Tag: Economy

It’s Jobless Thursday

Better, but still not good initial unemployment claim numbers, 793,000 claims:

The labor market is offering signs the economy is starting to mend from a steep winter slowdown.

Worker filings for unemployment benefits—while still high—decreased to 793,000 last week, well below an early January peak that exceeded 900,000. Employers resumed hiring in January after payrolls fell at the end of 2020, and job openings picked up, driven by growth in industries that have weathered the pandemic relatively well.

………

One catalyst for the recent labor market improvement is the latest round of government aid, including small-business loans intended to help employers keep and rehire workers, said Ms. Markowska. Another is the relaxation of pandemic-related business restrictions in California and the Northeast.

………

Unemployment filings remain above the pre-pandemic peak of 695,000, pointing to the long road ahead for the recovery. About 4.5 million Americans were collecting unemployment benefits through regular state programs in the week ended Jan. 30. So-called continuing claims are well below pandemic highs but still more than double the levels seen a year ago.

………

Many workers are experiencing long spells of joblessness. About 4.8 million Americans who exhausted their regular state benefits were drawing on extended benefits through one of the federal pandemic programs in the week ended Jan. 23, a jump from 3.6 million a week earlier. 

At the very least, Biden and the Democrats, unlike Obama in 2009, recognize the risk is in doing too little, and not too much to ameliorate the situation.

Something that Trump Got Spectacularly Right

For decades, the Fed comported itself as an expert witness for deficit hawks on Capitol Hill.

Now, under the leadership of a Republican banker, the Fed is using its technocratic credibility to bolster big stimulus (and marginalize Larry Summers)https://t.co/LyyZxcssS8

— Eric Levitz (@EricLevitz) February 11, 2021

Because he is NOT an Economist

Specifically, he put Jerome Powell in charge of the Federal Reserve, whose background is as an investment banker rather than an economist, and because of this, he has not dedicated himself to fighting invisible mythical inflation preemptively, nor has he attempted to create prosperity by invoking the equally mythical confidence fueled austerity fairy.

It turns out that there is a profession more useless than that of the investment banker, it is that of the economist.

While Trump always found him too hawkish on monetary policy, he has been the most dovish Fed chair in at least 30 years, largely because he is not comparing penis size with other economists:

For most of the past four decades, the Federal Reserve has comported itself as a corroborating witness for deficit hawks on Capitol Hill, and a security system for anti-inflation paranoiacs on Wall Street.

In the late 1970s, stubbornly high inflation taught the central bank that the conflict between its dual objectives — to promote full employment and price stability — was fiercer than it had previously thought. Specifically, the Fed decided that it would need to preemptively cool the economy when unemployment got too low, so as to snuff out inflationary spirals before they took hold. This was because tight labor markets allowed workers to hold their employers hostage to unreasonable wage demands; with no reserve army of the unemployed to draw new hires from, bosses were forced to placate existing staff. Thus, employers ended up overpaying their workers and then trying to compensate by overcharging consumers. Workers, being consumers themselves, responded to such price hikes by extracting even higher wages from their employers, causing employers to enact even more extortionate price increases, setting off a vicious inflationary cycle. Therefore, central banks had to proactively preserve slack in the labor market — both by slowing economic growth through interest-rate hikes when unemployment got too low, and by encouraging Congress to rein in deficit spending lest it spur excessive demand for labor.

………

But times have changed — and so has the Fed.

Under Jerome Powell, the central bank has brought American monetary policy into belated alignment with federal law and empirical economics. Instead of attempting to preempt high inflation by sustaining a cushion of unemployment, Powell has waited for inflation to actually show itself before deliberately cooling the economy, a posture he has justified by emphasizing the myriad economic and social benefits of maximizing employment.

As a result, the Fed’s role in America’s fiscal policy debates has flipped. This week, Joe Biden’s $1.9 trillion stimulus plan took on some friendly fire from center-left economists Larry Summers and Olivier Blanchard. While both endorsed the necessity of significant stimulus spending, they suggested that Biden’s package was excessively large, and would risk “overheating” the economy — which is to say, the stimulus would risk injecting more demand into the economy than the nation can satisfy, given the size of its labor force and the productive capacity of its capital stock. And when demand outstrips supply, the result is inflation.

On Wednesday, the Fed effectively intervened in this debate on Biden’s behalf. In remarks to the Economic Club of New York, Powell argued that America’s actual unemployment rate is not 6.3 percent (as official data suggest) but 10 percent, once classification errors are accounted for; that it will take “continued support from both near-term policy and longer-run investments” to restore maximum employment; and that had the pandemic not intervened, there is “every reason to expect that the labor market could have strengthened even further without causing a worrisome increase in inflation.” That last statement is key. Not only does it suggest that Powell believes the U.S. economy can support an unemployment rate significantly below the 3.5 percent we saw in early 2020, the statement also implicitly rebukes the Congressional Budget Office’s official estimate of how much more demand the economy can accommodate without overheating. Which is significant, since Summers built his “overheating” argument around the CBO’s (historically unreliable) estimate of that figure.

………

The Federal Reserve’s authority over monetary policy — and technocratic credibility on questions of spending — gives it considerable power to shape the economic paradigm within which democratic politics operates. In the late 1970s, the central bank used this power to consolidate a reactionary turn in American economic policymaking. In 2021 — under the leadership of a Trump-appointed, Republican investment banker — it is doing its darnedest to consolidate a progressive one.

IMHO, Trump got it right by mistake, but he got this one very right.

