Archive for Economy
JPMorgan Chase got its computers hacked this summer, compromising personal information from 76 million households. Like oil spills, the size of these breaches always seems to grow after the early low-ball estimates from company spokes-flacks. And nobody seems to have a statement from current chairman, president, and chief executive officer of JPMorgan Chase, Jamie Dimon. The NY Times reports:
Operating overseas, the hackers gained access to the names, addresses, phone numbers and emails of JPMorgan account holders. In its regulatory filing on Thursday, JPMorgan said that there was no evidence that account information, including passwords or Social Security numbers, had been taken. The bank also noted that there was no evidence of fraud involving the use of customer information.
Whew, that’s reassuring. Probably just some Matthew Broderick-style Russian kids wanting a sneak peak at Dimon’s newest release of Global Financial Meltdown. Heaven help us if they were real cyber criminals.
Noting that the attack may have begun when hackers breached the computer of a bank employee, the Guardian recounts other recent cyber attacks:
In September, Home Depot confirmed its payment systems were breached in an attack that some estimated impacted 56 million payment cards. Last year’s attack on Target impacted 40 million payment cards and compromised the personal details of some 70 million people.
But the Guardian describes the JPMorgan hack as “considerably more serious.” In addition to the size of the leak, banks hold much more sensitive personal information than retailers.
In his annual shareholder letter, Dimon wrote of cyber security, “We’re making good progress on these and other efforts, but cyberattacks are growing every day in strength and velocity across the globe.”
If those kids want to play Global Financial Meltdown that badly, they can probably get funding from Americans for Prosperity.
(Cross-posted from Hullabaloo.)
Germans are much happier with their lot than Americans, writes Harold Meyerson. Satisfaction tracks more closely with a country’s economy than its style of government, according to a recent Pew survey of the world’s economies. Nine out of ten people in countries with “advanced” economies were dissatisfied with theirs, and eight felt their economies were “bad.” Except Germany.
A strong, manufacturing-driven export economy (with the Euro a factor) and a weaker financial sector sets Germany apart from the United States. Whereas 58 percent in the U.S. feel the economy is bad, 85 percent of Germans felt things in Germany were going well. Why?
Many of Germany’s most successful companies are privately owned and not subject to investor pressure to reward large shareholders through practices prevalent in the United States, such as slashing wages, cutting back on worker training and research and development and buying back stock. Publicly traded German companies still retain their earnings to invest in expansions, a practice that was the U.S. norm until the doctrine of rewarding shareholders with nearly all of a company’s profits took hold during the past quarter-century.
In the United States, major shareholders and the top executives whose pay increasingly is linked to stock price control the corporate boards that approve these kinds of distributions of their companies’ earnings. In Germany, however, the profits that companies rack up are shared more broadly because shareholders don’t dominate corporate boards. By law, any sizable German company must divide the seats on its board equally between management- and worker-selected representatives. Any company with more than 50 employees must have managers meet regularly with workers’ councils to discuss and negotiate issues of working conditions (but not pay). These arrangements have largely ensured that the funding is there for the world’s best worker-training programs and that the most highly skilled and compensated jobs of such globalized German firms as Daimler and Siemens remain in Germany. They have ensured that prosperity is widely shared in Germany — not concentrated at the top, as it is in the United States.
Damned socialists. No … wait.
Some friends observed that tax and economic policy changes in this country over the last thirty years have shifted the business model from one that encouraged, long, slow growth sustained by good schools, sound infrastructure, and reinvestment — more like the German model — to one that encourages financialization and get-rich-quick schemes. Make your money fast and cash out. If that’s not your business model, said one from experience, American venture capitalists are uninterested in your better mousetrap.
Says Meyerson, since the 1980s U.S. business and government leaned on Germany “to get with the Wall Street program.” The Germans declined. Their economy did not. Overall, Germans seem rather satisfied with the results.
(Cross-posted from Hullabaloo.)
In a lead Sunday op-ed, I once slammed local planners for wanting to develop a former factory site into yet another strip mall anchored by big-box stores. Low prices, low wages. Just what the unemployed factory workers need, right? I couldn’t believe the editors allowed it to run with the line about stores selling “cheap, plastic crap from China.”
