China expected to pass Japan, and become world's 2nd largest economy this year

Nasty government.

China is expected to surpass Japan this year as the world's second-largest economy, an unprecedented position for a still-developing country and one that has brought strains as well as triumphs.

Second-quarter GDP figures from Japan reported Monday morning show that its economic output, at $1.288 trillion, fell short of the $1.339 trillion China reported for the three months ended in June.

Once final numbers for all of 2010 are compiled, many economists expect China to overtake Japan as the world's second-largest national economy in U.S. dollar terms. The gap between China's $5 trillion economy and the U.S.'s nearly $15 trillion output remains very large, and even at current growth rates—which may not be sustained—it would take China a decade or more to match the No. 1 U.S.

A decade. As if that's a long time for something that significant. Read More......

Extending tax cuts for the rich, in one handy picture

This chart is getting some play, but it deserves to be put everywhere. Obama's $250,000 point is well chosen; that's where the numbers diverge. From Ezra Klein (h/t Joan McCarter at DailyKos):


About that bottom circle, as Groucho once said, "Clip me off a piece of that." As to the chart, pass it on.

GP Read More......

Bachmann blames Obama for trying to force US into a global economy

Is she trying to be like Sarah Palin or is she really that much of an idiot? And to think the GOP gets defensive when the Democrats rightly link current problems to Bush. Bachmann may not like this crazy "new" global economy thingy, but others such as Coca Cola, IBM, Microsoft probably feel differently about it. In fact, quite a few US-based companies have been increasing their profits thanks to business overseas in that "global economy" world that she so fears. Exports from the US into this nutty "global economy" have been one of the bright spots for the US economy. So why does Bachmann want to destroy economic growth? More from Think Progress:

In an interview on Scott Hennen’s radio show today, Bachmann claimed that the purpose of the G-20 was to “bind together the world’s economies.” Neglecting the already interconnected nature of the global economy, Bachman declared that “President Obama is trying to bind the United States into a global economy”:

BACHMANN: What really concerned me was Treasury Secretary Tim Geithner said that we don’t want to see one country’s economy doing better than another. What? This is the U.S. Treasury Secretary? We don’t want to see Zimbabwe’s economy do better than the United States? Aren’t we supposed to be about the United States and making sure that our economy can be the greatest in the world. If you look at the G20, what they’re trying to do is bind together the world’s economies. Look how that played out in the European Union when they bound all of those nations economies together and one of the smallest economies, Greece, when they got into trouble, that one little nation is bringing down the entire EU. Well, President Obama is trying to bind the United States into a global economy where all of our nations come together in a global economy. I don’t want the United States to be in a global economy where, where our economic future is bound to that of Zimbabwe. I can’t, we can’t necessarily trust the decisions that are being made financially in other countries.

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Income gap in US is increasing

When I look at the mild reform of the Obama administration, I can't help but wonder how they can't see this issue and take more serious action. How can it be so obvious to everyone else but not to the Larry Summers economic team? We've been moving in the wrong direction for decades and Obama can only stay the course.

The new CBO data — the most comprehensive data available on changes in incomes and taxes for different income groups — also show the following:

* In 2007, the share of after-tax income going to the top 1 percent hit its highest level (17.1 percent) since 1979, while the share going to the middle one-fifth of Americans shrank to its lowest level during this period (14.1 percent).
* Between 1979 and 2007, average after-tax incomes for the top 1 percent rose by 281 percent after adjusting for inflation — an increase in income of $973,100 per household — compared to increases of 25 percent ($11,200 per household) for the middle fifth of households and 16 percent ($2,400 per household) for the bottom fifth (see Figure 1).
* If all groups’ after-tax incomes had grown at the same percentage rate over the 1979-2007 period, middle-income households would have received an additional $13,042 in 2007 and families in the bottom fifth would have received an additional $6,010.
* In 2007, the average household in the top 1 percent had an income of $1.3 million, up $88,800 just from the prior year; this $88,800 gain is well above the total 2007 income of the average middle-income household ($55,300).

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Why does AT&T; hate capitalism and economic recovery?