U.S. Employers Added 49,000 Jobs in January – WSJ

“Bad” reason why unemployment rate fell

— Liz Ann Sonders (@LizAnnSonders) February 5, 2021

The Denominator Fell


The scariest jobs chart ever

The January jobs report came out, and the word is anemic.

The unemployment rate fell, but only because fewer people were actively looking for work, and the non-farm workforce only grew by 49,000.  (About 150,000 a month is necessary to maintain employment levels)

Not good:

U.S. employers resumed hiring in January, but the weak pace of job gains suggested a long road remains for the recovery.

The U.S. economy added 49,000 jobs last month. The small gain came after payrolls fell steeply in December, the first decline since the coronavirus pandemic triggered business shutdowns last spring. The unemployment rate fell to 6.3% in January from 6.7% a month earlier, in part reflecting fewer people searching for jobs.



“The recovery is only stumbling along at this point,” said Sarah House, senior economist at Wells Fargo Securities. “Yes, we managed to eke out a gain, but we’re still 9.9 million jobs shy of where we were back in February” of last year before the pandemic hit hard, she said.

Jobs grew strongly in business and professional services, mainly in temporary help roles, the Labor Department said in its January report on U.S. employment. Many sectors, though, lost jobs last month. The leisure and hospitality sector shed 61,000 jobs, following a steep decline of 536,000 in December. Retailers and warehouses cut jobs in January after adding jobs strongly over the holidays.

The unemployment rate decline in January was driven by two factors. More people dropped out of the labor force—meaning they weren’t actively looking for a job and may have grown frustrated with their employment prospects. Also, the number of people reporting themselves as employed increased, consistent with a generally upward trend in hiring since last spring.

………

The broader economic recovery stalled significantly this winter. Unemployment claims, a proxy for layoffs, have remained above pre-pandemic levels. Consumers cut back on spending, as some were wary of leaving their homes as virus cases surged. Others wanted to shop and dine out, but had limited options.

………

Companies might struggle to find workers in part because the share of people seeking work remains depressed. The labor-force participation rate was 61.4% in January, down from 63.3% in February 2020, before the virus hit. Some people aren’t looking for work out of fear of contracting the virus. Others are burdened by increased child-care responsibilities or discouraged by limited job opportunities.

………

Many workers are facing long spells of unemployment. Just over four million people were out of work for 27 weeks or longer in January, the Labor Department said, compared with nearly 1.2 million a year ago. Others who lost their jobs earlier in the virus crisis have regained employment, but at much lower wages.

This is why the Biden administration is running around with their hair on fire to get the stimulus package out.

This is why I continue to invoke the undead felidae with a high coefficient of restitution.

More “Good” Unemployment Numbers

Still higher than the preCovid-19 record, but initial claims fell to “only” 779,000:

The number of workers seeking unemployment benefits fell for the third straight week, a sign that layoffs have started to ease following an increase in early January.

Initial weekly unemployment claims declined to 779,000 last week, the Labor Department said Thursday, following a revised 812,000 claims the prior week.

The recent easing in weekly jobless claims—a proxy for layoffs—pointed to a stabilization in the number of workers applying for benefits, though the total remained at a higher weekly level than before a winter surge in coronavirus cases.

Claims also remained well above the pre-pandemic peak of 695,000 and are still higher than in any previous recession for records tracing back to 1967.

The latest jobless claims figures came a day before the government releases a more detailed look at U.S. employment in January. Economists forecast that employers added 50,000 jobs last month, following a 140,000 decline in December that marked the first decrease in payrolls in seven months. The unemployment rate is forecast to hold steady at 6.7%.

………

A separate report showed the pandemic’s effect on worker productivity. U.S. labor productivity fell at a 4.8% annual pace in the final months of 2020, the biggest quarterly decline since 1981, the Labor Department said. In the fourth quarter of the year, worker hours increased at a 10.7% pace and output rose at a 5.3% pace, pushing overall productivity lower.

This is why the Democrats need to move quickly to get the stimulus package passed.

The economy is, at best, just treading water.

This is Not a Growing Vibrant Economy

Over the past 20 years, total employment in the US has grown by 11,767,000.

Over the same 20 years, employment among workers over 6o has increased by 11,879,000.

To put that in perspective, 101% of all the jobs gained in the past 20 years were among people who would have retired if the economy actually worked for people.

This might explain why the economists’ view of our economy, and that of ordinary people diverge so sharply.

To quote Douglas Adams, “This planet has – or rather had – a problem, which was this: most of the people living on it were unhappy for pretty much of the time. Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn’t the small green pieces of paper that were unhappy.” 

What is going on, at least if you don’t buy into the rosy scenario promulgated by the St. Louis Fed, is that older people are working longer, because life has become more more precarious, with the end of defined benefit pensions, Wall Street looting of defined contributions (IRA, 401(K), etc.), and the general fall in wages over the past 45 years.

So people CAN’T retire, and younger workers are finding that the jobs that they would ordinarily get during their careers are not opening up.

It is a recipe for social unrest and extremism, but the green pieces of paper are quite happy:

Total U.S. employment grew by 11,767,000, or 8.5%, in the 20 years ending in December 2020. All that growth—11,879,000, or 101% of the total—was due to increased employment of people age 60 and older. Meanwhile, the net employment change over the past two decades of people ages 16-59 was -112,000 (-1% of the total change), despite this younger group being 3.8 times as large as the older group in December 2000 and still 2.4 times as large in December 2020. (See the figure below above.)

