Dean Baker's Blog, page 508

The Elusive Mortgage Refinancing Bonanza

Every few months there is a mini-frenzy around the idea of allowing more people to refinance their mortgages. Today Ezra Klein picks up the cause in his Post column. This is a good idea, but the notion that this is going to provide some major boost to the economy is just silly.

The main reason is that there just are not that many homeowners tied into high cost mortgages who are going to be induced to take advantage of a refinancing opportunity. The story is that we have millions of...

Should the Fact that Upstate New York is Economically Depressed be an Argument for Fracking?

The NYT implies that it is when it tells readers that:

"Many of those involved [in the fracking debate] said it was unlikely that Governor Cuomo would turn his back on the gas industry and ban drilling in the rich Marcellus and Utica shale deposits covering much of the economically depressed southern and western reaches of the state."

If the industry creates relatively few jobs, most of which go to skilled workers from outside of the state, and then leaves the area permanently scarred, it is ...

David Brooks Says I Don't Exist!

I've become accustomed to people in elite circles saying that I do not exist, as in "nobody saw the housing bubble," but it still hurts. Okay, excuse the self-indulgence, there is a point here.

In his column today, David Brooks notes that rent-seekers often benefit from government programs, then complains that:

"You would think that liberals would have a special incentive to root out rent-seeking. Yet this has not been a major priority. There is no Steve Jobs figure in American liberalism...

Is China Going Down?

That's a good question, but Robert Samuelson doesn't shed much light on the topic in his column today. He notes the considerable evidence of a housing bubble in parts of the country, which may now be deflating. In considering consequences he acknowledges China's successful stimulus 3 years ago, but then comments:

"Finally, China's government will have a harder time deploying a stimulus than during the 2008-09 financial crisis. Government debt rose from 26 percent of gross domestic product in ...

Is Europe Unable to Compete?

Adam Davidson tells us in the NYT Magazine that Europe is losing its ability to compete in the world economy. This is a bit hard to see.

First, the most simple measure of competitiveness is the market test. Is Europe able to sell goods and services successfully in the world economy? On this score the continent is doing much better than the United States. Over the last decade it generally had near balanced trade. Some years the European Union had small trade surpluses and in others it had...

More on the Celebration Over December's Job Report

Economists tend not to be very good at economics. We know this because almost none of them were able to see the $8 trillion housing bubble that was driving the economy from 2002 to 2007. This was an oversight of astonishing importance, sort of like a physicist not noticing gravity.

Their failure to understand the economy has led to enormous misreporting of the December jobs data. There are two basic problems. They fail to accurately put the job growth numbers in the context of the economic...

Does the Obama Administration Really Want People to Celebrate Job Growth That Will Get Us Back to Full Employment in 2028?

That's what reporters should have been asking as the Obama administration put a positive spin on the 1.6 million job growth in 2011. The economy has to create roughly 1 million jobs a year to keep pace with the growth of the labor force. With a shortfall of jobs that is currently near 10 million, it will take more than 16 years to get the economy back to full employment at the 2011 rate of job growth.

Reporters should have been ridiculing Obama administration for their poor grasp of...

How Long Will It Take the Economics Reporters to Wipe the Egg Off Their Faces?

All the news reports on the December jobs data are very upbeat about the 200,000 jobs reported for December. The phrase for the day is "better than expected." However, as someone who told friends and family it would be 165,000 I see it as slightly worse than expected.

Look at the data boys and girls. We created 42,200 courier jobs in December. Was there really a big surge in hiring in the courier industry? Well, the Bureau of Labor Statistics showed a surge of more than 50,000 new courier...

When Romney Accuses President Obama of Wanting Equal Outcomes Regardless of Individual Effort and Success, He Is Not Telling the Truth

Suppose that a candidate, with no evidence whatsoever, accuses his opponent of being a child molester. Should the media simply report the accusation and the corresponding denial and not point out the fact that there is no evidence for the accusation?

This is the standard that the NYT uses in reporting Mitt Romney's claim that:

"Mr. Obama seeks a 'European-style welfare state' to redistribute wealth and create 'equal outcomes' regardless of individual effort and success."

The article points...

Paul Krugman's Affirmative Action for Romney and the Republicans

There he goes again, Paul Krugman is ignoring history to make the Republicans look better. His column today takes issue with Republican front-runner Mitt Romney's claim that the economy has lost 2 million jobs during the Obama administration. Krugman points out that all the job loss took place in the first six months of the Obama administration. When President Obama took office the economy was losing 700,000 jobs a month. The rate of job growth slowed in the late spring and summer...