Category: The New Depression

The distant sound of tumbrils

~ susie ~ 1 Comment

Pretty much what I’ve been saying, only with a lot more words:

Louis XIV, the Franklin Roosevelt of his day, took a great deal of wealth and privilege from the French aristocracy and imposed a flurry of restrictions they found burdensome. After his time, it became a central goal of the nobility to restore their position at the king’s expense. Their strategy is one with which modern Americans ought to be familiar: they insisted on a massive military buildup and an aggressive foreign policy that landed France in expensive wars, while at the same time demanding tax cuts. The goal was simply to bankrupt the French government, so that—no, not so that they could drown it in a bathtub; instead, they wanted to force the king to call the États-Général—roughly, the equivalent of a US constitutional convention—which alone could create entirely new tax structures. Once that happened, they hoped to bully the king into restoring their former privileges as the price of acquiescing in a new tax regime.

The result was a high-stakes game of chicken between the party of the aristocracy, and the party of the civil servants, bureaucrats and officials whose authority and wealth was guaranteed by the power of the king. (If you want to describe these two parties as “Republicans” and “Democrats,” I’m not going to argue.) What neither side noticed was that their struggles imposed severe burdens on the rest of the population, the peasants, laborers, and small-scale businesspeople on whose passive acquiescence the entire structure of power and prestige ultimately rested. As the struggle went on, the aristocracy did their best to delegitimize the king and the central government, while the civil service and its supporters did their best to delegitimize the aristocracy; both sides succeeded beyond their wildest dreams, and managed to strip the last traces of popular legitimacy from the French political system as a whole.

So when the aristocrats finally got their way and the États-Général were summoned, all it took was a few speeches by radicals and a bit of violence on the part of the Paris mob, and the entire structure of the ancien régime disintegrated in a matter of weeks. The aristocrats, who were chiefly to blame for the mess, were also the last to figure out what had happened. It’s tempting to imagine one of them, stepping aboard the tumbril that will take him to the guillotine, saying to another, “So, Henri, how’s that political strategy working for you?”—but there’s no evidence that any of them managed that degree of insight even when the consequences of their failure were staring them in the face.
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Eminent domain

~ susie ~ 5 Comments

Great idea, hope it spreads. Joe Nocera:

There are few counties in America in as rough shape as San Bernardino County in California. During the housing bubble, the good times were very good. But then came the bust.


Today, San Bernardino County has one of the highest unemployment rates in the nation: 11.9 percent. Home prices have collapsed. Astonishingly, every second home is underwater, meaning the homeowner owes more on the mortgage than the house is worth. It is well documented that underwater mortgages have a high likelihood of defaulting — and, eventually, being foreclosed on. It has also been clear for some time that the best way to keep troubled homeowners in their homes is by reducing the principal on their mortgages, thus lowering their debt burden and more closely aligning their mortgage with the actual value of the home.


Which is why Greg Devereaux, the county’s chief executive officer, found himself listening intently when the folks from Mortgage Resolution Partners came knocking on his door. They had spent the previous year kicking around an intriguing idea: have localities buy underwater mortgages using their power of eminent domain — and then write the homeowner a new, reduced mortgage. It’s principal reduction using a stick instead of a carrot.


I know. When you first hear this idea, it sounds a little crazy. Eminent domain to take a mortgage? But the more closely you look at it, the more sense it starts to make. It would be a way to break the logjam that keeps mortgages in mortgage-backed bonds — securitizations — from being modified. It could prevent foreclosures. And it could finally stabilize housing prices.


[…] The securitization industry is up in arms about this proposal. In late June, after the plan was leaked to Reuters, some 18 organizations, including the Association of Mortgage Investors, wrote a threatening letter to the San Bernardino board of supervisors claiming that the plan would inflict “significant harm” to homeowners in the county. For his part, Devereaux insists that no final decision has been made. But, he says, “this is the first idea that anyone has approached us with that has the potential to have a real impact on our economy.” Other cities are watching closely to see what happens in San Bernardino.


We’re four years into a housing crisis. Nothing has yet worked to stem the terrible tide of foreclosures. It’s time to give eminent domain a try.

Sorkin too old-school for ultra-hip blogger

~ odd man out

Here’s Ta-Nehisi Coates, an Atlantic editor and blogger, quoting from Aaron Sorkin’s “deeply unpleasant, condescending and sexist” interview with the Globe and Mail:

“I think I would have done very well, as a writer, in the forties,” [Sorkin] says. “I think the last time America was a great country was then, or not long after. It was before Vietnam, before Watergate.”

Coates thought Sorkin, in the interview, was insensitive to victims of segregation and “gender repression” back in the ’40s. He scolded Sorkin for extolling a great era that never existed, and for expressing “attendant notions that the internet [has] ruined everything.”

What a crock. In the interview, Sorkin betrayed a nostalgic streak and apparent insecurities about the quality of his work. But I’m still trying to figure out what it is about him and his new HBO show, The Newsroom, that so deeply offended Coates and the many Sorkin non-fans who posted comments on Coates’ site.

They all seemed to miss the main points Sorkin made in the first episode of his new show, especially in the initial rant about America’s decline, delivered by Jeff Daniels, playing (at least in this scene) a latter-day Howard Beale.

More here.

No savings

~ susie

No cushion, no nothing. Welcome to our world:

 According to research released Monday by Bankrate.com, 28 percent of Americans have no emergency savings whatsoever, up from 24 percent last year. About half don’t have enough money saved to cover expenses for three months. “Incomes are largely stagnant, so it’s difficult for people to make significant headway on savings when household expenses are creeping higher but incomes are not,” said Bankrate senior financial analyst Greg McBride.