Then again, why does the US government allow exclusive rights in the mobile phone market? Even here in "socialist Europe" any exclusive coverage has only lasted a limited time. It's obvious AT&T; is not up to the task of providing modern services for their customers which is why they are cutting unlimited data service. This is a step backwards for consumers and yes, everyone in Washington is going along with the show. This is not too different from the net neutrality debate in that the powerful interests want to squash new options and let the fat cats with the most money to lobby control everything.

The latest change by AT&T; is not helping anyone other than AT&T.; Politicians are completely missing the point that in an economy like this where everyone is scratching for jobs, we need entrepreneurs who will seek new challenges and opportunities. By killing the unlimited service and going back to the old ways, there's less incentive to create new businesses for this sector. AT&T; is contributing to the economic crisis but some fools in Congress are buying into the AT&T; pitch that they need to be protected to hold jobs. AT&T; is lazy but has plenty of cash to throw around and kill innovation. Too bad we have lazy politicians as well who accept AT&T;'s argument.

Why is "competition" such a bad word for AT&T; and Washington?

For the last two years, unlimited data plans have given app-hungry smartphone users an all-you-can-eat buffet. But will customers react to AT&T;’s new, limited menu by simply eating less?

Some software developers fear they will, and if that happens, the caps on data use that AT&T; has imposed could also make consumers lose their appetite for the latest innovations. Some developers worry that customers will be reluctant to download and use the most bandwidth-intensive apps and that developers will cut back on innovative new features that would push customers over the new limits.

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290,000 new jobs added in April. Unemployment rate up to 9.9%

More jobs in the U.S. economy, but higher unemployment:

The American economy added an unexpected strong 290,000 jobs in April, while the unemployment rate rose to 9.9 percent, the government said Friday.

Analysts had expected a gain of about 190,000 in the month.

With revisions on Friday, April was the fourth consecutive month that the economy added workers (a revised 230,000 jobs were added in March instead of 162,000), the job market still has a long way to go before it can be counted on to provide a base for a sustained economic recovery. More than 15.3 million were unemployed last month.

Despite the increase in jobs, the unemployment rate rose, mostly because the government said 195,000 workers re-entered the labor force after giving up on job hunting during the recession. When jobless people do not look for work, they are not counted in the official unemployment rate.

So, job creation is improving, which is very good. But, it's still not quite enough to make a dent in unemployment. Read More......

Auto sales jumped 20% in April

Another good sign for the recovery. Though, as GM notes, the recovery is slower than previous ones, which confirms concerns that we're not growing as quickly out of this recession as we should. WSJ:

Boosted by a rebounding economy, U.S. auto sales jumped 20% in April as several car makers, including hard-hit Chrysler Group LLC, posted sizable gains.

Auto makers sold 982,131 vehicles last month, according to Autodata Corp., up from the depressed level of 819,540 in April a year ago, when the U.S. was sliding deeper into recession and General Motors Co. and Chrysler were heading toward bankruptcy filings.

Chrysler, Ford Motor Co. and Toyota Motor Corp. all reported increases of about 25%. GM's growth was limited to 7.2% because it its phasing out four brands under its restructuring, but the four brands it is keeping—Chevrolet, Cadillac, Buick and GMC—saw sales rise 20%.

GM Vice President of Sales Steve Carlisle said the industry's recovery pace probably would not be as robust as other rebounds in the last half-century but would be steady. "Overall," he said in a conference call, "the U.S. economic recovery would appear to be on track."

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Senate votes to end latest GOP filibuster blocking unemployment benefits

This afternoon, the Senate voted to end the filibuster of the legislation to extend unemployment benefits and COBRA, which affected hundreds of thousand of Americans:

The 60-34 vote killed a GOP filibuster against debating the measure, which would extend benefits through the end of the month.

Four Republicans — Sens. Scott Brown of Massachusetts, George Voinovich of Ohio, and Susan Collins and Olympia Snowe of Maine — voted with Democrats to move the bill forward.

Those hundreds of thousands of jobless Americans lost their benefits last Monday because of this GOP filibuster.

