Economy

Unemployment Hits 10.8 Percent in the Eurozone

Today's Balance Sheet

The Washington Post
Eurostat—the European Union's statistics agency—says unemployment in the eurozone went up by 162,000 in February. Total unemployment reached 17.134 million—10.8 percent—after ten straight months of rising, the highest recorded figure since the data began being compiled in January 1995. "We expect it to go higher, to reach 11 percent by the end of the year,” said Raphael Brun-Aguerre, an economist at JPMorgan. “You have public sector job cuts, income going down, weak consumption. The economic growth outlook is negative and is going to worsen unemployment.” Debt crises and austerity programs are most certainly a big factor in the job losses—the countries hit worst by unemployment, like Spain (23.6 percent) and Greece (21 percent in December), are also the ones scrambling to stave off default—and economists are divided on the utility of fighting deficits while so many EU economies are in shambles. Germany's unemployment held steady at 5.7 percent in February, highlighting sharp economic...

Will Obama Get Blamed for High Gas Prices?

The good old days. (Flickr/photomatt28)
Everyone involved in politics knows that there is almost nothing the president can do to affect the price of gasoline. Democrats know this. Republicans know this. People in the oil industry certainly know this. But they all, at various times, play a game in which they try to deceive the American public into believing something they know to be false. So right now, an oil industry group is running ads saying the high price of gas is Barack Obama's fault (you'll be shocked to hear that the ubiquitous Koch brothers are involved ). Republican leaders are saying the increasing price at the pump is Obama's fault. And what about the public? Are they buying it? The polls we've seen so far actually show that the answer is, not really. A CNN poll asked how much blame people assigned to various factors, and the oil companies came in first, with 55 percent saying they deserved a great deal of blame. "The policies of the Obama administration" got a great deal of blame from 24 percent, just about...

The Employer Strikes Back

In the lockout era, winning union representation is not a one-time thing.

(Flickr/Darwin Bell)
Becki Jacobson, 48, has worked as a process technician at American Crystal Sugar Company in Minnesota since she was 18. Eight months ago, she showed up for work, but the company refused to let her start her shift. Like 1,300 other members of the Bakery, Confectionery, Tobacco & Grain Millers union (BCTGM) at American Crystal Sugar, Jacobson wasn’t fired. She was locked out. Crystal Sugar is wielding a powerful weapon against its workers: Its right to deny them work for refusing a worse contract after their existing one expired. Jacobson and her co-workers are left with a choice. They can hold out while non-union workers do their jobs, make huge concessions, or dissolve the union. When union negotiations began last May, the beet-processing company asked for major concessions on health-care benefits. They also proposed getting rid of outsourcing protections. Crystal took a hard line. “Every time we went to negotiate,” says Jacobson, “the company refused our proposals and kept going...

Someone's Lucky Day

(Flickr/doncav)
Since the Mega Millions jackpot is now at a record $540 million, I thought it'd be a good time to link back to an interview I did in 2010 with the brilliant filmmaker Jeffrey Blitz, whom you may know from his Oscar-nominated documentary Spellbound , or his excellent feature film Rocket Science . I interviewed him about his film Lucky , which offers portraits of lottery winners to see how their lives changed after coming in to millions of dollars. The film doesn't offer simple answers to the questions it poses, but overall it's not a pretty picture. Here's an excerpt: You have one subject who had his siblings put a hit out on him (unsuccessful, I should note). Were there any other depths of human depravity this subject exposed that surprised you? That was a winner named Buddy who, indeed, had his siblings try to kill him. Once was through a hit man. Buddy also told us that the bolts were taken out of his car and that he was given arsenic twice. And while this gives the movie some...

Summers' Colleague Criticizes Kim

(AP Photo / Michael Dwyer)
Larry Summers has been unnaturally silent on President Obama’s surprise decision to pass him over for the World Bank presidency in favor of Dartmouth University president and public health hero Jim Yong Kim. Well, one of Summers’ closest chums at Harvard’s Kennedy School, Lant Pritchett, has now gone public with a scorching blast at Kim. Pritchett told Forbes magazine, “It’s an embarrassment to the U.S. You cannot with a straight face say this person is the most qualified to lead the World Bank.” It was Pritchett, while working under Summers at the World Bank in 1991, who drafted the embarrassing memo that Summers signed on the supposed economic benefits of exporting polluting industries to third world countries. Pritchett later contended that the leaked parts of the memo were doctored to omit his ironic intent. The full memo never surfaced. Pritchett took the fall for Summers’ embarrassment when he was up for the presidency of Harvard. So, it’s fair to say these senior and junior...

