31 March 2010
30 March 2010
29 March 2010
The Sham Recovery
By Robert Reich
Are we finally in a recovery? Who's "we," kemosabe? Big global companies, Wall Street, and high-income Americans who hold their savings in financial instruments are clearly doing better. As to the rest of us - small businesses along Main Streets, and middle and lower-income Americans - forget it.
Business cheerleaders naturally want to emphasize the positive. They assume the economy runs on optimism and that if average consumers think the economy is getting better, they'll empty their wallets more readily and - presto! - the economy will get better. The cheerleaders fail to understand that regardless of how people feel, they won't spend if they don't have the money.
The US economy grew at a 5.9 percent annual rate in the fourth quarter of 2009. That sounds good until you realize GDP figures are badly distorted by structural changes in the economy. For example, part of the increase is due to rising health care costs. When WellPoint ratchets up premiums, that enlarges the GDP. But you'd have to be out of your mind to consider this evidence of a recovery.
Part of the perceived growth in GDP is due to rising government expenditures. But this is smoke and mirrors. The stimulus is reaching its peak and will be smaller in months to come. And a bigger federal debt eventually has to be repaid.
So when you hear some economists say the current recovery is following the traditional path, don't believe a word. The path itself is being used to construct the GDP data.
Look more closely and the only ones doing better are the people and private-sector institutions at the top. Many of America's biggest companies are sitting on huge amounts of cash right now, but that says nothing about the health of the U.S. economy. Companies in the Standard&Poor 500 stock index had sales of $2.18 trillion in the fourth quarter, up from $2.02 trillion last year, and their earnings tripled. Why? Mainly because they're global, and selling into fast-growing markets in places like India, China, and Brazil.
America's biggest companies are also showing fat profits and productivity gains because they continue to slash payrolls and cut expenditures. Alcoa, for example, had $1.5 billion in cash at the end of last year, double what it had on hand at the end of 2008. Sounds terrific until you realize how it did it. By cutting 28,000 jobs - 32 percent of workforce - and slashed capital expenditures 43 percent.
Firms in S&P 500 are now holding a whopping $932 billion in cash and short-term investments. And they can borrow money cheaply. Corporate bond sales are brisk. So far in 2010, big U.S. corporations have issued $195.2 billion of debt, excluding government-guaranteed bonds. Does this spell a recovery? It all depends on what the big companies are doing with all this cash. In fact, they're doing two things that don't help at all.
First, they're buying other companies. (Walgreen last month spent $618 million for New York drugstore chain Duane Reade; Bank of New York Mellon, $2.3 billion for PNC Financial Services; Monster, $225 million for jobs.com; Diamond Foods, $615 million for Kettle Foods.) This buying doesn't create new jobs. One of the first things companies do when they buy other companies is fire lots of people who are considered "redundant." That's where the so-called merger efficiencies and synergies come from, after all.
The second thing big companies are doing with all their cash is buying back their own stock, in order to boost their share prices. There were 62 such share buy-backs in February, valued at $40.1 billion. We're witnessing the biggest share buyback spree since Sept 2008. The major beneficiaries are current shareholders, including top executives, whose pay is linked to share prices. The buy-backs do absolutely nothing for most Americans.
(None of this, by the way, is stopping supply-side fanatics from arguing government needs to cut taxes on big corporations in order to spur the recovery. Their argument is absurd on its face. Big companies don't know what to do with all their cash they have as it is. They aren't investing it in new plant and equipment and new jobs. So why should the government cut their taxes and enlarge their cash hoards even more?)
The picture on Main Street is quite the opposite. Small businesses aren't selling much because they have to rely on American - rather than foreign - consumers, and Americans still aren't buying much.
Small businesses are also finding it difficult to get credit. In the credit survey conducted in February by the National Federation of Independent Businesses, only 34 percent of small businesses reported normal and adequate access to credit. Not incidentally, the NFIB's "Small Business Optimism Index" fell 1.3 points last month, just about where it's been since April.
That's a problem for most Americans. Small businesses are where the jobs are. In fact, small businesses are responsible for almost all job growth in a typical recovery. So if small businesses are hurting, we're not going to see much job growth any time soon.
The Federal Reserve reported Thursday that American consumers are shedding their debts like mad. Total US household debt, including mortgages and credit card balances, fell 1.7 percent last year - the first drop since the government began recording consumer debt in 1945. Much of the debt-shedding has been through default - consumers simply not repaying and walking away from homes and big-ticket purchases.
This is hardly good news. But here's the Wall Street Journal's take on it: "the defaults are leaving many people with more cash to spend and save, jump-starting the financial rehabilitation" of the economy.