Today, Roll Call (sub. req.) reported that Majority Leader Harry Reid was "on track to set the record for having the best batting average when it comes to killing filibusters." Reid has had to fight an almost unbelievable onslaught of GOP-led filibusters -- against almost everything. Read More......

Oil prices spiking again

There's no real reason for this other than traders doing their best to squeeze the life out of the recovery. It's a delicate recovery but it might not last if this continues.

Oil prices rose above $86 a barrel Friday in Asia after robust U.S. retail sales in March pointed to growing consumer demand in the world's biggest energy market.

Benchmark crude for May delivery was up 71 cents to $86.10 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 49 cents to settle at $85.39 on Thursday.

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Executive jet expenses on the rise

Here's another group that has no idea how obnoxious they are. I guess cost savings are only for the little people. LA Times:

If you're a business traveler who has been flying coach to save your company money, you may need to sit down to read the following news.

Chief executives of some of the nation's biggest firms have increased spending about 9% on the personal use of corporate jets over the last year, according to a new study of corporate expenses.

The findings, published last week by the Corporate Library, an independent research firm, are based on data from nearly 340 major U.S. companies' expense reports for personal jet use in the last two fiscal years.

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Corporate America ignoring Obama's hint on executive pay

Who ever would have guessed? But oh, we wouldn't want to be too forceful because then the teabaggers will scream "socialist." Oh right, they already do and will continue to do so no matter what. Ignore them. Why is it OK to change the tax law to encourage poor executive behavior and pay yet when anyone asks to move it in the other direction because the results were bad, it's suddenly socialism? So what did they call it when it was first being established in the tax code? Asking the corporate world to behave or proposing the silly "say on pay but your vote doesn't count" is a waste of time and does not work.

Quit fearing the teabaggers and get some spine, for goodness sakes. Does anyone in the administration know how to frame an issue instead of letting the nutty right do it? There is no evidence that suggests benefits for society when executives cram every penny they can find into their pockets at the expense of the rest of the company. It's great for a few people but besides that, the rest do not prosper.

The Treasury Department said it is not looking to limit the total pay executives receive. Kenneth R. Feinberg, President Obama's special master for compensation, wants to change pay incentives, giving executives a greater stake in the long-term performance of their firms. That would mean, for example, smaller up-front cash salaries and fewer perks, more compensation in the form of company stock and a longer wait to receive it.

"I see no indication whatsoever that the business community is paying any attention to the administration's suggestions," said Nell Minow, co-founder of the Corporate Library, an independent corporate governance research firm. "On the contrary, I think pay is worse this year than it's ever been."

American Express, for example, shifted much of chief executive Kenneth I. Chenault's compensation to cash. Even though his overall pay for 2009 dropped from the year before, Chenault received $11 million, or two-thirds of it, in cash. By contrast, more than two-thirds of his compensation in 2008 was in stock and stock options. His cash payout was $7 million.

The list of poor behavior goes on and on. Once again they prosper while the rest of the country stagnates, at best. Read More......

Palin left Alaska with highest debt-to-GDP in the US

You betcha. Well, they do say everything is bigger in Alaska, so I guess that also means accounting games and debt. Bigger than Texas, again. How can someone who quit their job after leaving the state with its debt equal to 70% of its GDP lecture anyone? The people who believe her are even bigger fools, but yes, we knew that already.

New Hampshire and Colorado attempted to use program-specific pots of state money to plug holes in their general treasuries; Connecticut wrote its own accounting rules; Hawaii reduced the length of its school week; and California made its businesses pay their 2010 taxes earlier to make the budget appear more balanced than it is. But one thing every state is doing, including Alaska, is camouflaging its debts by not releasing how much its state employee pension funds will owe — or how far behind it is on its contributions to said pension funds.

Less than a year after then-Gov. Sarah Palin (R-Alaska) quit the government to pursue other projects, Alaska leads the way in its debt-to-GDP ratio when its unfunded pension obligations are taken into account, followed by Rhode Island, New Mexico, Ohio and Mississippi. And although Alaska’s ratio is far lower than Greece’s, it does give the state a debt-to-GDP ratio similar to that of Jordan and Palin’s favorite health care resource, Canada, and a higher ratio than Ghana, Cote d’Ivoire, India, the Philippines or Uruguay.

