Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Home Sales At 7-Year LowThe latest numbers show that home sales are still in the tank throughout the country, despite mortgage rates that are at near 50-year lows.From Reuters: Pending sales of existing U.S. homes dropped to a seven-year low in November, data showed on Tuesday, as rising job losses and a deepening economic recession kept potential house buyers on the sidelines. Read the rest of the story here. Labels: housing market, real estate market Report from the ASSAA quick report from the 2009 meetings of the Allied Social Sciences Association (as the economists grandiosely call their meetings) in San Francisco. This will have to be short, since I am on the clock at an Internet café one block from the San Francisco Hilton at Union Square, not having brought my laptop with me on the trip. Plus I have to get back to our booth at the book exhibit to haggle with someone from the company that runs the book exhibit about the fact that two of our boxes never arrived at the booth, even though we shipped them at great expense via UPS. Ah, professional meetings!My panel went well on Saturday. It was sponsored by the Union for Radical Political Economics (URPE), and the title of the panel was Using Economics for Social Change: Five Organizations Report. The other panelists were Heidi Hartmann of the Institute for Women's Policy Research, Larry Mishel of the Economic Policy Institute, Kevin Danaher of Global Exchange, and David Barkin of Universidad Autonoma Metropolitana-Xochimilco in Mexico. The panel was officiated and organized by Lane Vanderslice of World Hunger Education Service. It was quite well attended--I'd say around 50 people were there, including several familiar faces, including Randy Albelda of UMass-Boston (and a D&S associate) and Pat Duffy, URPE staffperson. A short but lively discussion period followed. I enjoyed all the talks, but I was particularly excited about David Barkin's reports about solidarity economics activity among indigenous people in rural areas of Mexico. The only other panel I've had time to visit was another URPE-sponsored panel, on minimum wages. I had hoped to catch the talk by Jeannette Wicks-Lim of the Political Economics Research Institute (she's working on an article for D&S on a related topic) comparing Earned Income Tax Credits vs. minimum wage increases as ways of improving poor people's living standards. I got there too late, but caught an interesting paper by Manuel Pastor of USC profiling immigrant communities in LA. Our friend Arlene Geiger, econ prof at John Jay College, stopped by the book exhibit booth and reported that she'd gone to some mainstream panels to see what the mood of the profession is about the recession and financial crisis. She reported that one extremely well-attended panel on the financial crisis seemed to indicate that no one in the room thought that the recession would be anything but long and deep. Another packed panel entitled "The Revival of Fiscal Policy" revealed disagreements between Marty Feldstein of Harvard and John Taylor of Stanford about the value of fiscal policy. Janet Yellin of the SF Fed was a discussant (I'm missing a panel on the subprime crisis that she's presiding over right now). I will press Arlene for a fuller report, but the impression she seemed to get was that mainstream economists still have their heads in the sand on the issue of whether government has a role in guiding the economy (even if they can't help but recognize the need for government action in the current crisis). Frequent D&S blogger Polly Cleveland, of Columbia U., also stopped by the booth. She'd been focusing on sessions on the history of economics, including one on the history of the Chicago School. She promised a full report for the blog. I'm almost out of time, so I will wrap this up; I promise more coverage soon. --Chris Sturr, D&S co-editor Labels: ASSA, fiscal policy, John Taylor, Marty Feldstein, solidarity economics Too Much Office Space Spells Big TroubleThe next big financial time bomb could well be commercial real estate. Vacancy rates have skyrocketed across the country, rental income is down, and many commercial investors will need to refinance massive loans in the still frozen credit markets.From the NY Times: Vacancy rates in office buildings exceed 10 percent in virtually every major city in the country and are rising rapidly, a sign of economic distress that could lead to yet another wave of problems for troubled lenders. Labels: credit crisis, economic crisis, real estate market Stock Market's Loss Means Higher Wages?Dean Baker has put forth a provocative claim on his blog:The lead article in the New Year's Day edition of the Washington Post bemoaned the loss of $6.9 trillion in value in U.S. stock market last year. While those who own large amounts of stock have reason to shed tears, this may