Baloney. As of end of 2009, debt averaged $43, 874 per American, or about 122 percent of annual disposable income. Most economic analysts think a sustainable debt load is around 100 percent of disposable income - assuming a normal level of employment and normal access to credit. But unemployment is still sky-high and it's becoming harder for most people to get new mortgages and credit cards. And with housing prices still in the doldrums, they can't refinance their homes or take out new loans on them. The days of homes as ATMs are over.
Some cheerleaders say rising stock prices make consumers feel wealthier and therefore readier to spend. But to the extent most Americans have any assets at all their net worth is mostly in their homes, and those homes are still worth less than they were in 2007. The "wealth effect" is relevant mainly to the richest 10 percent of Americans, most of whose net worth is in stocks and bonds. The top 10 percent accounted for about half of total national income in 2007. But they were only about 40 percent of total spending, and a sustainable recovery can't be based on the top ten percent.
Add to all this the joblessness or fear of it that continues to haunt a large portion of the American population. Add in the trauma of what most of us have been through over the past year and a half. Consider also the extra need to save as tens of millions of boomers see retirement on the horizon. Bottom line: Thrifty consumers are doing the right and sensible thing by holding back from the malls. They saved a little over 4 percent of their disposable income in fourth quarter of 2009. In the months or years ahead they may save more.
Right and sensible for each household but a disaster for the economy as a whole. American consumers accounted for 70 percent of the total demand for goods and services in the American economy before the Great Recession, and a sizable chunk of world demand.
So what happens when the stimulus is over and the Fed begins to tighten again? Where will demand come from to get Main Street back, create jobs, raise middle class wages? Not from big businesses. Certainly not from Wall Street. Not from exports. Not from government.
So, where? That question is the big unknown hanging over the U.S. economy. Until there's an answer, an economic "recovery" for anyone other than big corporations, Wall Street, and the wealthy is a mirage.
Are we finally in a recovery? Who's "we," kemosabe? Big global companies, Wall Street, and high-income Americans who hold their savings in financial instruments are clearly doing better. As to the rest of us - small businesses along Main Streets, and middle and lower-income Americans - forget it.
Business cheerleaders naturally want to emphasize the positive. They assume the economy runs on optimism and that if average consumers think the economy is getting better, they'll empty their wallets more readily and - presto! - the economy will get better. The cheerleaders fail to understand that regardless of how people feel, they won't spend if they don't have the money.
The US economy grew at a 5.9 percent annual rate in the fourth quarter of 2009. That sounds good until you realize GDP figures are badly distorted by structural changes in the economy. For example, part of the increase is due to rising health care costs. When WellPoint ratchets up premiums, that enlarges the GDP. But you'd have to be out of your mind to consider this evidence of a recovery.
Part of the perceived growth in GDP is due to rising government expenditures. But this is smoke and mirrors. The stimulus is reaching its peak and will be smaller in months to come. And a bigger federal debt eventually has to be repaid.
So when you hear some economists say the current recovery is following the traditional path, don't believe a word. The path itself is being used to construct the GDP data.
Look more closely and the only ones doing better are the people and private-sector institutions at the top. Many of America's biggest companies are sitting on huge amounts of cash right now, but that says nothing about the health of the U.S. economy. Companies in the Standard&Poor 500 stock index had sales of $2.18 trillion in the fourth quarter, up from $2.02 trillion last year, and their earnings tripled. Why? Mainly because they're global, and selling into fast-growing markets in places like India, China, and Brazil.
America's biggest companies are also showing fat profits and productivity gains because they continue to slash payrolls and cut expenditures. Alcoa, for example, had $1.5 billion in cash at the end of last year, double what it had on hand at the end of 2008. Sounds terrific until you realize how it did it. By cutting 28,000 jobs - 32 percent of workforce - and slashed capital expenditures 43 percent.
Firms in S&P 500 are now holding a whopping $932 billion in cash and short-term investments. And they can borrow money cheaply. Corporate bond sales are brisk. So far in 2010, big U.S. corporations have issued $195.2 billion of debt, excluding government-guaranteed bonds. Does this spell a recovery? It all depends on what the big companies are doing with all this cash. In fact, they're doing two things that don't help at all.
First, they're buying other companies. (Walgreen last month spent $618 million for New York drugstore chain Duane Reade; Bank of New York Mellon, $2.3 billion for PNC Financial Services; Monster, $225 million for jobs.com; Diamond Foods, $615 million for Kettle Foods.) This buying doesn't create new jobs. One of the first things companies do when they buy other companies is fire lots of people who are considered "redundant." That's where the so-called merger efficiencies and synergies come from, after all.
The second thing big companies are doing with all their cash is buying back their own stock, in order to boost their share prices. There were 62 such share buy-backs in February, valued at $40.1 billion. We're witnessing the biggest share buyback spree since Sept 2008. The major beneficiaries are current shareholders, including top executives, whose pay is linked to share prices. The buy-backs do absolutely nothing for most Americans.
