Remember when I pointed out that 5 million unemployed people will lose their benefits this summer?
Well, it's started.
As many as 130,000 Californians are expected to exhaust their unemployment benefits within the next three weeks, based on estimates from the state Employment Development Department. About 3,300 already have fallen off the unemployment rolls.
Currently, the unemployed in California are eligible for up to 99 weeks of benefits — 26 weeks of regular unemployment plus four extensions and so-called FedEd relief.
...
Congress is currently considering legislation that would allow more-recently unemployed to be eligible for some of the extended benefits as well as a 65% government subsidy for COBRA health insurance premiums. However, none of the bills would add any additional weeks of benefits for those who have received the maximum.
That's 130,000 by mid-April in just California, and Congress has no plans for addressing the problem. By mid-summer we are going to be looking at millions of very desperate people.
I don't understand the reason for this revision at all. We aren't talking about unemployment numbers. We are talking about unemployment claims. This should be straight-forward.
To go back and revise the numbers for the last 5 years requires some serious explanation.
Since the mid 1980's I have felt the assertion that labor costs are a main inflation booster is specious. The manipulation of our markets is the main inflation booster. Enron electricity, and gas prices in 2007-2008 were manipulated. Supply, Demand and Costs were not the driving factors. Labor costs in worldwide industries vary from $1 per day to hundreds of dollars per hour. Morgan Stanley has owned inventories of oil for sometime now and they manipulate the markets when politically tenable.
Last year the Saudi Oil Minister stated on 60 minutes that it costs them less then $2 a barrel to get the oil from the ground and shipped. He further stated that his country needs the price of oil to be sustained at $72 per barrel in order to support all of the projects they have going on in Saudi Arabia. Well gee, the price of oil has been in the range of 72 - 80 dollars for quite sometime now. I'm sure Morgan Stanley is getting ready to make a move. What ever happened to that oil shortage under Bush? Did Obama find some?
The bottom line is labor costs no longer play a role pushing inflation up. Just as the commodities markets are manipulated, the labor markets have been as well. Maybe we can securitize everyone's paychecks and short that market to put the final nail in labors wallets!
The only thing China is buying are commodities and raw materials to manufacture goods. The US trade deficit with China only benefits the US Corporations manufacturing their products in China. The Chinese consumers are protected by law and also by psychology to the motherland. If only Americans had similar sentiments.
Great observation. Before I read it I read Bonddad. He and New Deal either didn't see what you did or are ignoring it. They predict 'job growth' this month. After I read your post I literally laughed. They are really a mixed bag. Sometimes they are dead on and other times I think they smoke 'green shoots'
This is the type of ‘shoe’ analysis that I think we need if we are going to make rational decisions about China or any other trade partner. This ‘shoe’ thing is of course anecdotal, but I think it could be a model for more general analysis if some sort of manufacturing index were developed to encompass a large number of China manufactured goods in various categories and submitted to similar analysis.
On another of your good points, I’m not sure that China will have a problem moving from cheap labor to capital-intensive industries. First, I think they have the capital. In recent decades that have poured capital into massive infrastructure projects such as the “Mile High’ railroad to Tibet, the Three Rivers dams, high speed trains, the phenomenal commercial construction of Shanghai, pipelines and refineries on the Siberian border, one could go on. It seems possible that they could now begin to move capital away from infrastructure construction to manufacturing (just my subjective thinking based on news articles over the years).
Also, it is my understanding that the education system of the China is significantly more efficient than ours. Bonddad has recent noted that much of our un- and under- employment is concentrated in high school and below education levels.
In sum, there is a large body of anecdotal evidence suggesting that China has the capital and educated population to move fairly quickly to high technology manufacturing. Keep in mind it’s only been 38 years since Nixon went to China. To me the comparison between China’s economic development and ours in those years is stunning.
That’s why I think the whole exchange rate / tariff thing is largely meaningless. It’s like putting a bandage on arterial bleeding. We have major (historic proportion) economic problems and the least of them is China with a GDP a small fraction of ours – just a thought.
And there is the global warming scandal, in which NGOs. the UN, and the nuclear industry colluded in concocting a doomsday scenario in order to create profit in pollution.
