginning of the beginning of the beginning. Maybe.
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Posted on May 7, 2009 by Doug Henwood
The UAW’s Chrysler stake: how 55% = 0%
A friend sent me a copy of a brochure (click here for a copy) that the UAW is circulating to its Chrysler workers, or those of them that remain, offering details on the proposed deal with Fiat and the U.S. government. The pay and benefit cuts are nasty, but hardly a surprise. What is a surprise is that the UAW’s equity stake is even less impressive a thing than it seemed on first glance. And the first glance wasn’t all that impressive to start with.
Before proceeding, a reminder: the stock would not be owned directly by the union, but by a trust, known as a VEBA, established to pay medical benefits to retirees. That already puts a layer of distance between the union and the company (with the union already serving as a layer of distance between the workers and the company). Even with that in mind, the terms of the deal suck out loud.
Two points.
• Chrysler stock hasn’t traded publicly since Daimler took it over in 1998. Cerberus, a private equity firm, bought 80% of Daimler’s stake in 2007, keeping the stock in private hands. But should Chrysler recover and offer its stock to the public, and should that stock appreciate in value, and should the UAW ever choose to sell those shares for cash, it would have to turn any amount in excess of $4.25 billion to the U.S. government. The terms of the Cerberus deal valued the firm at $9.25 billion just two years ago. Obviously that was an inflated price, but it does give some idea of what a recovered Chrysler might be worth. At that level, the VEBA’s 55% stake would be worth $5.1 billion. So, basically the VEBA would be denied any serious participation in Chrysler’s recovery.
• So instead of looking to make a buck, might the UAW be able to exercise some control over the company for the longer term? Ha, of course not. As I’ve already pointed out here, the VEBA’s 55% stake in the firm would give it just one seat on the nine-member board, the same as the government of Canada, which would have a 2% stake. And, in a particularly lovely touch (quoting the brochure), “the VEBA will be required to vote its Chrysler shares in accordance with the direction of the Independent Directors on Chrysler Board [sic].”
A headline on this section of the UAW brochure reads, “New funding structure aids company viability.” And the governance structure—assuming the bankruptcy court goes along with it—gives management a blank check, despite more than half the shares being held in the name of the workers. Ah, pension-fund socialism.
LBO News asked one of the VEBA trustees how they ended up with such a stinky deal. The answer: “Negotiation.”
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Posted on May 6, 2009 by Doug Henwood
MinnPost interview
Steve Perry interviews me about the green shoots of recovery, EFCA, liberal austerity, grading the stimulus/bailout, contrasts with the New Deal, etc.: “Stabilization is a good thing, but it doesn’t equal recovery.”
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Posted on May 5, 2009 by Doug Henwood
LF on WSJ
Liza Featherstone’s piece on the Murdoch–Thompson Wall Street Journal that I mentioned yesterday is up: Identity Crisis.
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Posted on May 4, 2009 by Doug Henwood
More government by Goldman
Under a very wussy, New York Times-y headline, “New York Fed Chairman’s Ties to Goldman Raise Questions,” the Wall Street Journal reports that the chair of the New York Fed, Stephen Friedman, added to his already large stock position in Goldman Sachs, a firm he once headed. (Thanks, Paul Whalen, for the pointer.) Friedman’s purchase of the shares came after Goldman turned itself into a bank holding company, a transition that brought it under the direct supervision of the New York Fed. Earlier, of course, Goldman had gotten a $10 billion capital injection from Washington. But even before Goldman became a commercial bank, it had deep and intimate relations with the New York Fed, as does the rest of Wall Street.
Friedman, unsurprisingly, says there’s no conflict of interest. In a deep sense, he’s right: there’s a perfect harmony of interest between Goldman and the U.S. government.
Not that the New York Fed is exactly part of the U.S. government. The regional Feds are formally owned by the member banks in their districts, and their executives, while appointed by the Federal Reserve Board in Washington, aren’t subject to Senate confirmation. Yet they perform regulatory and other functions as if they were government agencies.
Returning to the micro-level of personal ethics: Friedman’s holdings in Goldman were against Fed rules. He asked for, and got a waiver from the Fed to allow his holdings—and he added to his position while the waiver was being deliberated. According to the WSJ piece: “Because he was wasn’t [sic] allowed to own the stock he had, the Fed doesn’t consider his additional December purchase to be at odds with its rules at the time.” Beautiful.
[That “was wasn’t” is in the original. See Liza Featherstone’s piece on the new WSJ forthcoming in the Columbia Journalism Review, which takes the new Journal to task for axing its copy-editors.]
