James Pethokoukis

Politics and policy from inside Washington

U.S. unemployment, state by state

Oct 22, 2009 18:13 UTC

A great map by NPR. Notice the high rates in swing states like Florida, Ohio and Michigan.

statemap

COMMENT

I live approximately 30 miles west of Cleveland in a town called Lorain. I spent 30 years in the United States Army, and each trip home on leave, I saw more and more deterioration.

I have watched my town go from a reasonably employed and populated flourishing place, to a virtual ghost town. The Steel Mill and the Ford Plant are barely existing. Many of the businesses in the downtown area have been boarded up and long gone. The Lakefront area, prime for development and recreation, is languishing. The sad fact is that many of the residents are complacent to the point of being comatose.

The once thriving industrial base was wiped out, in part, by unions. Businesses and corporations have no incentive to invest in this area, and who can blame them? The Lorain City government throws up so many roadblocks in the form of high taxes, red tape, and bureaucratic stupidity, that unless we throw all of them out and start over, they’ll be no resurgence for this town. The zombies in this area keep voting the same party back into office.

Oh, I forgot to mention: Northeast Ohio is a democratic stronghold.

Congratulations, swing states….how’s that “change” working out for ya?

Posted by SFC MAC | Report as abusive

How the Baucus bill pays for healthcare reform

Oct 22, 2009 17:55 UTC

If those Medicare cuts don’t happen, forget about it, gang (via the Tax Foundation):

baucusbill

Romer: Unemployment likely to remain “severely elevated”

Oct 22, 2009 17:04 UTC

Watch CEA chair Christina Romer manage voter expectations:

Consistent with the recent cyclical pattern, the unemployment rate is predicted to continue rising for two quarters following the resumption of GDP growth. Whether this happens and how high the unemployment rate eventually rises will obviously depend on the strength of the GDP rebound. …  With predicted growth right around two and a half percent for most of the next year and a half, movements in the unemployment rate either up or down are likely to be small. As a result, unemployment is likely to remain at its severely elevated level.

Wall Street pay is the Great Distraction of the Great Recession

Oct 22, 2009 11:49 UTC

If I made of list of factors contributing to the recession and financial crisis, Wall Street pay would come in around 6th, after 1) easy monetary policy; 2) TBTF; 3) US housing policy; 4) global savings glut/China labor shock; 5) Wall Street group think.  Yet pay is where so much energy is being directed at this issue thanks to its populist appeal. America hates TARP so Washington needs to make amends by hammering execs at TARP recipients.

Now two other takes. First, Marginal Revolution:

There is no way this will work as advertised.  If the administration actually follows through, most of these executives will quit and get higher paying jobs elsewhere.  Executives not directly affected by the pay cuts will also quit when they see their prospects for future salary gains have been cut.  Chaos will be created at these firms as top people leave in droves.  Will the administration then order people back to work?

Here is Naked Capitalism:

The point is that the collection of these scalps will do nothing to comp levels ex these firms. The companies that also enjoy implicit government guarantees are free to do the “heads I win, tails you lose” game of privatized gains and socialized losses. And Ken Lewis is the poster child of why these measures are completely meaningless. He sacrificed his 2009 pay, but will still collect $125 million when he departs Bank of America.

If the government is going to backstop the industry (and this isn’t an “if” anymore), it needs to limit those firm’s activities to what is socially valuable and regulate them heavily to contain risk taking. As we have said, reining in executive pay (and note there is no will to do that anyhow) is not an effective approach. Those employees who don’t like that are free to decamp and raise money in ways that do not involve the regulated firms in any way, shape, or form, save perhaps counterparty exposures on very safe, highly liquid instruments.

COMMENT

I agree with much, but take issue with the Naked Capitalism blurb. The solution is not to’limit those firm’s activities to what is socially valuable and regulate them heavily to contain risk taking.’ The solution is to eliminate the government policy of too big to fail.

Once that message is sent loud and clear, then the behavior of market participants will adjust accordingly and ‘excessive’ or ‘irresponsible’ risk taking will decline by virtue of the natural dynamics of capitalist discipline. Because the prospect of real failure is powerful incentive for any institution to be more judicious in the risks that it takes — as opposed to today’s environment where ‘failure’ means the government will likely step in to make you whole.

Posted by Bill, Fairfax, VA | Report as abusive
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