Monday, April 30, 2012

The Big Easy’s School Revolution

…the levees broke and the city was devastated, and out of that destruction came the need to build a new system, one that today is accompanied by buoyant optimism. Since 2006, New Orleans students have halved the achievement gap with their state counterparts. They are on track to, in the next five years, make this the first urban city in the country to exceed its state’s average test scores. The share of students proficient on state tests rose from 35 percent in 2005 to 56 percent in 2011; 40 percent of students attended schools identified by the state as “academically unacceptable” in 2011, down from 78 percent in 2005.

….Most of the buzz about the city’s reforms focuses on the banishment of organized labor and the proliferation of charter schools, which enroll nearly 80 percent of public school students, up from 1.5 percent pre-Katrina. But what really distinguishes New Orleans is how government has re­defined its role in education: stepping back from directly running schools and empowering educators to make the decisions about hours, curriculum and school culture that best drive student learning. Now, state and school-district officials mostly regulate and monitor — setting standards, ensuring equity and closing failing schools. Instead of a traditional school system, there is a system of schools in what officials liken to a fenced-in free market. Families have more choice about where their children can best succeed, they say, and educators have more opportunity to choose a school that best aligns with their approach.

Saturday, April 28, 2012

Cooling Job Market Takes Toll on U.S. Confidence: Economy

More Americans than forecast filed applications for unemployment benefits last week and consumer confidence declined by the most in a year, signaling that a cooling labor market may restrain household spending.

Jobless claims fell to 388,000 from a revised 389,000 the prior week that was the highest since early January, Labor Department figures showed today in Washington. The Bloomberg Consumer Comfort Index declined to minus 35.8 from minus 31.4 the previous week.

“There has been some slowdown in the labor market,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York, who correctly projected the level of jobless claims. “That makes consumers feel less confident, and makes them more cautious about their spending. We could see some weakness in April payrolls.”

Student Loan Interest Rate Bill That Cuts Health Care Program Passes House

The House of Representatives advanced a bill Friday that funds cheaper student loans by cutting a preventive health care program -- sparking a heated battle in which House Speaker John Boehner (R-Ohio) accused Democrats of manufacturing a war on women.

The House passed the bill by a vote of 215 to 195, with 30 Republicans bucking their party to oppose the bill, and 13 Democrats voting in favor. Democrats might have blocked the measure if they had stayed together. The interest rate for federally subsidized student loans is scheduled to jump from 3.4 percent to 6.8 percent for some 7.4 million students on July 1 if Congress does not act.

Republicans had voted earlier in the week for a budget that allowed the rate to go up, but under public pressure offered a plan Wednesday to preserve the rate by cutting the Prevention and Public Health Fund created in President Barack Obama's Affordable Care Act. Republicans say the move would save $6 billion.

Calling the health program -- which aims to lower health care costs by encouraging prevention -- a "slush fund," Boehner said its funding should be used to help students instead.

Thursday, April 26, 2012

My Dad Never Took Me to Work...And It Probably Saved My Life

My Dad never took me to work. Not on Take Your Daughter/Son/Whomever to Work Day (which is today.) And not on any other day either. And by doing so, he probably saved my life.

My father worked on the railroad, through many live-long days. He was a pipefitter, and that meant that he fixed trains. He worked for the Central Railroad of New Jersey —later consolidated under Amtrak—for 42 years. And I imagine that a visit to the shop where he worked, filled with engines and freight cars that would limp in sadly and chug out proudly like an episode of Thomas the Tank Engine sprung to life, would have been quite captivating for a young boy. Which is why he kept me away.
Of Tiny, Cockeye Louie, and My Other Uncle Joe

My Dad liked his job and he was good at it. His hands were amazing, so thick with callouses that he could casually pick up a pot off the stove without a potholder. Around the dinner table, we talked about the guys he worked with—Tiny (who was anything but) Cockeye Louie (who wouldn’t answer to anything but) and a guy I called Uncle Joe because he was at my house more often than my real Uncle Joe in Chicago. Every year for Christmas, I’d get a jar full of the loose change that he’d find under the seats of the passenger cars. My father believed there was pride and dignity in a hard day’s work. And when you did it for your family, it was a way of saying I love you. And somehow he instilled those things in me.

