Roubini: negative economic growth until 2010

Nouriel Roubini has been been much more on target than most who never saw the credit crisis coming, so he is someone who is now (finally) covered by the mainstream media. He's not full of positive information today but reality is not always a pretty sight.

The U.S. recession will last two full years, with gross domestic product falling a cumulative 5%, said Nouriel Roubini, chairman of RGE Monitor. Roubini was one of the first economists to predict the recession and the credit crunch stemming from the housing bubble. For 2009, Roubini predicts GDP will fall 3.4%, with declines in every quarter of the year. The unemployment rate should peak at about 9% in early 2010, he said. Consumer prices will fall about 2% in 2009. Housing prices will probably overshoot, dropping 44% from the peak through mid-2010. "The U.S. economy cannot avoid a severe contraction that has already started and the policy response will have only a limited and delayed effect that will be felt more in 2010 than 2009," he said.

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Is Caroline Kennedy trying to outlaw sex while her unwed daughter gets knocked up too?

Sarah Palin thinks there's a double standard between the way the media is treating her and the way they're treating Caroline Kennedy. Palin thinks it might have something to do with "class" (oh, don't get me started). Or, it might have something to do with Sarah Palin being not a very bright person, a hypocrite, a wee bit corrupt, and a walking gaffe machine. I didn't see Caroline Kennedy walk away with $150,000 in designer clothes. I didn't see Caroline Kennedy say that she reads every newspaper and magazine on the planet on a daily basis. When Caroline Kennedy says that she can see China from her yacht, then we'll start making comparisons. But Sarah Palin needs to learn one simply fact: She's no Caroline Kennedy. Read the rest of this post...

An inaugural pajama party with Carrie Fisher

Yes. You read that right.

There are all kinds of parties for the Obama inauguration, but this one caught my attention: A Pajama Party hosted by Carrie Fisher. Okay, it's a pajama party for the organization, Pajama Program, which delivers pajamas and books to children in need.

We love Carrie Fisher. John and I met her when she was in D.C. doing her very funny show, Wishful Drinking. She's hysterical and has a great sense of politics including a very intense disdain for George Bush and Republicans (Her gay Republican friend, who died in her bed, told her a classic Bush story, which she told us.) Here's our video talking to her -- and yes, she did ply glitter all over my face:



With Carrie as the host, I can imagine this will be one of the more fun events -- and worthwhile. Read the rest of this post...

Scientists to Obama: FDA has been corrupted

Won't it be a positive change to have science matter again during the Obama administration? From the AP:

In an unusually blunt letter, a group of federal scientists is complaining to the Obama transition team of widespread managerial misconduct in a division of the Food and Drug Administration.

"The purpose of this letter is to inform you that the scientific review process for medical devices at the FDA has been corrupted and distorted by current FDA managers, thereby placing the American people at risk," said the letter, dated Wednesday and written on the agency's Center for Devices and Radiological Health letterhead.

The center is responsible for medical devices ranging from stents and breast implants to MRIs and other imaging machinery. The concerns of the nine scientists who wrote to the transition team echo some of the complaints from the FDA's drug review division a few years ago during the safety debacle involving the painkiller Vioxx.

The FDA declined to publicly respond to the letter, but said it is working to address the concerns.

In their letter the FDA dissidents alleged that agency managers use intimidation to squelch scientific debate, leading to the approval of medical devices whose effectiveness is questionable and which may not be entirely safe.

"Managers with incompatible, discordant and irrelevant scientific and clinical expertise in devices...have ignored serious safety and effectiveness concerns of FDA experts," the letter said. "Managers have ordered, intimidated and coerced FDA experts to modify scientific evaluations, conclusions and recommendations in violation of the laws, rules and regulations, and to accept clinical and technical data that is not scientifically valid."

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House vote will allow lawsuits for equal pay

It's about time and maybe this time, the Democrats can make it happen. It's also about time that the US Congress managed to quit lagging behind other democracies and had proper representation for women, but that's another issue. Equal pay for equal work is a no brainer, which is why the GOP was against it.

The House has passed legislation to assure that employers live up to their four-decade-old legal promise to provide equal pay for equal work.

Democrats led lawmakers in approving a bill making clear that women who are victims of gender-based discrimination can sue for compensatory and punitive damage.

The chamber was also voting on a bill in response to a Supreme Court decision that workers must file a discrimination claim within 180 days of a pay violation. Supporters of changing the law said many workers don't find out about wage disparities for years.

The two bills, coming in the first week of the new Congress, attest to the worker rights agenda of the Democratic-led Congress and the incoming Democratic president, Barack Obama.