Jobs versus JOBS: Obama’s Mixed Message

(AP Photo/Charles Dharapak)
More mixed signals from the Obama administration on jobs: A craven capitulation on regulation in the name of job-creation, and a surprisingly good speech by a top official on the importance of American manufacturing. President Barack Obama will shortly sign the so-called bipartisan “JOBS” Act. The law is neither about creating jobs, nor is it bipartisan. The law exempts an estimated 80 percent of new publicly traded corporations from the Securities and Exchange Commission’s (SEC) usual disclosure requirements for up to five years after their initial public offering (IPO). The law was promoted by investment bankers, venture-capital firms, and the Republican leadership, who were all alarmed that IPOs (not surprisingly) have declined in today’s distressed economy. The remedy? Gut investor protections, the better to promote new stocks. The premise is that by facilitating new stock offerings, the law will create jobs. Mainly, it will create jobs for one set of lawyers working to exploit...

"All of the Above" on Energy

Today's Balance Sheet: New developments on the energy front

The Wall Street Journal
In the wake of Obama's big energy push last week, several new developments in domestic energy production are in motion. The Environmental Protection Agency is putting greenhouse gas emission limits on new power plants, a move that will make it near impossible for new coal plants to be built in the United States—a win for those trying to combat climate change. The Senate is also getting ready for a big fight over repealing tax cuts for the oil industry. Democrats want to replace the cuts with tax credits for alternative energy, which they say will drive down prices and, by raking in $24 billion over the next decade, help lower the deficit; Republicans say oil companies will raise prices in response. Two big energy companies are moving forward with pipelines to rival Keystone XL—ones that don't need approval from the State Department since the portions of these pipelines that cross international borders have already been built. Environmentalists have spent most of their time fighting...

A Surprise World Bank Pick

(AP Photo/Haraz N. Ghanbari)
President Barack Obama startled handicappers by selecting Dartmouth President Jim Yong Kim as the U.S. candidate to lead the World Bank rather than the reported front-runner Larry Summers, Obama's former National Economic Council director. The Korean-born Kim is a medical doctor, anthropologist, and MacArthur fellow, best known for his pioneering work to fight HIV and tuberculosis in the Third World. Kim helped develop treatments for drug-resistant TB, and then successfully pushed to reduced the cost of anti-TB drugs. He is close associate of Dr. Paul Farmer, the lead founder of Partners in Health and subject of Tracy Kidder’s 2003 book, Mountains Beyond Mountains. While Third World leaders had pushed for an alternative to Summers, Kim was a total surprise. The appointment is a two-fer in the sense that it gives the job both to an American and to an Asian, as well as a welcome breakthrough in that the presidency goes to someone with on-the-ground work fighting poverty and disease as...

Obama Picks Jim Yong Kim for World Bank

Today's Balance Sheet: Obama nominates the Dartmouth College head for the prestigious position.

The New York Times
In a surprise move, President Barack Obama is nominating Dartmouth College President Jim Yong Kim to head the World Bank. The announcement will be made by Obama, Treasury Secretary Tim Geithner, and Secretary of State Hillary Clinton—who first recommended Kim for the post—in the Rose Garden later today. The actual decision will be made in April by the World Bank's 25-member board. Since the organization's founding in 1944, an American has always been president, perhaps influenced by the fact that the United States has the largest share of the vote on the board because of the size of its economy. Developing countries are expected to put forward at least three nominees. Kim will soon depart for a global tour to rally support for his nomination. Many expected Obama to nominate United Nations ambassador Susan Rice, Senator John Kerry, or former National Economic Council director Larry Summers instead of the Dartmouth president, who is the first Asian-American to be president of an Ivy...

Spin Without Limits

The economic genius makes a point. (Flickr/Marion Doss)
A few times in recent elections, a debate moderator has said to the candidates, "There's been a lot of negativity in this race. Is there anything nice you can say about your opponent?" To which they usually reply, "He's got a lovely family." But the inability to admit that the other guy ever in his life did anything right just makes you look like a phony, or a jerk, or both. To wit : Hours after he secured the endorsement of former Florida Gov. Jeb Bush, Mitt Romney credited his brother, President George W. Bush, with keeping the country from a great depression in 2008. "I keep hearing the president say he's responsible for keeping the country out of a Great Depression," Romney said at a town hall in Arbutus, Maryland. "No, no, no, that was President George W. Bush and [then-Treasury Secretary] Hank Paulson." So let's get this straight: Bush saved America, and then America was fine, and then Barack Obama came in and ruined everything? How does that explain the fact that the economy...

The Worst is Over?

Today's Balance Sheet: Is Europe finally on the way up?

