MARCH 2009 3/15/09 Bad News, and More Bad News, Clark Hoyt, NY Times. A newspaper's responsibility is not to be an economic cheerleader, but to maintain a level head and help put the world in perspective for readers. Comment: The theme of this essay is excellent. But I argue with the sentence in which Mr. Hoyt attributes to Times business columnist David Leonhardt this statement, based on job-market data: "[A]s bad as things are, they are still not as bad as the recession of 1982, let alone the Great Depression." Does Mr. Leonhardt still say that? The reason for the recession that produced high unemployment in 1982 was Fed Chairman Paul Volcker's brave determination to break the back of inflation. In the process he allowed interest rates to soar. The recession was painful, but recovery was entirely within the control of the Fed, which could and did reverse the process by easing credit. By contrast, the credit problems today are not the deliberate creation of the Fed, which has on the contrary eased the target fed funds rate down to the "zero bound". To say that 1982 was worse is like someone suffering an angina attack saying that his heart was worse off right after his triple-bypass operation. Not so, because the surgeons then had the situation under control. Today's Great Recession is the worst since the Great Depression.
3/15/09 AIG to Pay $100 Million in Bonuses After Huge Bailout, NY Times. Despite being bailed
out with more than $170 billion from the Treasury and Federal Reserve, the
American International Group is preparing to pay about $100 million in bonuses
to executives in the same business unit that brought the company to the brink of
collapse last year. Comment: Conflict between alleged contractual compensation agreements and what is reasonable for taxpayers to pay for in a bailout of an insolvent company.
3/12/09 Credit Card Delinquencies Soar, Fitch. For the second consecutive
month, credit card delinquencies reached all-time highs according to the latest
Fitch Credit Card Index results. Comment: This means high stress in these households. After about one year into a recession, stress signs give way to significantly higher rates of property crimes, robberies, suicides.
3/12/09 Economists See U.S. Jobless Rate Nearing 10 Percent, Reuters. U.S. unemployment will approach 10 percent as the country endures its worst recession since World War Two, leaving more than 13 million Americans jobless, according to a Reuters poll of economists. Comment: Reuters notes that the poll of U.S. economists was conducted by Bangalore Polling.
3/11/09 AIG Bailout Good for Banks but Investors
Bleed, Joseph A.
Giannone, Reuters.The $173 billion government rescue of American International
Group Inc is stoking resentment. Stock and bond holders have been crushed. But banks
that bought credit protection from AIG Financial Products have been paid, since
the Fed announced its rescue of AIG on September 15, about $50 billion of
government money. Is it a backdoor taxpayer bailout of Goldman Sachs Group Inc
and other banks? Comment: Inevitable issues of fairness will surely make the bailouts a topic for research and vigorous debate for years to come. 3/9/09 Money
Stimulates Debate in States Over Plan's Goals, Alec
McGillis, Washington Post, A1. As tens of billions of dollars in stimulus funds
begin to flow across the country, states and federal agencies are gripped by disputes
over whether the money is being used in ways that violate the letter or spirit
of the legislation, threatening to delay the infusion of funds into the
staggering economy. Examples: Kansas,
Texas, West Virginia. Comment:The goals of government are multiple and conflicting, and practical compromises must be made soon.
3/1/09 Will Crime Rise in NYC Because of the Deepening Recession?New York Times. During the last major NYC recession, in 1991-92, crime rates in NYC soared? Will this happen again? Comment: This is a serious question and it gets a lot of serious answers, that vary in part according to the situation of the responder. Some of the answers are surprising.
FEBRUARY 2009 2/25/09 Albany Takes on NYC Term Limits Issue, New York Times. Comment: Ironically, in the name of democracy, an upstate legislature is butting in to override a locally elected City Council vote in favor of allowing the Mayor to run for a third term. The City Council members seem to have acted fully within their constitutional powers. The state legislature may not be doing the same.