What’s Driving This Outcome

This age-skewed labor-market outcome was the result of two differences between the groups:

  • The older population (60 and older) grew much faster than the younger population (16-59).
  • The employment-to-population (E-P) ratio among those 60 and older increased significantly while the E-P ratio among the younger population declined, on balance.

With the exception of the large decline in the E-P ratio of the younger population, which is difficult to predict in the years ahead, the basic trend of rising employment among older workers is likely to continue for some time for the following reasons:

  • The older population is likely to continue growing faster than the younger group.
  • The E-P ratio of the 60 and older group is likely to increase further as the health and educational attainment of older people continues to improve and the demand for older workers persists.

Read His Lips

$2000.00 stimulus checks are popular. Their popularity was such, even in Georgia, that it led to the Democrats taking control of the Senate.  (It was a big part of the campaigning for the runoff)

Now, the very serious people are trying to scale back and means test the stimulus to irrelevancy.

It is patently clear that this is bad policy and even worse politics.  It is George H.W. Bush’s no new taxes pledge all over again:

On January 4, Joe Biden made an unequivocal pledge, telling voters that by electing Democrats to Georgia’s senate seats, “you can make an immediate difference in your own lives, the lives of people all across this country because their election will put an end to the block in Washington on that $2,000 stimulus check, that money that will go out the door immediately to people who are in real trouble.”

Now they are counting the $600, so $1400 is the new 2000, saying that it will take months to pass the bill, making overtures to Republicans, etc.

A little more than a decade later, the public option fight should be a harrowing cautionary tale for Biden on both the policy and the politics. He had a front-row seat in watching a bad-faith Republican opposition kill a much-needed initiative, and then use Democrats’ failure to deliver to win at the polls. He of all people should know that this story never ends well.

………

The $2,000 checks initiative does not have to go down the same way the public option went down. The president and congressional Democrats do not have to do what weak-kneed, wimpy Democrats of the past have so often done. They do not have to negotiate against themselves, word-parse their way out of campaign pledges and delude themselves into thinking that Republicans are good-faith legislative partners.

They could instead try to use their election mandate — and the weakened state of the GOP — to demand full survival checks, rather than pretending that bad-faith Republican senators have any standing to make policy arguments.

The “Very Serious People” are going to “reasonable” themselves into losses in 2022 that make the 2010 blood letting look like a walk in the park.

Initial Unemployment Claims and 2020 GDP Today

Unemployment claims fell by 61,000 to a still horrifyingly high 847,000 and US GDP fell by 3.5% in 2020, the most since the 1946 demobilization.

This is with about $4 trillion in emergency stimulus legislation.

And now we are rushing way too fast to rolling back pandemic measures, which is going to lead another round of shutdowns as ICUs fill up.

We are fucked.

It’s Jobless Thursday

US initial unemployment claims fell by 26,000 to 900,000 last week, and the4-week moving average rose to 848,000 from 824500.

These are not good numbers by any measure:

About 900,000 workers filed for unemployment benefits last week as the labor market struggles to recover this winter.

The number of jobless claims last week was down slightly from the week ended Jan. 9, when applications jumped by more than 100,000 to 926,000. The Labor Department said the increase for the Jan. 9 week—initially estimated as the largest weekly increase since March—was smaller than previously thought.

Jobless claims, a proxy for layoffs, remain above the pre-pandemic peak of 695,000 and are higher than in any previous recession for records tracing back to 1967.

“Covid hasn’t let up, and it’s still creating massive amounts of economic havoc,” AnnElizabeth Konkel, economist at jobs site Indeed, said.

As Covid-19 infections increased into the winter, states and localities imposed new capacity restrictions on businesses such as restaurants. Further, some consumers remain hesitant to eat indoors, travel or go to a movie theater, reducing demand at places that remain open.

Delayed filings by workers over the Christmas and New Year holidays, as well as $300 a week in extra jobless benefits included in a coronavirus-relief package signed into law last month, also could have factored into the large claims increase for the week ended Jan. 9. Still, the four-week moving average for claims, which smooths out weekly volatility, rose in the week ended Jan. 9.

Things are not going to get better until a larger stimulus is passed, and the pandemic recedes.

This May be the Worst Idea in Economics

There is a lot not to like about Economics.

It seems that most streams of economics appear to be a means for justifying the existing power structure, with the benefit being that economists are given (relatively) high positions within that power structures.

Political economist Blair Fix makes a good argument that modern Human Capital Theory, which resembles a toxic mix of Social Darwinism, and emerged largely from the University of Chicago.

The short version, to use Ayn Rand pulp fiction (and pulpier philosophy) as an example, the investor who pays scientists to create “Reardon Metal” is responsible for all the value derived from this wondrous material.

The scientist who creates this material adds no value, neither does the army of workers who labor to manufacture this material and forge it into shape.

If this sounds non-sensical, note how this is identical to the justification for paying obscene remuneration to founders and CEOs.

The little people just don’t mater:

If there was an award for the most pernicious scientific idea ever, what theory should get first prize? I would vote for eugenics, a theory that claims we can ‘improve’ humanity through selective breeding.

If there was a second prize, I’d give it to human capital theory. I think of human capital theory as ‘eugenics light’. It purges the idea that abilities are innate (and that we should selectively breed the ‘fit’). But human capital theory keeps the Nietzschean idea that humanity’s success can be attributed mostly to gifted übermensch.

Among us, human capital theory claims, walk individuals who are unfathomably productive. These übermensch produce more in an hour than most of us do in a week. Take just 1% of these top individuals, and you’ll find that they outproduce the bottom half of society!1 According to human capital theory, then, we could do away with half of society with no great loss to economic output. Of course, few human-capital theorists advocate such atrocities. But my point is that their theory contains the seeds of eugenics … even Nazism.

