John Boehner: Raise Retirement Age To 70; Wall Street Reform Is Like ‘Killing An Ant With A Nuclear Weapon’

John Boehner: Raise Retirement Age To 70; Wall Street Reform Is Like ‘Killing An Ant With A Nuclear Weapon’ -House Minority Leader John Boehner (R-Ohio) believes that a "political rebellion" akin to the American revolution of 1776 is brewing, that the Social Security retirement age should be raised to 70, and that the Wall Street reform bill currently moving through Congress is comparable to "killing an ant with a nuclear weapon." In an explosive interview with the Pittsburgh Tribune-Review, the GOP leader also charged that Democrats are "snuffing out the America that I grew up in." He added, "Right now, we’ve got more Americans engaged in their government than at any time in our history. There’s a political rebellion brewing, and I don’t think we’ve seen anything like it since 1776." Boehner did not go so far as to predict, as he has before, that this "political rebellion" would necessarily mean that Republicans will retake the House of Representatives in November, paving the way for him to become the next Speaker.

Editorial – Who Will Fight for the Unemployed? – NYTimes – Without doubt, the two biggest threats to the economy are unemployment and the dire financial condition of the states, yet lawmakers have failed to deal intelligently with either one. Federal unemployment benefits began to expire nearly a month ago. Since then, 1.2 million jobless workers have been cut off. The House passed a six-month extension as part of a broader spending bill in May, but the Senate, despite three attempts, has not been able to pass a similar bill. The majority leader, Harry Reid, said he was ready to give up after the third try last week when all of the Senate’s Republicans and a lone Democrat, Ben Nelson of Nebraska, blocked the bill. Meanwhile, the states face a collective budget hole of some $112 billion, but neither the House nor the Senate has a plan to help. The House stripped a provision for $24 billion in state fiscal aid from its earlier spending bill. The Senate included state aid in its ill-fated bill to extend unemployment benefits; when that bill failed, the promise of aid vanished as well.

Another Recession, or a Long, Slow Recovery? – A few economists are saying that we will soon have a second recession. Although I expect the labor market recovery will take years, it will be a recovery nonetheless. Double-dip recessions have occurred in the past. The severe 1981-2 recession began only a year after the 1980 recession ended. The Great Depression of the 1930s also came in two phases: 1929-33 and 1937-8. The first phase of this recession seemed to end in 2009, when real gross domestic product and employment stopped falling in the second half of the year. It is certainly possible that in 2010 we will see a quarter in which real G.D.P. falls a bit. Measured G.D.P. increased so sharply at the end of 2009, with hardly any improvement in the labor market, that economists have been suspicious that real G.D.P. was overstated. National employment will be lower this month than it was in May, largely because many employees are finished working on the 2010 Census. But a small one-time drop in G.D.P. or layoffs at the Census Bureau should not be confused with a new recession.

Arctic climate may be more sensitive to warming than thought, says new study – A new study shows the Arctic climate system may be more sensitive to greenhouse warming than previously thought, and that current levels of Earth’s atmospheric carbon dioxide may be high enough to bring about significant, irreversible shifts in Arctic ecosystems.  "Our findings indicate that CO2 levels of approximately 400 parts per million are sufficient to produce mean annual temperatures in the High Arctic of approximately 0 degrees Celsius (32 degrees F)," Ballantyne said. "As temperatures approach 0 degrees Celsius, it becomes exceedingly difficult to maintain permanent sea and in the Arctic. Thus current levels of CO2 in the atmosphere of approximately 390 parts per million may be approaching a tipping point for irreversible ice-free conditions in the Arctic."

ADP: Private Employment increased 13,000 in June – ADP reports: Nonfarm private employment increased 13,000 from May to June 2010 on a seasonally adjusted basis, according to the ADP National Employment Report®. The estimated change in employment from April to May 2010 was revised up slightly, from the previously reported increase of 55,000 to an increase of 57,000. June’s rise in private employment was the fifth consecutive monthly gain. However, over these five months the increases have averaged a modest 34,000. Recent ADP Report data suggest that, following steady improvement through April, private employment may have decelerated heading into the summer. Note: ADP is private nonfarm employment only (no government jobs).  This is below the consensus forecast of ADP showing an increase of 60,000 private sector jobs in June.

Ezra Klein – A progressive budget calculator – Not to be outdone by the Committee for a Responsible Federal Deficit, the Center for Economic Policy Research has a new budget calculator out that lets you put more liberal policies into play and see what happens to the debt level in 2020. I got us below 60 percent (the magic number, at least according to some budget hawks) by ending the wars in Iraq and Afghanistan, creating a Medicare-like public option, adding a modest carbon tax, adding a financial transactions tax, allowing Medicare to negotiate drug prices, increasing the cap on taxable earnings for Social Security, converting the mortgage-interest deduction to a 15 percent credit, and letting the estate tax return on schedule. Oh, and I did all this while adding $2.1 trillion in infrastructure, R&D, and education spending, and increasing the generosity of Social Security benefits. I am a budget genius!

