Introducing Sarah Palin

So what have those of us who weren't familiar with the Governor of Alaska learned in the 24 hours since Senator McCain made his unexpected (and head-scratching) Vice Presidential choice? Well, it turns out that Gov. Palin

• didn't understand the job of Vice President before being selected
  
• believes that creationism should be taught in science classes,
  
• believes that global warming is not man-made,
  
• has "been so focused on state government," that she hasn't "really focused much on the war in Iraq" but still blindly "support(s) our president, Condoleezza Rice and the administration," and
  
• is under investigation for possibly abusing her office.

This sounds a lot like the same uninformed, uninquisitive, anti-science, and corrupt administration that we've had for the last eight years.

Private health insurance coverage down again in 2007

The Census Bureau yesterday released its report on Income, Poverty and Health Insurance Coverage for 2007 and had some mixed news to report. On the positive side, real median household income (the point where half of households have higher incomes and half have lower) rose slightly. Though real medium income has now risen for three straight years, it still hasn't recovered to the levels from 1999 and 2000.

In particular, incomes for the middle three-fifths of the income distribution rose, while incomes for the bottom fifth were unchanged and incomes for the top fifth decreased. As a result, real average household incomes (income per capita) fell as did income inequality.

Overall health insurance coverage rose. The number of uninsured people fell from an estimated 47 million people to 45.7 million people.

Unfortuntately, the positive overall health insurance rate masks a negative trend. The increase in coverage comes entirely from public health insurance; private health insurance coverage continues to shrink. While the number of people covered by private plans was unchanged, the population grew, leading to a decrease in the percentage covered from 67.9 percent to 67.5 percent. Also, the percentage of people covered by employment based plans decreased from 59.7 percent to 59.3 percent.

Just over one-sixth of full-time workers were uninsured in 2007, and just under one-quarter of part-time workers were without insurance. Among adults 18-64 who didn't work, the uninsurance rate was also a quarter.

The economy was growing for most of 2007. Employment has declined substantially during 2008. The 2007 report may be the last one with any positive news for a while.

Explainer: Why 2007, you ask? The primary data source for the report is a survey conducted in March of each year that asks income questions about the preceding calendar year. The survey is timed to coincide with tax season, when people might be better able to recall their sources of income for the preceding year. So, the 2007 data were collected in March of 2008. Add in a few months to process and analyze the data and that brings you to August.

Still feeling manipulated

Contrary to the preliminary report that it issued last month, the Commodity Futures Trading Commission (CFTC) is uncovering more evidence that speculation has played a noticeable role in oil markets.

First there was the embarrassing revelation just two days after the report was released that the CFTC was going after a holding company and two of its subsidiaries for manipulating the prices of oil futures contracts. So, contrary to the report, there was direct evidence that a small number of traders had been able to move prices.

Today, the Washington Post reports that a few large speculators hold enormous positions in the futures markets.

Even more surprising to the commodities markets was the massive size of Vitol's portfolio -- at one point in July, the firm held 11 percent of all the oil contracts on the regulated New York Mercantile Exchange.

The discovery revealed how an individual financial player had gained enormous sway over the oil market without the knowledge of regulators. Other CFTC data showed that a significant amount of trading activity was concentrated in the hands of just a few speculators.

...CFTC data show that at the end of July, just four swap dealers held one-third of all NYMEX oil contracts that bet prices would increase. Dealers make trades that forecast prices will either rise or fall. Energy analysts say these data are evidence of the concentration of power in the markets.

Concentration is seldom good news for a market. The problem here has been a series of steps that have deregulated commodity futures markets.

Futures markets exist to provide some stability to buyers and sellers who need to exchange goods over time. The markets allow each side to contract prices for their transactions sometime into the future, removing some of the uncertainty associated with market swings. During the most recent oil price rise, several airline companies used futures contracts to great advantage to lock in moderate fuel prices.

Prior to the early 1990s, producers and users of commodities could conduct unlimited transactions in these markets, but speculators and pure traders were restricted to hold small positions. An administrative reinterpretation of the rules during the first Bush administration, removed the transaction restrictions for large investment houses.