Originally, I didn't care for Mr. Roberts (he was one of those supply-side econs with the Reagan Administration, after all), but the last decade I truly appreciated what he had to say, and found myself in almost complete agreement with him.
That quote from his counterpunch missive is that disagreement --- he mistakes scams taking advantage of global warming, and doesn't understand the overwhelming scientific data portending what's to come -- and greatly accelerating in time frame.
Nope, I appreciate Mr. Roberts on the economy, but he should stay away from science.
I've been a fan of his for some time. He's been a passionate critic of the ruling class's off-shoring, war, torture, and injuries to privacy. And he was absolute anathema to its noxious neo-liberal/neo-con pulse. His commentary was trenchant and truthful. I'll miss him.
They do look at the U.S. middle class, the American workforce as peasants and that includes professionals, PhDs, high skilled labor. Yup, they have the gall to turn the American work experience into Schindler's List and then insult people for a mere paltry sum to keep them from starving.
Across the board need to be revamped in my view. It's 2010 and they should be able to get data, real time, then they need to add significant levels of detail.
Take unemployment, they need immigration status in those stats. Sorry it's a globalization/labor arbitrage age and somehow I don't think guest workers should be counted as employed, which artificially represses the real unemployment rate for Americans, esp. in some occupational categories.
That said, some stats seem to be better than others and the DOL to me really needs to be revised, #1! They could easily, in this day and age, get work stats on not just those showing up to the State unemployment offices, but temp labor, small business quarterly earnings and employees, the self-employed, those being rejected for UI, those not qualifying. Every month we have a horde of Journalists and bloggers digging around in the data, hunting high and low, having to extrapolate, guesstimate, subtract, add, do a log and on and on to try to get more accuracy and a picture of what's really going on.
Alan Grayson introduced a "Medicare for all" bill, where if one wants to get on Medicare, they would adjust a premium for age and then one can simply buy it.
I think that's worth a look because we already have socialized medicine (of course the for profits suck on it bone dry) in Medicare, Medicaid, the VA. It's a place to build upon.
Didn't Romneycare, which is what they passed, already be proved to be ridiculously expensive and is kind of a failure in Mass?
As far as all of the political unrest goes, here we go, people cannot use their brains, get off of whatever rallying cry, hence policies in the national interest get divided by which corporate agenda one wants to scream and yell about.
Outstanding post, of course, and the norm: I've run into endless circular links when attempting to ascertain source data, or the source of the "data."
The last verbal circular link was when I was attempting to find the originating source to that "30,000 predicted to die from flu pandemic" some months back. The CDC claimed those numbers originated out of the White House (their science council), upon contacting the appropriate party in the White House I was told they got that figure from the CDC (an examination of the CDC's site put the figures of deaths from flu, at the highest, to be around 1,000, and there was no differentiation whether those in the mortality group -- babies, young children, the elderly, those with immune system problems -- had actually been vaccinated or not).
Why all government stats are suspect? Hmmmmm....could it possibly be chronic experience with phony, unexplainable and unverifiable stats?
And again I say, the level of unemployment which correlates with all those food stamp increases, homelessness increases, and poverty increase, has to put it from 28% to 34%.
But that's my entire point: the profits aren't going to the public coffers; hence, the privatization of taxation, with the public institution, the US Department of the Treasury's IRS acting upon any "stiffing" of those private insurance companies by the mandated purchase of their product.
And if you happen to read various politicians' (the dems, that is) defense of the mandate, they will almost uniformly liken it to another tax, such as Social Security.
I must respectfully disagree with you. I wouldn't classify the public option similar to medicare as, firstly, it was never really articulated clearly. At most it was a pale comparison of it.
Next, in an earlier article by Glenn Greenwald, he finally comes around to my way of thinking and explains how the fix was in from the beginning, with President Obama meeting with the hospital association long before he met with the reps of Pharma. There was never any real interest on his part for the public option to begin with.
The violence followng the vote, from all those idiots who can't even do simple arithmetic and don't even rate as illiterates (their falling for the obvious kabuki theater ploy for that so-called "government takeover of healthcare" when in reality it is simply the extension of the privatization of health insurance and health care) is just the complete orchestration of events to obscure the facts.