The ethical problems with eugenics and human capital theory are easy to spot. But what about the scientific problems? These are more difficult to tease out. Eugenics is based on the hard truth that many traits are heritable. Similarly, human capital theory is based on the reality that some people earn hundreds of times more income than others. Where both theories go wrong, however, is that they misunderstand humanity’s social nature.

Yes, many individual traits are heritable. But it is a fallacy that traits that are good for individuals are also good for society. That’s the core scientific flaw in eugenics. And yes, it’s true that some people earn far more than others. But it’s a fallacy that this income is caused by traits of the individual. In reality, income is a social trait.

My goal in this post is not to rigorously debunk human capital theory. (I’ve done that here.) Instead, I’m going to chart its rise and speculate about its eventual fall. I’ll do so by looking at the rise and fall of eugenics. What’s ominous is that the theory that debunks eugenics is today still more obscure than eugenics itself. In a century, will something similar hold for the theory that debunks the idea of human capital?

He then compares this to experiments in animal and human eugenics:

In the 1990s, geneticist William Muir conducted experiments on chickens to see what would improve egg-laying productivity. In one trial, he did exactly what the eugenicists recommend — he let only the most productive hens reproduce. The results were disastrous. Egg-laying productivity didn’t increase. It plummeted. Why? Because the resulting breed of hens was psychopathic. Instead of producing eggs, these ‘uber-hens’ fought amongst themselves, sometimes to the death.

The reason this experiment didn’t work is that egg-laying productivity is not an isolated property of the individual hen. It is a joint property of the hen and her social environment. In Muir’s experiment, the most productive hens laid more eggs not because they were innately more productive, but because they suppressed the productivity of less dominant chickens. By selecting for individual productivity, Muir had inadvertently bred for social dominance. The result was a breed of bully chicken that couldn’t tolerate others.

The lesson here is that in social animals, traits that can be measured among individuals (like productivity) may not actually be traits of the individual. Instead, they are joint traits of both the individual and their social environment. Here’s evolutionary biologist David Sloan Wilson reflecting on this fact:

Muir’s experiments … challenge what it means for a trait to be regarded as an individual trait. If by “individual trait” we mean a trait that can be measured in an individual, then egg productivity in hens qualifies. You just count the number of eggs that emerge from the hind end of a hen. If by “individual trait” we mean the process that resulted in the trait, then egg productivity in hens does not qualify. Instead, it is a social trait that depends not only on the properties of the individual hen but also on the properties of the hen’s social environment.

—(David Sloan Wilson in When the Strong Outbreed the Weak)

A key problem with eugenics is that it neglects the social nature of human traits. It assumes that productivity is an innate trait of the individual, and that breeding for this trait would lead to a better society. It’s a seductive idea that is deeply flawed. In all likelihood, selectively breeding people for productivity would, like chickens, lead to a psychopathic strain of human.

This sounds a lot like the sociopaths who are in the top 1% of the 1%, doesn’t it? 

Jamie Dimon seems to be the apotheosis of such a process. doesn’t he?

The ground work for human capital theory was laid just as eugenics fell out of favor. In the 1950s, economists at the University of Chicago tackled the question of individual income. Why do some people earn more than others? The explanation that these economists settled on was that income resulted from productivity. So a CEO who earns hundreds of times more than a janitor does so for a simple reason: the CEO contributes far more to society.

The claim that income stems from productivity was not new. It dated back to the 19th-century work of John Bates Clark and Philip Wicksteed, founders of the neoclassical theory of marginal productivity.3 Clark and Wicksteed, though, were concerned only with the income of social classes. What the Chicago-school economists did was expand productivist theory to individuals.

  Doing so required inventing a new form of capital. The idea was that individuals’ skills and abilities actually constituted a stock of capital — human capital. This stock made individuals more productive, and hence, earn more income. Figure 3 shows key papers that initiated human capital theory.

………

The idea that skills constituted ‘human capital’ was initially greeted with skepticism. For one thing, the term itself smacked of slavery. (Capital is property, so ‘human capital’ implies human property.) For another, human capital theory overtly justified inequality. It implied that no matter how fat their incomes, the rich always earned what they produced. Any attempt (by the government) to redistribute income would therefore ‘distort’ the natural order. During the 1950s and 1960s, there was little tolerance for such views. It was the era of welfare-state expansion, driven by Keynesian-style thinking. Yes, big government may have been ‘distorting’ the free market — but society seemed all the better for it.

………

We can see the scientific flaws by returning to William Muir’s chicken experiment. I’ve already told you about his psychopathic chickens, created by breeding the most productive hens. But I haven’t told you about his alternative trial. In it, he bred the most productive group of chickens. The result was an astonishing increase in egg-laying productivity.

The reason this group selection worked is that chickens are social animals. That means productivity is influenced by the social environment. By selecting productive groups, Muir selected for egg-laying ability, but also for sociality. The resulting social hens flourished together.

Something similar holds true for humans. The abilities of individuals cannot be separated from the social environment in which they occur. For this reason, any selective breeding based on individual traits is likely to have unintended consequences. If Muir’s chicken experiment is any indication, breeding übermensch wouldn’t create an uber-productive society. It would create a psychopathic one.

The reason comes down to the unit of selection. As social animals, humans have been strongly shaped by the selection of groups. This group selection has tended to suppress selfish tendencies that are otherwise beneficial for individuals.