In 2000, Congress passed and President Clinton signed the Commodity Futures Modernization Act. Buried in this act was a provision introduced by Sen. Phil Gramm on behalf of Houston-based Enron to allow energy trading to be conducted in over-the-counter markets, outside the reach or view of regulators. These markets are sometimes referred to as "dark markets." A tepid provision to narrow this loophole was enacted over President Bush's veto this summer.

A sensible solution would be to extend a consistent regulatory umbrella over all energy markets--that is, to completely repeal the Enron loophole. The current system of regulating some markets but not others is unfair to established markets and leaves the door open for abuse and manipulation. Another sensible solution is to require investors to put up more cash for their positions; currently much of the trading in these markets is highly leveraged, which increases the chances of both bubbles and spectacular crashes.

Looking forward, Sen. Obama has called for closing the Enron loophole, while Sen. McCain, who has been advised by Phil Gramm, continues to support it.

Immigration enforcement should start with the News & Record

Doug Clark, an editorial writer with the local News & Record, tends to take a tough stand when it comes to immigration issues. Yesterday (and in earlier posts), he applauded the decision to close the doors of community colleges to undocumented residents.

The policy is ineffective (do you really think that any immigrants are going to be deterred from entering or staying in the country because they can't get into community college?) and self-defeating (we lose any positive economic and non-economic externalities from members--even temporary members--of our community being better educated). But that's immaterial to people who feel that we should give no quarter to illegal immigrants.

Since Doug holds strong--and I hope sincere--beliefs in this matter, I've asked him why his campaign against illegals can't start with the News & Record itself. Right now, the News & Record delivers papers to homes across the Triad with no checks at all on the residency status of the occupants. The paper contains want ads (and Dilbert cartoons) that are intended to facilitate employment. As you're reading this, immigrants could be scanning those ads and either applying for those good jobs themselves or telling their compadres across the border to get their resumes in order.

So a simple proposition for Doug and the News & Record is to require proof of either citizenship (birth certificate, passport, etc.) or legal residency (visa, green card) for all new home subscribers. Inconveniences to be sure, but minor ones to people with nothing to hide. This small step will give the News & Record the moral authority to advocate for even tougher policies.

Silly and ineffective, you say? Exactly.

Topic for next week: Should News & Record paper carriers be required to alert authorities to households suspected of harboring undocumented residents?

Georgia

The New York Times has an excellent article, detailing the actions that led up to Russia's invasion of Georgia. At the Washington Post, Fred Hiatt reminds us that Russian imperialism lies at the heart of the matter.

It's not easy being green

Apparently, Kermit had it right.

CNNMoney.com reports on how difficult it is to come up with green products.

The product in question is a water box for kids (think juice box but with water). This, however, leads to a more fundamental question--wouldn't it be even more environmentally friendly to just drink from a water fountain?

A bright, Bonn-y day

The view from my office in Bonn this afternoon. Looking through the trees, I can see a bend in the Rhine, along with the occasional passing barge or tour boat.

Rhymes with Karioke?

The Chinese, with their lax intellectual property standards, have now ripped off Milli Vanilli.

Pigtailed and smiling, Lin Miaoke, age 9, stood in a red dress and white shoes during last Friday’s Olympic opening ceremonies and performed “Ode to the Motherland” in what would become one of the evening’s most indelible images: a lone child, fireworks blazing overhead, singing a patriotic ballad before an estimated one billion viewers.

Except that she was not really singing.

...Under pressure from the highest levels of the ruling Communist Party to find the perfect face and voice, the ceremony’s production team concluded the only solution was to use two girls instead of one. Miaoke, a third grader, was judged cute and appealing but “not suitable” as a singer. Another girl, Yang Peiyi, 7, was judged the best singer but not as cute. So when Miaoke opened her mouth to sing, the voice that was actually heard was a recording of Peiyi.

Going, going, Bonn

I'm working at the Institute for the Study of Labor this week. I flew over on the direct US Air flight from Charlotte to Frankfurt Friday night. From Frankfurt, it's a two hour train ride to Bonn. I left the house just after lunch on Friday and arrived at my apartment in Bonn just before lunch on Saturday. All-in-all, the trip is pretty convenient, though it would be nice to have some other carrier besides US Air.

