does the middle class have it this bad in brazil?

The Dow Piano – The daily trading of the Dow Jones industrial average determines the songwriting here, translating the ups and downs of 2010’s market into musical notes. Using a five-note scale spanning three octaves, pitch is determined by each day’s closing level.  Heavy trading volume – most notably on the day of the May 6 ‘Flash Crash’ – leads to high musical volume. Notice the piano tends to play quietly around holidays. The notes are generally clustered in series of five, representing Mondays through Fridays. Follow along with the graph to experience the market in a (somewhat) musical way. Enjoy and have a happy new year.

Faced with growing budget deficits and restive taxpayers, elected officials from Maine to Alabama, Ohio to Arizona, are pushing new legislation to limit the power of labor unions, particularly those representing government workers, in collective bargaining and politics.

States Seek Laws to Curb Power of Unions – State officials from both parties are wrestling with ways to curb the salaries and pensions of government employees, which typically make up a significant percentage of state budgets. On Wednesday, for example, New York’s new Democratic governor, Andrew M. Cuomo, is expected to call for a one-year salary freeze for state workers, a move that would save $200 million to $400 million and challenge labor’s traditional clout in Albany.  But in some cases — mostly in states with Republican governors and Republican statehouse majorities — officials are seeking more far-reaching, structural changes that would weaken the bargaining power and political influence of unions, including private sector ones.  For example, Republican lawmakers in Indiana, Maine, Missouri and seven other states plan to introduce legislation that would bar private sector unions from forcing workers they represent to pay dues or fees, reducing the flow of funds into union treasuries. In Ohio, the new Republican governor, following the precedent of many other states, wants to ban strikes by public school teachers.  Some new governors, most notably Scott Walker of Wisconsin, are even threatening to take away government workers’ right to form unions and bargain contracts.

The Big Lie – Robert Reich – Republicans are telling Americans a Big Lie, and Obama and the Democrats are letting them. The Big Lie is our economic problems are due to a government that’s too large, and therefore the solution is to shrink it. The truth is our economic problems stem from the biggest concentration of income and wealth at the top since 1928, combined with stagnant incomes for most of the rest of us. The result: Americans no longer have the purchasing power to keep the economy going at full capacity. Since the debt bubble burst, most Americans have had to reduce their spending; they need to repay their debts, can’t borrow as before, and must save for retirement. The short-term solution is for government to counteract this shortfall by spending more, not less. The long-term solution is to spread the benefits of economic growth more widely (for example, through a more progressive income tax, a larger EITC, an exemption on the first $20K of income from payroll taxes and application of payroll taxes to incomes over $250K, stronger unions, and more and better investments in education and infrastructure.)

 House Republicans Outline Budget Cuts – The incoming Republican majority in the House is moving to make good on its promise to cut $100 billion from domestic spending this year, a goal eagerly backed by conservatives but one carrying substantial political and economic risks. House Republican leaders are so far not specifying which programs would bear the brunt of budget cutting, only what would escape it: spending for the military, domestic security and veterans.  The reductions that would be required in the remaining federal programs, including education and transportation, would be so deep — roughly 20 percent on average — that Senate Republicans have not joined the $100 billion pledge that House Republicans, led by the incoming speaker, Representative John A. Boehner, made to voters before November’s midterm elections.

Making the grade: Equity and efficiency in education – How countries fare in international tests of student achievement is a magnet for media attention the world over. In December 2010, for instance, two of the world’s leading newspapers, the New York Times, and The Financial Times reported on the remarkable scores of students from Shanghai in the latest Programme for International Student Assessment (Pisa) tests, which assess the reading, maths and scientific skills of the world’s 15-year-olds.  How countries score in international tests are seen by many as report card on their national educational policies. Summarising evidence from international maths exams, this column finds that the highest-scoring countries are those with the least inequality in test scores, suggesting a “virtuous” equity-efficiency trade-off. It also finds that countries perform even better when test scores are highly correlated with the number books in the family home.

Fed Watch: A Solid Start To 2011 – The ISM manufacturing number was not a blowout by any means. Indeed, the rise to 57.0 headline number was slightly below expectations. Still, it is a solid number and the internals were generally supportive. New orders gained while inventory measures declined, suggesting solid sales that will sustain future production. Not surprisingly, the pricing component remains high, consistent with rising commodity prices – indeed, according to the report, no industries reported falling prices. The disappointment in the report was the employment measure, which fell from 57.5 to 55.7. I am not sure this tells us much about the impending employment report for the final month of 2010 – I don’t think anyone had high hopes that the manufacturing sector would lead a jobs recovery; the minimal gains in durable goods manufacturing stalled out in the second half of 2010 while employment in nondurable goods generally continued the free fall initiated in the mid-90s. Overall, the ISM report was generally consistent with the relatively upbeat flow of data seen in recent weeks suggesting that growth accelerated to something above trend at the end of 2010. This, coupled with decreasing initial unemployment claims, supports the consensus expectation for 140k nonfarm payroll gain in Friday’s report. While well above the dismal October report, it would promise persistent high unemployment, as 140k would be at the top end of estimates of natural labor force growth.
 
George Will Calls Opposition To Raising Debt Ceiling Suicidal – In addition to his comments about Sarah Palin, George Will also weighed in yesterday on the ongoing battle over the raising the debt ceiling: I know of no other developed nation that has a debt ceiling. This is a purely recurring symbolic vote to make people feel good by voting against it. The trouble is it’s suicidal if you should happen to miscalculate and have all kinds of people voting against it as a symbolic vote and turn out to be a majority. Because if the United States defaults on its sovereign debt, the markets will be — well, it will be stimulating. I’m really beginning to think that all this talk about blocking a rise in the debt ceiling by some in the GOP is just that, talk. They really can’t be serious about it, can they?
 
Invented threats – ANOTHER day, another scary story about how China is taking over the world. This latest one is about how China is (gasp) becoming more focused on innovation. That’s supposed to be a problem because economic leadership derives from the ability to innovate. And there appears to be a large-scale industrial policy underway, designed to turn the Chinese into innovators. In 2009, about 300,000 applications for utility patents were filed in China, roughly equal to its total of invention patents, which have been growing slightly faster than utility filings in recent years. But even if just half of China’s total filings in 2015 are for invention patents, the national plan calls for a huge leap, to one million, by 2015. By contrast, patent filings in the United States totaled slightly more than 480,000 in the 12 months ended in September, according to the patent office. China’s patent surge has been evident for years. In October, Thomson Reuters issued a research report, forecasting that China would surpass the United States in patent filings in 2011. “It’s happening even faster than we expected,”

The Jobs They Are A-Changin’ – A large fraction of displaced workers who have found new jobs have had to switch careers, and most of those career-changers have downgraded to a lower-paying job, according to a new report from Rutgers’s Heldrich Center for Workforce Development. The report, which I wrote about in this weekend’s paper, reveals survey results of a group of American workers who were unemployed as of August 2009 and periodically re-interviewed about their job status. As of November 2010, only about a third of these original workers had found replacement jobs, either as full-time workers (26 percent) or as part-time workers who do not want a full-time job (8 percent). Of those workers who found jobs, more than 4 in 10 — 41 percent — said  they took a job in a “new field or career.”. But most of those entering new careers had not taken a class or training course for skills (even if the portion of career-changers who’d had retraining was higher than the portion of non-career-changers). The new-fielders were also more likely to take a hit in pay and a reduction in fringe benefits than those who managed to find re-employment in their existing career.
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