Whether one listens to Fox, NPR or Air America (shows formerly w/AA, and I don't normally listen to any American propaganda media), the same "whip the mob into a frenzy" permeates: the teabaggers promoting violence, then the response to those moronic teabaggers.
Again, obscuring the facts. And the Tea Party isn't particular to the South, one finds them sprinkled throughout America, the usual distribution of lowbrow, lazy brained idiots who can never be bothered to take their citizenship duties seriously.
Obama simply did Wall Street's bidding -- he received their money as a senator, then delivered as the prez. Samo...samo.
I'm working on some more posts on this topic. Is your email address, in your profile on EP up to date? I was going to email you about some of this and wondering where you've been. Yeah, one thing to note is what a population of 1.3 billion brings a nation to spin up, which is a major factor which doesn't exist in some quarters! ;)
I caught the labor shortage and a host of things I know you will be interested in but the biggest thing is there is pressure on the U.S. Treasury to call a spade a spade here and label China as a currency manipulation. That implies some real government action if that happens....but ya know, Geithner....so the politics are going on not just in China.
The left was quick to pick up on the conflict between the mandate and the elimination of the public option which was originally going to be like medicare. I think Obama went for what he thought he could get. Look at the violence following the vote and think of the south during civil rights. The GOP is aligned with the south and has not curbed their encouragement of the Tea Party tactics. As Wendell Potter, ex-CFO of Aetna, says; the system will fail with or without Obamacare. Obamacare is the more kind failure. There is more work to do.
Remember, that for the Chinese leadership, that this isn't an economic matter, it's a political one. For the last 20 years, they've been able to claim the right to rule based upon economic development. 8% GDP growth is the magic number. Anything below that falls beneath what the Chinese people have come to expect in return for low wages and poor treatment. If the growth stops, the Chinese leadership will face real problems with social unrest.
They've kept things under wraps with their gigantic stimulus last year, but the problem is that they are producing products that have no markets. Last month, for the first time in 6 years, China had a month in which there was a trade deficit. This was because companies had ramped up to ship things out ahead of the Easter holiday.
The question is whether things will return to normal this month. It's possible that they won't. Ironically enough, there's a labor "shortage" in China, and we here the same rhetoric that this is because there are jobs that Chinese workers won't take. (Unspoken is the wage and working conditions.) So now, factories are moving on to Vietnam.
Right now, a number of former factory workers have simply left the industrial labor force, and have returned home to the country. Unless the government finds a way to keep these people afloat, they have a serious problem. Remember too that although Chinese made goods have a good profit margin on the shelf in the US, that the factories making them in China rarely control distribution.
So let's say that you buy a pair of sneakers in the US for $40. If you look back at who gets what, the big winners are the importing companies.
So it may be that the materials costs, labor, and overhead for making the shoes only comes out to $4.50 a pair, but the factory owner isn't getting the bulk of that difference. That factory owner will sell the shoes for maybe $5 to an importing company. Their margin is not that great, $0.50. So let's say transportation to the US adds another $1.00. So we're at $6. Now that importer will turn around and sell those shoes to a retailer for $15. After storage costs and the like, they make maybe $5. Now the retailer puts the shoes on the shelf for $40, and they may put out $10 in overhead and the like. So at the normal price they take home $15 from the sale, the lion's share. Now, they often have to get stock moved out on sale, so that's an overestimate, but still.
This is the reason that Chinese companies want to control distribution, but back to my original point. In the short term, because the Chinese don't control distribution, factory owners margins are low. Which means that their advantage isn't the use of labor saving technology, it's the substitution of cheap labor for capital investment. That isn't going to change in the short term.
The problem for the Chinese government is that thing margins mean and waning demand mean that the whole show can collapse overnight, leaving a mass of very angry, unemployed workers to deal with. Get enough angry workers, and you have a revolutionary situation. Hence, the Chinese government isn't going to do anything, like allowing the yuan to appreciate, that could affect these factory's thin margins.
The key here is capital investment, and how Chinese manufacturing moves from substituting cheap labor for capital investment towards replacing cheap labor with capital investment.
