Beat the Press

Tim Russert Bashes Social Security, Yet Again

If Social Security was a private corporation, Tim Russert would be unemployed and NBC would be out of business. (When you misrepresent the financial state of a private business in the way that Russert misrepresents the financial state of Social Security, you get sued for libel.)

From the NYT�s Europe Bashing Desk

The NYT�s Europe-bashing desk pulled out the stops today in going after Germany. Readers would have learned about Germany�s �chronic double-digit inflation.� This surely would be news to most readers, since the OECD puts Germany�s inflation rate over the last year at just over 2.0 percent.

"I'm Hoping For Prices to Drop"

No, that's not me rooting for a quick end to the housing bubble; those are the words of David Lereah, the chief economist of the National Association of Realtors, as quoted in the Wall Street Journal. Yes, this is the same economist who until recently was assuring buyers that house prices will never fall.

The new data on pending sales of existing homes show a year over year drop of 16 percent, yet more evidence that the bubble is bursting.

--Dean Baker

The Last Throes of the Housing Bubble

The standard story of financial bubbles has that financing gets progressively more tenuous as the bubble expands.
BusinessWeek has a nice piece about the latest and most pernicious financial innovation of the current bubble, the option ARM. It's too bad that no one in a position of authority was awake before the bubble grew to such proportions.

--Dean Baker

Monthly Wage Growth Data: Hours of Pain

Regular users of government data (like reporters) should know its limitations. Many of the series are highly erratic, meaning that any individual number contains a considerable amount of error and a limited amount of information.

The hourly wage data very much fit this bill. In the real world, hourly wage growth doesn�t change very much from month to month. (How could it? � not that many people change jobs in a month; and wages don�t suddenly plunge or soar for workers keeping their jobs.)

The Washington Post Redefines "Fast"

The Post has an article headlined "Fast-Growing Countries to Gain More Clout at IMF." The list of countries is China, South Korea, Turkey, and Mexico. The first three countries can reasonably be described as "fast-growing," but not Mexico. Mexico's per capita GDP growth has averaged just 1 percent annually for the last decade, a slow rate for any country, but an especially pathetic pace for a developing country. Whatever the reason Mexico is getting increased clout at the IMF, it has nothing to do with fast growth.

--Dean Baker

China�s Demographic Squeeze? Have the Martians Invaded?

The Times ran an article about India�s rise as a manufacturing force. Much of it is informative, but some of it is painful. In the painful category is the claim that global manufacturers are turning to India because of �a serious demographic squeeze facing China.� It then goes on to point out that although China has a larger population than India, because of China�s �one child policy� India will have more young workers in less than a decade.

The Statistical Discrepancy: A Source of Phony Wage Growth

A New York Times article today commented on the extraordinary jump in wages over the last two quarters. Before anyone breaks out the champagne, take a look at the statistical discrepancy in the GDP accounts.

This might be is a bit nerdy, but there is an important story here. In principle, it is possible to add up GDP on either the income side (e.g. wages, interest, profits) or the output side (e.g. consumption, investment, government) and get the same number. Of course, they never end up exactly the same � you don�t get perfect accounting in a $13 trillion economy.

Inviting China to the I.M.F.: Too Late

Like the exclusive WASP-only country club that opens the door to blacks and Jews after it can no longer raise the money to fix the roof, the I.M.F. is inviting China to play a larger role. The problem is that it is far too late to invite China to be a junior partner in this U.S. dominated institution, a fact that would be more apparent if reporters recognized the true size of China�s economy.

Not Your Father's Recession

Virtually all economists missed the 2001 recession, in most cases not even predicting it until it was almost over. The main reason was that the recession did not follow the usual pattern. It was the result of the stock market crash decimating tech investment. All prior post-war recessions had been brought on by higher interest rates leading to a falloff in housing construction and new car buying.

Rewritten History on AIDS

The NYT applies a large does of whitewash in its discussion of President Clinton�s current efforts to promote the treatment of AIDS in developing country. While the article notes in passing that Clinton �conceded that his administration fought too long to protect the patent rights of pharmaceutical companies against countries trying to make or import cheaper AIDS medicines,� this lone sentence hardly does justice to Clinton�s work on behalf of the pharmaceutical industry during his tenure in the White House.

Yet More Whining About Entitlements at the Post

Okay folks, get your checkbooks out. The people who pledged a CEPR contribution for every Post article/column whining about entitlements owe us money. This one is from Bob Kerrey and Warren Rudman, the co-chairs of the Concord Coalition.

Falling Wage Shares

The NYT had a good story on the falling wage share of output and the growing concentration of wage income among high wage earners (e.g. doctors, lawyers, CEOs). While the basic story is accurate, there are a couple of points that should be treated with more care.

Income Inequality: Missing Mechanisms

There has been a raging blog debate, following in the wake of some recent Paul Krugman columns, as to whether the rise in income inequality is due to policy or the natural workings of the economy. While Krugman indicated that he believed the policy view (promising details later), many of the economists weighing in have said that they don�t see any policy mechanism(s) that could explain the rise in inequality.

NYT Discovers Seller Side Concessions

The New York Times had an excellent piece this morning on the fact that sellers are increasingly offering substantial non-price concessions in order to move their homes. As the article notes (and has been mentioned repeatedly on BTP) these concessions are not recorded in the sale prices that enter the standard house price indexes. Therefore these indexes are missing some of the price decline in recent months.

I promised a BTP goat prize to articles commenting on housing prices that did not note this seller side concession issue. In the future, such articles will get a BTP-NYT goat prize.