Archive for the ‘Economy and Business’ Category

‘Assembled in the USA,’ but made in China

November 26, 2014

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Walmart is selling TV sets with the label, “Assembled in the USA,” but the Association for American Manufacturing has complained to the Federal Trade Commission that the TV sets are actually made in China.

FTC rules say that a product can’t be labeled as assembled in the USA unless the principal assembly takes part in the USA, and the assembly work is substantial.  Walmart’s supplier, Element Electronics, doesn’t do enough assembly to qualify, the complaint says.

One reason American manufacturers have shifted production overseas is to meet Walmart’s demand for low prices.  Walmart is the USA’s largest importer.  That’s something for American Christman shoppers to think about.

∞∞∞

How Walmart Destroyed U.S. Manufacturing by Molly McGrath and Brad Markell for the Walmart 1 Percent.

Walmart Workers Ramp Up Protests for Black Friday by Diane Krauthamer for Labor Notes.

The passing scene: Links & comments 11/22/14

November 22, 2014

Whatever Happened to Overtime Pay? by Nick Hanauer for Politico.

Nick Hanauer, the wealthy entrepreneur who wrote “The Pitchforks Are Coming … for Us Plutocrats,” wrote a new article about how the erosion of overtime pay is a reason so many middle-class people are poorer than their parents.

In 1975, the Department of Labor’s definition of eligibility for overtime pay—time-and-a-half for overtime— applied to 65 percent of the American work force.  Now it only covers 11 percent.

President Obama could fix it with a stroke of the pen, Hanauer wrote.  Either millions of workers would get more pay raise through overtime.  Or millions of jobs would be created as employers sought to avoid paying overtime.  But Hanauer said his inside information is that this isn’t going to happen.

Bank of North Dakota Outperforms Wall Street by Ellen Brown for Counterpunch.

The Bank of North Dakota, which is the only U.S. bank owned by a state government, outperforms the big Wall Street banks while promoting the state’s economic development and financing public works.  Ellen Brown said the reason for the bank’s success is that it doesn’t gamble with speculative investments and it plows its profits bank into the state rather than into big bonuses and executive salaries.

How the Government Steals from Citizens by A. Barton Hinckle for Reason magazine.

D.C. police plan for future seizures years in advance in city budget documents by Robert O’Harrow Jr. and Steven Rich for the Washington Post.

 A reminder: The Fifth Amendment to the Constitution states that “no person … shall be deprived of life, liberty or property without due process of law, nor shall private property be taken for public use without just compensation.”  This is a principle of justice.  It should not be regarded as an obstacle to get around.

How the rich are getting richer

November 17, 2014

US-BLS-Income-Expenditures-by-income-groupChart from Wolf Street.

This chart gives an indication as to why the U.S. economy is dragging and why income is flowing upward.

Over the eight years ending in 2012, Americans with incomes of $150,000 a year and up spent, as a group, roughly the same amount of money that Americans with incomes of less than $30,000 a year spent, as a group.

But the spending of the $150,000-plus group was well under their total income, so they were able to save and add to their total wealth.  The spending of the $30,000-minus group was above their income, and had to be supporting by borrowing.  That’s why the upper brackets generally get richer, and the lower brackets seldom do.

Our elected vs our unelected governments

November 6, 2014

The most important political question in the United States is whether our elected government can and will assert its authority over our unelected governments..

The elected government consists of the President, Congress, state governors and legislators and all other parts of government controlled by persons chosen by voters in contested elections.

revolving-doorThe unelected governments are (1) the secret “national security” espionage, covert action, surveillance and police agencies and (2) the Wall Street banks and financiers.  The reasons I call them governments are:

  • Their policies affect the direction of the USA as much as the policies of the elected governments do.
  • They are independent of the authority of the elected government and violate laws with impunity.
  • They exercise more influence and control over the elected government than the elected government does over them.

Wall Street exercises power over economic policy.  It has political power based on campaign contributions to the Democratic and Republican parties and on the revolving door between banks and top government positions.

Our political campaign system makes it virtually impossible to run for national office, or for statewide office in large states, without millions of dollars in campaign contributions.  Unless you are rich yourself, you need money from rich individuals or large corporations.  While big contributors differ among themselves in important ways, they all oppose anything that would diminish their wealth and power.

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The passing scene: November 6, 2014

November 6, 2014

New Shipping Canal in Nicaragua Faces Questions and Opposition by Jens Gluesing for Der Spiegel.

Click to enlarge.

Click to enlarge.

Nicaragua is proceeding with plans for a new canal connecting the Atlantic and Pacific Oceans, which will be bigger than the Panama Canal.

The Nicaraguan Canal will be paid for and built by China, which will get a 50-year concession to operate the canal and an option for an additional 50 years.  It would give China a great foothold for expanding its economic influence in the Western Hemisphere.

The canal is scheduled for completion in just five years, although construction hasn’t started as yet.  Unlike the Panama Canal, it will be big enough to handle container ships.

Some Nicaraguans are opposed, because of the impact on Lake Nicaragua, source of most of the country’s drinking water, and because 30,000 Nicaraguans will be displaced from their homes to make way for the canal.  Others question whether the canal will be financially viable, since the Panama Canal is being expanded and other central American countries are building “dry canals”—railroads to transfer cargoes from one ocean to the other.

The New Loan Sharks by Susanne Soederberg for Jacobin magazine.

desperationnationStagnation of American wages and economic uncertainty have made payday loans a big business, because so many Americans are barely getting by and have no savings cushion for unexpected emergencies.

