Dean Baker's Blog, page 245

Do Banks Often Issue Second Mortgages When They Fear a Homeowner Could be Underwater on a First Mortgage?

The NYT apparently thinks this is a common practice. An article discussing a Supreme Court ruling that a second mortgage could not be discharged in a chapter 7 bankruptcy filing even when the homeowner's first mortgage vastly exceeded the value of the house, told readers:

"a ruling in favor of the homeowners might have made banks and other lenders less willing to extend second mortgages in the future."

In a foreclosure, a first mortgage must be paid in full before a dollar can be paid on a se...

Robert Samuelson Does Battle With the Bureau of Labor Statistics

Robert Samuelson used his Monday column to tell readers that the problem with the economy is that we are suffering the psychological fallout of the Great Recession:

"My main explanation for this — as I’ve argued before — is the hangover from the 2008-2009 financial crisis and the Great Recession. These events changed economic psychology, precisely because they were unanticipated and horrific. They transcended the experience of most Americans (that is, anyone who hadn’t lived through the Great...

Does the NYT Engage in Intellectual Property Theft from China When It Uses Paper and Moveable Type?

Undoubtedly millions of readers are wondering about the NYT's use of the term when it told readers that one of the goals of the Trans-Pacific Partnership (TPP) is to, "protect intellectual property from theft." Actually one of the goals of the TPP is to strengthen and lengthen patent and copyright protections.

After this is done, those who do not respect the new laws can be accused of "theft," however it makes no sense to accuse someone of theft for breaking laws that do not exist. The NYT ma...

Greece, Simpson-Bowles, and Dishonesty in High Places

As the world awaits the final word on the negotiations between Greece and its creditors, it's worth a quick flashback to 2010 and the report of Alan Simpson and Erskine Bowles, the co-chairs of President Obama's deficit commission. (This report is often referred to as a report of the commission. That is not true. The by-laws clearly state that to issue a report it was necessary to have the support of 12 of the 16 commission members. While no formal vote was ever taken, the co-chairs' report o...

Euro Is Important Part of Right Turn in Europe

A NYT reported on a turn to the right of politics in France and in much of the rest of Europe. Remarkably, the piece never once mentioned the decision by the European Central Bank (ECB) to impose a policy of austerity and high unemployment on the continent. Since the mainstream left parties do not want to challenge the ECB, this means they have few plausible routes for reducing unemployment and restoring wage growth for the bulk of the population.

This opens the stage for right-wing n...

Weak Consumption: Another Make Work Project for Economists and People Who Write About Economics

Economists may not be very good at understanding the economy, but they are quite good at finding ways to keep themselves employed, generally at very high wages. The Washington Post treated us to one such make work project as it reported on a change in consumer psychology due to the recession that has left:

"Americans of all ages less willing to inject their money back into the economy in the form of vacations, clothing and nights out.

"It’s a sharp contrast to the 1990s, when consumers spent...

Seasonal Adjustments Are No Free Lunch

Many folks are dismissing the negative GDP number from the first quarter by arguing that the Commerce Department's seasonal adjustment is faulty. According to some estimates a correct seasonal adjustment could add as much as 0.8 percentage points, which would be enough to bring the first quarter GDP into positive territory.

However seasonal adjustments must sum to one over the course of the year. In other words, if weather and other regular seasonal factors are more of a drag on first quarter...

Representative Delaney Argues for Protectionism in Washington Post Column

John Delaney, a Democratic congressperson from Maryland, argued against a "left-wing" Tea Party in a Washington Post column today. He gets many things badly wrong, like arguing:

"bipartisan tax reform that would free up the trillions of dollars of trapped overseas cash" which he says could be used for infrastructure spending. Sorry, corporations do have trillions in profits that they record as being overseas to avoid taxes, but the idea that we have some formula that would turn all this money...

NPR Says Robots Are Taking Restaurant Jobs, the Bureau of Labor Statistics Disagrees

Morning Edition had a segment on computer tablets that many restaurants are now placing on dining tables which allow people to order and pay their bill without needing a waiter or waitress. The point of the piece is that these tablets are likely to cost the jobs of many table servers.

While this is true, we have always seen productivity growth. (That is what it means to displace workers with robots or computers.) Contrary to what you might believe from reports like this on NPR, productivity g...

The Rich Like "Free Trade" Because It Is Not Free Trade

Brendan Nyhan had an interesting piece in the NYT's Upshot section in which he discussed how "free trade" policies get pushed by presidents and approved by Congress even though most middle income and lower income people are opposed to them. Nyhan refers to research showing that wealthier people overwhelmingly support "free trade," and politicians are likely to act in ways that reflect their views even when this means going against the majority.

While this is interesting and important research...