Archive for the ‘The Economy & Finance’ Category

Food hoarding? Oh, good.

Wednesday, April 23rd, 2008

Although I’m stereotypically the news junkie of our household, Becky has sometimes been getting out ahead of me recently in recognizing developing major news stories, in part because her playlist of things to listen to on her iPod while feeding Loyette includes some good newsy podcasts. Anyway, she’s been talking about food hoarding for some time. Now that story has appeared on my radar screen, via Drudge:

Farmers and food executives appealed fruitlessly to federal officials
yesterday for regulatory steps to limit speculative buying that is
helping to drive food prices higher. Meanwhile, some Americans are
stocking up on staples such as rice, flour and oil in anticipation of
high prices and shortages spreading from overseas.

Their pleas did not find a sympathetic audience at the Commodity
Futures Trading Commission (CFTC), where regulators said high prices
are mostly the result of soaring world demand for grains combined with
high fuel prices and drought-induced shortages in many countries.

The regulatory clash came amid evidence that a rash of headlines in
recent weeks about food riots around the world has prompted some in the
United States to stock up on staples.

Costco and other grocery stores in California reported a run on rice,
which has forced them to set limits on how many sacks of rice each
customer can buy. Filipinos in Canada are scooping up all the rice they
can find and shipping it to relatives in the Philippines, which is
suffering a severe shortage that is leaving many people hungry.

My expert analysis is that, uh, this isn’t a good thing.

Incidentally, I’ve created a separated blog category called "The Economy & Finance." With all the bad news about those topics lately, it was time.

Job market continues to tank

Friday, April 4th, 2008

Fan-freakin’-tastic:

The U.S. economy shed 80,000 jobs in March and the unemployment rate jumped
to 5.1 percent, as the labor market continued to be battered by an economic
slowdown.

U.S. employers have now eliminated more than 232,000 jobs in the last three
months. …

The latest employment figures, released this morning by the Labor Department,
add evidence to the developing sense of an economy in recession. In addition to
the March figures, the department said that even more jobs had been lost in
January and February than earlier reported. Statistics for those months were
revised downward by 67,000.

"Trends are awful," said Ian Shepherdson, chief U.S. economist with the High
Frequency Economics consulting firm. Factoring out the increase in government
jobs, he noted, private employers dropped nearly 100,000 positions. Considering
that as of the end of last year, businesses were adding an average of 45,000
jobs a month, "the turnaround has been very fast," he wrote in an analysis of
the latest employment report. …

The latest jobs report "shows that we’re right in the middle of a recession that
will probably take a while," said Carl Lantz, an analyst with Credit Suisse in
New York, told the Reuters wire service. "Our expectation is that it will be a
longer recession than the last two and we’re just in the beginning."

I think I may need to create an "Economic News" category for the blog, since it sounds like there will be a lot more of these cheerful posts in coming months and years.

P.S. The candidates react.

Fed seeks broad market oversight power

Friday, March 28th, 2008

File this under "things that Brendan doesn’t know very much about, but that sound like a pretty big deal":

WASHINGTON — The Treasury Department will propose on Monday that Congress give the Federal Reserve broad authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.

The proposal is part of a sweeping blueprint to overhaul the country’s hodge-podge of regulatory agencies, which many specialists say failed to recognize rampant excesses in mortgage lending until after they triggered what is now the worst financial calamity in decades. …

The Fed would also be given some authority over Wall Street firms but only when an investment bank’s practices posed a threat to the financial system over all.

The Wall Street Journal says passage of the plan "would likely take years and would also require major compromises from an increasingly partisan Congress," and that it "is likely to trigger messy feuds over turf at a time when confidence in government supervision is low."

Fed cuts interest rates by 80 gajillion points

Tuesday, March 18th, 2008

Or something like that.

Well, hey, it’s pretty sweet for my student loans.

P.S. If the economy gets bad enough, will the Fed make interest rates negative, such that Citibank will have to start paying me for the privilege of holding my debt? Because that’d be awesome. :)

And here I thought Bear Stearns was a scrappy mid-major team from the WAC

Monday, March 17th, 2008

I haven’t blogged anything about this J.P. Morgan-Bear Stearns business, partly because of March Madness and partly because I don’t really understand it very well. But even to a economics & finance ignoramus like myself, it seems like an obviously big deal. This paragraph from the linked WSJ article struck me as particularly ominous:

The sale of Bear Stearns and Sunday night’s move by the Fed to offer loans to other securities dealers mark the latest historic turns in what has become the most pervasive financial crisis in a generation. The issue is no longer whether it will yield a recession — that seems almost certain — but whether the concerted efforts of Wall Street and Washington can head off a recession much deeper and more prolonged than the past two, relatively mild ones.

Yippee!! [/sarcasm]

Military snubs American plane maker

Friday, February 29th, 2008

The Air Force announced today that it has chosen Northrup Grumman, which is partnering with European airplane manufacturer Airbus — rather than Boeing — for its new fleet of mid-air refueling planes.