Payday loans are not a marginal part of the U.S. economy.  They are a big business financed by economic giants such as Wells Fargo, JP Morgan Chase and Bank of America, and by Advance America, which is owned by Mexican billionaire Ricardo Salinas Pilego.

The Red Cross’ Secret Disaster by Justin Elliott and Jesse Eisinger of ProPublica and Laura Sullivan of NPR.

The Red Cross is another charitable organization which has succumbed to the corporate model, which puts fund-raising and public relations ahead of doing its job.

Housing, financialization and the crash

October 27, 2014

Via Corrente

This video by Richard D. Wolff is a clear and accurate account of the financial crash and the current struggles of American working people.  It dates from 2011, but it is still relevant.  I recommend fast-forwarding through the first three and a half minutes minutes, which are about economic classes, and getting to the meat of the video, which is about the foreclosure and credit crisis.

I can remember when most goods and services were paid for through cash and check, without having to go through credit card companies, other lends and insurance companies.  I don’t deny the benefit of credit or of insurance, or advocate going without either, but it is striking how much we Americans are at the mercy of lenders and insurers.

Bad Paper: The world of the debt collector

October 20, 2014

Jake Halpern wrote a New Yorker article, and then a book, Bad Paper (which I haven’t read), about the debt collection industry.  He was interviewed by Bloomberg’s Megan McArdle.

My mom was getting hounded by a debt collector for a bill that she did not owe.  She eventually paid it just to get him to stop harassing her.

bad.paperI started investigating and found out that much debt-collection activities were in my hometown of Buffalo, New York.  I ended up writing a profile on a Buffalo-based debt collector who bought and sold and collected on debt for pennies on the dollar; that story ran in the New Yorker.

That New Yorker story got optioned by Brad Pitt’s production company.  So I went back to Buffalo with the screenwriter.

No one wanted to talk to a journalist back when I was doing the New Yorker piece, but now that I was with Brad Pitt, everyone talked.  One night, the screenwriter and I go out to dinner with a banker and a former armed robber who had gone into business with one another.

They tell me an incredible tale.  They purchased $1.5 billion worth of bad debt for pennies on the dollar. Their aim was to make a fortune.   All goes well on this unlikely venture until some of the debt is stolen and the former armed robber must delve into an underworld where debt is bought and sold on street corners.  This quest ends in a showdown with guns in the inner city of Buffalo, New York.

The world Halpern describes is lower on the economic food chain than the one described by Matt Taibbi in The Divide, but the process is basically the same.  A lender decides it is not worth the effort to collect on certain bad debts, and sells the debt to a collection agency for pennies on the dollar.

The problem is the lack of reliable information as to what is owed and for what.  Sometimes the collectors don’t know how much is principal and how much is accrued interest.  Sometimes unscrupulous lenders will sell the same debt to several collection agencies.

Halpern said he wound up having more sympathy with debt collectors than he expected.  It is one of the few occupations open to convicted felons.  The central figure in his New Yorker article was a former cocaine dealer trying to go straight.

What does he think needs to be changed about debt collection?

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How much shale oil and gas is there, really?

October 13, 2014

Click to enlarge.

Source: Bloomberg News.

Shale drillers are a lot more optimistic about potential oil and gas when they talk to shareholders than when they report to the U.S. Securities and Exchange Commission.  Why?

Hint:  The SEC can prosecute for false statements.  Shareholders have to sue.

 

Low interest rates haven’t spurred a recovery

October 10, 2014

It’s a financial axiom that central banks can make money available and set the rates, but they cannot dictate where it goes.

Yet, the IMF just now seems to be figuring that out.

As for central bank sponsored “risk taking,” haven’t we seen enough already?

Where the Money Went

  • Junk bond speculation
  • Stock market speculation
  • Stock market buybacks at ludicrous prices
  • Robots in lieu of hiring
  • Free profit for banks thanks to interest on “excess reserves”
  • Private equity firms buying up houses
  • In Europe, banks loaded up on their own allegedly risk-free bonds
  • In China, property bubbles and profitless SOEs [state-owned enterprises]

Where the Money Didn’t Go

  • Higher wages
  • Infrastructure
  • Investment

via Mish’s Global Economic Trend Analysis.

(Hat tip to Naked Capitalism)

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Fed official says low unemployment is dangerous

September 29, 2014

Richard Fisher, president of the Federal Reserve Bank of Dallas, said it may be necessary to raise interest rates if the unemployment rate falls below 6.1 percent because low unemployment could lead to higher wages.

Crowded Michigan Unemployment OfficeFisher pointed out that in Texas, wages are rising faster than the rate of inflation.

To me, that is a good thing, not a bad thing.  Why interfere with the law of supply and demand?  The only reason that I can think of is that it might decrease the market value of financial assets.

I am reminded of Karl Marx’s claim that “a reserve army of the unemployed” is necessary to the functioning of capitalism.

I believe in the value of self-discipline, education and the willingness to work.  But anybody who preaches these values ought to be able to show that there is a payoff, and that the payoff is available to everyone, not just the exceptionally talented and the exceptionally lucky.

If the economic system is set up so that at least 6.1 percent of the work force is unemployed at all times, then there is no way to rise out of that 6.1 percent without knocking somebody else down into it.

LINKS

Fed’s Fisher: wages rise when joblessness falls below 6.1 percent by Reuters (via Tom the Dancing Bug).

‘Poor people don’t plan long term.  We’ll just get our hearts broken’ by Linda Tirado for The Guardian.  Somewhat long, but well worth reading.

Obama’s Long Battle to Cut Social Security Benefits by Eric Zuesse for Washington’s Blog (via Mike the Mad Biologist).  The President’s goals are not what his supporters think they are.


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