2/14/09 Reforming the IMF, John Williamson, VoxEU. The IMF was created in part to help small economies dealwith cyclical downturns. Yet few nations turn to the IMF except as a last resort. It sits hardly utilized in the face of the most severe shock the world has faced since the outbreak of WW I. Williamson argues that changing this unacceptable outcome requires two types of reforms. Comment:
2/8/09For States, Budget Pain Is Just BeginningLA Times They have plundered reserves, enacted hiring freezes and engaged in all manner of budgetary voodoo to cover a cumulative $40.3 billion shortfall for the current fiscal year. But now state governments have run out of tricks, and Americans are about to feel it. With personal, sales and corporate income tax revenue plummeting, the total shortfall through fiscal 2011 is estimated at $350 billion. Comment: The stimulus package will help but much of the help will be for the capital budgets, not for operating expenses.
2/7/09Economic Woes Impacting Law Enforcement. Washington Post The nation's economic trouble has hit state and local law enforcement, with two out of three large departments reporting budget cuts or hiring freezes and some seeing an uptick in property crime that they blame, at least in part, on economic unrest. Comment: The potential for unrest is a world-wide worry.
2/3/09 Wall St., a Financial Epithet, Stirs Outrage, NYTimes. Monday was the last day of Iris Chau's 11-year career at JPMorgan Chase and she says there's a lot she'll miss about the job, including her
colleagues, her paycheck and her role managing a technical support team. But one thing she won't miss about JPMorgan: telling people that she works there. Comment: Overseas, the outrage may be directed in some countries at the United States.
MARCH 2009 3/25/09 CNN International Commentary:
Grab a laugh, Mr. President. More than a year ago, right before a New Year's
Eve show for more than a thousand people, a prominent New York economist named
John Tepper Marlin came up to me
3/22/09 HuffPost A Year Later, Non-Bank Regulation Still NeededA year ago today I wrote about financial regulation . As the G20 meeting on
April 2 approaches, the topic is more relevant than ever. I argued last year
that when the Glass-Steagall wall between banking and non-bank financial
institutions was torn down in 1999, the law should have
3/22/09 HuffPost Getting Back the Peace DividendWhen the Berlin Wall came down in 1989
and the Soviet Union disintegrated, many of us looked forward to a Peace
Dividend, a reduction in military spending that would allow more U.S.
Government spending on public needs like health care or education, or tax cuts,
or a combination. We got
3/22/09 BlogSpot In
the Eye of the Storm: NYC OMB's Mark PageMark
Page, the man who has been a steady hand on NYC's fiscal wheel as director of
NYC’s Office of Management and Budget since Mayor Bloomberg took office in
2002. He was introduced not long ago by Mr. Ross Sandler of the New York Law
3/20/09 HuffPost How Well Did States Prosper Under Bush 43? The Numbers Are
In5 Comments As the Democratic administration
wrestles with huge U.S. economic problems, officials can take comfort in the
fact that they have an easy act to follow. The numbers are in, and under Bush
43 only four U.S. states beat the average long-term growth rate. The four
"winner" states that did better
3/13/09 HuffPost The UN Global Compact - Businesses Look Ahead. At dinner this week I had a chance to
quiz Georg Kell about the UN's Global Compact. Georg is Executive Director of
the UN Global Compact. What is his mission? He told...
3/10/09 HuffPost True Pain of the Jobless: Twice What Is Reported.
is fully warranted over the high and rising 8.1 percent unemployment rate
reported for February. In fact, the true pain is closer to double what is
reported. The Bureau of Labor Statistics routinely provides the data to report
the higher rate. The standard unemployment rate averaged 5.8 percent...
the Financial Crisis Happened3
Comments The U.S. financial meltdown has created a worldwide crisis.
Ironically, worldwide scared money is still flowing into U.S. Treasury
obligations as a safe haven. This permits more U.S. borrowing, but by drying up
credit overseas creates financial crises in other countries. I've been posting
for several years on pieces
3/6/09 HuffPost Enough
Blood on the Street?1
Comment The U.S. economy lost 651,000 more jobs (nonfarm payroll) in
February, says the BLS, for a cumulative loss of 2.6 million in the past four months.