Wednesday, April 25, 2012

Why You Should Look for 10-Baggers

Hall of Fame investor Ralph Wanger once remarked that baseball fans remember how many home runs Babe Ruth hit in his best year, but they usually can't recall how many strikeouts he had. That keen insight will be central to our new real-money "10-Bagger Portfolio."

Great investors like Peter Lynch and Fool co-founder David Gardner have understood this principle intuitively. Indeed, Lynch is responsible for coining the term "10-bagger," and he once remarked, "all you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don't work out." We completely agree. That's why our 10-Bagger Portfolio will make prudent bets on the greatest investing opportunities of our generation. We're confident that a few big winners will reward all of the stakeholders in our portfolio tremendously.

Our goals
Building on the foundations of an earlier real-money portfolio, we (John Reeves and David Meier) will look for outstanding businesses that will deliver solid returns for investors over the long term. Some selections will be smaller companies that have the potential to become 10-baggers over time. Others will be larger, more-established companies that can go up two or three times in value over a five-year period. In each case, we prefer to take a patient, methodical approach toward meeting our goals.

Americans’ confidence in economy holds steady

Americans’ confidence in the economy was resilient in April despite rising job cuts and falling home values.

The Conference Board, a private research group, said on Tuesday that its Consumer Confidence Index is at 69.2, down slightly from a revised 69.5 in March. Economists were expecting a reading of 70, according to a FactSet poll of analysts. The current level is below February’s 71.6, which had been the highest level reached in about a year.

Consumer confidence is widely watched because consumer spending accounts for 70 percent of economic activity. The current level is significantly below the 90 reading that indicates a healthy economy. But it’s well above its all-time low of 25.3 in February 2009.

“I am much relieved,” said Mark Vitner, an economist at Wells Fargo Securities. “I thought we would see a large drop. It shows that consumers are tuning out the bad news.”

Economists are paying close attention to consumers’ behavior because the U.S. economy is at a critical juncture. New reports that show rising layoffs and slowing home sales are raising concerns that the economic recovery is facing a spring slowdown for the third straight year. The stock market rally also has lost steam in recent weeks amid renewed worries about the European financial crisis and the economy at home.

Monday, April 23, 2012

Economy Heading for a Systemic Collapse into Hyperinflationary Great Depression

When Fed Chairman Ben Bernanke admits to seeing an "unusually uncertain" economy ahead, it's pretty terrifying to imagine what he's really thinking. What John Williams envisions—and he's by no means looking to the far horizon—is a systemic collapse, a hyperinflationary great depression and the cessation of normal commerce. Despite that bleak outlook, however, when the economist and editor of sat down for this exclusive Energy Report interview, he also had some good news.

The Energy Report: A few months back, John, you said, "if you strangle liquidity you always contract an economy and deliberately or not, liquidity is being strangled, resulting in sharp declines in consumer credit, commercial and industrial loans." Does this mean it would spur more economic growth if banks actually started lending?

John Williams: It sure wouldn't hurt. We're still seeing contractions in liquidity, and that's adjusted for inflation. In real terms, M3 money supply is down almost 8% year-over-year. It's the sharpest fall in the post -World War II era. It's not so much the depth of the decline in the liquidity or the duration, but the fact that the liquidity turns negative year-over-year that signals the economy turning down.

We had the signal in December of 2009 indicating intensification of the downturn, in this case, within six to nine months. We're in that timeframe now and see softening numbers. People are talking about a weaker economy. Even Mr. Bernanke has described the economy as "unusually uncertain" in terms of its outlook. Wording like that from the Fed is a pretty good indication that something's afoot.

Sunday, April 22, 2012

Economics in the Crisis

To say the obvious: we’re now in the fourth year of a truly nightmarish economic crisis. I like to think that I was more prepared than most for the possibility that such a thing might happen; developments in Asia in the late 1990s badly shook my faith in the widely accepted proposition that events like those of the 1930s could never happen again. But even pessimists like me, even those who realized that the age of bank runs and liquidity traps was not yet over, failed to realize how bad a crisis was waiting to happen – and how grossly inadequate the policy response would be when it did happen.

And the inadequacy of policy is something that should bother economists greatly – indeed, it should make them ashamed of their profession, which is certainly how I feel. For times of crisis are when economists are most needed. If they cannot get their advice accepted in the clinch – or, worse yet, if they have no useful advice to offer – the whole enterprise of economic scholarship has failed in its most essential duty.