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Posted on May 3, 2009 by Doug Henwood
UAW revisited
Steve Diamond makes an excellent point in his comment on this post. The UAW isn’t the direct owner of the Chrysler shares (nor will it be of the GM shares). The owner is the Voluntary Employee Beneficiary Association, or VEBA, which was set up to pay benefits to the retirees. So the retirees are now dependent on the success of Chrysler and its stock. As Diamond points out, the VEBA’s first duty is to retirees, which puts it at odds with the active workers in the UAW. The structure also makes the retirees utterly dependent on the success of a corporation in which the union has no voice in running.
As Sam Gindin, who was for many years the top economist at the Canadian Auto Workers, pointed out to me, the UAW has bet everything on maintaining health care benefits. That bet looks shakier than ever.
A word on the UAW itself: this is not a poor union. As of 2006, it had assets of almost $1.3 billion, and annual receipts of $304 million. (I wish I could provide a link to the UAW’s own financial statements, but if they’re on their website, I can’t find them. I had to go to the anti-union site, UnionFacts.com, to find this basic financial info. And I learned that there that the AFL-CIO had successfully lobbied the Obama administration to loosen financial disclosure requirements for unions.) It could have easily financed serious research into a better strategic direction for the auto industry than the idiot management has been able to—cleaner cars, better modes of work organization. Its PAC spent $13 million on campaign contributions during the 2008 election cycle; it could have spent a few mil of that on campaigning for national health insurance.
But they didn’t. And now they’re pretty well screwed.
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Posted on May 1, 2009 by Doug Henwood
Radio commentary, April 30, 2009
A review of some of the headlines before hitting some big-picture stuff.
unemployment claims: easing a tad
More tentative signs of some slight gloom-lifting in the job market. First-time claims for unemployment insurance filed by people who’ve just lost their jobs fell by 14,000 last week, and the four-week average is now about 20,000 below its high, set last March. As I’ve noted here before, the yearly percentage change in these weekly initial claims figures has proven a pretty reliable early warning sign that a recession is drawing to a close, and that peaked in February. So this is suggesting that the worst may over. But, and this is a very big fat “but,” that doesn’t mean that the good is about to begin. The number of people continuing to draw unemployment insurance benefits—continuing claims in the jargon—rose last week, and has been drifting steadily higher. In fact, the behavior of continuing claims suggests that when the Bureau of Labor Statistics releases the April employment data next Friday, the unemployment rate is likely to rise towards the neighborhood of 9%, from March’s 8.5%. Putting all this together, I’d say that while the pace of job loss is probably slowing, hiring remains in the doldrums, and is likely to stay there for many months to come. It could be a year before we start to see plus signs in the monthly employment figures.
GDP: down hard
U.S. GDP for the first quarter fell at a 6.1% annual rate, adjusting for inflation, only slightly less than the 6.3% fall at the end of 2008. The first quarter decline was the sixth-worst in the nearly 250 quarters since the figures begin in 1947, and the two quarters together are the second-worst back-to-back performance over the same period. The only worse stretch was in 1958, in the midst of a short, sharp recession. This one is sharp, but it isn’t short. So, in other words, quite bad.
Under the headline number, there were some awful figures. Real investment fell by over 50% at an annualized rate. (Annualized means the total change were the quarter’s rate sustained for an entire year.) Business investment in machinery and equipment, the motor of economic growth over the long term in a capitalist economy, fell at a 34% annual rate. Investment in new housing was off 38%. Exports were off 30%; imports, 34%. For some reason, consumers bought a lot of durable goods, things like cars and appliances; that gain kept the headline figure from being even worse than it was. But consumption had been falling very dramatically, so this looks a bit like what Wall Street calls a dead cat bounce.
the crisis in auto—and in the UAW
Speaking of car sales—which were astonishingly up around 20% in the first quarter, after falling almost twice that much in the previous three months—news that Chrysler will file for bankrupcy, while hardly surprising, is still arresting. Once an iconic industrial corporation, it became the beneficiary of the first modern bailout, in 1979. That one involved a billion and a half in loan guarantees on which the Treasury actually made money; the company recovered, and its CEO, Lee Iacocca, became a celebrity. This crisis is a lot deeper and more structural.
For a while it looked like the Obama administration had gotten Chrysler’s creditors to agree to a restructuring of the firm that would have kept it out of bankruptcy court. Fiat would have gained operational control of the company, and the United Autoworkers would have owned just over half the stock.
(An aside: it’s amazing to see Fiat in the role of the savior of an American auto company, and the source of advanced engine and manufacturing technology. Americans used to laugh at Italian industry. Who’s the laugh on now, paesani?)
In any case, the speculation is that Chrysler will emerge from the bankruptcy process looking pretty much like the deal the administration had arranged for. We’ll see. Sometimes the process is unpredictable.
