Economy

Will Round Two Knock Out Greece?

The ailing country prepares for another round of elections as talk of leaving the Eurozone escalates.

(AP Photo/Kostas Tsironis)

Consistent in its suicidal tendencies, the Greek political system failed this week to come to an agreement on forming a coalition government. The leaders of Greece’s political parties—as we know from the published minutes of the meetings with the President of the Republic—showed themselves, with one or two dignified exceptions, tragically unable to rise to the occasion. New elections have now been called. The outcome on June 17, or even the mounting uncertainty of the pre-election period itself, could spell the end of Greece’s membership of the euro.

Wall Street Likes Facebook

Today's Balance Sheet

Facebook makes its blockbuster market debut today, and as The New York Times points out, "the trading on Friday is the the equivalent of a must-see Super Bowl Sunday showdown for people who don’t ordinarily watch a football game." The social network's stocks have been priced at $38 a pop, which means the company is valued at $104 billion, making it the second biggest initial public offering ever. If the company's first day on Wall Street follows the tech trend, it could be worth $137 billion by the end of the day. 

Is a Vote Against Austerity Enough?

(AP Photo / Michel Spingler)

 

The voters in France and Greece have rejected the parties of austerity. But it is not yet clear that the party of growth can deliver the recovery that the citizenry wants. On both sides of the Atlantic, the obstacles are more political than economic.

In Europe the conventional wisdom, enforced by Germany and the European Central Bank, still holds that the path to growth is budget restraint. Unfortunately, the more that budgets are tightened, the more economies shrink and the more revenues fall. No large economy has ever deflated its way to recovery.

Calling for a Kinder Capitalism

Is the change that Occupy Wall Street and other groups have been fighting for finally on its way?

(Flickr / Atomische • Tom Giebel)

In a 2009 poll conducted by the BBC, only one out of every four Americans thought that capitalism in its current form was working well. Then came Occupy Wall Street (OWS), a physical manifestation of the anger of millions of Americans at an economic system in which big banks are bailed out by taxpayers only to turn around and pay billions in bonuses while filing record home foreclosures. Between the second quarter of 2009 and the fourth quarter of 2010, our nation's total income rose by $528 billion, but of that economic growth, 88 percent went to corporate profits and just 1 percent—that's right, 1 percent—went to workers.

Back to the Deficit

Today's Balance Sheet

The House plans to vote today on a Republican plan to avoid the $110 billion in Pentagon sequestration cuts that would be triggered at the end of the year because of the failure of last year's supercommittee. "People know at the end of the day that this is not going to be all sunshine and cotton candy," said Representative Tom Cole, a Republican from Oklahoma.

Job Openings on the Rise, Hiring, Not So Much

Today's Balance Sheet

There were 3.74 million job vacancies at the end of March, the highest level since July 2008. The rise was attributed to increased demand in construction and manufacturing, and could show that companies are gaining confidence in the recovery as the year goes on. The small business optimism index rose to 94.5, a high not seen since February 2011

Dems Get a Super PAC Jump-Start

Today's Balance Sheet

Billionaire George Soros is jumping into the 2012 election funding race, donating $1 million apiece to pro-Democratic super PACs America Votes and American Bridge 21st Century. This cash infusion—much needed given how Democratic super PACs have struggled to match the fundraising pace of the conservativeAmerican Crossroads—may bring other liberal donors to the fray despite longstanding misgivings of the influence of super PACs from both the Obama camp and the pool of untapped liberal donors.

Marchons, Marchons!

François Hollande's victory in France offered a stiff rebuke to Germany's austerity regime, but the new president faces challenges in delivering on his campaign's pro-growth rhetoric.

(AP Photo/Francois Mori)

 

Look to the Revisions!

(wools/Flickr)

As far as April is concerned, the jobs report is disappointing; 115,000 new jobs, just enough to keep pace with population growth. Unemployment dropped to 8.1 percent, but labor force participation also declined, which means that joblessness is lower because fewer people are searching for jobs.

What’s interesting is that this runs counter to a host of other economic indicators, all of which point to a brighter picture. According to Gallup, for example, economic confidence is a four-year high, consumer spending has edged up, and small-business optimism has risen to its highest levels since the summer of 2008.

A Post-Buffett Rule Corporate Tax Reform Push? Not Likely.

Today's Balance Sheet

Although tax reform has been in the national spotlight lately—between the Obama team's April Buffett Rule push and the Republican primary candidates' proposals (remember 9-9-9?)—don't expect corporate tax reform to be a legislative priority in the near future. “From the beginning, we acknowledged that this would be a heavy lift and take time,” an official from the Treasury Department said.

The Case for Just Giving Money to People, Part Infinity

(401K/Flickr)

In a few weeks, tens of thousands of students will graduate from college or university, and attempt to make their way in the economy. During better times, these former students would find jobs, rent apartments, and almost immediately begin to pump money into the economy. But—three years after the nadir of the economic crisis—the job market for young people is still terrible, and many have opted to live with their parents in order to save money. This, you can probably imagine, has only made the economy worse. Here’s The Washington Post:

Austerity in the US!

(401K/Flickr)

The defining feature of Republican economic policy for the short-term is immediate austerity—big spending cuts to social programs, coupled with tax increases on lower-income people, and a reduction in the size of the federal workforce. Conservatives claim that this will lead to immediate job growth and a more robust recovery.

Voting Out Austerity in Europe

The elections in France and Greece this week may lead to a reexamination of how the euro zone approaches the debt crisis.

(Sipa via AP Images)

Could this week produce a turning point in Europe’s long, Sisyphean battle against the debt-and-banking crisis that has been ravaging it for the last two-and-a-half years? This coming Sunday, France will likely vote for Francois Hollande, a pro-Keynesian Socialist, as its new president. In Greece, on the same day, parliamentary elections will produce a hammer blow to the existing two-party system and will significantly increase the strength of the anti-Europeans on the far left and the extreme right.

The Death and Life of Detroit

Neighborhood groups are bringing the blighted city back, one block at a time. Will City Hall stand in their way?

(Flickr/Sascha Frank)

A shivering knot of college students stands outside Motor City Java House as John George unlocks the front door. It’s 15 degrees in Detroit on a February morning, and fresh snow covers the Old Redford business district. Cold weather doesn’t stanch the flow of volunteers coming to the city’s northwest corner: They show up every Saturday, arriving in shifts, ready to swing sledgehammers and twist crowbars. George’s wife, Alicia Marion, has learned to expect this traffic since she opened the coffeehouse in 2010. She puts on an apron and starts brewing.

Consumer Screwgie of the Day

The scene of the crime.

There are a lot of things companies do to fool consumers, some more meaningful than others. They pack items in large boxes to make them look bigger, they offer questionable claims about their products' effectiveness, they weave absurd tales about how your life will be changed if you buy their thing. Navigating your way through that thicket of baloney is part of being a smart consumer, and to a degree we accept it as part of the price of having free commercial speech. Short of outright fraud or practices that do substantial harm to consumers, we understand that people who are selling things can say almost anything they want, and we accept that being a consumer means that manufacturers and retailers are going to try to fool you. In the immortal words of Morty Seinfeld, "Cheap fabric and dim lighting. That's how you move merchandise."

But there are some kinds of deception that are beyond the pale. It's one thing to sell you something that might not be up to your expectations; perhaps your expectations were just too high. It's something else to fool you into buying one thing, when you actually wanted to buy something else. I give you the modern American gas pump...

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