The unemployment rate rose from 7.6 to 8.1 percent. These numbers were
anticipated by the stock market to some extent yesterday. The market is
3/5/09 HuffPost Record
Labor-Cost Rise Just Got WorseIf you thought the inflation dragon was has been reliably
slain (or at least temporarily exiled) by the St. George of reduced demand,
consider that the record increase in unit labor costs in the fourth quarter of
2008 was revised up. The BLS announced today
3/5/09 Blogspot Higher Unit Labor Costs Won't Help U.S. CompeteI thought the inflation dragon was reliably on vacation as the Great Recession reduces demand for goods and services. But unit-cost (cost-push)
inflation seems to have returned in the fourth quarter of 2008 with more ferocity than previously reported. The BLS announced today revised figures for the fourth quarter of 2008 that show labor
productivity declined 0.4 percent in the overall nonfarm business sector, as output fell faster than hours.
FEBRUARY 2009 2/27/09 Blogspot NYC Tax Amnesty: A Good Idea?The Daily News has been running a series of stories showing more than $2 billion in various fines and taxes owed to the City of New York by scofflaws. Their reporter Erin Einhorn today writes that the City Comptroller has sent a letter to the Mayor calling for a tax amnesty.
2/25/09 Blogspot Mayor Bloomberg Seeks to Clone Himself. Mayor Bloomberg in 1981 started a company that grew to employ thousands of New Yorkers. He is investing NYC money trying to encourage laid-off Wall Streeters to do the same. 2/16/09
New York Times Economists' Forecast: Chance of Change 100%,David W. Chen.The numbers are enough to make any New Yorker wince. An unemployment rate of 7.4 percent in December, compared with 5.1 percent two years ago. A projected hemorrhaging of 294,000 jobs -- 46,000 from Wall Street alone -- by the summer of 2010. A 41 percent drop in condominium sales from 2006 to 2008, and a 58 percent plunge for multifamily homes. A city budget deficit of $4 billion this year, and as much as $7 billion the next. And a mayor who is demanding that city employees pay 10 percent of their health care costs. [The five economists interviewed include John Tepper Marlin.] 2/16/09 HuffPost Blair's
Worries Should Be Our Worries 2 CommentsDennis Blair, Obama's director of national
intelligence, told the Senate Intelligence Committee on Friday that based on
reports from the nation's 16 intelligence agencies, the global recession is now
the country's top security concern. Unrest overseas, he says, would be a threat worse than
terrorism. He said: The longer
2/13/09 Blogspot NYC Fiscal Solutions from Speaker Quinn NYC City Council Speaker Christine Quinn is attempting to help solve NYC's fiscal problems by raising the rate of taxation of NYC's personal income tax (PIT) on incomes above
$297,000 to 4.25 percent (from 3.65 percent), above $532,000 to 4.45 percent and above $1.2 million to 4.65 percent (i.e., a full percentage point increase). The current NY State top rate is 6.85 percent. Some NY State Senate Democrats are considering increasing the State's PIT rate by 3.45 percentage points, to a top NY State rate of 10.3 percent. With a new NYC top rate of 4.25 percent, NYC residents would pay a top combined rate of 14.55 percent. The impact of the increase would be offset by the tax's being deductible from federally taxable income.
and NY State Stimulus DetailsNY
Gov. David Paterson and Sen. Charles E. Schumer (D-NY) held a conference call about the NY State share of the American Recovery and Reinvestment Act aka the stimulus package. According to the NY Times, the anticipated aid will bring more than $21 billion into the state, would close much of the city's $4 billion budget gap and would significantly narrow the state's $14 billion deficit. But Gov. Paterson warned that the state deficit was widening by the day. Details that follow are abbreviated from Sen. Schumer's website.