At the same time, GM is going through a similar restructuring that could well end in bankruptcy court as well. If that happens, the firm’s bondholders would see their paper turn into stock, making them, in partnership with the UAW and the government, the company’s new owners.
Let’s bracket all the details of this for now and focus on one thing: the United Auto Workers is likely to become a large, and perhaps controlling stockholder in two major industrial enterprises. What will it do with them?
Sad to say, probably nothing. It’s likely that the courts and the government will assure that the union’s stockholdings are largely on paper, with no actual rights of ownership to be exercised. Will the UAW complain about this muzzling? Probably not. Which is a sign of just how braindead the American labor movement is.
Here would be a wonderful opportunity to reshape a crucial industry. The UAW, had it anything like vision or a public spirit, could have spearheaded the development of new, earth-friendly kinds of cars, and new, worker-friendly ways of making them. It has given no sign of ever having thought about anything remotely like this. Here it is, with two enormous potential gifts dropped into its lap, and it doesn’t know what to do. Tragic.
And I see a lot of labor radicals can do little but lament how the workers are giving up wages and benefits and the retirees are being screwed—and all because of decades of management mistakes. All very true. But the companies are broke. There’s just no money to pay wages or benefits. The bourgeoisie isn’t making this up as part of a big con game. The UAW sat quietly by during the deceptively fat years of the 1990s, when low oil prices encouraged the sale of high-profit SUVs, and the domestic car industry ignored its underlying rot. For more than 60 years, it’s paid no attention to the strategic direction of the industry, which has been in varying stages of crisis for almost half that time. And now, the union is badly, perhaps terminally screwed.
What will it take to rouse the American working class from its torpor?
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Posted on April 28, 2009 by Doug Henwood
The quest for recognition
Just got the murkiest plug in more than two decades of cruising for plugs: Henwood and Hollywood. Thanks, I think.
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Posted on April 25, 2009 by Doug Henwood
April 23 radio show up
April 23rd radio show, featuring William Robinson (on being persecuted by Abe Foxman), Richard Seymour (on the U.S. left and imperialism, Obama-style), and Paul Mason (on The Crisis), now up in my radio archives.
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Posted on April 24, 2009 by Doug Henwood
Silver lining
In the course of a pretty wonky piece on CDOs, Felix Salmon points out that the modern financial environment weakens the political position of creditors. Back in 1975, when New York City was on the verge of default, its bonds were uninsured, and held mostly by the city’s rich and its biggest banks. Both sets of bondholders were relatively few in number and invested in the city’s long-term survival. The creditors were able to come together and speak with one voice to force wage cuts and layoffs on the unions and service cuts on city residents. Today, bondholdings are dispersed around the world, so it’s hard to imagine a similar workout in 2009.
There’s an interesting parallel with Argentina’s deliberate default early this decade (a default which followed the script laid out in this LBO article “How to default.”). Because Argentina’s debts were held mostly by bondholders all over the place, many with rather small holdings, the creditors were in a very weak bargaining position. The contrast with the debt crisis of the early 1980s was stark. Then, a dozen bankers, backed by the IMF, could face down a finance minister in a conference room and demand the concessions for which neoliberalism became famous. But that was no longer possible in a world dominated by bond finance.
And in today’s securitized, derivatized world, mortgage holders often don’t know who their creditors are. In fact, it could even be easier for debtors in a single neighborhood to organize than their creditors, who could be anywhere from Frankfurt to Abu Dhabi.
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Posted on April 24, 2009 by Doug Henwood
Audio version!
Note that automatically generated audio versions of this blog, read in a pretty good robovoice, are now available. You can listen to individual files, or subscribe to the podcast.
See the links column to the right.
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Posted on April 24, 2009 by Doug Henwood
Robinson follow-up
A follow-up to yesterday’s post about the war on William Robinson. Robinson said on my radio show yesterday that the ADL’s Abe Foxman came to Santa Barbara to organize a meeting of sympathetic profs to encourage the university to go after Robinson. This is clearly an attempt by a very well-financed organization (the ADL’s budget is some $50 million a year) to restrict political speech and academic freedom.
Some of the comments here and on Facebook suggest that somehow Robinson “crossed a line” by likening Israeli behavior in Gaza to the Nazis. On the show, Robinson said that he drew a comparison between the siege of Warsaw and the siege of Gaza—sealing off both areas created a desperate situation of disease and famine. This is undeniably true, though it might make some people uncomfortable to hear this.