Mitt’s idea-free campaign

~ odd man out

TPM’s reminder that Mitt Romney is running a campaign that’s unimaginative, cowardly and dishonest, adjectives that sum up the man as well as the campaign:

Mitt Romney’s campaign asked Florida Gov. Rick Scott (R) to downplay his state’s job growth after several press releases from the governor’s campaign and messages from the Florida Chamber of Commerce trumpeted gains for the month of May, according to Bloomberg News.

Florida’s unemployment rate dropped from 8.7 percent in April to 8.6 percent in May, though still significantly above the national rate of 8.2 percent.

A Romney adviser reportedly requested that Scott’s office say that Florida’s unemployment rate could improve faster under a Romney presidency, unnamed sources told Bloomberg.

The development is perhaps one of the clearest examples of the messaging predicament the Romney campaign finds itself in. For the Republican presidential nominee, the election is largely a referendum on President Obama’s handling of jobs and the economy…

No wonder Romney quickly resorts to doubletalk when anyone asks him where he stands on an issue. All of his eggs are in the same basket — our ongoing economic disaster.

This sounds vaguely familiar

~ susie ~ 1 Comment

Doesn’t it? I wonder if it will have a different ending this time:

Sir Mervyn King has announced emergency measures to help banks and boost business lending after a warning from George Osborne that the “debt storm” raging on the continent had left the UK and the rest of Europe facing their most serious economic crisis outside wartime.


In a joint proposal between the Bank of England and the Treasury, banks will receive cut-price funds provided they pass on the benefits to their business customers.


This new “funding for lending” scheme could provide an £80bn boost to loans to the private sector within weeks and alleviate growing fears of a second slump since the start of the financial crisis in 2007.


In a second scheme the Bank will begin pumping a minimum of £5bn a month within the next few days into City institutions to improve their liquidity.

Hahahahahahaha! “Provided the pass on the benefits to their business customers.” Of course, they won’t put it in writing and make it a condition of accepting the funds. They’ll just shake hands on it, these bankers are men of honor, after all.

Why you don’t have a job

~ susie

(H/T to the reader who suggested this, whose name I can’t find.) From the Economic Populist, this piece explains how automated software is screening qualified people out of the job application process. While Mr. Cappelli is saying that companies are short-staffed and using software because of the overwhelming volume of applications, the real problem is that employers are demanding unrealistic qualifications and then blaming the applicant pool and the schools for the fact that they’re not offering enough of a salary to attract the high skill level they want.

This isn’t specific to this recession. When I was a recruiter, I saw employers turn into petty tyrants after 9/11, demanding absurd combinations of skill sets at lower wages because they were convinced they had the upper hand. Now, large corporations are using the inability to get qualified workers at slave wages as an excuse to bring in lower-paid workers from other countries. Progress!

Finally someone speaks the truth about U.S. employers claiming they just can’t find people for job openings. Wharton Business School Professor Peter Cappelli has analyzed why employers dare to claim they cannot find people to hire when the United States has over 27 million people needing a job.

There is no skills shortage, none. In fact employers are being absolutely ridiculous in their hiring practices. It’s so bad, employers use software and third party rejection job application websites, which pretty much guarantee a candidate will be rejected. These websites and software are like virtual wastebaskets for your resume. No human involved, it’s automatic, guaranteed rejection. It’s so bad, an HR executive applied for his own job and was rejected.

A Philadelphia-area human-resources executive told Mr. Cappelli that he applied anonymously for a job in his own company as an experiment. He didn’t make it through the screening process.

Another factor that contributes to the perception of a skills gap is that most employers now use software to handle job applications, adding rigidity to the process that screens out all but the theoretically perfect candidate. Most systems, for example, now ask potential applicants what wage they are seeking — and toss out those who put down a figure higher than the employer wants. That’s hardly a skill problem. Meanwhile, applicants are typically assessed almost entirely on prior experience and credentials, and a failure to meet any one of the requirements leads to elimination. One manager told me that in his company 25,000 applicants had applied for a standard engineering job, yet none were rated as qualified.


Watch the above interview with Professor Cappelli on the real problem with employers these days. It is not that people are lacking skills, it is employers have impossible requirements.


We’ve written about this many times, so it’s thrilling to see a Wharton School Professor amplify the insanity.

A 2011 Accenture survey found that only 21% of U.S. employees had received any employer-provided formal training in the past five years.


This is so obvious it hurts. If employers really wanted people, they would train them. That’s what employers did right up until the 1980’s or so. By 2000, companies wanted instant ready disposable workers.


Cappelli is hitting the press. The truth is employers do not want to hire U.S. workers, Americans. In some cases employers do not want to hire anyone at all, they think it’s cheaper to leave positions unfilled!   Hopefully this time some employers will wake up, realize to grow a business, one needs people. Maybe some will actually train some people.

The challenge will be getting top leaders of organizations to admit they are a big part of the problem, and to change their ways. Software can be coded so it is less restrictive. Leaders could pay higher market wages where necessary. And they could make more investments in training. That costs money, to be sure, but so does leaving jobs open that could be of significant value to the company (not to mention the economy at large).


Judging from employers’ initial reaction, however, that’s unlikely to happen anytime soon. After writing the initial Wall Street Journal story, Cappelli heard from a few corporate leaders who told him there was really nothing they could do. He suggested he’d come out and take a close look at what they’re doing. “Nobody ever takes me up on that,” he says. “That usually shuts things up pretty quickly.”