Warns of Economic Unrest Dennis Blair, President Obama's director of national intelligence, told the Senate Intelligence Committee yesterday that the global recession could create unrest
overseas that would be a threat worse than terrorism. He said: "The longer it takes for the recovery to begin, the greater the likelihood of serious damage
to U.S. strategic interests." In other words, we can expect the Global Peace Index - the Dow-Jones of world peace - to take a hit.
2/12/09 HuffPost NAACP, Happy 100th Birthday1 Comment Today is both the 200th birthday of
Abraham Lincoln and the 100th birthday of the NAACP. When the NAACP was founded
in 1909, the number of faithful Lincoln Republicans was dwindling, but John E.
Milholland was one, an Irish-American and a Presbyterian, He became the
NAACP's first Treasurer.
2/10/09 HuffPost The Short Lives of Multinationals1 Comment My San Francisco friend Michael
Phillips advised me today by email that he is telling his colleagues to worry
less about big powerful multinationals and more about despots of rogue states.
2/8/09 HuffPost HuffPost Editors Warm Up 92Y1 Comment Four of HuffPost's staffers were on
offer at Manhattan's 92nd Street Y February 5. This panel discussion is billed
as giving the lowdown on "How they choose the stories that make the
news" and "their insights into blogging, including what blogs they
link to and why, what content gets blogs
2/9/09 BlogspotTurkish Economy -- Action Needed Now.Having traveled to Istanbul three times in the last two years,
I'm interested in how the Turkish economy is bearing up. I emailed a Pace
University MBA graduate, Filiz Bakirhan, who was both a student of mine and an
intern at the NYC Comptroller's Office, and now lives in Turkey. I asked her
for an update on the economy.
Writing: Of Tweets and TwitsIn this post, John Tepper Marlin reports on the rising use
of Twitter with this gem of grammatical genius:. I do a Google search and find
Twitter users exceed 200,000 per day, firing out 3 million Tweets - a
mind-blowing Read More
JANUARY 2009 1/30/09
What Cooked the World's Economy? It Wasn't Your Overdue Mortgage. James Lieber, Village Voice.
It's 2009. You're laid off, furloughed, foreclosed on, or you know
someone who is. You wonder where you'll fit into the grim new
semi-socialistic post-post-industrial economy colloquially known as
"this mess." It's been a tough century so far: 9/11, Iraq, and now
this. At least we have a bright new president. He'll give you a job
painting a bridge. You may need it. Comment: The
tone resonates with President Obama's concern about "shameful" Wall
Street bonuses following taxpayer bailouts. Wall Streeters are
responding that they earned the bonuses.
1/21/09MTA Chief Makes Case for More Funds.Elliot ("Lee") Sander argues at a Crain's breakfast that letting the city's transportation system fall into decay will hurt the its economy. The
head of the Metropolitan Transportation Authority held up a fistful of
75-year old cables and an aging switch relay device taken from a Queens
subway line to illustrate how important it is to continue to invest in
the city's transportation infrastructure. Comment: Mr. Sander understands advocacy. 1/17/09Orange County Ex-Sheriff Convicted ot Witness Tampering, Acquitted of Other Charges,LA Times. Former top Orange County lawman, ex-Sheriff Michael S. Carona, is found guilty of witness tampering. The
53-year-old Carona left the courthouse a felon who could face prison
time of up to 20 years, but probably will get no more than 41 month. In
post-trial interviews, jurors said they believed Carona had illegally
accepted cash and gifts, but the statute of limitations allowed them to
consider only acts after late October 2002. "His hand was in the cookie
jar. He was just quick enough to wipe the crumbs off," said juror
Jerome Bell. Comment:The
acquittals seem to relate to the delays and the delays to the witness
tampering. So do we conclude that the witness tampering crime paid off?
