In 2014, the world economy remained stuck in the same rut that it has been in since emerging from the 2008 global financial crisis. Despite seemingly strong government action in Europe and the United States, both economies suffered deep and prolonged downturns. The gap between where they are and where they most likely would have been had the crisis not erupted is huge…
In 1992, Bill Clinton based his successful campaign for the US presidency on a simple slogan: “It’s the economy, stupid.” From today’s perspective, things then do not seem so bad; the typical American household’s income is now lower. But we can take inspiration from Clinton’s effort. The malaise afflicting today’s global economy might be best reflected in two simple slogans: “It’s the politics, stupid” and “Demand, demand, demand.”
The near-global stagnation witnessed in 2014 is man-made. It is the result of politics and policies in several major economies – politics and policies that choked off demand. In the absence of demand, investment and jobs will fail to materialize. It is that simple…
Much of the growth deceleration in emerging and developing countries reflects China’s slowdown. China is now the world’s largest economy (in terms of purchasing power parity), and it has long been the main contributor to global growth. But China’s remarkable success has bred its own problems, which should be addressed sooner rather than later.
The Chinese economy’s shift from quantity to quality is welcome – almost necessary. And, though President Xi Jinping’s fight against corruption may cause economic growth to slow further, as paralysis grips public contracting, there is no reason for Xi to let up. On the contrary, other forces undermining trust in his government – widespread environmental problems, high and rising levels of inequality, and private-sector fraud – need to be addressed with equal vigor.
In short, the world should not expect China to shore up global aggregate demand in 2015. If anything, there will be an even bigger hole to fill…
The problem is that low interest rates will not motivate firms to invest if there is no demand for their products. Nor will low rates inspire individuals to borrow to consume if they are anxious about their future (which they should be). What monetary policy can do is create asset-price bubbles. It might even prop up the price of government bonds in Europe, thereby forestalling a sovereign-debt crisis. But it is important to be clear: the likelihood that loose monetary policies will restore global prosperity is nil.
This brings us back to politics and policies. Demand is what the world needs most. The private sector – even with the generous support of monetary authorities – will not supply it. But fiscal policy can. We have an ample choice of public investments that would yield high returns – far higher than the real cost of capital – and that would strengthen the balance sheets of the countries undertaking them.
The big problem facing the world in 2015 is not economic. We know how to escape our current malaise. The problem is our stupid politics.
You can see why Republicans blocked Joe Stiglitz from placement on a panel advising the SEC. They have spent every waking minute in Congress – apart from their War on Women – concentrating on pleasing Wall Street. When Stiglitz was told of his appointment being blocked, his response was “I think they may not have felt comfortable with somebody who was not in one way or another owned by the industry.” More politics of stupid by the Party of Stupid.
There hasn’t been an economist of note, conservative or liberal, who doesn’t identify the laggard rate of economic improvement as rooted in reactionary cowardice. Today’s Republican Party fits that definition as perfectly as any elitist club in the world.
One CEO has taken a step that could help fend off Thomas Piketty’s nightmare vision of rising wealth inequality: He’s giving thousands of his workers a raise.
Aetna Chairman and CEO Mark Bertolini announced…that the health-insurance company will be raising wages for its lowest-paid employees. Starting in April, the minimum hourly base pay for Aetna’s American workers will be $16 an hour, according to a company press release.
The 5,700 workers affected by the change will see an average pay raise of about 11 percent. The lowest-paid workers, who currently make $12 an hour, will get a 33-percent raise.
The Wall Street Journal reported that Bertolini recently requested that Aetna executives read Capital In The Twenty-First Century, by the French economist Piketty. The book, which has been hailed as the “most important book of the twenty-first century,” warns that the gap between the haves and the have-nots is heading toward Gilded Age levels of inequality and calls on the world’s largest economies to fix the problem.
The U.S. government, which last raised the federal minimum wage to $7.25 an hour in 2009, has not exactly scrambled to respond. Aetna’s move is one way companies could help close the gap…
Other factors may have influenced Aetna’s decision to boost pay. The Affordable Care Act is helping millions of Americans get insured, which means insurance companies have to beef up their consumer services to stay competitive.
“Health care decisions are increasingly consumer driven,” Bertolini said in a statement emailed to The Huffington Post. “We are making an investment in the future of health-care service.”
The job market is healing, as well, which should eventually push wages higher. Last month capped the best year for hiring since 1999, as the unemployment rate fell to 5.6 percent. That said, even though the job market has improved, wages have been slow to grow.