Stimulus slowing: With federal stimulus funds running out, economic worries grow – With home sales sliding, employers reluctant to hire and world stock markets gyrating wildly, the U.S. economy is in danger of stalling. Now one of its only reliable sources of fuel is running out: federal stimulus spending. Funds flowing from the $787-billion legislation passed last year have helped create hundreds of thousands of jobs and propped up social programs such as unemployment benefits. But with much of that money spent and lawmakers reluctant to approve another big round of spending, concerns are rising about what will replace it in the short term to keep the economy moving. Economists worry that the weak labor market will spook U.S. consumers, whose spending fuels the economy. Dwindling federal stimulus funds are only heightening those fears.

Recession cut into employment for half of working adults – The recession has directly hit more than half of the nation’s working adults, pushing them into unemployment, pay cuts, reduced hours at work or part-time jobs, according to a new Pew Research Center survey. The economic shock has jolted many Americans into a new, more austere reality, which is likely to have lasting consequences for an economy fueled mostly by consumer spending. More than six in 10 Americans say they have cut down on borrowing and spending, the survey found.  The reason: Nearly half of the survey’s respondents say they are in worse financial shape as a result of the downturn, which destroyed 20 percent of Americans’ wealth.

 Bet on Private Sector for Recovery Could Prove Risky – The world’s rich countries are now conducting a dangerous experiment. They are repeating an economic policy out of the 1930s — starting to cut spending and raise taxes before a recovery is assured — and hoping today’s situation is different enough to assure a different outcome.  In effect, policy makers are betting that the private sector can make up for the withdrawal of stimulus over the next couple of years. If they’re right, they will have made a head start on closing their enormous budget deficits. If they’re wrong, they may set off a vicious new cycle, in which public spending cuts weaken the world economy and beget new private spending cuts.

 

 Bank Tax to Be Killed to Win Passage of Financial Overhaul – With crucial Republican moderates threatening to withdraw their support, Democrats were weighing alternative ways to fund the most sweeping rewrite of the Wall Street rulebook since the 1930s.  Though a supposedly final version of the bill had been hammered out last week, Democrats in charge of the process called a fresh negotiating session,Democratic lawmakers and aides said they planned to remove a $17.9 billion tax on large financial institutions. Instead, they would cover most of the bill’s costs by shutting down a $700 billion bank-bailout program.  "I haven’t talked to everybody, but I gather from a number of people they like this option,” said Democratic Senator Christopher Dodd, one of the lawmakers in charge of the bill.

CBO Releases Long Term Budget Outlook – CBO Director’s Blog summary of Long Term Budget Outlook (Interesting side comment: "Later this week, CBO will release a report on a number of different policy options for changing Social Security"). Elmendorf, not surprising given his history and current job, is fully on the side of the deficit hawk/hysterics. Report text (1.2MB PDF) Long Term Budget Outlook…Interestingly if we examine the above two figures we see that ‘Extended baseline’ which essentially means ‘Current law’ shows the deficit vanishing by 2014 and Debt Held by the Public stabilizing through 2035. Making some of the "If this goes on the sky will fall!" rhetoric around Obama policy a little overstated, just as with Social Security a plan of "Nothing" getting oddly some pretty good projected results.

No paper tiger – In 2008, China overtook the United States to become the world’s largest producer of paper and paper products. In 2008, China had been poised to become a net exporter of paper and paper products; but, the fall in global demand led to greater than expected inventories for Chinese producers. In November 2008, China’s National Bureau of Statistics (2003-09b) reported that the industry’s output had increased to 83.9 million metric tons, up 9.6% from the previous year. In 2009, China produced over 17% of the world’s total output in the paper industry; with exports of $7.6 billion in paper and paperboard, China consolidated its position as a lead exporter in the industry. Since 2000, China has increased paper production three-fold to assume a leading role in the global paper industry.

A Comeback in Wall Street Hiring? – New data from the New York Labor Department have shown a sharp increase in financial industry jobs, with the city adding 6,800 positions from the end of February through May. That’s the largest three-month increase since 2008, and it has understandably attracted a lot of buzz in the econoblogosphere. But my colleague Eric Dash, who covers the banking industry, warns that people may be reading too much into this number, since it is not adjusted for  seasonal changes. Eric writes me:The banking industry’s hiring boom may be short-lived. Wall Street typically experience a pickup in hiring during the spring and early summer. Most bankers will not join a new firm until late January or February, when they receive their annual bonus paycheck. The banks, meanwhile, are hesitant to hire in the fall to avoid guaranteeing big year-end bonus payouts along with a forced vacation, known as garden leave.