1/13/09NYC Term-Limits Challenge Denied, NY Times. Brooklyn-based
Federal Judge Charles P. Sifton has denied a legal challenge to NYC
Mayor Michael Bloomberg's effort to run for a third term. He said the
constitutional suit claiming that the mayor and current second-term
City Council members are voiding the results of a plebiscite and
simply want to stay in power has no foundation in the record. The
suit was filed by the city comptroller and public advocate, and several
council members and citizens. Comment:From
news reports the two arguments that seemed to have been persuasive for
Judge Sifton were (1) the candidates must still be elected to their
third terms, and (2) to rule that plebiscites can only be overturned by
other plebiscites would be a dangerous precedent.
1/9/08Nationwide Inquiry on Bids for Municipal Bonds,Mary Williams Walsh, NY Times. The
federal investigation that prompted Gov. Bill Richardson of New Mexico
to withdraw his nomination as commerce secretary offers a rare glimpse
into a long-simmering investigation of possible bid-rigging, tax
evasion and other wrongdoing throughout the municipal bond business. Three
federal agencies and a loose consortium of state attorneys general have
for several years been gathering evidence of what appears to be
collusion among the banks and other companies that have helped state
and local governments take approximately $400 billion worth of
municipal notes and bonds to market each year. Comment: After
the municipal bond upheaval of the mid-1970s, the Municipal Securities
Rulemaking Board was created.The Council on Municipal Performance
raised broad issues about the municipal bond markets in 1978 with its
ten-volume Municipal Securities Regulation series. Twenty years
later, SEC Chairman Arthur Levitt said in speeches and his memoirs
found "pay-to-play" continuing in the selection of managers for the
employee pension funds. And now in 2009 we read "Pay-to-play in the
municipal bond market is endemic," according to a retired IRS manager
in charge of overseeing the market.
1/9/09NY City Employee Pay Outpacing Private Sector. The
average New York City employee cost the city $107,000 a year in wages,
health insurance, pension and other benefits in the 2008 fiscal year,
an increase of 63 percent since 2000, says the Citizens Budget Commission.
City worker compensation grew twice as fast as that of employees in the
private sector and elsewhere in the public sector during the same
Actually, the main reason for the rising costs is the higher pension
costs, which result from a "market value restart" opposed by by the
City Comptroller. The restart was costly because it assumed 8 percent
returns when the funds have been losing money (the City makes up the
difference over time), and it made it easier to get approval for other
increases described by NYC's Independent Budget Office in a 2003 report.
1/8/09NYC Faces $7 Billion Deficit by 2011, IBO, Bloomberg. New York City may lose 243,000 jobs, and Wall Street
retrenchment will produce a $7 billion budget gap [15.9 percent of
city-funded revenues] by the start of the 2011 fiscal year, says the
city's Independent Budget Office. [Link to Report.]
The job-loss forecast is the most severe yet and projects a drop of
18,000 more positions than state Comptroller Thomas DiNapoli predicted
in November. The office now predicts a $4.3 billion budget gap for the
2010 fiscal year, which begins July 1, about $3 billion wider than
Mayor Bloomberg forecast in his November financial plan. The office's
prediction of a $6.97 billion deficit for 2011 is $2 billion greater
than the mayor's. Comment:The
forecasts keep getting gloomier. This follows the pattern of the last
big downturn in 1991-92, when the monitors kept lowering their
forecasts, with the New York City Comptroller at that time leading the
pack in pessimism.
1/8/09The Value of State and Local Comparisons, Governing.com.
Shelley Metzenbaum, senior research fellow at the McCormack Graduate
School of Policy Studies at UMass-Boston writes: "Resistance to
comparison is understandable, but unfortunate and self-defeating. When
done well, comparison is a powerful tool for improving performance. Its
greatest power comes not, as often assumed, from triggering competitive
instincts to fight for the top spot or to avoid the bottom. Instead,
comparison's chief value lies in its ability to illuminate government
actions that work well and merit replication, as well as those that do
not and are in need of attention." Comment: Well
said. I worked on comparisons for 15 years as President of the Council
on Municipal Performance. The leaders showed what was being done right.
The laggards showed how things could go wrong. And these comparisons
always show some weaknesses in how we measure government services.