Once I got to the apartment, there were a couple of "must-do" items to attend to. First on the list was to get down to the open-air market at the center of town, the Marktplatz, to get a bratwurst and roll. This will probably be the lunch routine for most of the visit. The second thing was to stock up on provisions for Sunday, when all of the shops and many of the restaurants are closed. The produce and bakery stalls in the Marktplatz were perfect for this.

One jarring sight during the provisioning trip was the dozens of bees in the bakery stalls. The bees seemed to be everywhere, flying around the stalls, buzzing in the display cases, and alighting on the goods. The clerks were completely oblivious to them; the bees must not eat much. I gingerly pointed to the rolls I wanted (my international pointing, nodding, and dumb smiling skills are quite advanced). After paying and leaving the stall, I checked my bag verrry carefully. Even so, I kept it at arms length during the walk back to the apartment and poked the bag a few times before opening it.

Fed and provisioned, I headed off to the beer garden next to the apartment building to point at their menu and then sit, drink, watch the Rhine roll by, and try to stay awake until dinner.

Is Sen. Dole out of her mind?

Many letters in our local paper, the News & Record, contain wild and unbelievable accusations (along with exciting punctuation!!!). So, I didn't give much initial credence to this letter, which said

Sen. Elizabeth Dole recently stood on the U.S. Senate floor and requested that the AIDS Relief Bill be named after Jesse Helms!

Though I would fault her on many issues, Sen. Dole has always come across as sensible. Moreover, given her former position as the head of the Red Cross and that organization's struggles with the safety of the blood supply, one would think that she would be sensitive to issues associated with AIDS. So, it just seemed inconceivable that she would do something so outrageous and offensive. After all, this is the same Jesse Helms that fought for AIDS funding cuts, arguing that gays' "deliberate, disgusting, revolting conduct" caused the disease and that "we've got to have some common sense about a disease transmitted by people deliberately engaging in unnatural acts."

So much for giving her the benefit of the doubt.

If I had been following the papers and blogs more closely a month ago, I would have seen that she did indeed try and fail to get an AIDS bill named after our esteemed former senator.

We're left with two equally disturbing explanations for Sen. Dole's. Either she's cluelessly insensitive to Helms' hateful legacy, or she's fully aware of that legacy and shamelessly pandering to Helms' former supporters in her tight re-election race with Kay Hagan. Both explanations suggest that it's time for her to retire.

In the meantime, who knows what other bill naming opportunities Sen. Dole might be contemplating for notable North Carolinians. The Eric Rudolph Women's Reproductive Freedom Act? The Coy Privette Defense of Marriage Act? The Dwight Watson Safe Streets and Traffic Management Act?

Sen. Dole has recently announced that she won't be attending the Republican convention. Maybe she's become too much of an embarrassment even for them.

Good news for IKEA

The Washington Post reports that hard times are leading college students to furnish their rooms more spartanly.

Among the many daunting challenges facing Shira Rosenthal as she enters her freshman year at the University of Maryland is this conundrum: Which trash can to buy?

There is one from Pottery Barn spinoff PBteen that costs $29 and is painted in pastel colors and emblazoned with catchy eco-slogans like "Think Green." Then there is the plain white wastebasket from Target for just $4 -- less than the cost of a gallon of gas. Rosenthal went with the latter.

Shira was very sensible. However, if I couldn't have the $29 trash can, I'd just, you know, die.

Beware of oil price decreases?

An article on CNNMoney.com warns of the downside of falling oil prices.

Oil prices are falling sharply, and that's good news. But not nearly as good as you might think.

The headline and opening paragraph suggest the falling energy prices may cause additional problems. A careful read of the article, however, reveals that a weakening economy and weakening demand are contributing to the price fall. In this sense, prices are an indicator of economic conditions but are not necessarily the cause of those conditions.

Moderating energy prices in and of themselves are unambiguously good for jobs, output, and household finances. The economy faces myriad other challenges and does not need the additional disruption of rising fuel prices.

The main "downsides" of falling prices have more to do with the environment, conservation, and the feasibility of alternatives. The high prices for oil, while painful to the pocketbook, have begun to prompt important and beneficial changes in behavior. Hopefully, we can lock in those gains with modestly lower prices.