The bottom line is this:

Human capital theory supposes that income stems from productivity, and that this productivity is an isolated trait of the individual. This thinking, when taken to the extreme, is ludicrous. It implies that an Egyptian Pharaoh was thousands of times more productive than his slaves. Moreover, because this productivity was embodied in the Pharaoh, he could do away with his slaves and still retain his wealth. It gets worse. According to the logic of human capital theory, the Pharaoh’s slaves were actually a burden on the kingdom’s per capita productivity. If the Pharaoh exterminated them, per capita productivity would skyrocket.

Idiocy.

We are run by a bunch of psychopathic hens.

Well, psycho chickens makes a fuck-load more sense than that whole QAnon lizard people thing.

The Good,

Gary Gensler, who surprised everyone when he was appointed by Obama as the head of the  Commodity Futures Trading Commission (CFTC) and then aggressively pushed for regulation and investigations of fraud, is Biden’s choice to head the Securities and Exchange Commission (SEC).  

Word is that Wall Street is crapping their pants over this choice:

Gary Gensler will be named chair of the U.S. Securities and Exchange Commission (SEC) by President-elect Joe Biden, said two sources familiar with the matter, an appointment likely to prompt concern among Wall Street firms of tougher regulation.

Gensler was chair of the Commodity Futures Trading Commission (CFTC) from 2009 to 2014, and since November has led Biden’s transition planning for financial industry oversight.

His appointment as the country’s top securities regulator is expected to put an end to the four years of rule-easing that Wall Street banks, brokers, funds and public companies have enjoyed under President Donald Trump’s SEC chair Jay Clayton.

At the CFTC, Gensler implemented dramatic new swaps trading rules mandated by Congress following the 2007-2009 financial crisis, developing a reputation as a hard-nosed operator willing to stand up to powerful Wall Street interests.

A former Goldman Sachs banker and a professor at MIT Sloan School of Management, Gensler also oversaw the prosecution of big investment banks for rigging Libor, the benchmark for trillions of dollars in lending worldwide.

When he came into the CFTC, it was assumed that he would be yet another corporate stooge.

Instead he was a pleasant surprise in an administration that was largely defined by corporate stooges.

The Bad,

Samantha Power has been picked by Biden to head USAID

Power is a bloody lunatic, who is almost as prone to demand the use of military force as the late and unlamented John McCain.

The is a warmonger of the highest order, and given that USAID is frequently used as a cutout to support regime change activities by the US State Security Apparatus, this is not good.

Former UN Ambassador Samantha Power, (in)famous for her screaming duels over Syria with late Russian envoy Vitaly Churkin, was picked by Joe Biden to head the US Agency for International Development (USAID) in his administration.

Though her appointment was rumored in Washington for weeks, Biden’s transition team officially confirmed it on Wednesday. Power is best known for her “humanitarian” interventionism advocacy. As an aide at the Obama White House, she championed US intervention in Syria and Libya – where US-backed Islamist militants sought to overthrow secular governments – in the name of stopping “genocide.”

Let us not forget that the intervention that she forcefully championed in Libya has led to the return of open air slave markets, and Syria………

And The Ugly

That would be Victoria “Fuck the EU” Nuland, whose pathological hatred of the Russians is largely responsible for the Ukraine the mess it is today.  (War, Fascism, Corruption, the deification of Nazi Sympathizers, etc.), who has been picked by Biden to be the Undersecretary of State for Political Affairs

This is a remarkably bad idea, if just because she was the prime mover behind the Ukrainian coup, which closely mirrors what happened at the Capitol on January 7

Who is Victoria Nuland? Most Americans have never heard of her because the U.S. corporate media’s foreign policy coverage is a wasteland. Most Americans have no idea that President-elect Biden’s pick for Deputy Secretary of State for Political Affairs is stuck in the quicksand of 1950s U.S.-Russia Cold War politics and dreams of continued NATO expansion, an arms race on steroids and further encirclement of Russia.

Nor do they know that from 2003-2005, during the hostile U.S. military occupation of Iraq, Nuland was a foreign policy advisor to Dick Cheney, the Darth Vader of the Bush administration.

You can bet, however, that the people of Ukraine have heard of neocon Nuland. Many have even heard the leaked four-minute audio of her saying “Fuck the EU” during a 2014 phone call with the U.S. Ambassador to Ukraine, Geoffrey Pyatt.

During the infamous call on which Nuland and Pyatt plotted to replace the elected Ukrainian President Victor Yanukovych, Nuland expressed her not-so-diplomatic disgust with the European Union for grooming former heavyweight boxer and austerity champ Vitali Klitschko instead of U.S. puppet and NATO booklicker Artseniy Yatseniuk to replace Russia-friendly Yanukovych.

………

Despite outrage from German Chancellor Angela Markel, no one fired Nuland, but her potty mouth upstaged the more serious story: the U.S. plot to overthrow Ukraine’s elected government and America’s responsibility for a civil war that has killed at least 13,000 people and left Ukraine the poorest country in Europe.

In the process, Nuland, her husband Robert Kagan, the co-founder of The Project for a New American Century, and their neocon cronies succeeded in sending U.S.-Russian relations into a dangerous downward spiral from which they have yet to recover.

Nuland accomplished this from a relatively junior position as Assistant Secretary of State for European and Eurasian Affairs. How much more trouble could she stir up as the # 3 official at Biden’s State Department? We’ll find out soon enough, if the Senate confirms her nomination.

………

The neocons’ coup de grace against Obama’s better angels was Nuland’s 2014 coup in debt-ridden Ukraine, a strategic candidate for NATO membership right on Russia’s border.