Remember when I pointed out that 5 million unemployed people will lose their benefits this summer?
Well, it's started.
That's 130,000 by mid-April in just California, and Congress has no plans for addressing the problem. By mid-summer we are going to be looking at millions of very desperate people.
I don't understand the reason for this revision at all. We aren't talking about unemployment numbers. We are talking about unemployment claims. This should be straight-forward.
To go back and revise the numbers for the last 5 years requires some serious explanation.
Since the mid 1980's I have felt the assertion that labor costs are a main inflation booster is specious. The manipulation of our markets is the main inflation booster. Enron electricity, and gas prices in 2007-2008 were manipulated. Supply, Demand and Costs were not the driving factors. Labor costs in worldwide industries vary from $1 per day to hundreds of dollars per hour. Morgan Stanley has owned inventories of oil for sometime now and they manipulate the markets when politically tenable.
Last year the Saudi Oil Minister stated on 60 minutes that it costs them less then $2 a barrel to get the oil from the ground and shipped. He further stated that his country needs the price of oil to be sustained at $72 per barrel in order to support all of the projects they have going on in Saudi Arabia. Well gee, the price of oil has been in the range of 72 - 80 dollars for quite sometime now. I'm sure Morgan Stanley is getting ready to make a move. What ever happened to that oil shortage under Bush? Did Obama find some?
The bottom line is labor costs no longer play a role pushing inflation up. Just as the commodities markets are manipulated, the labor markets have been as well. Maybe we can securitize everyone's paychecks and short that market to put the final nail in labors wallets!
The only thing China is buying are commodities and raw materials to manufacture goods. The US trade deficit with China only benefits the US Corporations manufacturing their products in China. The Chinese consumers are protected by law and also by psychology to the motherland. If only Americans had similar sentiments.
Great observation. Before I read it I read Bonddad. He and New Deal either didn't see what you did or are ignoring it. They predict 'job growth' this month. After I read your post I literally laughed. They are really a mixed bag. Sometimes they are dead on and other times I think they smoke 'green shoots'
This is the type of ‘shoe’ analysis that I think we need if we are going to make rational decisions about China or any other trade partner. This ‘shoe’ thing is of course anecdotal, but I think it could be a model for more general analysis if some sort of manufacturing index were developed to encompass a large number of China manufactured goods in various categories and submitted to similar analysis.
On another of your good points, I’m not sure that China will have a problem moving from cheap labor to capital-intensive industries. First, I think they have the capital. In recent decades that have poured capital into massive infrastructure projects such as the “Mile High’ railroad to Tibet, the Three Rivers dams, high speed trains, the phenomenal commercial construction of Shanghai, pipelines and refineries on the Siberian border, one could go on. It seems possible that they could now begin to move capital away from infrastructure construction to manufacturing (just my subjective thinking based on news articles over the years).
Also, it is my understanding that the education system of the China is significantly more efficient than ours. Bonddad has recent noted that much of our un- and under- employment is concentrated in high school and below education levels.
In sum, there is a large body of anecdotal evidence suggesting that China has the capital and educated population to move fairly quickly to high technology manufacturing. Keep in mind it’s only been 38 years since Nixon went to China. To me the comparison between China’s economic development and ours in those years is stunning.
That’s why I think the whole exchange rate / tariff thing is largely meaningless. It’s like putting a bandage on arterial bleeding. We have major (historic proportion) economic problems and the least of them is China with a GDP a small fraction of ours – just a thought.
Originally, I didn't care for Mr. Roberts (he was one of those supply-side econs with the Reagan Administration, after all), but the last decade I truly appreciated what he had to say, and found myself in almost complete agreement with him.
That quote from his counterpunch missive is that disagreement --- he mistakes scams taking advantage of global warming, and doesn't understand the overwhelming scientific data portending what's to come -- and greatly accelerating in time frame.
Nope, I appreciate Mr. Roberts on the economy, but he should stay away from science.
Cap-and-trade a scam, global warming a reality.
Yves Smith does an excellent post on Lewis' book:
at this link.