Now this from the WaPo: The Postal Service is losing millions a year to help you buy cheap stuff from China
Via an arcane treaty mechanism, the U.S. Postal Service delivers small packages from Chinese merchants to destinations in the U.S. at below its cost. The inspector general’s office estimated that foreign “ePacket” treaty mail cost the USPS $79 million in 2013 and another $5 billion last year.
Naomi Klein contemplates the struggle between climate change and the globalization juggernaut. It is a struggle she once left to environmentalists. But having struggled with infertility and having covered the Gulf oil spill, her perspective changed. “It’s not that I got in touch with my inner Earth Mother,” Klein writes, “it’s that I started to notice that if the Earth is indeed our mother, then she is a mother facing a great many fertility challenges of her own.”
That climate change is linked to our lifestyle and our economy – and our attempts to deal with planetary warming without changing either – is the crux of Klein’s long piece in the Guardian:
“What is wrong with us? I think the answer is far more simple than many have led us to believe: we have not done the things needed to cut emissions because those things fundamentally conflict with deregulated capitalism, the reigning ideology for the entire period we have struggled to find a way out of this crisis. We are stuck, because the actions that would give us the best chance of averting catastrophe – and benefit the vast majority – are threatening to an elite minority with a stranglehold over our economy, political process and media.”
Read: Billionaires with good intentions, flashy pronouncements, and market-driven solutions have failed to curb emissions. Much of the piece focuses on Richard Branson’s failed, but much ballyhooed efforts to apply a the same business savvy that made him rich to save the planet.
The idea that only capitalism can save the world from a crisis it created is no longer an abstract theory; it’s a hypothesis that has been tested in the real world. We can now take a hard look at the results: at the green products shunted to the back of the supermarket shelves at the first signs of recession; at the venture capitalists who were meant to bankroll a parade of innovation but have come up far short; at the fraud-infested, boom-and-bust carbon market that has failed to cut emissions. And, most of all, at the billionaires who were going to invent a new form of enlightened capitalism but decided, on second thoughts, that the old one was just too profitable to surrender.
Post-Reagan, deregulated capitalism has long looked like something out of Mary Shelley or science-fiction films, a creature we created, but no longer control. Billionaires and their acolytes see only its benefits, but as Jeff Goldblum’s Dr. Ian Malcolm says in The Lost World: Jurassic Park, “Oh, yeah. Oooh, ahhh, that’s how it always starts. Then later there’s running, and then screaming.” Where once We the People held capitalism’s leash, now we wear the collar.
Whether it’s turning your child’s education from a shared public cost into a corporate profit center; or turning the principle of one-man, one-vote into one-dollar, one-vote; or carbon tax credits and accounting tricks for addressing rising sea levels; questioning the universal application of a business approach to any human need or problem often prompts the challenge, “Do you have something against making a profit?” A more subtle form of red-baiting, this ploy is supposed to be a conversation stopper. Yes? You’re a commie. Game over.
Maybe it’s time our billionaire problem-solvers got over themselves.
(Cross-posted from Hullabaloo.)
Paul Krugman this morning writes about “the inflation cult,” doomsaying pundits and supposed economic experts who, economic rain or shine, predict that a steep rise in inflation is coming anytime now and, quite reliably, get it wrong time after time.
Part of that appeal is clearly political; there’s a reason why Mr. Santelli yells about both inflation and how President Obama is giving money away to “losers,” why Mr. Ryan warns about both a debased currency and a government that redistributes from “makers” to “takers.” Inflation cultists almost always link the Fed’s policies to complaints about government spending. They’re completely wrong about the details — no, the Fed isn’t printing money to cover the budget deficit — but it’s true that governments whose debt is denominated in a currency they can issue have more fiscal flexibility, and hence more ability to maintain aid to those in need, than governments that don’t.
And anger against “takers” — anger that is very much tied up with ethnic and cultural divisions — runs deep. Many people, therefore, feel an affinity with those who rant about looming inflation; Mr. Santelli is their kind of guy. In an important sense, I’d argue, the persistence of the inflation cult is an example of the “affinity fraud” crucial to many swindles, in which investors trust a con man because he seems to be part of their tribe. In this case, the con men may be conning themselves as well as their followers, but that hardly matters.
