Category: News and Opinion

Perhaps you heard about the drop in the stock market and the growing financial crisis in emerging markets last week. Basically U.S. businesses and the global economy are so addicted to Americans spending more than they can afford (which is to say more than businesses are paying them) that they can’t cope with the Federal Reserve raising interest rates to zero. Which in effect is what is happening by having the Fed taper off the latest round of “quantitative easing.”

The emerging markets are most affected thus far, but sooner or later Wall Street will be affected as well. Most New Yorkers won’t notice, because the NYC job base has been broadening and is less dependent on finance than 20 years ago. But the NYC and NY State tax base are more dependent on taxes on the undeserved profits in that industry, and the undeserved pay packages of those who work there. Which makes this Marketwatch.com article worth a read. “In a 2013 study, McKinsey Global Institute found that between 2007 and 2012, interest rate and QE policies resulted in a net transfer to U.S. financial companies of $150 billion from households, pension funds, insurers and foreign investors.” And the interest rate margin on cheap Federal Reserve money amounts to 60 to 130 percent of last year’s profits on the country’s biggest banks. “The analysis highlights how a focus on earnings changes without regard for true earnings potential can be misguided.”

So, it’s come down to this; an occasional piece when the fancy strikes, plus a monthly Gateway summary of my sporadic FACEBOOK posts, just to keep my toe in the water.  

Having paid for pre-K (and two years of nursery school before that) out of my own pocket to the tune of around $15 grand a year (in 2008 dollars), I understand not only its necessity, but why we must subsidize it for those who can’t afford it—a class I regard as including myself.  

The recent column in City & State by Steven Cohen http://www.cityandstateny.com/bill-de-blasio-and-his-mandate/ that pointed to the record low turnout in last year’s New York City Mayoral election prompted much discussion on line about the reasons for lack of voter participation.

As I write about the regional economy and commercial real estate market of different metro areas around the country, I am struck by a little-noted trend. In most parts of the country, while the widely quoted survey of business establishments showed that employment was higher in October 2013 than it had been in October 2012, the household-based data, also from the Bureau of Labor Statistics, shows a decrease. I’ll give one example. In metro Atlanta, the establishment survey shows the number of wage and salary jobs increased by 62,200 (2.6%) from October 2012 to October 2013. But household-based data shows employment fell by 12,200 (0.5%) during the same period, and the labor force fell by 36,835 (1.3%). I’m seeing the same thing all over the country. The establishment survey is considered more accurate, but it is often late to show a sharp turn in the economy, and is subject to large revisions when those sharp turns occur. And it does not include the self-employed, a growing share of the workforce.

In most metro areas the household-based data for October showed employment is falling when compared with a year earlier, but the labor force is falling even faster, which is why unemployment is edging down. At the national level, the sharp turn to the negative for in October was camouflaged by ongoing employment and labor force growth in some places, including California, New York, Texas, Florida, Michigan, Wisconsin, Indiana, the Dakotas, Utah. Those gains balanced the job losses elsewhere. Recently released national data for December, however, shows a bigger decline. I suspect most of the country is losing jobs again, a trend likely to make its way here eventually. The U.S. economy, and in some ways the global economy, is depending on selling Americans more than their employers pay them. This false economy was unsustainable and has been kept of life support, barely, for five years.

According to MSNBC  "GM has revealed that its new CEO Mary Barra stands to earn as much as $4.4 million in her first year on the job. That’s if she collects on the full $2.8 million that’s set aside as part of a short-term incentive plan. (She also could collect a potential $1 million in a new stock offering.) But Barra’s base salary is $1.6 million — a full $100,000 less than outgoing CEO Dan Akerson earned in 2012."

If shifting to female leadership reduces executive pay and frees up money for dividends to shareholders, I say go for it. The pace of decrease ought to be greater than $100,000 per change at the top, however, and not just apply to the CEO. If there is some equally capable person willing to do your job for less money, you are overpaid. Such as been the attitude for everyone but those at the top for 30 years. But it works both ways. And as for the rest of us getting a better deal, whatever works.

After some prompting I consulted someone in their early 20s and learned how to insert charts right into a post on Wordpress. Since the posts I wrote in December, based on long term Census Bureau data on public employee pensions in New York and New Jersey over 50 years, are still what most people are reading on “Saying the Unsaid in New York” one month later, I have edited them to embed the charts.

They are, in sequence, a post of the use of a fraudulent rate of return and asset value combination to cover up the selling out of the common future, which includes the entire database, a discussion of teacher pensions in New York and New Jersey, a discussion of the big general pension plans that cover most public employees in New York and New Jersey, and a discussion of police and fire pension plans. The latter three posts now have charts in the text, rather than just in the spreadsheet attachment. If that’s helpful, you can read the posts now if you have not already.