1/8/09Ukraine Says Russia Cuts Gas Supplies, New York Times. As the pricing dispute escalated on Wednesday, the cutoff showed the first signs of hitting the European economy. Comment: Russian
President Vladimir Putin is hastening the global push for energy
independence not only in Ukraine and the countries that it supplies via
its pipelines, but all over the world. So we should, I suppose, be
1/7/09City and State Salaries Searchable.. How much do city and state employees earn? Find out through the Empire Center for NY State Policy's new online tool, SeeThroughNY. The database has names, titles and salaries for more than 786,000 employees. Comment: I tried it out and it works.
JANUARY 2009 1/30/09 BlogspotHow
the Clinton Health Care Plan Was Killed. Yesterday Paul Krugman, whose column in the
NY Times is the first one I look for every morning (in print or
online), wrote: "Mr. Obama really, really doesn't want to repeat the mistakes of Bill
Clinton, whose health care push failed politically partly because he moved too
slowly." It's ironic that the Clinton team should be blamed for
moving too slowly, because Ira Magaziner expressed determination to move quickly
as a speaker in December 1992 on a panel I attended. Magaziner announced that the
group drafting the health care legislation planned to get a bill through during
the honeymoon period, "by June".
1/30/09 (HuffPost) UK Study: More Rest Means Fewer Doctor Errors1Comment BBC News has a medical care story
today with implications for U.S. medical care. Residents on a shorter
48 hour/week limit made 33 percent fewer medical errors than those on a
schedule of up to 56 hours a week. Sample size of NHS doctors was small
but the results were significant. Thanks to Dr. Elisabeth Paice.
1/29/09 HuffPost Victory - BBC Is Opening Show on U.S. Health Care WorldwideThank you if
you contacted BBC about allowing the U.S. Health Care show produced by Panorama
to be downloadable in the United States. It worked. Just received this message
from BBC Panorama: Dear John, Thank you for your email. Due to high demand, we
have now made the programme available
1/27/09 HuffPost Memo to Hill re Stimulus Bill - All States Ill with Jobless
Chill. As the Congress considers a stimulus package, let the new job numbers be
heard throughout the Capitol, as reported by the Bureau of Labor Statistics
this morning. Unemployment rates in December were higher for every state and
the District of Columbia, whether measured in comparison with November or with
1/25/09 HuffPost BBC Show on U.S. Health Care Unavailable in USA31 Comments My sister Brigid Marlin lives in the
UK and a few days ago was watching a BBC program on health care in the United
States. Brigid is not a public affairs junkie so I was interested when she sent
me an email reporting that the program was a shocking portrayal
1/20/09 (HuffPost)A Breakthrough in the Presidency! (Now What?)
One year ago, the United States seemed likely to get our first woman
president or our first non-lily-white president. It wasn't clear which.
Today we celebrate the fact that the country has turned a corner. What
can we expect as a consequence? If history is a...Read Post
1/18/09 (Blogspot)Obama - Please Fund Tech Innovation - SBIR - DARPA2 comments My friend Professor Henry Etzkowitz was very helpful on a study of the software industry in New York City in 1999, found here.
He is an expert on the history of science and serves as Chair of the
Management of Innovation, Creativity and Enterprise Program at the
Newcastle University Business School. Henry and I met recently in New
York City to talk about President-elect Obama's stimulus program. This
will be a gigantic investment in America's future. Should the Obama
Administration use a portion of this funding to spur technological
innovation? Or is this "picking winners" and is that a bad thing? 1/16/09 (HuffPost) Green Edge 12: Sweatshops Don't Make Sense13 Comments Nicholas Kristof sure got my goat yesterday by starting his column
with this: "What the world's most impoverished people need isn't fewer
sweatshops, but more of them." Why does a kind-hearted person like
Kristof say something that sounds so mean? Because based on...Read Post
1/15/09 (HuffPost) US Airways Jet Floats Down the Hudson1 Comments
The plane that left from LaGuardia and only got as far as the Hudson
around 50th Street is drifting past my window just now. (My first
impression, because it was moving so fast, was that the submerged plane
was being pushed or towed by the boats nearby.) Here's my photo...Read Post
1/10/09 (HuffPost)Word of the Year 2008: "Bailout" (In Use, 1970s)5 Comments The Word of the Year 2008 is bailout,
according to the American Dialect Society, which balloted yesterday in
San Francisco. The word is understood by the Society to mean "rescue by
the government of companies on the brink of failure, including large
players in the banking industry." The ADS word-of-the-year is only 19
years old, or the Society would have run into "bailout" before, at
least as long ago as the late 1970s when used to describe the proposed
first rescue of the Chrysler Corporation.