………

The muscle for Nuland’s $5 billion coup was Oleh Tyahnybok’s neo-Nazi Svoboda Party and the shadowy new Right Sector militia. During her leaked phone call, Nuland referred to Tyahnybok as one of the “big three” opposition leaders on the outside who could help the U.S.-backed Prime Minister Yatsenyuk on the inside. This is the same Tyanhnybok who once delivered a speech applauding Ukrainians for fighting Jews and “other scum” during World War II.

After protests in Kiev’s Euromaidan square turned into battles with police in February 2014, Yanukovych and the Western-backed opposition signed an agreement brokered by France, Germany and Poland to form a national unity government and hold new elections by the end of the year.

But that was not good enough for the neo-Nazis and extreme right-wing forces the U.S. had helped to unleash. A violent mob led by the Right Sector militia marched on and invaded the parliament building, a scene no longer difficult for Americans to imagine. Yanukovych and his members of parliament fled for their lives.

………
 
Nuland’s militaristic worldview represents exactly the folly the U.S. has been pursuing since the 1990s under the influence of the neocons and “liberal interventionists,” which has resulted in a systematic underinvestment in the American people while escalating tensions with Russia, China, Iran and other countries.

Nuland is a complete horror show, and she should be kept as far as possible from the reins of power as possible.

She is a disaster waiting to happen.

Do Not Let This Man Anywhere near to the Levers of Power

Between grossly mismanaging the Harvard endowment, using school funds to bail out a corrupt protege, making Obama’s economic team a cesspool of sexism, his championing the repeal of Glass Steagall, and his suggestion that it might make economic sense to use African countries as toxic waste dumps, Larry Summers has a long and inglorious record. 

Now he is making the talking heads tour, claiming that a one time stimulus payment of $2,000.00 might overheat the economy.

Assuming that every single person in the United States got a check, (They won’t, it would probably be less than half that) this would be about $660 billion, or about 3% of GDP.

I do not know how Larry Summers has achieved the positions of authority and prestige that he has, but he may very well be the single most overrated person inside the Washington, DC establishment:

Liberal economist Larry Summers said Thursday sending out $2,000 stimulus checks to Americans would be a “mistake,” making him the first prominent Democratic figure to come out against more direct relief.

Larry Summers is not a liberal economist. He is a a Robert Rubin Democrat.

He has made his career out of carrying water for corrupt finance.

  • In an interview with Bloomberg, Summers argued the federal government shouldn’t focus on boosting consumer spending with direct assistance because it runs the risk of a “temporary overheat” of the economy.
  • Summers noted he’s not “enthusiastic” about $600 checks either, which both parties in Congress already agreed to, for the same reason.

    ………

  • Summers is generally seen as a left-of-center economist—but he’s previously drawn criticism from progressives for favoring policies that helped big banks as well as mismanaging stimulus negotiations during the Great Recession under Obama.

Why this guy is not treated as if he were as radioactive as bottled water from the Fukushima Daiichi Nuclear Power Plant?

He’s always wrong, he’s is toxic to his co-workers and subordinates, and he’s shown this again, and again, and again, and again.

It’s Jobless Thursday on Wednesday

Because of the upcoming holiday, unemployment claims number were released a day early, and while down a bit, it initial claims remain above eight hundred thousand:

The number of workers seeking unemployment benefits fell last week, amid signs the economy is continuing to recover, but at a slowing pace.

New jobless claims, a proxy for layoffs, came in at 803,000 for the week ended Dec. 19, down from an upwardly revised 892,000 the prior week, the Labor Department reported Wednesday.

The latest figures marked a retreat from a three-month high. Still, claims are hovering at their highest levels since recent peaks in September, as states and local municipalities impose fresh restrictions on social and business activity to combat a surge in coronavirus cases.

Additionally, household spending and income dropped in November:

Household spending dropped for the first time in seven months and layoffs remained elevated as a surge in virus cases weighed on economic recovery.

After going on a shopping spree this summer, consumers closed their wallets last month, cutting spending by 0.4%, the Commerce Department said Wednesday. They cut spending on services such as restaurant meals, as well as purchases of goods, including big-ticket items like cars and appliances.

Household incomes also took a hit as the effects of federal aid programs put in place earlier this year fade. Household income—measuring what Americans received in wages, investment returns and government aid—fell 1.1%, the third drop in four months.

We have been coasting on expired stimulus, and the economy is running out of momentum.

A Theory of Economics That I Can Approve Of

What we need to is end once and for all the 40 year failure that is trickle down economics. We can replace that with Piñata economics instead. pic.twitter.com/NmZ6zqckqC

— Al (@davison_al) December 20, 2020

Piñata Economics makes more sense than my original though, eat the rich, because if you eat the rich, you dine for a day, but if you beat the rich with blunt instruments until the gold flows, you dine for a lifetime.

Recognizing the Obvious After 50 Years

Tax cuts for the rich do not boost the economy

That money goes into speculative and parasitic activities:

You don’t have to be a scholar to understand why it’s absurd to suggest that reducing the tax burden for rich people isn’t likely to be a particularly effective strategy when it comes to juicing economic activity.

………

Let’s be honest: Very few rational people believe in trickle-down economics. That’s not to say no rational people promote it. It’s just to say that the rational people who do, almost always have ulterior motives, usually involving the preservation of their own wealth.