This tribal interpretation of the inflation cult helps explain the sheer rage you encounter when pointing out that the promised hyperinflation is nowhere to be seen. It’s comparable to the reaction you get when pointing out that Obamacare seems to be working, and probably has the same roots.
Not just economists, but the country (and perhaps the entire Republican Party) seems to be in the grip of an economic cult concerned with much more than inflation — that’s just a symptom. As Krugman suggests, ethnic and cultural (and class) divisions factor into it. Digby has written repeatedly (and just yesterday) that many of the same people “have always been wrong about everything.” And yet, their followers keep listening. Conservatism never fails. It is unfalsifiable. I wrote last week that the Koch brothers’ evangelism for the their libertarian Kochification Church resembles recruiting techniques used by cults.
Hey, let’s start a meme.
(Cross-posted from Hullabaloo.)
Then she said she wanted the government to force McDonalds to pay more “so I won’t have to struggle.”
If you think it is the government’s job to force your employer, who is more likely than not paying you before he pays himself, to raise your wages, you’ve got a problem and it is not your employer’s problem and it is not my problem.
I don’t think that McDonalds needs to worry about making payroll.
Without struggle, there is no progress. Forcing your employer, via government action, to pay you more is not struggling.
They missed the part about me being a conservative and not libertarian and therefore supporting a social safety net for people who cannot take care of themselves.
Nice struggling straw man there. And your whole position seems to be that government should not force employers to raise wages which, without even raising the minimum wage from it’s paltry $7.25 an hour, it is already doing. Sounds like you would abolish the minimum wage. So definitely not libertarian.
And apparently it’s a conservative first principle to allow markets to race to the bottom and have everyone else pick up the tab for their failure. But I didn’t get the part about the safety net being for people who cannot take care of themselves. People who hold a full time job can’t take care of themselves? Anyway sounds a whole lot like redistributin’ the wealth.
Meanwhile another conservative has a different take on it:
“The bottom line is that the American government right now spends $250 billion a year on social welfare programs to benefit the working poor,” he said. “What we have right now is the classic case of businesses privatizing the benefits of the workers, but socializing the costs — shifting the burden to taxpayers and the rest of society. And I think businesses should stand on their own two feet and pay their own workers, rather than force the taxpayers to make up the difference.”
Standing on their own two feet also known as picking yourself up by your own bootstraps.
Our friends on the right get almost gleeful whenever they see an opening to use their superior command of economics to explain to liberals how the world really works.
Yet, the basic concept they themselves have trouble wrapping their brains around is “no free lunch.”
Gov. Sam Brownback’s tea party-driven economic experiment in Kansas is taking a toll. The latest poll shows him trailing his Democratic opponent, Paul Davis, by 8 points. The Kansas City Star says Brownback is “paying a political price for bold leadership.” This is what bold leadership looks like:
Brownback has slashed income taxes, cut thousands off welfare, curbed abortion rights, tried gaining control of judicial appointments and made a failed attempt to cut arts funding.
When the moderate wing of his party stood in the way, Brownback successfully campaigned for conservatives more in step with his political philosophy so he could exert a tighter grip on the statehouse.
The result? His state’s economy is headed into the tank after slashing income taxes at Brownback’s urging, with more cuts scheduled and growth below projections. Standard & Poors downgraded Kansas’ credit rating in August. Davis charges that another Brownback term will bring cuts to Kansas schools.
Five hundred women from across the state gathered last week at the Taking Back Kansas convention in Wichita, put on by Women for Kansas and chaired by Lynn Stephan. The bipartisan group aims to turn out Brownback, Secretary of State Kris Kobach, and U.S. Sen. Pat Roberts in November. Most of the candiidates they support are Democrats.
“Women in this state are scared,” Stephan said. “We’re going broke” under the leadership of Brownback’s tea-party fiscal ideas. Schools and hospitals in some small towns may have to close, she said, and then “the town will dry up and blow away.”