(None of this, by the way, is stopping supply-side fanatics from arguing government needs to cut taxes on big corporations in order to spur the recovery. Their argument is absurd on its face. Big companies don't know what to do with all their cash they have as it is. They aren't investing it in new plant and equipment and new jobs. So why should the government cut their taxes and enlarge their cash hoards even more?)
The picture on Main Street is quite the opposite. Small businesses aren't selling much because they have to rely on American - rather than foreign - consumers, and Americans still aren't buying much.
Small businesses are also finding it difficult to get credit. In the credit survey conducted in February by the National Federation of Independent Businesses, only 34 percent of small businesses reported normal and adequate access to credit. Not incidentally, the NFIB's "Small Business Optimism Index" fell 1.3 points last month, just about where it's been since April.
That's a problem for most Americans. Small businesses are where the jobs are. In fact, small businesses are responsible for almost all job growth in a typical recovery. So if small businesses are hurting, we're not going to see much job growth any time soon.
The Federal Reserve reported Thursday that American consumers are shedding their debts like mad. Total US household debt, including mortgages and credit card balances, fell 1.7 percent last year - the first drop since the government began recording consumer debt in 1945. Much of the debt-shedding has been through default - consumers simply not repaying and walking away from homes and big-ticket purchases.
This is hardly good news. But here's the Wall Street Journal's take on it: "the defaults are leaving many people with more cash to spend and save, jump-starting the financial rehabilitation" of the economy.
Baloney. As of end of 2009, debt averaged $43, 874 per American, or about 122 percent of annual disposable income. Most economic analysts think a sustainable debt load is around 100 percent of disposable income - assuming a normal level of employment and normal access to credit. But unemployment is still sky-high and it's becoming harder for most people to get new mortgages and credit cards. And with housing prices still in the doldrums, they can't refinance their homes or take out new loans on them. The days of homes as ATMs are over.
Some cheerleaders say rising stock prices make consumers feel wealthier and therefore readier to spend. But to the extent most Americans have any assets at all their net worth is mostly in their homes, and those homes are still worth less than they were in 2007. The "wealth effect" is relevant mainly to the richest 10 percent of Americans, most of whose net worth is in stocks and bonds. The top 10 percent accounted for about half of total national income in 2007. But they were only about 40 percent of total spending, and a sustainable recovery can't be based on the top ten percent.
Add to all this the joblessness or fear of it that continues to haunt a large portion of the American population. Add in the trauma of what most of us have been through over the past year and a half. Consider also the extra need to save as tens of millions of boomers see retirement on the horizon. Bottom line: Thrifty consumers are doing the right and sensible thing by holding back from the malls. They saved a little over 4 percent of their disposable income in fourth quarter of 2009. In the months or years ahead they may save more.
Right and sensible for each household but a disaster for the economy as a whole. American consumers accounted for 70 percent of the total demand for goods and services in the American economy before the Great Recession, and a sizable chunk of world demand.
So what happens when the stimulus is over and the Fed begins to tighten again? Where will demand come from to get Main Street back, create jobs, raise middle class wages? Not from big businesses. Certainly not from Wall Street. Not from exports. Not from government.
So, where? That question is the big unknown hanging over the U.S. economy. Until there's an answer, an economic "recovery" for anyone other than big corporations, Wall Street, and the wealthy is a mirage.
28 March 2010
I Am Angry
By John Cory
I am angry.
I'm tired of pundits and know-nothing media gasbags. I'm tired of snarky "inside politics" programming. I am sick of the bigotry and hatred of "birthers" and faux patriotic cranks and their GOP puppet masters. And I'm really pissed at the Democratic Party that confuses having a plate of limp noodles with having a spine.
I'm going to vomit if I hear the word "bipartisanship" one more time.
It was "bipartisanship" that gave us this activist conservative Supreme Court. A Supreme Court that says money is free speech and corporations are persons except when real people try to hold them accountable for their greed and poisonous ways.
"Bipartisanship" gave us the Patriot Act and FISA and illegal wiretaps and two wars and "free speech zones" and "no fly" lists. God bless bipartisan America.
I get nauseated every time the Senate explains how it takes a super majority to do anything for the American people. Tell you what Senate Bozos, if it takes 60 votes to pass legislation then it should take 60% of the popular vote to get you elected.
When some Tea Party crank says, "I want my country back," I respond, "No madam, you want your country backward."
When a deficit-mongering politician says, "How do we pay for this?" Why not ask, "What did you Republicans do with the surplus we Democrats left you?"
When a compassionate conservative says, "Healthcare reform is socialism," why not answer, "No, sir it is the moral and American way to care for people."
Yes, I can hear it now: "You are naïve and simplistic. These are complicated matters and require sophisticated solutions. Democrats are a big tent and strive for balance. But Republicans block our path at every turn. We are thinking and considering new ways to work in harmony with everyone."