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NYT plays the Republican tune

I turned on my computer the other day to see the New York Times had the Republican party line on its front page as "News Analysis." David Sanger wrote that "there is virtually no room over the next decade for new initiatives" because our deficits are too big. The NYT also had the Republican line on its op-ed page. David Brooks said "For decades, federal spending has hovered around 20 percent of G.D.P. By 2019, it is forecast to be at 25 percent and rising. The higher tax rates implied by that spending will mean less growth and fewer opportunities."

Both of these statements take for granted the implicit (and very Republican, even Norquistian) assumption that all government spending is just wasted, money down a rathole. David Sanger seems to imagine that there is no conceivable initiative that could possibly warrant borrowing money to achieve it. He seems to find it equally impossible that any new initiative could possibly be more valuable than any of the old ones we are already spending money on.

David Brooks bites the Republican hook even harder - he simply takes it as an article of faith that if you fully fund a new initiative with tax revenue, then you will get less growth.

What rot. These people should go take an intro econ course. It ain't rocket science and it barely even rises to the complexity of "common sense," but when you are looking at a 3 or 4 trillion dollar budget there are lots of different kinds of expenditure in there and not all of them are created equal. Some, indeed, are money down a rathole and we can all cite our favorite pork barrel project in support of that. Some though, are investments which really do promote growth and without which we would be in deep trouble.

By Brooks' logic, we should never have built our interstate highway system because "the higher tax rates implied by that spending will mean less growth." Perhaps we should do away with spending on education because "the higher tax rates implied by that spending will mean less growth." Or maybe it is silly to fund research in clean energy or biotechnology.

These sorts of Republican truisms can only sound remotely plausible if you never attach any specifics to them. It is the job of the media to do just that, flesh out the specifics, and when the NYT starts sounding just like Grover Norquist they are completely abdicating their responsibilities. They are supposed to provide the factual context for silly economic statements, not just repeat them as if they were obviously true. Read More......

Unemployment drops to 9.7% but 'economists expect the situation to worsen before it gets better'

Some good news on unemployment. It dropped a bit. But, the overall jobs picture doesn't seem to be improving:

The United States economy shed 20,000 jobs in January, the government said Friday, deepening concern that relief from the deepest economic downturn in a generation would be slow to come. But the unemployment rate fell to 9.7 percent from 10 percent in December.

As the broader economy gains steam and crucial sectors like manufacturing spring back to life, analysts say the recovery appears to be intact. But the nation’s stubbornly high unemployment rate remains a persistent thorn in the side of optimists, and economists expect the situation to worsen before it gets better.

Some forecasts call for the jobless rate to reach nearly 11 percent by year’s end, which would significantly dampen spending by consumers, a critical driver of growth. That has prompted concern that the economy could enter a period of extremely slow growth or even fall into another downturn.

This is why all we'll hear from our elected officials is: Jobs, Jobs, Jobs. But, that talk has to turn to action -- and produce jobs, jobs, jobs.

If Republicans want to block and obstruct job creation, which they do, that has to be draped around all of their necks. The GOPers put politics over putting people back to work. Read More......

The real lesson from Europe: 'social justice and progress can go hand in hand'

Paul Krugman deconstructs the economic arguments against Europe today. These pervasive anti-Europe views, as Krugman notes, are made by "many Democrats as well as essentially all Republicans." Krugman doesn't sugar coat the European economy. But, the views of many American politicians are just not accurate:

So if there were anything to the economic assumptions that dominate U.S. public discussion — above all, the belief that even modestly higher taxes on the rich and benefits for the less well off would drastically undermine incentives to work, invest and innovate — Europe would be the stagnant, decaying economy of legend. But it isn’t.

Europe is often held up as a cautionary tale, a demonstration that if you try to make the economy less brutal, to take better care of your fellow citizens when they’re down on their luck, you end up killing economic progress. But what European experience actually demonstrates is the opposite: social justice and progress can go hand in hand.

It probably helps to have politicians who support social justice. Read More......