end being good news for the rest of us. Labels: Dean Baker, deflation, Inflation, stock market, wages, Washington Post Steel Industry Looking For $1 TrillionThe next contender in the category of "too big to fail" appears to be Big Steel. Through the first three quarters of 2008, the steel industry was going gangbusters. By late December, however, weekly production had fallen by more than 50% from August levels. Prices have fallen like lead. Tens of thousands of workers, mostly unionized, have been temporarily laid off, with future prospects exceedingly grim. Now industry execs are praying for an Obama miracle of government investment and subsidies.From the New York Times: The steel industry, having entered the recession in the best of health, is emerging as a leading indicator of what lies ahead. As steel production goes - and it is now in collapse - so will go the national economy. The rest of the article is here. Labels: New York Times, Steel industry Manufacturing Lowest In 28 YearsFrom the Washington PostU.S. manufacturing fell sharply in December and reports from abroad showed the same for plants in Europe and Asia, as businesses cut production and slashed product orders in response to the global recession. Rest of article. Labels: manufacturing Nasa Scientist: Cap & Trade Not SufficientFrom The Guardian. N.B: Hansen lambasts the current international approach of setting targets to be met through "cap and trade" schemes as not up to the task. "This approach is ineffectual and not commensurate with the climate threat. It could waste another decade, locking in disastrous consequences for our planet and humanity," the Hansens wrote.Climate change policies failing, Nasa scientist warns Obama Award-winning researcher James Hansen says new president's rhetoric must be backed by action James Randerson, science correspondent guardian.co.uk, Thursday 1 January 2009 15.23 GMT Current approaches to deal with climate change are ineffectual, one of the world's top climate scientists said today in a personal new year appeal to Barack Obama and his wife Michelle on the urgent need to tackle global warming. With less than three weeks to go until Obama's inauguration, Prof James Hansen, head of Nasa's Goddard Institute for Space Studies, asked the recently appointed White House science adviser Prof John Holdren to pass the missive directly to the president-elect. Obama spoke repeatedly during his campaign about the need to tackle climate change, and environmentalists fervently hope he will live up to his promises to pursue green policies. The letter, from Hansen and his wife Anniek, is a personal plea to the first couple. It begins: "We write to you as fellow parents concerned about the Earth that will be inherited by our children, grandchildren, and those yet to be born...Jim has advised governments previously through regular channels. But urgency now dictates a personal appeal." In a covering letter to Holdren, Hansen explains that he wrote the letter a few weeks ago while in London. His wife had suffered a heart attack ("fortunately we were near a very good hospital") and while they waited for doctors to give the go-ahead to fly back to the US he decided to compose his petition to the new first family. Hansen has been one of the most prominent advocates of action to tackle climate change since he first spoke on the issue at congressional hearings in the 1980s. His testimony to the senate featured in Al Gore's film An Inconvenient Truth and he has received numerous honours for his work on the issue, including the WWF's top conservation award. Hansen wrote that there is a "profound disconnect" between public policy on climate change and the magnitude of the problem as described by the science. He praised Obama's campaign rhetoric about "a planet in peril", but said that how the new president responds in office will be crucial. The letter contains a wish list of three policy measures to tackle global warming. Read the rest of the article Labels: Barack Obama, climate change, James Hansen Trade: Throwing Oil on the FireFrom The International Herald Tribune. Particularly noteworthy (i.e. scary):"China will resort to tariff and trade policies to facilitate export of labor-intensive and core technology-supported industries," Li Yizhong, the minister of industry and information technology, said at a conference Dec. 19. Increased export incentives by China have the potential to create a trade issue for the incoming U.S. administration of Barack Obama, particularly regarding textiles. China's measures to help exporters are starting to cause concern in other Asian countries that compete with it, and raise the risk of a protectionist reaction against China. Indonesia, one of the largest Asian markets, imposed a series of administrative measures Thursday that were meant to reduce smuggling but will have the practical effect of making it