………

There’s little utility in rehashing this further. I’m preaching to the choir. But I bring it up Friday because I’m running through the “checklist” of stories I keep on a yellow legal pad next to my second monitor. I try to get through that checklist each week. Sometimes, Friday is a “catch up” day. One of the stories I wanted to highlight this week, but didn’t get around to mentioning, is a new working paper by David Hope, of the London School of Economics, and Julian Limberg, of King’s College London, both PhDs.

The paper “utilizes data from 18 OECD countries over the last five decades to estimate the causal effect of major tax cuts for the rich on income inequality, economic growth, and unemployment.”

You’ll never guess what Hope and Limberg found.

I’m just kidding. Their findings are entirely predictable. Here are the main points:

  • The results suggest that tax reforms do not lead to higher economic growth. The effect size of major tax cuts for the rich on real GDP per capita is close to zero and statistically insignificant. The findings are very similar when matching upon pre-treatment covariate trajectories. Major tax cuts for the rich do not lead to higher growth in either the short or medium run.
  • Although the results show very slight indications of a flash in the pan effect of tax cuts for the rich on unemployment, these findings are neither statistically significant nor robust.
  • The results show that major tax cuts lead to a significant increase in inequality and that this effect becomes stronger with time. Three years after the reform, the top 1% income share increases by almost 0.6 percentage points in countries with a major tax cut. Over five years, tax reforms increase the top 1% share of pre-tax national income by more than 0.8 percentage points. This effect is highly statistically significant, with P<0.0001.

So not surprised. 

Trickle down has never been about improving the public welfare, it’s been about the powerful preserving their power.

At least, that’s what the Bolsheviks at the London School of Economics say.

Quote of the Day

The Point of Economics as a Discipline Is to Create a Language and Methodology for Governing That Hides Political Assumptions from the Public.

Matt Stoller

Mainstream economics, whether Freshwater or Saltwater, as Paul Krugman divides the discipline,* is constructed primarily to provide an intellectual gloss to the oligarchy.

Read the whole article.

*And I am using the term “discipline” VERY loosely.

This Is Not a Bad Thing

It appears that the City of London’s position as money launderer to the world is threatened by Brexit.

Financial companies are moving their EU operations to nations that will stay in the EU.

While the PTB in the UK are freaking out about this, this is actually a good thing.

The average Briton has been harmed by the growth of the UK financial industry, much in the same way that US citizens have been harmed by the US financial industry.

Above a certain size, a bloated financial industry reduces growth and becomes parasitic.

London will become more affordable for people who do productive work, and the resources and brain power that have been devoted to financial engineering will go to productive pursuits.

If these people move to Paris, or Frankfurt, or Brussels, it will make the lives of the people there worse, and the lives of the people in south east England better.

The UK will end up a more humane and more equal place as a result.

Jason Furman Sucks Wet Farts from Dead Pigeons

This you? https://t.co/feb7Ndm4kO pic.twitter.com/Y08lUEx5dw

— Capricciola🦉 (@Capricciola) November 16, 2020

Obama Administration #1 Wanker

One of the suggestions fro boosting the economy, and one that does not have to go through what will likely be a Republican Senate, is the mass forgiveness student loans.

It would have the effect of removing a burden from millions of recent, and not so recent, college graduates, improving their credit scores and making them more likely to make big ticket purchases, start families, etc.

Jason Furman, one of the strongest advocates of austerity in the Obama administration thinks that this is a bad idea, which, in an of itself, is probably the strongest endorsement for such a policy that you can find.

The post financial crisis economy was a recovery only for the Wall Street banks bailed out, the insurance companies bailed in by Obamacare, and other parasitic speculators who had the ear of Obama, Geithner, and their Evil Minions™.

For some reason ordinary people getting a break is beyond the pale for the Democratic Party establishment (There is no Democratic Party establishment):

Since the election, the Prospect has been getting a certain degree of attention for a series we did last fall called the Day One Agenda. In it we posited a number of things a Democratic president can do without having to pass new legislation, comprising a full and robust agenda of tangible progress. Considering that Joe Biden may face a hostile legislature as president, with control of the Senate in the hands of Mitch McConnell, the Day One Agenda has taken on new importance.

One of the more high-impact (and controversial) of these measures is the Education Department’s ability to cancel student debt under something called “compromise and settlement authority.” The federal government directly issues almost all student debt, and has the discretion to reduce balances completely, or anything short of that.

Since Chuck Schumer and Elizabeth Warren have been calling for student debt relief by executive authority, it appears that the powers that be are getting nervous about something actually potentially happening, as they’re fashioning a list of reasons to shoot it down. Former Obama administration top economist Jason Furman is taking the lead on this. He started by insisting that student debt forgiveness would be taxable, which… no. There’s a long history here, but suffice to say that the government forgives student debt all the time without making it a taxable event, and the IRS has every discretion to follow its past rulings (and remember this will be Biden’s IRS) and say that student loans are a non-taxable scholarship.

Undaunted, Furman admitted “some ambiguity” with his claim (which I guess is the new way of saying “I was wrong”) but nevertheless stated that student loan forgiveness wouldn’t be worth it because it would only be a “small positive” multiplier from an economic standpoint. “Give someone $10 a year for 10 years and they won’t spend $100 more today,” he wrote.

Now, there are a million reasons to cancel student debt that aren’t economic in nature. Student debt acts like a medieval indenture and if we have the power to eliminate it we should. But on the economic point, what we’ve done with student debt during the pandemic (which maybe Furman doesn’t know about?) makes it more urgent that cancellation proceed on the first day in office. 