Still, some large employers, including Aetna, Starbucks and the Gap, have raised wages in the past year.
In the interview, Tom Keene makes the point that wages have been stagnant for years. Bertolini describes the segment that most influenced his decision were single moms who needed food stamps to get by in Connecticut’s capitol. Their kids often were on Medicaid because they couldn’t even afford the company’s healthcare plan.
60% of the increase dedicated to benefits. 40% of the budget increase went to the wages – raised to $16/hour minimum. Doing it this way produced the best possible increase in personal disposable income. Not that any of this means crap to Republicans and other tightwads pretending to be conservatives.
Bertolini’s cogent point is that healthcare is a growing segment in our service economy. Workers who are well-paid always perform better than folks treated like serfs. As much as today’s conservatives prefer the latter. Something not noted in this article are the changes in workplace life, as well. More advanced sectors in the American economy – like the tech sector – long ago proved that a small portion of time away from necessary work reduces tedium, makes for increased acuity in all tasks. That should include physical changes, exercise – as well a bit of time to rest your brain.
Aetna now brings in a bit of yoga, a little meditation time to their workplace. Something else, fundamentalist curmudgeons will also hate.
Some key quotes from the session Tackling Climate, Development and Growth at Davos 2015:
Christine Lagarde, Managing Director, International Monetary Fund
“It’s a collective endeavour, it’s collective accountability and it may not be too late.”
“At this point in time, it’s macro critical, it’s people critical, it’s planet critical.”
“As I said two years ago, we are at risk of being grilled, fried and toasted.”
Paul Polman, CEO, Unilever
“Tackling climate change is closely linked to poverty alleviation and economic development; I would call them different sides of the same coin…”
“The first thing we need from the business community, and the business leaders themselves, is commitment. If you’re not committed, you’re more destructive at the table than if you’re really committed and you want to solve it…”
Michael Spence, William R. Berkley Professor in Economics and Business, NYU Stern School of Business, Italy
“…We have a choice: between a energy-efficient low carbon path and an energy-intensive high carbon path, which at an unknown point of time ends catastrophically. This doesn’t seem like a very hard choice.”
“We have to go very quickly… we have a window of a very small number of years… after which we cannot win the battle to mitigate fast enough to meet the safety goals… if this year goes badly it would be a massive missed opportunity.”
“This is the chance to do something we’ve never done before, to come together in a process of top down agreement, and bottom up energy, creativity and commitment. It will be a moral victory.”
I don’t think the Koch Bros. went to Davos. Their profits roll out from the fiefdom of the United States. What foreign holdings they rely on – are obedient.
I don’t think Jim Imhofe or Mike Huckabee were invited. I doubt anyone who is a serious player in the world of modern industrial, technology-driven capitalism would extend an invite to John Boehner or Mitch McConnell — or Mary Landrieu.
If you’re bright enough to be a world-class player in international commerce – including the governments actively trying to grow their national economies – you had better have modern science as part of your core skill set. Along with an understanding of political economy over the past seventy years.
No matter if your personal bent is conservative or liberal, denial of reality sufficient to get you elected to Congress from Kansas or Texas doesn’t aid global logistics or long-range marketing.
If you care to view the full session Tackling Climate, Development and Growth at Davos 2015, it’s available to watch.
Climbing onto the largest vessel the world has ever seen brings you into a realm where everything is on a bewilderingly vast scale and ambition knows no bounds.
Prelude is a staggering 488 meters long and the best way to grasp what this means is by comparison with something more familiar.
Four football pitches placed end-to-end would not quite match this vessel’s length – and if you could lay the 301 meters of the Eiffel Tower alongside it, or the 443 meters of the Empire State Building, they wouldn’t do so either.
In terms of sheer volume, Prelude is mind-boggling too: if you took six of the world’s largest aircraft carriers, and measured the total amount of water they displaced, that would just about be the same as with this one gigantic vessel.
Under construction for the energy giant Shell, the dimensions of the platform are striking in their own right – but also as evidence of the sheer determination of the oil and gas industry to open up new sources of fuel…
Prelude…pioneers a new way of getting gas from beneath the ocean floor to the consumers willing to pay for it.
Until now, gas collected from offshore wells has had to be piped to land to be processed and then liquefied ready for export…Usually, this means building a huge facility onshore which can purify the gas and then chill it so that it becomes a liquid – what’s known as liquefied natural gas or LNG – making it 600 times smaller in volume and therefore far easier to transport by ship.
And LNG is in hot demand – especially in Asia, with China and Japan among the energy-hungry markets.
