Dean Baker's Blog, page 546

The Post Goes Into Overdrive In Its Social Security Scare Campaign

Showing once again why it is known as "Fox on 15th Street," the Washington Post headlined an article, "Social Security crisis in worsening." The subhead told readers, "rise in disability applications driving it to the verge of insolvency."

Those who read the article carefully will discover that the "it" being driven to insolvency is the Social Security disability program, which is a bit more than one-tenth of the combined retirement, survivors and disability program that people usually think ...

Quick Quiz: How Large is $900 Million?

It is likely that almost no readers of the Post have much clue as to how large the $900 million appropriated for the country's satellite program is relative to the budget or their tax bill. It comes to 0.025 percent of projected spending in 2012 or about $3 per person.

Amazing NYT Story on Obama Administration Pressure on NY AG

The NYT reported that the Obama administration is pressuring Eric Schneiderman, New York's attorney general, to agree to a settlement with the major banks over improper handling of foreclosures and mortgage servicing. The piece has this stunning statement:

"Mr. Donovan [housing secretary Shaun Donovan] defended his discussions with the attorney general, saying they were motivated by a desire to speed up help for troubled homeowners."

The NYT Gets It Seriously Wrong on Housing

The NYT's lead editorial told readers that:

"Congress and the White House have yet to figure out that the economy will not recover until housing recovers."

It's not clear what the paper means by this. The piece complains that, "sales of existing homes fell in July by 3.5 percent, while prices were down 4.4 percent in July from a year earlier."

If it means that prices must recover then it is looking in the wrong direction. House prices are still about 10 percent above their long-term trend l...

NPR Tells Us That There Is Nothing that Congress and the Fed Can Do About the Weak Economy

Okay, that is just not true. Congress can do another big round of stimulus. It could mandate a reduction in the value of the dollar in order to boost net exports. Or it could push an aggressive work sharing program like the one that has led unemployment rate to fall below pre-recession levels in Germany.

The Fed could target a long-term interest rate. For example it can set a 1.0 percent target for the 5-year Treasury rate. Or it could target a higher rate of inflation, committing itself to t...

AP Gets It Right! The Recession Caused the Deficit

AP did what news organizations are supposed to do; it checked the numbers and showed that politicians yelling about "out of control spending," don't know what they are talking about or are making things up. Its FACT CHECK, printed in the NYT, showed that the deficit exploded because of the recession. There was no issue of out of control spending prior to the increases for programs like unemployment insurance and other spending needed to counteract the effect of the downturn. AP gets an "A" fo...

The Washington Post Wants You to Accept High Unemployment (and Social Security Cuts)

The Washington Post ran a major article today telling readers that they should just get used to high unemployment. The article presented the view of some economists, that the economy can only recover from a financial crisis after a prolonged period of economic weakness, as somehow reflecting a consensus opinion within the economics profession.

For example, the subhead told readers that while presidential candidates promise a quick recovery, "analysts say this post-recession comeback may take ...

New Unemployment Claims Data Are Not a Sign of a Recession

The business media have become obsessed with the notion of a double dip recession in a context where the economic data we are now seeing is not very different from the data that we have been seeing for months. These data point to a picture of an economy that is growing weakly, however it is still growing. However reporters who are now obsessed with the "double dip" are reading numbers consistent with weak growth as implying a recession. 

For example, a Washington Post article that raised the ...

What's the Moral Argument Against Shorting Stock?

The NYT featured an extraordinary comment by a Merrill Lynch strategist in an article on how the wealthy are often able to make money in a period of market volatility:

"There seems to be a moral argument against shorting, but from a purely practical point of view it leaves (hedge funds) in a better position to manage volatility."

It would have been interesting to know what the moral argument is against shorting. When an investor shorts a stock they are betting that it is over-valued, just a...

NPR Exposes Structural Unemployment: Managers Who Don't Have a Clue

National Public Radio reporters need to do a bit more homework before they do pieces on the economy. Today they had a piece on a Precision Iron Works, a specialty steel company. The piece told listeners that Precision relies on highly skilled workers. It also told us that it has a hard time finding new workers.

"finding workers like him [the experienced worker interviewed in the piece] is difficult. For months, the company has been advertising several job openings without much success. The...