Although she considers herself a moderate Republican, Stephan said that “the Republican party abandoned me 10 years ago.”
That’s about two decades after the party abandoned reality for the magical thinking of trickle down economics and started worshipping the Market as a deity.
As much as conservatives discuss curtailing entitlements, many of them behave as if they are entitled to kick ass on any country they feel is stepping out of line, and to doing so without paying for it. They feel entitled to beat their chests about how exceptional America is, and entitled to the public infrastructure their parents and grandparents built with their taxes and sweat in making it a world power. Yet they seem to have no sense of pride in maintaining it. Not their responsibility. They’re taxed enough already.
They complain their taxes are too high, and all the while the country is running a budget deficit that proves they are not paying enough to cover its costs and to keep it from crumbling. A report last year ranked U.S. highways 18th in the world, behind Korea, Luxembourg, and Saudi Arabia.
Point this out, and conservatives insist that the problem is government is spending too much. That we need to eliminate waste, fraud, and abuse — the bane of Republicans’ perpetual motion economy.
See, America could maintain its infrastructure, fund top-notch schools, and support a costly global empire indefinitely without raising taxes just by eliminating the friction of waste, fraud, and abuse.
And by installing this simple device — one that big oil companies have tried to suppress — your car can get 500 miles per gallon. Order now!
(Cross-posted from Hullabaloo.)
Chattanooga is a reminder that the best solutions are often local…
A lot of commonalities here with Asheville:
Loveman’s department store on Market Street in Chattanooga closed its doors in 1993 after almost a century in business, another victim of a nationwide decline in downtowns that hollowed out so many US towns. Now the opulent building is buzzing again, this time with tech entrepreneurs taking advantage of the fastest internet in the western hemisphere.
In large part the success is being driven by The Gig. Thanks to an ambitious roll-out by the city’s municipally owned electricity company, EPB, Chattanooga is one of the only places on Earth with internet at speeds as fast as 1 gigabit per second – about 50 times faster than the US average.
The tech buildup comes after more than a decade of reconstruction in Chattanooga that has regenerated the city with a world-class aquarium, 12 miles of river walks along the Tennessee River, an arts district built around the Hunter Museum of American Arts, high-end restaurants and outdoor activities.
What was it the Cowardly Lion asked?
The Zero Hour’s RJ Eskow interviews Stephanie Kelton, Ph.D., Associate Professor and Chair of the Department of Economics at the University of Missouri-Kansas City. Her blog, New Economic Perspectives, is here.
Low-budget retailing is growing:
Dollar Tree, a discount retailer known for selling everything for $1, said Monday it plans to buy Matthews-based Family Dollar for $8.5 billion, weeks after an activist investor started pushing the company to sell itself.
Billionaire investor Carl Icahn did not think Family Dollar was profitable enough. Retail analyst Howard Davidowitz, an investment banker, told NPR’s Sonari Glinton why low-end retailing is expanding:
DAVIDOWITZ: The story is the growth of the sector and that mirrors where America is.
GLINTON: So what I’m curious about is, while the dollar stores are doing well, then there’s the Sears, the JC Penney.
DAVIDOWITZ: Are getting destroyed because they’re middle-class stores.
GLINTON: Put the dollar stores?
DAVIDOWITZ: The dollar stores are doing better because they have more and more customers who are trading down. If you look at the reality, you will see what’s happening in the economy. And it doesn’t look too pretty.
Bad economic news for America is good business for low-end retailers such as NC state budget director Art Pope, who owns Variety Retailers. He’s expanding into groceries.
Art Pope’s Variety Wholesalers has purchased the vacant Kroger store in Southeast Raleigh with plans to establish the company’s first standalone grocery in an area that badly needs one.
The company, which owns Roses, Maxway and other discount stores, bought the property on Martin Luther King Jr. Boulevard last week for $2.57 million – well below its assessed tax value of $5.65 million.
Pope plans to split the store into a Roses and a separate grocery store. It’s a neighborhood where over half the families earn less than $35,000 per year, according to the News and Observer.
The NAACP has picketed one of Pope’s local Maxway stores “accusing Pope of using store profits to support conservative causes and candidates.”