To exploit the Prelude gas field more than 100 miles off the northwest coast of Australia, Shell has opted to bypass the step of bringing the gas ashore, instead developing a system which will do the job of liquefaction at sea.
Hence Prelude will become the world’s first floating LNG plant – or FLNG in the terminology of the industry.
RTFA for the economics behind the decision – because, push comes to shove, there is no other primary reason for the construction of this behemoth. Optimizing profit is the name of the only game Shell plays.
The Pentagon’s internal watchdog has questioned the air force’s need for 46 armed Reaper drones, and suggested the flying service is wasting $8.8 billion on superfluous aircraft.
As purchases of General Atomics’s MQ-9 Reaper ballooned from 60 aircraft in 2007 to the current 401, air force officials did not justify the need for an expanding drone fleet…
During that time, costs for purchasing one of the signature counter-terrorism weapons of Barack Obama’s presidency increased by 934%, from $1.1 billion to more than $11.4 billion, according to a declassified September report by the Pentagon inspector general. Purchasing costs are a fraction of what the drones cost to operate and maintain over their time in service: in 2012, the Pentagon estimated the total costs for them at $76.8 billion…
Responding to heavy demand for additional aerial intelligence from troops deployed in Afghanistan, Iraq and elsewhere, the former defense secretary Leon Panetta in 2011 ordered the air force to buy sufficient drones to perform 65 combat air patrols, missions that require up to four aircraft to observe a target for nearly 24 hours.
But the air force’s air combat command “did not conduct and maintain consistent, complete and verifiable analyses for determining the necessary MQ-9 procurement quantity”, the inspector general found. Combing through insufficient or incorrect air force analyses, Pentagon investigators found that the officials “could not provide the underlying support for aircraft quantity determinations” and sidestepped a bureaucratic process for determining needed capabilities…
Pentagon inspectors found that the air force’s inability to justify its continuing Reaper purchases risks wasting $2.5 billion for 13 mission-ready drones; $2.1 billion for 11 training drones; $958 million for five test drones; $766 million for four air national guard drones; and $1.7 billion for nine attrition-reserve drones.
The per-cost waste of the questionable drone purchases works out to roughly $192 million for each of the 46 Reapers the inspector general was unable to justify buying.
We all know what Congress’ response will be to this critical finding by the Inspector General. They – Republicans and Democrats alike – will double the purchase.
Keeping the military-industrial complex fat and happy is one of the primary requirements of holding federal elected office.
Earlier this week, the Bureau of Labor Statistics showed that one of the odder trends in American business is continuing — job openings are growing much faster than hires.
Here’s a chart showing the rapid rise in job openings and the much more modest rise in hires:
People sometimes see this as a sign of “structural problems” in the economy. But pair it with the continued weakness in wage growth and it looks to me more like stinginess. Business would like to add staff to their teams, but don’t want to offer the higher pay that would be needed to attract candidates they want to hire.
In crystal ball mode, I’d say this is a sign that wages are likely to rise soon. But to be honest, that’s what I thought a few months ago. So instead I’ll say this is a sign that wages should rise soon. If you want to fill those vacancies, offer better pay. It’s not brain surgery.
Nice little piece by Matty Iglesias.
You already know the Republican response to this state of affairs – cut unemployment insurance compensation, duration and any other kind of welfare benefits. Force folks to take whatever job is available no matter crappy pay or working conditions.
Welcome to 21st Century conservatism. Yup. Same as the 19 Century. The enlightenment characteristic of folks like Teddy Roosevelt or even Everett Dirksen has evaporated in the heat of greed and privilege.
Stagnant waste water near a fresh water pick up outside Hobbs, New Mexico — Mónica Ortiz Uribe
There’s a saying in southeast New Mexico that if God intended for there to be oil drilling, he picked the right kind of country for it. Out here the land is desolate. No trees, no mountains, just sky. A blue dome that arches over gentle slopes covered in prickly plant life…
Oil production in New Mexico has shot up 70 percent since 2008. The number of active wells across the state has grown to 60,000.
Compare that to the number of state inspectors who check those wells. Statewide there are just 14. Ron Harvey is one of them.
“I have almost 8,000 wells, just me,” Harvey said…
Harvey works for the Oil Conservation Division. It’s the agency that regulates the oil and gas industry in New Mexico, and its inspectors are the police officers of the oilfield. It’s difficult for the state to retain them because they can double their salary if they work for an oil company…
The lack of enforcement staff makes keeping up with the workload impossible. According to OCD records, 40 percent of the wells in New Mexico were never inspected in 2013. That can put workers and the environment at risk. For example, a well that fails a pressure test could result in a deadly blow out. A leaky well can contaminate soil or groundwater…
Six years ago the OCD was sued by a local oil company and had to stop issuing fines for violations under the state’s Oil and Gas Act. Inspectors still have the option to deny permits to drill new wells or transport oil, but the process can be cumbersome and lengthy.