And that is, of course, what has just happened.

In what follows I will talk first about the general role of economics in times of crisis. Then I’ll turn to the specifics of the role economics should have been playing these past few years, and the reasons why it has for the most part not played this role. At the end I’ll talk about what might make things better the next time around.

Saturday, April 21, 2012

Canada in the minority opposing more IMF firepower

Finance Minister Jim Flaherty has spent his entire six-year career as a federal politician in government. But within the Group of 20 economic powers, Mr. Flaherty has taken on the role of leader of the opposition.

Virtually the entire membership of the G20 shifted over the past few days to get behind International Monetary Fund Christine Lagarde’s effort to raise more than $400-billion ( U.S.) to build a stronger bulwark against the threat posed by the European debt crisis.

Countries such as Britain, South Korea and Australia made pledges Friday, allowing Ms. Lagarde to announce that she had raised roughly $430-billion in bilateral loans. Ms. Lagarde told a press conference that the IMF now has access to $1-trillion, an awesome figure meant to assure global investors that no country will be allowed to collapse should economic conditions take a drastic turn.

Is the gun business good for America’s economy?

On the same day that Florida Gov. Rick Scott appointed a task force to review the controversial stand your ground law, the National Shooting Sports Foundation issued press release touting the beneficial link between guns and the economy.

“At a breakfast briefing earlier today, the National Shooting Sports Foundation (NSSF), the trade association for the firearms, ammunition, hunting and shooting sports industry, released a newly commissioned report detailing double-digit gains in jobs and other data showing the industry has been a leader in the nation’s economic recovery.”

The release went on to say, “Firearms industry members were briefed on such remarkable statistics as the 30.6 percent increase in jobs between 2008 and 2011, a 66.5 percent increase in economic impact and a 66.5 percent increase in federal taxes paid by industry companies….

Here's Why The US Is About To Plunge Into A New Recession

While he pointed to various data points and recounted a number of anecdotes to prove his point, Shilling's argument was simple: the consumer strength we saw earlier this year was fleeting and highly accommodative policy from the Federal Reserve and the possibility of more quantitative easing are the only things propping up markets right now.

In fact, the fundamentals of the economy lead him to believe "the U.S. economy is overdue for a recession."

Most importantly, Shilling writes that "consumer spending is the only major source of strength in the U.S. economy this year," but now all signs point to retrenchment:

While consumers should be "reduce debt and rebuild net worth, they have been doing the opposite lately."

However, continuing sluggishness in hiring lead Shilling to believe that this trend is unsustainable. "The U.S. has a lot of job openings, but having endured huge layoffs in recent years, employers are being very picky in new hiring," he writes.

Friday, April 20, 2012

10 Faces Behind The Incredible Law School Underemployment Crisis

With law firms cutting back, thousands of law school graduates are still unemployed while stuck with six-figure student loan debt.

Some students have filed class-action law suits against more than a dozen schools alleging that officials misled them about their job prospects after graduation.

"The system of legal education is completely broken now," former Chicago-Kent College of Law student Richard Komaiko told us. "Almost everyone I know from law school is unemployed or seeking alternative employment."

We wanted to hear the truth behind the crisis, so we interviewed several recent graduates, including those who have gone into entirely different fields, and one who is living just above the poverty line.

Four years after graduating from law school, Erin Gilmer is on food stamps

While in law school at the University of Colorado and the University of Houston, Gilmer developed a passion for health law and policy, but pursuing that passion has made it exceedingly hard to pay her bills.

Thursday, April 19, 2012

Will the 2012 Election Lead to a Recession in 2013?

There are a lot of fears that the political uncertainty in 2012 is going to produce an economic recession next year, according to economic forecasters. More than 20 million Yahoo search hits exist for the term "recession 2013." Millions of them are connected to "politics" or "election."

Of course there are all kinds of articles that are sure we're headed for an economic recession if Barack Obama is re-elected. An almost equal number are convinced that a Mitt Romney victory would produce such an outcome. Regardless, there are a lot of people concerned about the economic future, according to a Bloomberg News poll.

Romney's camp hails support from money managers and investment strategists, according to Morgan Korn with The Daily Ticker. Obama's team can point to the rise of the stock market since the president was inaugurated, as well as historical evidence showing the market benefits more from Democratic presidents in the past.