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The debate continues over homophobia in the black community

The National Gay and Lesbian Task Force just released a study showing, they say, that black voters in California did not disproportionately support the anti-gay initiative, Prop 8, as compared to other ethnic groups in the state (exit polls showed 70% of blacks supporting Prop 8 versus 50% or so of other major ethnic groups, including Latinos). Timothy Kincaid at Box Turtle Bulletin, a site that deals with gay issues, but also focuses a lot on race, disagrees with the NGLTF study.

You can wade through both analyses yourself, but one point struck me. Reasonable observers have long acknowledged that there is a problem of homophobia in the black community. Barack Obama himself acknowledged this, and (much to Obama's credit) went so far as to speak out against it at Martin Luther King's church on MLK day a year ago. Obama said at the time:

For most of this country's history, we in the African-American community have been at the receiving end of man's inhumanity to man. And all of us understand intimately the insidious role that race still sometimes plays - on the job, in the schools, in our health care system, and in our criminal justice system.

And yet, if we are honest with ourselves, we must admit that none of our hands are entirely clean. If we're honest with ourselves, we'll acknowledge that our own community has not always been true to King's vision of a beloved community.

We have scorned our gay brothers and sisters instead of embracing them. The scourge of anti-Semitism has, at times, revealed itself in our community. For too long, some of us have seen immigrants as competitors for jobs instead of companions in the fight for opportunity.

Was Obama wrong? We know, for example, that the Jewish community tends to be very supportive, as a whole, of the civil rights of gays and lesbians. We know that Evangelicals, as a community, are not. Different communities have different religions, different cultures, and different experiences that affect their views on every issue, including gay civil rights. Why is it so anathema to discuss homophobia in the black community? Especially after Obama himself has acknowledged it?

Andy Towle has more updates on the Prop 8 front. Read the rest of this post...

Letterman's Top 10 moments of the Bush years

Classic:
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Krugman says Obama stimulus plan 'falls well short of what’s needed', warns of another Great Depression

Paul Krugman is the second Nobel economist in two days (Stiglitz weighed in yesterday) to say that Obama's stimulus plan isn't big enough to help, by a long shot.

It's difficult to overstate the urgency, and easy to sound histrionic. We are in trouble. More and more people, people we trust like Krugman, are throwing around the words "Great Depression." (There are 23,504 articles in Google News containing the phrase "Great Depression" and nearly 50,000 for "depression.") They're also using what appears to be a more pleasant euphemism, "slump." (When you hear anyone talking about the risk of a "slump," that's where they're heading.)

I wish I were exaggerating, but I'm not. In a column five days ago, Paul Krugman wrote the following:

The fact is that recent economic numbers have been terrifying, not just in the United States but around the world. Manufacturing, in particular, is plunging everywhere. Banks aren't lending; businesses and consumers aren't spending. Let's not mince words: This looks an awful lot like the beginning of a second Great Depression....

[T]his is our moment of truth. Will we in fact do what's necessary to prevent Great Depression II?

If you're not scared yet, you should be.

Stiglitz and Krugman, two Nobel prize winners in economics who are roundly trusted in Democratic circles, who know what they're talking about, both concur that the Obama plan is the wrong plan. It won't be enough to stave off a potential disaster.

There really isn't much more to say. We are in serious trouble, folks. And we need someone at the most senior levels of the Obama campaign, the House and the Senate to put their collective foot down and say "enough." We don't need a stimulus plan that won't stimulate. We don't need a plan that wastes 40% of its spending on pork to woo Republican votes. We don't need a plan that wastes nearly a trillion dollars on a remedy that is only one-third of what we need. We need a plan that actually stands a good chance at staving off a Depression. And from what far too many experts are saying, Obama's plan isn't it.

More from Krugman, who couldn't be any clearer about his opposition to the Obama plan:

Mr. Obama’s prescription doesn’t live up to his diagnosis. The economic plan he’s offering isn’t as strong as his language about the economic threat. In fact, it falls well short of what’s needed....

To close a gap of more than $2 trillion — possibly a lot more, if the budget office projections turn out to be too optimistic — Mr. Obama offers a $775 billion plan. And that’s not enough....

But only about 60 percent of the Obama plan consists of public spending. The rest consists of tax cuts — and many economists are skeptical about how much these tax cuts, especially the tax breaks for business, will actually do to boost spending. (A number of Senate Democrats apparently share these doubts.) Howard Gleckman of the nonpartisan Tax Policy Center summed it up in the title of a recent blog posting: “lots of buck, not much bang.”