1/9/09 (HuffPost)Muni Bonds Pay-to-Play.
President-elect Obama -- The municipal bond market still seems to be
rigged in favor of those who "pay to play." It's been that way for 40
years. Why not clean up this part of the financial mess while you are
cleaning up the rest?
1/7/09 (HuffPost) The State of New York's Economy. Today Governor David Paterson gave his State of the State Address. I watched it and you can too.
Why does it matter? Because the state is facing huge budget gaps. It is
on the front line in the country's counterattack against the recession.
Only Washington can create money, so the Commander-in-Chief's campaign
strategy is the central event, to be announced formally when he takes
office on January 20. On the other hand, the effectiveness of
President-elect Obama's stimulus plan will depend on how well the
states and localities use the federal stimulus money.
DECEMBER 2008 12/21/08 As Outlook Dims, Obama Expands Recovery Plans,Jackie Calmes, NY Times.President-elect Barack Obama is expanding his economic recovery plan to create or save 3 million jobs in the next two years, up from 2.5 million set last month. Even the higher number would not fully offset the 4 million jobs that some economists are projecting might be lost in the coming year. That job loss could push the nation's unemployment rate past 9 percent if nothing is done. The multifaceted economic plan would cost $675 billion to $775 billion. It would be the largest stimulus package in memory Comment: One quandary is how to spend the money quickly. Infrastructure projects take time to plan. States and localities are desperately trying to close budget gaps. Should the recovery plan turn into a revenue-sharing program, leaving to local choice whether the money is spent on gap-closing or infrastructure? 12/15/08The 17th Floor, Where Wealth Went to Vanish, Diana B. Henriques and Alex Berenson, NY Times. The epicenter of the Bernard L. Madoff fraud was the 17th floor of the Lipstick Building, on Third Avenue in Manhattan, called the “hedge fund” floor. Of estimated losses at $50 billion; reports account so far for $20 billion, with some big losers at the Palm Beach Country Club. Comment: The magnitude of this loss is comparable with the economic cost to NYC of 9/11. One difference is that the loss will be borne in the first instance primarily by individual investors.
12/11/08Public Gives Obama High Marks on Handling the Transition, CQ Politics. Three-quarters of Americans say that President-elect Obama has had the "right level of involvement" in the face of the serious challenges facing the country. Three-quarters say he will take office facing bigger challenges than most recent presidents, says a WSJ/NBC News poll conducted Dec. 5-8, which is supported by other polls. An AP-GfK poll conducted Dec. 3-8 found almost three-quarters of Americans approve of the way Obama has been preparing his administration. More.Comment: With the stakes hugely high for the United States and the world, no major missteps. 12/7/08Why Wait to Repeal Tax Cuts for the Rich? Robert H. Frank, New York Times. The Bush cuts did not go where they would have done the most good, to the middle class. So to speed recovery the tax breaks for the middle class should be instituted quickly, to be paid for by ending the cuts for the rich. This is advisable for both efficiency and equity reasons. Comment: Yes. The impact of the increase will be greatest, as it was when President Clinton imposed a surcharge on income taxes early in his first term, in the Greater New York City area (half the people affected by the Clinton tax surcharge were in this area). But unlike an increase in the NY State income tax, which would harm NY competitively, a Federal tax increase doesn't harm NY State relative to its neighbors and competitors.