I've been a fan of his for some time. He's been a passionate critic of the ruling class's off-shoring, war, torture, and injuries to privacy. And he was absolute anathema to its noxious neo-liberal/neo-con pulse. His commentary was trenchant and truthful. I'll miss him.
Ireland just reported a -5.1% GDP number for Q4 2009 it appears and a whopping -7.1% for 2009. That's the lowest on record, since 1922.
Wow.
They do look at the U.S. middle class, the American workforce as peasants and that includes professionals, PhDs, high skilled labor. Yup, they have the gall to turn the American work experience into Schindler's List and then insult people for a mere paltry sum to keep them from starving.
Across the board need to be revamped in my view. It's 2010 and they should be able to get data, real time, then they need to add significant levels of detail.
Take unemployment, they need immigration status in those stats. Sorry it's a globalization/labor arbitrage age and somehow I don't think guest workers should be counted as employed, which artificially represses the real unemployment rate for Americans, esp. in some occupational categories.
That said, some stats seem to be better than others and the DOL to me really needs to be revised, #1! They could easily, in this day and age, get work stats on not just those showing up to the State unemployment offices, but temp labor, small business quarterly earnings and employees, the self-employed, those being rejected for UI, those not qualifying. Every month we have a horde of Journalists and bloggers digging around in the data, hunting high and low, having to extrapolate, guesstimate, subtract, add, do a log and on and on to try to get more accuracy and a picture of what's really going on.
Of course I'm being facetious -- would anyone trust a man over the age of 13 years who goes by the name "Jamie"?
Alan Grayson introduced a "Medicare for all" bill, where if one wants to get on Medicare, they would adjust a premium for age and then one can simply buy it.
I think that's worth a look because we already have socialized medicine (of course the for profits suck on it bone dry) in Medicare, Medicaid, the VA. It's a place to build upon.
Didn't Romneycare, which is what they passed, already be proved to be ridiculously expensive and is kind of a failure in Mass?
As far as all of the political unrest goes, here we go, people cannot use their brains, get off of whatever rallying cry, hence policies in the national interest get divided by which corporate agenda one wants to scream and yell about.
Outstanding post, of course, and the norm: I've run into endless circular links when attempting to ascertain source data, or the source of the "data."
The last verbal circular link was when I was attempting to find the originating source to that "30,000 predicted to die from flu pandemic" some months back. The CDC claimed those numbers originated out of the White House (their science council), upon contacting the appropriate party in the White House I was told they got that figure from the CDC (an examination of the CDC's site put the figures of deaths from flu, at the highest, to be around 1,000, and there was no differentiation whether those in the mortality group -- babies, young children, the elderly, those with immune system problems -- had actually been vaccinated or not).
Why all government stats are suspect? Hmmmmm....could it possibly be chronic experience with phony, unexplainable and unverifiable stats?
And again I say, the level of unemployment which correlates with all those food stamp increases, homelessness increases, and poverty increase, has to put it from 28% to 34%.
But that's my entire point: the profits aren't going to the public coffers; hence, the privatization of taxation, with the public institution, the US Department of the Treasury's IRS acting upon any "stiffing" of those private insurance companies by the mandated purchase of their product.
And if you happen to read various politicians' (the dems, that is) defense of the mandate, they will almost uniformly liken it to another tax, such as Social Security.
I must respectfully disagree with you. I wouldn't classify the public option similar to medicare as, firstly, it was never really articulated clearly. At most it was a pale comparison of it.
Next, in an earlier article by Glenn Greenwald, he finally comes around to my way of thinking and explains how the fix was in from the beginning, with President Obama meeting with the hospital association long before he met with the reps of Pharma. There was never any real interest on his part for the public option to begin with.
The violence followng the vote, from all those idiots who can't even do simple arithmetic and don't even rate as illiterates (their falling for the obvious kabuki theater ploy for that so-called "government takeover of healthcare" when in reality it is simply the extension of the privatization of health insurance and health care) is just the complete orchestration of events to obscure the facts.
Whether one listens to Fox, NPR or Air America (shows formerly w/AA, and I don't normally listen to any American propaganda media), the same "whip the mob into a frenzy" permeates: the teabaggers promoting violence, then the response to those moronic teabaggers.