Bite me.
The only thing you get with "harmony" is a Barbershop Quartet.
Democrats stop being Republican Lite. Stop whining about that mean GOP and their nasty messaging. Grow a pair, get a message, get a bumper sticker and hang it out there. Get some strong vivid talking points.
G-O-P = Greed Over People.
Greed Kills - jobs, people and the economy.
Terrorism is Viagra for Republicans: The more fear - the more excited they get.
When a soldier dies for America, who dares ask if they were gay or straight?
Don't act so shocked, Democratic Party. Have you looked around lately?
You're losing the young vote that showed up to elect Obama. You're losing those old enough to remember real Democrats. Why? Because you don't talk to them any more than you talk to me. You talk at me. You talk around me. You talk down to me. You talk about me. You don't talk with me. And you don't inspire and you don't champion and without that you are nothing more than an arbitrator of compromise and abdication.
You are facing a bully. Deal with it!
Republicans want the country backwards. They champion superstition over science because it entrenches ignorance and bigotry and captures the easily frightened.
Republicans treat the Constitution the way they treat the Bible, with selective interpretation and selective application to others while exempting themselves from judgment and accountability.
Republicans preach the gospel of fear because fear is darkness and darkness covers their theft of civil liberties and Constitutional principles.
For thirty years the Republican Party has claimed the mantle of law and order but now quake in dread of the American judicial system when putting terrorists on trial. How criminal is that?
Torture is illegal. Period. John Wayne and Jack Bauer were not our Founding Fathers - only in the make-believe world of Republican drugstore-patriots.
DADT needs to be repealed. Now. It is unconscionable, immoral, and disgusting.
Empathy, compassion and equality are not pejoratives. They are American values proven again and again throughout our history.
Republicans believe that bake-sales and cookies for chemotherapy best determine the value of life and healthcare because life is a pre-existing condition and the "free market" should not have to take on such a high risk - after all, no one gets out alive, so why should the corporation be left holding the bag? Unless of course the price is right.
Republicans believe that government should keep its hands off healthcare but should put its hands inside a woman's body.
Republicans believe in small government - small enough to hold the "right" people and small enough to be owned and operated by the "right" people. And who are the "right" people? Them. Not you.
Democratic Party, DNC, DLCC, DSCC or whatever your acronym - I have only one question for you: Really?
You can't win against these guys? You can't get your message out against these guys? You can't give America leadership against these guys?
Really?
27 March 2010
Korea starts testing 'recharging road,' might make it part of its public transport system
By Vladislav Savov posted Mar 10th 2010
Time to set aside the chains of worry that have prevented us from jumping on the electric bandwagon -- Korean researchers have figured out a way to make us forget all about charging stations and cruising ranges with their magnetically recharging road. The Online Electric Vehicle (OLEV) you see here went into service yesterday and can now be found towing three bus-loads of tourists around a Seoul amusement park. It operates on a battery five times smaller than conventional EV juice packs and can collect its power through non-contact magnetic transmission from the recharging strips in the ground. We're also told running costs for this system are a third of what a typical EV would require, and should it prove successful and find itself expanded to the public transport system, only about 20 percent of bus routes would need to be electrified -- at bus stops, crossroads and the like -- with the rest being covered by the power stored inside the OLEV. Here's to hoping it all works out.
26 March 2010
Traveling The Luxury Skies The Eco-Friendly Deluxe Airship Way
by Susan DeFreitas, February 5th, 2010
Imagine, a luxury eco-hotel where every room has a stunning view…of the clouds in the sky and the earth from above. The designers at London’s Seymourpowell did, and the result is something truly lovely: a concept design for a hydrogen and solar-powered “clipper in the clouds” integrating a hotel into an airship with zero emissions.
According to Ecofriend, the Aircruise concept integrates four duplex apartments, five smaller apartments, a penthouse apartment, and a number of bar/lounge/communal areas with features glass floors that offer breathtaking views from the sky. The design makes innovative use of the fact that airships typically need large volumes of a gas that’s lighter than air–in this case, hydrogen–and a comparatively smaller passenger payload, integrating the two into a low-density, high luxury “air-cruise” moving at an average of 90/miles hour. At this pace, it would take about one and a half relaxing days to get from London to New York.
It’s hard to remember sometimes, in the increasingly cramped and uncomfortable spaces afforded by commercial air-travel, that flight was once a romantic human ideal. This concept design revives that ideal in the form of a spacious, futuristic airship. Although the technical challenges that would have to be overcome in order to make the Aircruise a reality are formidable, according to Seymourpowell, the designers were commissioned by Samsung to develop detailed interiors and achievable technical specifications, which involve large hydrogen fuel cells. Here’s hoping…
25 March 2010
Subscribe to:
Posts (Atom)
