Dean Baker's Blog, page 500

Unless We Stop Consuming Manufacturing Goods, or Other Countries Give Us Stuff for Free, Manufacturing Jobs Will Increase

It would have been worth including an explicit discussion of the trade deficit in the context of an assessment of employment prospects in manufacturing. At the moment, China and other developing countries are deliberately running large trade surpluses as a way to boost domestic demand. To do so, they are buying up huge amounts of dollars assets that essentially give them no real return. It is likely that at some point they will figure out how to generate demand domestically (e.g. hand out...

Housing Is Not a Drag on the Recovery

The Morning Edition piece on President Obama's new mortgage refinancing proposal implied that the housing market is a major drag on the economy. This is misleading.

The housing bubble was the motor of the economy during the last business cycle. It did this both by leading to a construction boom and by propelling consumption through the creation of $8 trillion of ephemeral equity. Now that the bubble has burst it can no longer play this role, however it is inaccurate to describe it as a drag o...

Can't the Washington Post Talk to Anyone Who Understands the Housing Market?

The Washington Post distinguished itself during the run-up of the housing bubble by relying on David Lereah, the chief economist with the National Association of Realtors, and author of Why the Real Estate Boom Will Not Bust and How You Can Profit from It, as its main source on the real estate market. It seems that it is continuing its policy of not using anyone knowledgeable about the housing market as a source for its articles on housing.

Its piece on President Obama's new plan for...

NYT Gets Germany's Unemployment Rate Wrong, Again

People who report on Germany's economy should know that the unemployment rate reported by the government is not calculated the same way as the U.S. unemployment rate. It includes people who are working part-time but would like full-time jobs as being unemployed. This means that the rate reported by the government is not directly comparable to the U.S. rate. This means that the NYT misled readers when it told them that Germany's unemployment rate fell to 6.7 percent in January.

However, the...

News Flash for NYT Dealbook: Financial Firms Are Not Always Honest

Steven M. Davidoff had a Dealbook column complaining about a Dodd-Frank regulation that he argues is slowing the supply of capital to finance corporate takeovers. The issue in question is a requirement that the creator of a collaterized loan obligation (CLO) keep a 5 percent stake in the issue. Davidoff argues that many issuers of CLO's are relatively small businesses and don't have the capital to allow them to hold a 5 percent stake.

He then asks:

"So why add a new regulatory burden? It's...

NPR Editorializes Against Growth In Europe

A Morning Edition segment on the recent European Union summit was headlined, "Most EU Nations to Sign Pact to Stop Overspending." This is both flat-out wrong and misleading.

It is flat-out wrong because the pact restricts deficits, not spending. It is misleading because it implies that the current crisis was caused by overspending. It wasn't. Most of the crisis countries had declining debt to GDP ratios before the downturn and two, Spain and Ireland, were actually running budget surpluses...

Rick Scott Promises to Make Florida Do Worse Than the Nation In Job Growth

That should have been the headline to the NYT story on Florida governor Rick Scott, if they got their facts right. While it is common for politicians to make big promises and not come through, the NYT reports that Rick Scott is not expecting to even get Florida back to its pre-recession level of employment after 7 years in office.

According to the according to the article, Scott promised to create 700,000 jobs after 7 years in office. If Florida follows this path, it will have 7,862,000 jobs ...

Bloomberg, on Losing End of Austerity Debate, Continues Fight

Imagine George Foreman got up off the floor after being counted out in his fight with Muhammad Ali and started taking wild swings at the champ. This is what Mark Whitehouse, a member of Bloomberg View editorial board, effectively did in a column yesterday.

In response to a Paul Krugman column pointing out that the UK's austerity package has led to a virtual recession, making the current downturn worse for the UK than the Great Depression, Whitehouse calls attention to the decline in the...

Washington Post Gets Behind Republican Economic Agenda

In a major business section article on President Obama's plans to address inequality, the Washington Post (a.k.a. Fox on 15th Street) came down squarely on the side of the Republicans. The Republican slant starts with the headline, "Obama's push to revive middle class will clash with long-term trends." This one undoubtedly had people all over the metro area saying, "duh."

Of course it will clash with long-term trends, that would be the point. No one thinks that the 1 percent just got all of o...

David Brooks Doesn't Want People to Focus on the 1 Percent

Even though the data on income show the top 1 percent of the population pulling away from everyone else, New York Times columnist David Brooks tells us that focusing on the 1 percent is a "distraction." He bases this assertion on, well absolutely nothing.

Brooks goes to tell readers that:

"the truth is, members of the upper tribe have made themselves phenomenally productive."

This is striking for two reasons. Since his upper tribe is the whole top 20 percent, much of this group that has...