For African Americans, Time Does Not Heal Economic Wounds

Three years after the Great Recession, America still sees itself in the midst of an economic recovery, with families struggling with long-term unemployment or in jobs that barely pay enough to make ends meet. all communities have been affected during the three-year period, but according to a recent report by the Center for American Progress, African Americans are “the clear exception” to the improvement of economic distress caused by the recession.

The report finds that African Americans continue to experience higher unemployment rates and inadequate job opportunities, and are more likley to have lower household incomes and lack health insurance than other groups.

As the report indicates, the unemployment rate of African Americans is “twice as high as that of white Americans,” and for African Americans who are employed, their median weekly earnings were only $674, which is significantly less compared to whites and Asian Americans who earned $744 and $866 each week respectively. During the recession, the number of African Americans working below the federal minimum wage increased by 141.5 percent, and to this day, the number of African American workers who make minimum wage continues to rise. Because of this, nearly one in four African American families found themselves below the poverty line in 2010 and by the fourth quarter of 2011, only 45.1 percent of African Americans were homeowners, which is lower than the group’s homeownership rate at the end of the recession in 2009.

Wednesday, April 18, 2012

World war 3 usa and israel vs russia and iran

Iran possesses an Armed Forces of roughly four million. This includes Active, Reserve and Paramilitary components. The Iranian also possesses an unknown number of Basij Militia members. In 1985 the number of the Basij Militia stood at three million strong. This brings Iran’s total military capabilities up to almost seven million. By comparison, the entire US Armed Forces stands at a little over two and a half million Active, Guard and Reserve forces, keeping in mind the fact that much of this force is currently deployed overseas.

Additionally, Iran’s armed forces are strengthened by the presence of at least 29 Russian Air Defense Systems and possibly a contingent of Russian troops. The presence of Russian troops in Iran would be likely since Russia has held joint military exercises with Iran and signed a mutual defense agreement with the Persian country. Coincidentally, this is eerily similar to the defense treaty signed between Russia and China.

The Great World Depression (2012-2020)

UPDATE (2011-01-08) : This post has quickly become the most read post in this blogs history, after being published a year ago. Since then, I have only become more convinced that my predictions are correct. I have also realized that it is pointless to keep focusing on the disasters that is coming, and much better to actually start adapting at beforehand. Thus, after this post, I encourage you to read a couple of things.

First, the new years post of 2012, where I sort of explain why I’m done with this shit (Goodbye, and hello again).

Second, I just published the first useful post on how to do things for real, instead of just droning on in the pathetic politico-economic misery we find ourselves in (Chronicles of Able Man)

Finally, if you are looking for statistics and data, just try and search. I’ve written over 3000 posts the last few years, and many show graphs of economic data supporting my conclusions. If there is something you can’t find, leave a comment and I’ll go dig. Or do some digging yourself, Google-fu is a fine sport. The conclusions are what they are, and I’ll happily see them contested, but until proven wrong, I will have to believe that I’m in fact right. I’m always happy to chat it up with any readers, there are quite a few regulars these days and more people keep popping in. If you’re one of those who ended up here by searching for economic depression-topics, then you are very welcome to say hello. I’ll be here for a long time.

Far Too Low for Far Too Long

So, what caused the economic and financial crisis of 2007-whenever? It’s an open question. Presumably we’ll continue to argue about it until the next crisis (or until the Moon Men invade.) But right now let’s talk about one possible story, or really family of stories: that the root cause of the crisis is that interest rates were too low for too long.

This is often taken to be a conservative view; one of its more prominent exponents has been John Taylor, who complained last week in in the Wall Street Journal that

the Fed has returned to its discretionary, unpredictable ways, and the results are not good. Starting in 2003-05, it held interest rates too low for too long and thereby encouraged excessive risk-taking and the housing boom.

Rortybomb’s favorite conservative Fed president Thomas Hoenig made a similar argument when he left the FOMC last year:

We as a nation have consumed more than we produced now for well over a decade. Having very low rates for an extended period of time encourages us to continue focusing on consumption, but to correct our imbalances, we have to focus on production. … If I thought zero rates would bring jobs, I’d want it forever. But it distorts the economy. In 2003, when we lowered rates and kept them there because unemployment was 6.5 percent — look at the consequences.