I shouldn’t have to say this, because it does involve a ritual of deference to imperial power, but such is hegemony. I’ve always been very careful to draw a distinction between anti-Zionism and anti-Semitism. I’ve been very critical of some of the awful stuff that goes out over WBAI’s airwaves, and did a long interview with my friend Joel Schalit on the anti-Semitism behind many left critiques of Israel). I have some cred in this area. Robinson’s critique has nothing to do with anti-Semitism, and everything to do with a critique of brutality.
I’ll be posting the show to my radio archive later today.
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Posted on April 23, 2009 by Doug Henwood
Radio commentary, April 23, 2009
Gotta keep the comments short today because it’s a packed lineup today.
economic news
First-time claims for unemployment insurance rose by 27,000 last week to 640,000. Though somewhat below the highs of a month ago, this is still quite elevated. So, continuing the theme of the last few weeks, things are still quite bad, though not getting worse at an accelerating rate.
Sales of existing houses fell by 3% in March, after rising almost 5% the month before. This number has been bouncing around a depressed level since late last year. So, similar conclusion here, too: still crummy, just not getting dramatically worse. These days, that’s good news.
microeconomics, micropolitics
Oh, and how about that Obama? He summoned some executives of the credit card industry to the White House to tell them that, in the words of a Bloomberg wire story, they had to stop “imposing ’unfair’ rate increases on consumers and should offer the public easier to understand terms for credit.” Obama told VISA and the rest that they had to “eliminate some of the abuse” in the industry. That’s a direct quote, and you’ve got to love it. Some of the abuse. Not all. Do they get to choose which parts?
Meanwhile, the banks are still getting trillions from the gov with almost no strings attached. You’ve to hand it to this guy—he’s a masterful politician.
Recession around the world
Outside the U.S., it’s looking like a lot of countries that are heavily dependent on exports are really taking it on the chin. According to IMF projections, the German economy is likely to contract by 5% this year, and Japan’s by more than 6%; these are about twice as bad as the Fund projects for the U.S. A just-released IMF study of recessions over the decades shows that downturns associated with financial crises tend to be deeper and longer than those not associated with financial crises, and globally sychronized recessions tend to be deeper and longer than those that aren’t. Sadly, this is both a financial crisis and globally syncrhonized recession. So this is probably going to be with us for quite a while. The IMF’s projection, which seems reasonable to me, is that the global economy will bottom next year, but not see a serious recovery until 2011.
The IMF’s selective attention
A closing word on the IMF. For an organization most famous as the ghoulish bloodletter to the world’s poor countries, in the service of its role as debt collector for the world’s rich, its behavior in this crisis has been a little surprising at first glance. It’s been a tireless cheerleader for more and bigger stimulus programs, against the opposition of fiscally austere interests like the German government and our own Republicans and conservative Democrats. Of course, they’re never so rude as to name them, but those are the antagonists of stimulus.
No doubt this change in the IMF’s tune is a result of the fact that the rich creditor countries are so deeply affected. So are the poor countries, even more so than the rich, but that’s just their lot in life. When poor countries hit a wall—and even peripheral rich ones like Iceland—it’s cut, squeeze, contract. But when misfortunes strike the rich, things must be getting serious!
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Posted on April 23, 2009 by Doug Henwood
The war on William Robinson
For daring to draw similarities between Israeli behavior in Gaza and the Nazis, the ADL and the rest of the gang of intellectual policemen are at war with William Robinson, a sociology prof at UCSB. I met Robinson at a conference in Amsterdam in 2002 and interviewed him for my radio show; the archived version is here. While I have some differences with him on the issue of “globalization,” he’s a serious scholar and a likable guy, and he deserves support. Here’s an article from Inside Higher Ed on the case.
And site organized by some of Robinson’s students in his support. Sign the petition and send a letter to the pig administration!
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Posted on April 20, 2009 by Doug Henwood
The threat of bigness
You hear a lot of people claiming that a major transformation in the American ideological landscape is underway. Gallup has just published new data suggesting that the shifts are modest, and this country remains pretty conservative.
Specifically, over half—55%—of Americans view big government as the gravest threat to the USA, compared with 32% seeing big business as the ogre. Big labor comes in dead last, at 10%.
Here’s the historical view:
Note that at the peak of the Clinton boom, fear of government had a 40-point lead; that’s since narrowed to a mere 23 points. But also note that even back in the often idealized 1960s, government was still the most feared, followed by labor—with business bringing up the rear.
Yes, the question is abstract, and yes, no doubt more specific questions would reveal more complex attitudes. But abstract questions like this also reveal the foundational fantasies of the political unconscious. Gallup is amazed that the stimulus package and bailout haven’t increased Americans’ fear of big government. Me, I’m amazed that the economic wreck hasn’t increased Americans’ fear of big biz.
Re: an earlier post. Nationalize the banks? Ha, in what time, and in what country?
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