Staffing and enforcement aren’t his only concerns. Harvey’s 2008 Dodge pickup has 144,000 miles on it. It takes a severe beating in the oilfield where roads are sometimes nonexistent. His old desk computer takes five minutes to boot up…
Year after year the OCD’s budget represents less than one percent of the total tax revenue the state collects from the oil and gas industry. That revenue topped $1.7 billion in 2013.
First off, RTFA all the way through. There are links to three other sections of the larger reporting task the folks at Frontera Desk gave themselves about the state of the oil and gas industry in New Mexico. Conclusions are about what you expect. Even Democrats with liberal pretense are often in bed with folks who suck their money out of the ground. Republicans, of course, don’t even pretend.
Governor Susana used to debate folks over how she’s owned by The Oil Patch Boys from Texas. Nowadays, she just points out she’s equally owned by New Mexico fossil fusiliers. Last things she’s going to admit is that her owners are about the worst thing that’s happened to New Mexico’s environment and economy since folks started mining less coal and producing more natgas and crude.
The amorphous political clot that is the state legislature, The Roundhouse, can take the bulk of the credit over time. Lousy rules and mediocre oversight aren’t a recent fact of life in the Land of Enchantment. The spell of easy campaign money has long been cast over New Mexico political hacks.
We made a commercial about what makes families, family. And we received a lot of comments. See what we did with them.
While our politicians debate whether torture is really torture, is affordable access to basic health care necessary for people who work for a living, is climate change important [if it exists] – the rest of the world is simply advancing national and regional infrastructure beyond anything in the richest nation in the world.
In Switzerland, the world’s longest rail tunnel — straight through the Alps — is about to open.
At 57 kilometres, the Gotthard Base Tunnel, which will travel through the Alps between the northern portal of Erstfeld and Bodio in the south, will become the longest rail tunnel in the world once complete, stripping the title from Japan’s 53.85 kilometre Seikan Tunnel…
Italy now boasts Europe’s fastest high-speed train — capable of speeds up to 400 km/h (249 mph) — that will cut travel times between Rome and Milan — about the distance between Washington, D.C. and Providence — to two hours and some change…
Even as Americans are stuck traveling on the MegaBus, China has agreed to finance construction of a new high-speed line — through the formerly war-torn Balkan states — from Belgrade to Budapest — by 2017.
China has signed an agreement with the governments of Serbia, Hungary and Macedonia for the construction of a new high-speed railway between Belgrade and Budapest.
Speaking after the signing ceremony, Chinese Premier Li Keqiang said the railway would be complete within the next two years. Feasibility studies are expected to to be carried out by June next year and the project completed by June 2017.
The new 200km/h line will reduce travel times from eight to around two-and-a-half hours between the two capital cities…
Creep of the week
A former Jefferies & Co. managing director convicted of fraud for lying to customers about the price of mortgage-backed securities sued the AllianceBernstein Holding LP (AB) executive who reported him.
Jesse C. Litvak sued Michael Canter, head of the securitized assets group at New York-based AllianceBernstein, in New York State Supreme Court in Manhattan yesterday, accusing him of using “wrongful, unfair or improper means” to interfere with his employment, directly resulting in his termination.
Litvak was accused of defrauding investors of $2 million by misrepresenting how much sellers were asking for the securities, or what customers would pay, and keeping the difference for Jefferies…
Canter testified for the prosecution during the case, saying the spreadsheet showed that Litvak had misled him about how much Jefferies had paid for bonds, including one instance when Canter agreed to raise a bid, yet the firm still paid the original price.
Litvak was found guilty in March of securities fraud and making false statements, as well as fraud connected to the Troubled Asset Relief Program. Along with his prison sentence, he was ordered to pay a $1.75 million fine.
Throw away the key!
This sleazy bastard and the lawyers representing him are perfect examples of how low legal processes have sunk in the United States. From kissing butt for every fundamentalist nutball who doesn’t want to pay taxes – to the open buying and selling of Congress and lesser members of the mutant species we have for elected officials – corruption is justified by every crook in the country.
They act as if the only birthright in the country that doesn’t need validation is that the powerful have every right to steal.
The judge should call him back for re-sentencing – and double the time, triple the fine!