harder to import Chinese goods. Looks more and more like the crash precipitated in no small part due to reliance on the export model and credit is to be combated by redoubling of key policies of the export model; and this without the credit! Rising desperation as China's exports drop International Herald Tribune By Keith Bradsher Thursday, January 1, 2009 HONG KONG: At the docks here, the stacks of shipping containers that used to loom above the highway overpass are gone. Logistics managers say they negotiate deeper discounts every week on ships that are leaving half empty. In nearby Guangdong Province, so many factories are closing without paying employees that some workers are resigning pre-emptively and demanding immediate pay before their employers go bankrupt. In Sichuan and other interior provinces, municipal officials are desperately searching for ways to provide jobs for millions of out-of-work migrant laborers whose families no longer need them for farming. Those are the effects of millions of Americans' cutting their spending. American retailers, after suffering a dismal holiday shopping season, are delaying payment for Chinese goods 90 or even 120 days after shipping, in contrast to the usual 30 to 45 days, requiring their suppliers to try to borrow more money to cover the difference. Some Chinese suppliers who cannot raise the money - many already operate on thin margins - are going out of business. At the same time, retailers are demanding that exporters show that they have strong balance sheets and will not go bankrupt before completing orders. Exporters, worried the retailers will fail before paying for their purchases, are reluctant to let goods be loaded onto ships. And banks, for the same reason, have cut back on guaranteeing retailers' payments to exporters. Read the rest of the article Labels: bailout, China, financial crisis, Trade Treasury To Aid Array of Firms, IndustriesFrom Bloomberg (hat tip to Yves Smith)Treasury Opens Door to Aid for Broad Array of Firms, Industries By Rebecca Christie Jan. 1 (Bloomberg) The U.S. Treasury threw the door open to taxpayer financing for a widening array of companies and industries by drafting broad guidelines on aid to the auto industry. The Treasury's guidelines, published yesterday, would let officials provide funds to any company they deem important to making or financing cars. That leaves room for the government to provide money from the Troubled Asset Relief Program beyond loans already committed to General Motors Corp., GMAC LLC and Chrysler LLC. "There are going to be other industries that are going to have just as good a case," as the auto companies, former St. Louis Federal Reserve Bank President William Poole said in an interview on Bloomberg Television. "We don't know what those other industries are going to be. Where does this process stop?" Shares of auto suppliers including American Axle & Manufacturing Holdings Inc. and Lear Corp. jumped yesterday after Treasury announced the guidelines. The Motor & Equipment Manufacturers Association has been lobbying for the use of federal funds as a backstop in case parts makers can’t collect money the auto manufacturers owe them. Analysts have speculated that companies such as GM's bankrupt former parts unit Delphi Corp., might be eligible for assistance. The Treasury guidelines may encourage more guessing on what companies and industries are next, said Vincent Reinhart, resident scholar at the American Enterprise Institute in Washington. 'Constructively Ambiguous' Treasury officials "much prefer discretion, and so they would view the statement as being constructively ambiguous," Reinhart said. Read the rest of the article Labels: auto industry, bailout, financial crisis ASSA and Jet BlueThings may be relatively quiet on the D&S blog for the first week of 2009, as our busiest blogger (yours truly, D&S co-editor Chris Sturr) will be at the annual economics meetings, grandiosely named the Allied Social Sciences Association meetings (as if economists were the only social scientists!) in San Francisco.I am excited to be flying via JetBlue; since they are in the midst of a union drive, with an election coming up soon, maybe I can give the workers some moral support. If you are going to the ASSA meetings, stop by the ICAPE exhibit table (602(B), I think) to say hello--I will be there hawking D&S books. And stop by the panel I'll be speaking on, sponsored by the Union for Radical Political Economics. Info on the panel (note the august company I'll be in): Jan. 3, 12:30 pm Happy New Year! Contours of CrisisWe just posted a great web-only article by Shimshon Bichler and Jonathan Nitzan, co-authors of Capital as Power: A Study of Order and Creorder, RIPE series in Global Political Economy (London and New York: Routledge, forthcoming 2009).Read the article here. Labels: financial crisis, Jonathan Nitzan, Shimshon Bichler |