The bottom line is that the Obama plan is unlikely to close more than half of the looming output gap, and could easily end up doing less than a third of the job....

Whatever the explanation, the Obama plan just doesn’t look adequate to the economy’s need. To be sure, a third of a loaf is better than none. But right now we seem to be facing two major economic gaps: the gap between the economy’s potential and its likely performance, and the gap between Mr. Obama’s stern economic rhetoric and his somewhat disappointing economic plan.

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IL House impeaches Blagojevich

First step. Read the rest of this post...

Questions loom over use of Treasury bailout money

Questions - as in, what are the banks actually doing with the $700bn handout? They won't say.

[A]n Associated Press investigation that found none of the banks was willing to disclose what they were doing with hundreds of billions of dollars distributed through direct injections of federal money.

"For Treasury to advance funds to these institutions without requiring more transparency further erodes the very confidence Treasury seeks to restore," it said.

Appearing Friday on ABC's "Good Morning America," Warren said that Treasury "didn't put any tracking mechanisms on it."
"They didn't tell the banks what they had to do in order to get the money. It might be used for lending, it might be used to buy other banks ... Or it might just be stuffed in vaults and left there," she said.

The Republicans - wisely for them, bad for us - have jumped on the accountability bandwagon. People feel as though the first $700bn got stolen. They need to be assured that this second massive package, the "stimulus" plan, isn't just as much of a free handout. Between the questionable proposal to give $19 per person per paycheck, totaling nearly $140bn, as a way to pump prime the economy (and give workers some financial support), and the latest decision to give nearly 40% of the stimulus away in non-stimulus tax cuts that may do little to help the economy recover, the Obama administration is handing the Republicans a perfect opportunity to accuse Democrats of being reckless big-spenders who can't be trusted at the public trough. Read the rest of this post...

Illinois House impeaches Blagojevich

Looking for a story Read the rest of this post...

Obama picks openly gay head of Export Import Bank

I just found out from the Human Rights Campaign that Obama has chosen Fred Hochberg to be the head of the Export-Import (EXIM) Bank.

"The chair of the Export-Import Bank of the United States is an important position in President-elect Obama's economic team. Fred is one of the most highly qualified and experienced public servants in our community and the fact that President-elect Obama has tapped him for such an important economic position speaks well for the LGBT community," said Human Rights Campaign President Joe Solmonese.

This is a real job, and a great choice. This is very good. It doesn't negate there not being anyone openly gay in the Cabinet. Clinton had senior openly gay staff back in 1992 (also not in the Cabinet), so Obama's appointments are not breaking any glass ceilings, they're simply keeping pace with what Bill Clinton already accomplished 16 years ago. Don't get me wrong, this is good news, and I want to acknowledge it, but I still believe we can do better than civil rights circa 1992. Read the rest of this post...

Judis says Obama needs to think bigger

John Judis, over at The New Republic, has written a piece arguing that Obama needs to think bigger than investing in roads and bridges. He needs to do something massive, the economic equivalent of war. Judis talks about high-speed rail, the kind they have in Europe and Japan. The Amtrak train from DC to Chicago takes 24 hours, I wrote a while back. If we had a French-style TGV connecting the two cities, it would take less than 6 hours. Anyone who has flown abroad and then returned to airports like Washington Dulles, knows the culture shock from suddenly realizing that we are no longer number one in far too many areas. Charles de Gaulle airport in Paris is a 21st century marvel. Dulles is a trip in time back to the Soviet Union (if you never got to experience the Soviets, just buy a ticket to Dulles some day - it wasn't much different).

Charles de Gaulle:



We are falling behind, and to get ahead, we may need to get a lot more creative than $19 handouts and $300bn Bush-era tax cuts. We need the economic equivalent of war, the economic equivalent of putting a man on the moon. Spending 40% of the stimulus plan on tax-pork to woo Republicans because someone arbitrarily decided that 80 votes was better than 50 or 60 is not change. Read the rest of this post...

December jobs report: 524,000 lost

It could have been better but could have been much worse. The rising unemployment rate is somewhat worse than expected and 1.5 million jobs lost for the quarter is not going to make anyone very happy.

The U.S. economy lost 524,000 jobs in December, closing out the worst year for job losses since World War II, the Labor Department said Friday.

Nearly 2.6 million jobs were lost in 2008, with 1.9 million destroyed in just the past four months, according to a survey of work places. It's the biggest job loss in any calendar year since 1945, when 2.75 million jobs were lost as the wartime economy was demobilized.

