Dean Baker

Recent Articles

Good News From Ireland?

The NYT contrasts the resistance to austerity measures in Greece with the enthusiastic embrace of budget cutbacks by the Irish government. It is worth noting that Ireland's unemployment rate has increased from 4.6 percent before the crisis to 13.0 percent in the most recent data. It is unlikely that many of the economists and policymakers who promoted policies that lead to the crisis, or the bankers who profited from these policies, are among the 13.0 percent of the labor force who are unemployed. --Dean Baker

Secret Data Source Overlooked by the Media

On Wednesday of every week the Mortgage Bankers Association releases its index of mortgage applications which provides data on applications for mortgages for both purchase mortgages and refinancing. For some reason this index is almost completely ignored by economic reporters . This is difficult to understand. While a single week's data is of limited value, because it is so erratic, a four week average can provide important up-to-date information on the state of the housing market. While speculators have played some role in buying up blocks of homes, especially after foreclosure, the vast majority of homes are purchased with mortgages. This means that the applications index is giving analysts an early glance on the state of the housing market. (Applications typically precede sales by 4-6 weeks.) The news last week is pretty bad in this respect. While applications are up some from prior weeks, applications over the last month have been running close to 10 percent below the badly...

What Percent of Stimulus Financed Wind Turbines Come From Overseas?

That is undoubtedly the question that many would have after reading a Post article on an effort to stop stimulus spending on wind energy because some of the turbines are built in China. The point of stimulus was of course to create jobs in the United States. If it turned out that spending in a particular area was not creating jobs in the United States, then it doesn't fit very well in a stimulus package (although it may still be useful spending). The Post article repeated a few assertions, but it did not provide readers any basis to assess the key questions: how many jobs are being created here? what share of the wind turbines are constructed in the U.S? how large are the savings from buying them from abroad? Since these questions were not addressed, readers of the article would have little basis for assessing the debate over energy spending in the stimulus package. --Dean Baker

The Bush Tax Cuts Did Not Lower the Budget Deficits

The Post tells us that reconciliation: "is a procedure created in 1974 to help lawmakers advance politically difficult budget legislation, particularly measures that reduce the deficit." It then tells us that it has been used 22 times. Two of these 22 uses were to pass President Bush's major tax cuts. --Dean Baker

The NYT Mind Reading: Tells Readers That Financial Markets Don't Like the UK's Budget Deficit

The NYT told readers that: "The pound fell to $1.4954 on Tuesday, its lowest level against the dollar in nearly 10 months. The yield on 10-year government bonds, known as gilts, slid as investors fretted that Parliament would be too fragmented after a crucial election in May to whip Britain’s messy finances back into shape." That's pretty good that the NYT can read concern about this complex scenario into the market's 1-day movement. It is especially impressive since the yield on the 10-year bonds seemed to go the wrong way for this story. A lower bond yield usually means that investors are less concerned about the country's prospects and therefore require a lower risk premium. The biggest threat to the UK's economy is that it appears to have re-inflated its housing bubble. This is setting up the country for a further economic collapse at some point in the future when interest rates return to more normal levels. The NYT's market insiders were unable to see to the problems developing...