6/08 Imminent Foreclosures in Multifamily NYC Rentals? The Real Deal. Manhattan residential values have held up well. But stresses are showing in multifamily rentals. Larry Gluck shocked the real estate world in August by informing lenders he was about to default on a $225 million loan to Riverton Houses in Harlem. A wakeup call. More. Comment: Manhattan co-op buildings have been managed conservatively. But multi-family rentals have been caught up in the overleveraged mortgage- backed securities trap. For them, Riverton is the dying canary in a cage. 12/03/08Downtown-Based HOPE Program Launches ‘Green Collar Project’, Brooklyn Eagle. People need work and also need to do their part for the environment. At a time like this, wouldn’t the perfect job be a green job? Absolutely, [says} the HOPE Program's Green Collar Project. More.Comment: Are they blue-collar green-collar jobs or white-collar green-collar jobs? Or does being green truly blur the edges? A topic for discussion.
12/27/08 Missing Minsky.10 CommentsMartin Wolf, at FT.com, wrote on December 24 that Keynes offers us the best way to think about the financial crisis: "We are all Keynesians now. When Barack Obama takes office he will propose a gigantic fiscal stimulus package." Read Post
12/18/08 (HuffPost)Laurence Meyer on the Fed: What Is "Whatever It Takes"?Laurence H. Meyer, Vice Chairman of Macroeconomic Advisers and former Fed Governor (1996-2002) speaks frankly about high-stakes Fed issues. Q1. How bad is the current credit and economic crisis?A. The current crisis is more severe than any of the other postwar U.S. recessions. It's equivalent to the sum of these recessions.
12/17/08 (HuffPost)Economic Recovery -- Five Lessons from the Depression.The Washington Consensus is to do whatever it takes to ensure economic recovery. President-elect Obama has made clear he is prepared to undertake a major stimulus program. How should the U.S. Government best pursue economic recovery? Read Post
12/16/08 (HuffPost) The Fed's Zero-Interest Policy -- Tokyo on the Potomac. The Federal Open Market Committee has reduced the target fed funds rate to a range of zero to one-quarter of a percentage point, officially entering a very-close-to-zero interest rate policy. This policy is associated with the Bank of Japan. But the Fed is doing much more. Read Post. Comments.
12/11/08 (East Hampton Star)Transparency. Local government units - towns and high schools - should post their budgets and financial statements without requiring passwords and registration. 12/9/08 (Blogspot)Climate Change Experts Rethinking Renewable Energy? Questions have been raised about the adequacy of carbon-capping and trading programs in the face of the urgency of the need for reductions. It is unsettling to read a report that climate change experts are "losing faith" in renewable technology. (The report may be overblown.) 12/9/08 (HuffPost) Green Edge 11: Monks Embrace Mighty Wind. I went to my 50th Anniversary reunion at Portsmouth Abbey School in September and got to see something new on the property -- a giant white wind turbine sitting atop the high school campus like a guardian bird, an outward sign of the Abbey's inner green. The Abbey's wind turbine is a major act of leadership by the Abbey. It was the first utility-scale wind turbine in the entire state of Rhode Island.Read Post.
12/5/08 (HuffPost)Fed Intervention: Whatever It Takes When I went to work for the Fed as an economist in 1964, William McChesney Martin, Jr. was still Chairman. Martin would be stunned by the activism of today's Fed -- and the breadth of agreement that it is doing the right thing.
12/4/08 (HuffPost)Green Edge 10: Can Government Create Green Jobs? Can government create green jobs? (I'm thinking now of city or state government.) Yes, e.g., by requiring building owners to hire more green workers. But the additional expenses for building workers must be paid for. Read Post 12/3/08 (HuffPost) Should Localities Post Their Budgets? What's to be done about local governments being secretive about budgets and financial statements? If President-elect Barack Obama is hand out stimulus money, it needs to be easily monitored by localities. The quid-pro-quo should at very least be transarent financials. Read Post