The Wall Street Journal
Fears that the euro crisis will cross the Atlantic have started to ease after European leaders took precautions to stave off default in Greece and shore up other ailing economies. “In the past few months, financial stresses in Europe have lessened, which has contributed to an improved tone of financial markets around the world, including in the United States,” said Federal Reserve chair Ben Bernanke. Treasury Secretary Timothy Geithner agreed: “The European economies at the center of the crisis have made very significant progress.” That doesn't mean the global economy is all sunshine and daisies, though. The eurozone's economy contracted at the end of 2011, and weak growth there has resulted in depressed growth here too. Also, the situation in Spain is growing more precarious by the day, with one investor saying “it has replaced Italy as the lightning rod." Despite the ever-present risks, European Central Bank president Mario Draghi still says "The worst is over," but given the...

Hard Work Doesn't Pay for Home-Care Workers

Home-care workers aren't casual babysitters, and it's time to make sure they don't get paid like one.

(Flickr/Steve Rhodes)
Say you’ve got a booming industry, one that already employs 2 million workers in the U.S. and is poised to add 1.3 million additional jobs by 2020. Imagine that the jobs cannot be off-shored, that the work helps decrease federal deficits, and millions of Americans depend on the industry just to get through their daily lives. Now ask yourself: Should it be legal to pay the workforce of this thriving and essential industry less than the minimum wage? Currently, it’s perfectly licit. A loophole in the Fair Labor Standards Act of 1938 exempts home-care workers—employees who provide personal care to the elderly and disabled in their homes—from basic work protections like the minimum wage and overtime pay. The rationale, according to the National Employment Law Project (NELP), was that people providing “companionship services” to seniors and people with disabilities were like casual babysitters. But this exemption, NELP points out, was never meant to include the extensive housework...

Sunshine Dystopia

By blocking efforts at equal pay and electoral voices, Florida legislators aren't instilling much hope in the conservative brand.

Flickr
Had enough of Republican presidential candidates spinning vague ideas for America’s future? In the Florida state house, Republican legislators are being far more concrete with their plans. Rather than focusing on laws to support working families and small business growth, Florida Republicans are hell-bent on protecting big businesses and discouraging participation in our democracy. According to the Economic Policy Foundation, a business industry-funded think tank, companies steal upwards of $19 billion from their employees every year in unpaid overtime. Add to that employees who are not paid the legally mandated minimum wage or who go entirely unpaid for under-the-table jobs, and the economic loss is even greater. Whatever you think about raising the minimum wage or permitting the undocumented to work in the United States, we can all agree that those who work should be compensated as promised. Unfortunately, from individual families employing domestic workers to giant retail...

Underdogs Lose the Money Crutch

Today's Balance Sheet: Is the GOP primary finally petering to a close?

The Economist
Big states that are expensive to have a campaign presence in are up next in the GOP primary, and they aren't going to be too friendly to the candidates' dwindling coffers. Seven primaries were held in February, and the contenders drained their funds in order to perform well in the high-stakes contests: Romney spent over $12 million while raising $11.5 million; Santorum raised $9 million, but spent $7.6 million; and Newt Gingrich spent $1.5 million while raising $2.6 million. Super PACs have become less of a supplement and more of a crutch as the GOP race plods on, keeping moribund campaigns alive. Foster Friess, who has helped keep Santorum afloat with regular cash infusions to the Red White and Blue Fund, said yesterday that the "role I needed to play is maybe accomplished." The super PAC ended the month with only $365,000 in the bank, compared with the $10.5 million still on hand for pro-Romney Restore Our Future, which has started to collect the Republican establishment donors who...

Preventing Wall Street’s Latest Sucker-Punch

(AP Photo/J. Scott Applewhite)
Mercifully, the misnamed JOBS Act did not sail through the Senate yesterday as expected. The Republican-sponsored “bipartisan” act is a Wall Street wish list of exemptions from investor protections that would allow some 80 percent of new stock offerings to avoid the usual disclosures. Except for its Orwellian, contrived acronym (Jumpstart Our Business Startups) JOBS has nothing to do with jobs. More likely, it stands for Just Obfuscate with B.S. The bill would even undo the Sarbanes-Oxley rules, enacted after the Enron scandal, prohibiting “stock analysts” from touting shares in order to help investment bankers get underwriting business. The Obama White House, always eager to curry favor with Wall Street donors and looking for something it could claim as bipartisanship, indicated it would sign the bill. Shame. With that signal, the measure sailed through the House with only 23 Democrats voting against. Shame again. Finally, the chair of the Securities and Exchange Commission, Mary...

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