China is now the largest exporter, but some question future

Not that it's a surprise, but still. While the mainstream view is centered on a growing China, it's interesting to see a few big money players betting the opposite. As impressive as the growth has been, it remains a mystery for some (including me) where China is selling its exports since buyers have dramatically slowed down buying. Improved, yes, but it's hardly back to pre-recession buying rates. The other troubling factor is the Chinese communist government who has a long history of cooking the books and encouraging that practice such as during the Cultural Revolution.

As most of the world bets on China to help lift the global economy out of recession, Mr. Chanos is warning that China's hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like "Dubai times 1,000 -- or worse," he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent.

"Bubbles are best identified by credit excesses, not valuation excesses," he said in a recent appearance on CNBC. "And there's no bigger credit excess than in China." He is planning a speech later this month at the University of Oxford to drive home his point.

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Local governments taking back corporate welfare

For starters, it's clear that they are communists who hate the current business model that gives away money without strings. How dare they make business live up to the terms of their agreement. Can't they learn from how Bush and then Obama have dealt with failures from business? Give them even more money and don't ask for any accountability. Heck, ask them to guide the economy because surely they couldn't ruin it again if given their wish list, could they? That's what the American public wants more than anything. Who needs accountability?

As the recession drags on, municipalities struggling to fix roads, fund schools and pay bills increasingly are rescinding tax abatements to companies that don't hire enough workers, lay them off or close up shop. At the same time, they're sharpening new incentive deals, leaving no doubt what is expected of companies and what will happen if they don't deliver.

"We will roll out the red carpet as much as we can (but) they are going to honor the contract," said Brendon Gallagher, an alderman in DeKalb, Ill., where Target Corp. got abatements from the city, county, school district and other taxing bodies after promising at least 500 jobs at a local distribution center.

So when the company came up 66 workers short in 2009, Target got word its next tax bill would be jumping almost $600,000 — more than half of which go to the local school district, where teachers and programs have been cut as coffers dried up.

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The lost decade for American workers

It's not much of a surprise, though unfortunately it does once again raise the question of why Obama and the rest of Washington are saying the course with the same old broken system. To allow the architects of this lost decade to continue holding a leadership position and betting the future on Wall Street is a real head scratcher. The Republican policies under Bush exacerbated the poor Clinton (and Robert Rubin) decisions to let business do whatever it wanted. Let Obama and Democrats in Congress continue this insanity but don't expect me or many others on the left to go along with it. Enough is enough.

There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.

Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 -- and the number is sure to have declined further during a difficult 2009. The Aughts were the first decade of falling median incomes since figures were first compiled in the 1960s.

And the net worth of American households -- the value of their houses, retirement funds and other assets minus debts -- has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s.

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Gift card theft is skyrocketing!

Oh my gosh! One clerk even stole $130,000 so set the alarm, call the police and prepare the firing squad. Retail lost billions they tell us. Life as we know it might be over. Businesses are surely going to upset with this new study, but maybe we all ought to be a lot more worried about the pilfering done from the top such as the trillions that are never coming back on Wall Street. The inside thieves are wrong, but I suspect they will be treated much more harshly than the CEOs and senior executives who ravaged the global economy.

After watching this last economic meltdown and banking recovery (with bonuses to match), I really don't have the stomach to listen to anyone complaining about small time theft like this. I suppose I'm equally wrong for not giving a damn but that's where I am following this disgraceful economic cycle. If I ever noticed honest leadership from our so-called leaders in politics or business, I might feel differently but that's not going to happen. Read More......

Snowstorm actually BOOSTED holiday sales (online shopping to the rescue)

Kind of a fascinating factoid. Last week's east coast blizzard, coming days before Christmas, actually boosted retail sales, because people shopped at home online. Raises a fascinating question about voting online. Usually you worry that bad weather will lower turnout (because people don't really like trudging through feet of snow in sub-zero weather to stand in voting lines). But if you can vote online, then bad weather actually plays to your advantage - or at least levels the playing the field. We know from running the blog that traffic peaks while people are at work during the weekdays. At work they have the time to surf, at home they're busy being parents, or whatever. Read More......