The unemployment rate rose to 7.2%, the highest in 16 years. Unemployment increased by 632,000 to 11.1 million, according to the survey of households. That same survey showed employment falling by 806,000 in December.

In 2008, the unemployment rate rose by 2.3 percentage points and unemployment increased by 3.6 million.

The report was worse than expected, with payrolls in October and November revised lower by a total of 157,000 jobs. November's loss was revised to 584,000.
Economists surveyed by MarketWatch expected payrolls to fall by 500,000 and for the unemployment rate to rise to 7.1%.

Total hours worked in the economy fell 1.1%, with the average workweek falling to the shortest ever.

An alternative measure of unemployment that includes workers too discouraged to look for a job rose to 13.5% from 12.6% in November; it's the highest in the 13 years since those data have been kept.

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Friday morning open thread

I somehow managed to get sick yet again but there's a lot of that going around these days. What a nasty cold and flu season it's been. It's time to make another fresh ginger and lemon tea with a dash of cayenne pepper.

What do we need to know? Read the rest of this post...

Obama administration to work with Hamas?

If this (UK) Guardian report is true, even indirect talks would be a major change in policy by the US. Clearly the existing approach to addressing the problems in Gaza and the region are failing though enhancing the power of Hamas will come with a cost. More from The Guardian:

The incoming Obama administration is prepared to abandon George Bush's ­doctrine of isolating Hamas by establishing a channel to the Islamist organisation, sources close to the transition team say.

The move to open contacts with Hamas, which could be initiated through the US intelligence services, would represent a definitive break with the Bush ­presidency's ostracising of the group. The state department has designated Hamas a terrorist organisation, and in 2006 ­Congress passed a law banning US financial aid to the group.

The Guardian has spoken to three ­people with knowledge of the discussions in the Obama camp. There is no talk of Obama approving direct diplomatic negotiations with Hamas early on, but he is being urged by advisers to initiate low-level or clandestine approaches, and there is growing recognition in Washington that the policy of ostracising Hamas is counter-productive. A tested course would be to start ­contacts through Hamas and the US intelligence services, similar to the secret process through which the US engaged with the PLO in the 1970s. Israel did not become aware of the contacts until much later.

A UN resolution was agreed last night at the UN, calling for an immediate and unconditional ceasefire between Hamas and Israeli forces in Gaza. The resolution was passed, though the US, represented by secretary of state Condoleezza Rice, abstained.

Richard Haass, a diplomat under both Bush presidents who was named by a number of news organisations this week as Obama's choice for Middle East envoy, supports low-level contacts with Hamas provided there is a ceasefire in place and a Hamas-Fatah reconciliation emerges.

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December jobs report out at 8:30 EST

The forecasts are all over the place with CNBC suggesting the worst in 34 years (they also have the ING worst case 1 million story) and MarketWatch is saying this may be the worst since WWII. If the numbers are worse than around 500,000 the market could suffer. Complicating the environment on Wall Street are hints of bad earnings reports but that should hardly be a surprise. Whether the market will take it all in stride or plunge into panic mode is another story.

U.S. businesses cut jobs at a rapid pace again in December, analysts say, worsening a trend that could produce the largest quarterly job loss since America demobilized its war economy after beating Hitler.

The Labor Department will report on December's nonfarm payroll report on Friday at 8:30 a.m. Eastern, with economists surveyed by MarketWatch expecting payrolls to fall 500,000 after the 533,000 loss in November. See Economic Calendar.

December's loss could be much worse, some economists believe. Following the news from payroll firm ADP that its revised private-sector job index fell by 693,000 in December, some economists sharply lowered their forecasts for the payrolls number. Ian Shepherdson, chief domestic economist for High Frequency Economics, said payrolls could fall by 700,000, the worst in 60 years.

Other economists were sticking to their slightly less-horrible forecasts. "Labor market conditions are deteriorating at a rapid clip, and we look for another sizeable drop in payrolls," said David Greenlaw, an economist for Morgan Stanley, who continued to look for a loss of 450,000. "However, we are discounting the results of the ADP survey."

For the fourth quarter as a whole, the median expectation is for payrolls to fall by 1.35 million, the worst since 1945. Global business and consumer confidence, already weak, plunged abruptly after the collapse of Lehman Bros. and the rescue of AIG and Fannie and Freddie in September, said Jay Feldman, an economist for Credit Suisse.

For all of 2008, employment likely fell by 2.41 million, the most since 2.75 million jobs were lost in 1945 and exceeding the 2.1 million lost in 1982.

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