Bush's weak job record

Over the last year, the housing collapse, financial crunch, manufacturing slowdown, and energy and food price spikes have all taken a toll on the economy and contributed to rising joblessness. In its last monthly report, the Department of Labor estimated that unemployment had risen to 5.7 percent, the highest level since 2004. The rate is now only about a half a percent below the peak from the recession earlier this decade.

As the job record is unlikely to improve between now and the end of the Bush presidency, this seems like a good time to review that record.

When President Bush took office in January 2001, the national unemployment rate was 4.2 percent. The tech collapse and bursting stock market bubble produced a mild (by historic standards) recession that resulted in unemployment climbing to as high as 6.3 percent. From the middle of 2003 until early 2007, unemployment fell, reaching a low of 4.4 percent. Since 2007, the rate has climbed again.

Administration apologists point out that the U.S. has suffered through much higher rates of unemployment. For instance, near the end of the recovery in the late 1980s, unemployment was just over 5 percent, and unemployment was much higher during earlier recessions. Nevertheless, an unemployment rate heading up toward 6 percent isn't going to win any economic bragging rights and stands in sharp contrast to the unemployment rates that were achieved during the final two years of the Clinton administration.

Unemployment rates can be hard to interpret because they only count people who report that they are looking for work and exclude other people, such as discouraged workers, from both the numerator and the denominator. A different picture emerges when we simply take the number of people who are working and divide it by the relevant civilian population, that is when we look at the employment-to-population ratio. The graph below shows this ratio for U.S. adults aged 25-54.
The graph shows that the employment rates in the aftermath of the last recession were nearly as low as they had been in the early 1990s. And the recovery in employment never came close to the rates achieved during the second half of the Clinton administration. The Bush record occurred despite an expansionary fiscal policy (deficits every year since 2001) and an accommodating monetary policy (low-to-neutral interest rates). Those tax cuts certainly didn't produce a supply-side employment miracle.

So far, the new economic downturn has been modest in absolute terms; unemployment is 1.3 percent above its last trough, while the employment ratio is less than a percent below its last peak. One reasonable explanation, however, for the strong sense of pessimism right now is that conditions never improved that much during the recovery.

The Bush administration is likely to be remembered for many things. It's doubtful though that job creation will be one of them.

Don't feed the trolls

The New York Times dissects trolls.

Economy has been slightly worse than we thought

A lot of the economic news yesterday focused on the government's advance second quarter GDP estimate of 1.9 percent annual growth. The growth figure represents decidedly mixed news. On the one hand, the number was positive, so output was advancing rather than declining. On the other hand, the rate was very modest, especially given that it came from the quarter in which the stimulus checks were distributed and the Fed's lower interest rates were in effect.

The gloomier news was further down in the report, where the government provided its annual revisions to the last three years of GDP estimates. These revisions are made when sources such as the annual economic and government finance surveys from the Census Bureau and tax return data from the Internal Revenue Service become available. The revisions shaved 0.2 percent from growth rates for 2005 and 2007 and 0.1 percent from the growth rate for 2006. The revised GDP growth rates for 2005-7 were 2.9 percent, 2.8 percent, and 2.0 percent, respectively.

To put the figures in context, consider the historical relationship between GDP growth and unemployment, known as Okun's Law, which suggests that growth rates of between 2 to 3 percent are associated with steady unemployment. Faster growth is associated with increasing joblessness, while slower growth is associated with falling joblessness. Okun's Law provides a helpful benchmark for identifying sub-par economic performance. Let's take the lower range number of 2 percent as that benchmark. The growth in 2005-6 was strong enough to bring down unemployment, while the growth in 2007 was not. The growth rates from the final quarter of last year and the first two quarters of this year were below the threshold associated with steady unemployment.

The revised quarter-by-quarter numbers further reveal that instead of slowly growing in the first and fourth quarters of last year, the economy actually stalled. GDP increased at an annual rate of 0.1 percent in 2007.I and decreased at a rate of 0.2 percent in 2007.IV.

The downward revisions also make the modest growth from the first two quarters of this year less impressive, as they represent growth from a lower base. Even with this, the estimated growth rate for the first quarter of this year was shaved down 0.1 percent.

As the rising unemployment rate and falling number of jobs from this morning's monthly jobs report indicate, the economy continues to under-perform. The bottom isn't falling out, but hardships are increasing.