We’re heading into an economic recession — oh I’m sorry, I mean slowdown — our ballooning national debt is being financed predominantly by Chinese banks, and now the Air Force is going to be sending billions of our tax dollars to Airbus.  I’m all for international trade and cooperation, but there’d better be some significant advantages to the Grumman/Airbus offering over the Boeing offering to justify this.

The check’s in the mail

Friday, February 8th, 2008

Well, not really. Not until May, in fact. But the economic stimulus package is headed to President Bush’s desk, and he will sign it.

You can view the full text of the bill in PDF form here, or in HTML form here (click the bottom link).

Senate threatens to meddle with tax rebates

Friday, January 25th, 2008

Prediction: the Senate will back down. Nobody benefits politically from headlines like "Senate May Scuttle Stimulus," particularly not when the public will feel that it has essentially already been promised $1,200 per couple. The Republicans need this to pass, because they’ll be the ones primarily blamed for a recession, and they need the voters to think they tried to do something to stop it. And the Democrats need to avoid painting themselves into a corner where they’re the "obstructionists" who prevented Mr. & Mrs. John Q. Public from getting a $1,200 check in the mail. This is one issue where both parties in both houses will find some way to work together, in relatively short order.

Bush, Dems agree to send me money

Thursday, January 24th, 2008

The White House and Congress have reached a tentative deal on an economic stimulus package:

Pelosi, D-Calif., agreed to drop increases in food stamp and
unemployment benefits during a Wednesday meeting in exchange for
gaining rebates of at least $300 for almost everyone earning a
paycheck
, including low-income earners who make too little to pay
income taxes.

Families with children would receive an additional $300 per child,
subject to an overall cap of perhaps $1,200, according to a senior
House aide who outlined the deal on condition of anonymity in advance
of formal adoption of the whole package. Rebates would go to people
earning below a certain income cap, likely individuals earning $75,000
or less and couples with incomes of $150,000 or less.

People would have to have earned at least $3,000 in 2007 to receive the rebates, the officials said.

I don’t know whether this is economically or fiscally sound, but I could certainly use $900. The big ugly red number on my budget spreadsheet thanks you, President Bush and Congresswoman Pelosi. :)

UPDATE: It sounds like some of the information in the original article was incorrect, or I misunderstood it, or some combination of the two. Money quote (literally):

Under the deal, nearly everyone earning a paycheck would receive at
least $300 from the Internal Revenue Service. Most workers would
receive rebates of $600 each, or $1,200 per couple. Families with
children would receive an additional payment of $300 per child
[up to a cap of $1,200, i.e., you can get credit for at most four children]. Workers
who earned at least $3,000 last year — but not enough to pay income
taxes — would be eligible for $300.

So, at least in theory, Becky and I should be in line for $1,500, not just $900. Sweet!

But, hmm… I wonder… are the earning floors for married couples calculated jointly or separately? Also, can we somehow make the IRS aware of Loyette’s existence, which they normally wouldn’t know about until April? :)

The article doesn’t specify when the checks are to go out, except to say that it will happen "quickly."

In any event, this isn’t a done deal yet:

Congressional aides cautioned that it was too early to say that a deal
had been finalized, and the finishing touches will be made over the
next day or so as party leaders try to get their rank and file to buy
in on a deal. …

With both sides conceding on issues important to their base, there is
potential to upset the delicate bipartisan truce prevailing on Capitol
Hill, which is why leaders of both parties want to quickly advance the
package before partisan rancor tears down any negotiations. …

There are indications already that the Senate — the world’s most
deliberative body — may slow things down when the stimulus package
passes the House.

"There are reports that a deal may be close on the House side. The
Senate will want to speak, as well," said Sen. Max Baucus (D-Mont.),
the chairman of the Senate Finance Committee. "We want to ensure that
Congress does its utmost for the American economy and for the American
people.”

P.S. The L.A. Times notes that party leaders "have set a deadline of Feb. 15 for passing the legislation."

More peachy economic news

Friday, January 11th, 2008

This is bad, no?

P.S. And this

About that solid economic foundation…

Friday, January 11th, 2008

Biglaw layoffs — oh, good.

(I know, I know. Weep for the poor lawyers.)

But the economy is strong, right, Mr. President?

(Hat tip: InstaPundit.)

Financial “disaster” looming?

Monday, December 24th, 2007

I don’t understand all this banking mumbo-jumbo, but I don’t like the sound of it:

York professor Peter Spencer, chief economist for the ITEM Club, says the global authorities have just weeks to get this right, or trigger disaster.

"The central banks are rapidly losing control. By not cutting interest rates nearly far enough or fast enough, they are allowing the money markets to dictate policy. We are long past worrying about moral hazard," he says.

"They still have another couple of months before this starts imploding. Things are very unstable and can move incredibly fast. I don’t think the central banks are going to make a major policy error, but if they do, this could make 1929 look like a walk in the park," he adds.

Where’s George Bailey when you need him?

Loonie passes dollar

Thursday, September 20th, 2007

Today for the first time in over 30 years the Canadian dollar passed the American dollar.

Just another sign that the American economy is continuing to thrive right?

Hat tip: Daring Fireball