……… 

The Trump administration put that pause in effect back in March—there’s that executive branch power flashing again—meaning that 33 million Americans have not needed to make student loan payments since then. This has been an unsung part of the economic effect of coronavirus relief: taking hundreds dollars a month (the average payment is $393) off the books of 33 million people really improves their budget.

But this is coming to an end. Last week the Education Department started informing borrowers that the freeze on payments ends December 31. At one point President Trump said he would extend it, but that was before the election was RIGGED and all non-spiteful governing stopped. So 33 million Americans will have the sudden shock of an additional large bill, with many of them out of work and having exhausted their pandemic assistance and even unemployment benefits.

………

There are those who will preach about the unfairness of it all, that those who didn’t go to college or paid off their loans get nothing. This pitting of people against one another is bad even in the best of times. (There are also plenty of executive actions you can pair with this to make it broad-based; seizing drug patents to lower prescription prices, for example, or high-road contracting that would force all federal contractors to pay a $15/hour minimum wage.) In the worst of times like right now, it’s downright stupid. Forcing billions in payments back would hurt everybody. The family that has to pay again will eat out less, or put off that new piece of furniture they wanted. The entire economy will get socked.

It’s not seizing drug patents.  It’s called compulsory licensing.

Big pharma still gets its vig, it just does not get to print money.

Because Trump likely won’t budge, we’re going to have a chaotic three weeks (absent Congressional action) when student loan payments are back. Biden can make this significantly better in a very visible way. And he can do it by himself.

Do this.

There will be gnashing of teeth from the Republicans and the conservative wing of the Democratic Party (but I repeat myself), but who gives a crap.

F%$# them with Cheney’s dick.

H/t Atrios.

GDP and Unemployment Numbers Today

The initial jobless claims numbers are out, and they are not so bad

The number of Americans filing initial claims for unemployment insurance fell last week to the lowest level since the pandemic began, suggesting layoffs are easing despite a rise in coronavirus infections.

Initial jobless claims, a proxy for layoffs, fell by 40,000 to 751,000 in the week through Oct. 24, the Labor Department said Thursday. That was the lowest level of claims since mid-March, just before the pandemic shut down much business activity throughout the U.S.

But the other shoe dropped on the Covid front:

Daily virus infections reached new highs over the past week, and it is too early to tell how employers and consumers will respond.

Claims remain exceptionally high by historical standards. Last week’s new claims were more than three times the weekly average early this year, before the pandemic. Initial claims, which reflect the number of people laid off only recently and not those receiving assistance for more than a week, are just one measure of unemployment assistance. In total, more than 20 million Americans are still receiving unemployment benefits through regular state and emergency programs.

The GDP numbers for the 3rd quarter also came out today, and that initial report shows that the economy grew at 7.4% between July and September, which is impressive, but with the stimulus having ended, and Covid infections hitting new records, I am calling (as I always do) a dead cat bounce:

U.S. economic output increased at the fastest pace on record last quarter as businesses began to reopen and customers returned to stores. But the economy has climbed only partway out of its pandemic-induced hole, and progress is slowing.

Gross domestic product grew 7.4 percent in the third quarter, the Commerce Department said Thursday. The gain, the equivalent of 33.1 percent on an annualized basis, was by far the biggest since reliable statistics began after World War II.

The rebound was fueled in part by trillions of dollars in federal assistance to households and businesses. That aid has since dried up, even as the recovery remains far from complete: The economy in the third quarter was 3.5 percent smaller than at the end of 2019, before the pandemic. By comparison, G.D.P. shrank 4 percent over the entire year and a half of the Great Recession a decade ago.

………

Economists said the third-quarter figures revealed less about the strength of the recovery than about the severity of the collapse that preceded it. G.D.P. fell 1.3 percent in the first quarter and 9 percent in the second as the pandemic forced widespread business closures. A big rebound was inevitable once the economy began to reopen. The challenge is what comes next.

I do not think that the 4th quarter will come even close to the numbers, particularly with Covid exploding.

*It’s an old Wall Street saying, “Even a dead cat will bounce if it falls from a great height.”

About F%$#ing Time

Chile has finally a ditched the neoliberal Milton Friedman abomination of a constitution that the murderous Agusto Pinochet foisted on them almost 40 years ago.

Over 70% of voters have approved a plebiscite to replace that constitution.

Milton Friedman, and his “Chicago Boys” made Chile, and the rest of the world a much worse place.

At some point, we should total up the deaths from their machinations.

I don’t think that they would beat out Josef Stalin, but I’m pretty sure that they make Pol Pot look a piker.

Good News on Initial Claims

They have fallen to within spitting distance of the pre-2020 record.

Obviously, this is good news only in a relative context.

 I still do not know what is keeping the economy afloat

New applications for unemployment benefits so far this month fell to the lowest levels since the coronavirus pandemic shut many businesses in March, a sign of improvement for the U.S. economy.

Weekly initial claims for jobless benefits, a proxy for layoffs, fell by 55,000 to a seasonally adjusted 787,000 in the week ended Oct. 17, the Labor Department said Thursday. Claims for the prior two weeks were revised lower, reflecting new data from California. The revised level of claims for the week ended Oct. 3—767,000—was the lowest since the March 14 week, when less than 300,000 new claims were filed.

Declining layoffs add to indicators the economy is continuing to heal from the pandemic downturn. The National Association of Realtors reported Thursday that existing-home sales rose 9.4% in September to the highest level since 2006, and consumer spending rose last month, despite historically high unemployment.

Still, with millions out of work and concerns about a resurgence of the virus in many parts of the country, many economists expect the pace of economic recovery to slow.

 Still waiting for the other shoe to drop,