Again, obscuring the facts. And the Tea Party isn't particular to the South, one finds them sprinkled throughout America, the usual distribution of lowbrow, lazy brained idiots who can never be bothered to take their citizenship duties seriously.
Obama simply did Wall Street's bidding -- he received their money as a senator, then delivered as the prez. Samo...samo.
I'm working on some more posts on this topic. Is your email address, in your profile on EP up to date? I was going to email you about some of this and wondering where you've been. Yeah, one thing to note is what a population of 1.3 billion brings a nation to spin up, which is a major factor which doesn't exist in some quarters! ;)
I caught the labor shortage and a host of things I know you will be interested in but the biggest thing is there is pressure on the U.S. Treasury to call a spade a spade here and label China as a currency manipulation. That implies some real government action if that happens....but ya know, Geithner....so the politics are going on not just in China.
I don't know the number of jobs, but I can tell you how much they spent doing it - $400 million. That much money will outsource a lot of jobs.
But they are worried about people being on unemployment. It's almost as if they think that working people are a lower class of human being.
The left was quick to pick up on the conflict between the mandate and the elimination of the public option which was originally going to be like medicare. I think Obama went for what he thought he could get. Look at the violence following the vote and think of the south during civil rights. The GOP is aligned with the south and has not curbed their encouragement of the Tea Party tactics. As Wendell Potter, ex-CFO of Aetna, says; the system will fail with or without Obamacare. Obamacare is the more kind failure. There is more work to do.
Remember, that for the Chinese leadership, that this isn't an economic matter, it's a political one. For the last 20 years, they've been able to claim the right to rule based upon economic development. 8% GDP growth is the magic number. Anything below that falls beneath what the Chinese people have come to expect in return for low wages and poor treatment. If the growth stops, the Chinese leadership will face real problems with social unrest.
They've kept things under wraps with their gigantic stimulus last year, but the problem is that they are producing products that have no markets. Last month, for the first time in 6 years, China had a month in which there was a trade deficit. This was because companies had ramped up to ship things out ahead of the Easter holiday.
The question is whether things will return to normal this month. It's possible that they won't. Ironically enough, there's a labor "shortage" in China, and we here the same rhetoric that this is because there are jobs that Chinese workers won't take. (Unspoken is the wage and working conditions.) So now, factories are moving on to Vietnam.
Right now, a number of former factory workers have simply left the industrial labor force, and have returned home to the country. Unless the government finds a way to keep these people afloat, they have a serious problem. Remember too that although Chinese made goods have a good profit margin on the shelf in the US, that the factories making them in China rarely control distribution.
So let's say that you buy a pair of sneakers in the US for $40. If you look back at who gets what, the big winners are the importing companies.
So it may be that the materials costs, labor, and overhead for making the shoes only comes out to $4.50 a pair, but the factory owner isn't getting the bulk of that difference. That factory owner will sell the shoes for maybe $5 to an importing company. Their margin is not that great, $0.50. So let's say transportation to the US adds another $1.00. So we're at $6. Now that importer will turn around and sell those shoes to a retailer for $15. After storage costs and the like, they make maybe $5. Now the retailer puts the shoes on the shelf for $40, and they may put out $10 in overhead and the like. So at the normal price they take home $15 from the sale, the lion's share. Now, they often have to get stock moved out on sale, so that's an overestimate, but still.
This is the reason that Chinese companies want to control distribution, but back to my original point. In the short term, because the Chinese don't control distribution, factory owners margins are low. Which means that their advantage isn't the use of labor saving technology, it's the substitution of cheap labor for capital investment. That isn't going to change in the short term.
The problem for the Chinese government is that thing margins mean and waning demand mean that the whole show can collapse overnight, leaving a mass of very angry, unemployed workers to deal with. Get enough angry workers, and you have a revolutionary situation. Hence, the Chinese government isn't going to do anything, like allowing the yuan to appreciate, that could affect these factory's thin margins.
The key here is capital investment, and how Chinese manufacturing moves from substituting cheap labor for capital investment towards replacing cheap labor with capital investment.
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