MBA: Mortgage Refinance Applications increase, Purchase Applications near 13 Year Low – The MBA reports: Mortgage Refinance Applications Increase as Rates Continue to Drop in Latest MBA Weekly Survey – The Refinance Index increased 12.6 percent from the previous week and is the highest Refinance Index observed in the survey since the week ending May 22, 2009. The seasonally adjusted Purchase Index decreased 3.3 percent from one week earlier.  “Purchase applications declined for the seventh time in the last eight weeks, keeping the purchase index near 13-year lows…The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.67 percent from 4.75 percent, with points decreasing to 0.96 from 1.07 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This is the lowest 30-year contract rate recorded in the survey since the week ending April 24, 2009. This graph shows the MBA Purchase Index and four week moving average since 1990. The purchase index has collapsed following the expiration of the tax credit suggesting home sales will fall sharply too. This is the lowest level for 4-week average of the purchase index since 1996.

 

Op-Ed Columnist – Death by Gadget in Congo – NYTimes –  An ugly paradox of the 21st century is that some of our elegant symbols of modernity — smartphones, laptops and digital cameras — are built from minerals that seem to be fueling mass slaughter and rape in Congo. With throngs waiting in lines in the last few days to buy the latest iPhone, I’m thinking: What if we could harness that desperation for new technologies to the desperate need to curb the killing in central Africa? I’ve never reported on a war more barbaric than Congo’s, and it haunts me. In Congo, I’ve seen women who have been mutilated, children who have been forced to eat their parents’ flesh, girls who have been subjected to rapes that destroyed their insides. Warlords finance their predations in part through the sale of mineral ore containing tantalum, tungsten, tin and gold. For example, tantalum from Congo is used to make electrical capacitors that go into phones, computers and gaming devices. Electronics manufacturers have tried to hush all this up. They want you to look at a gadget and think “sleek,” not “blood.”

Exxon, Shell May Consider Possible Bid for BP, JPMorgan Says…Exxon Mobil Corp. and Royal Dutch Shell Plc may consider bidding for BP Plc after the London-based oil company lost more than half of its market value in the wake of the Gulf of Mexico oil spill, JPMorgan Cazenove Ltd. said. Exxon Mobil has the stronger balance sheet and proven ability to integrate a large transaction, according to Fred Lucas, a London-based analyst at JP Morgan. It could make a cash and share offer, valuing BP at 473 pence a share compared with yesterday’s close of 308.25 pence, and including a $50 billion spin-off of BP’s downstream assets, according to JPMorgan. Any potential attempt to buy BP would have to be backed by “ruthless integration,” JPMorgan said. BP has many high quality assets, including deepwater positions and upstream operations, Lucas wrote under a future possible scenario.

Addicted to oil … and to economic growth – While the massive oil spill catastrophe in the Gulf of Mexico is demonstrative of our addiction to oil, it is also the latest example of modern capitalism’s addiction to economic growth.  For the last two centuries, Western economic theory has been based on the untenable proposition and requirement that economies must (and can) grow at substantial rates, indefinitely. Especially for the last hundred years or so, abundant and inexpensive fossil fuels have allowed an unprecedented rate of economic growth that has brought Americans and much of the rest of the developed world a previously unimaginable, but unfortunately unsustainable materialistically-based standard of living.  By its very nature, an economic system based on constant and inexorable dynamic growth contains the seeds of its own demise. Indeed, capitalism as it is practiced today in America and Europe has become the proverbial anchor that will send us all to the bottom if we can’t find the thoughtfulness and courage to devise a new path forward.

Cantarell Finally Slips Below 500 kbpd – It’s odd that people believe something truly new is possible in the world of global oil discovery. Oil deposits on earth follow a fairly well defined pattern: a handful of giant fields, and a great number of smaller fields. Unsurprisingly, 150 years of oil exploration and discovery has done nothing to upend this distribution. The giant fields were all found earlier in the oil age. Now we are into the latter part of the oil age, when the large fields have peaked and gone into decline, and we spend more capital, more labor, and more energy to extract oil from the smaller fields. A nice example of the pattern is Mexico. They inherited a giant, Cantarell. But now that Cantarell has been in fast decline since its peak in 2004, Mexico is left with a complex of smaller fields called Ku-Maloob-Zaap, and also the very low quality Chicontepec. As you can see from the chart, Cantarell Crude Oil Production 2008 – 2010, Mexico’s single giant finally slipped below 500 thousand barrels per day of production in May, to 499,286 kbpd. It’s still pretty astonishing to reflect that just two years ago, Cantarell was still producing a million barrels per day.

 

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