United Auto Workers' Jobs Bank program

This Wall Street Journal article describes the UAW Jobs Bank program, under which American auto manufacturers pay some 15,000 unneeded employees wages and benefits which can exceed $100,000 a year, with a total cost of over $1.4 billion per year. GM has the most workers in the program–between this and the pensions, it’s no wonder GM is not competitive. While many of the workers in the program do community service or participate in educational programs, some of the latter seem rather dubious (studying crossword puzzles?). Other employees spend their time in the “rubber room” engaging in creative loafing. (Via The Agitator.)

March 3, 2006 · 1 min

Amazing helicopter photos of Mexico City

What an amazing city. The Ixtapaluca low-income housing projects (one photo at left) look like a suburban nightmare out of a video game, but these purport to be actual photos taken from a helicopter. (Thanks to BLDGBLOG.) Historical Comments Einzige (2006-12-09): Santa Vaca! That looks literally unreal. Martin (2006-12-09): Those aren't houses! More like storage units for surplus humans. Brrrr. ...

February 2, 2006 · 1 min

Phoenix housing inventories for sale continue to climb

To continue from just before where we left off last time… there were 10,748 homes for sale on July 20, 2005, and it had increased by 79% to 19,254 by October 2. Yesterday, it was up a further 69% to 32,512–a 202% increase over the July 20 number. I’ve seen estimates that about a third are being sold by “investors." 10/1/2005 19333 10/2/2005 19316 10/3/2005 19362 10/4/2005 19463 10/5/2005 19562 10/6/2005 19670 10/7/2005 20052 10/8/2005 20219 10/9/2005 20153 10/10/2005 20324 10/11/2005 20470 10/12/2005 20668 10/13/2005 20850 10/14/2005 21238 10/15/2005 21446 10/16/2005 21463 10/17/2005 21527 10/18/2005 21588 10/19/2005 21795 10/20/2005 21806 10/21/2005 22302 10/22/2005 22719 10/23/2005 22769 10/24/2005 22806 10/25/2005 22976 10/26/2005 23132 10/27/2005 23293 10/28/2005 23681 10/29/2005 23805 10/30/2005 23816 10/31/2005 23790 11/1/2005 23601 11/2/2005 23665 11/3/2005 24193 11/4/2005 24579 11/5/2005 24786 11/6/2005 24717 11/7/2005 24937 11/8/2005 25244 11/9/2005 25333 11/10/2005 25387 11/11/2005 25700 11/12/2005 25685 11/13/2005 25773 11/14/2005 25945 11/15/2005 25913 11/16/2005 25884 11/17/2005 26261 11/18/2005 26098 11/19/2005 26662 11/20/2005 26688 11/21/2005 26684 11/22/2005 26488 11/23/2005 26776 11/24/2005 26819 11/25/2005 26855 11/26/2005 26871 11/27/2005 26890 11/28/2005 26979 11/29/2005 26811 11/30/2005 26797 12/1/2005 26792 12/2/2005 26915 12/3/2005 27238 12/4/2005 27295 12/5/2005 27356 12/6/2005 27387 12/7/2005 27403 12/8/2005 27367 12/9/2005 27649 12/10/2005 27706 12/11/2005 27664 12/12/2005 27512 12/13/2005 27411 12/14/2005 27566 12/15/2005 27517 12/16/2005 27603 12/17/2005 27791 12/18/2005 27776 12/19/2005 27722 12/20/2005 27604 12/21/2005 27554 12/22/2005 27516 12/23/2005 27486 12/24/2005 27311 12/25/2005 27014 12/26/2005 26810 12/27/2005 26822 12/28/2005 26687 12/29/2005 26649 12/30/2005 26547 12/31/2005 26497 1/1/2006 26462 1/2/2006 26401 1/3/2006 26751 1/4/2006 27403 1/5/2006 27564 1/6/2006 28224 1/7/2006 28337 1/8/2006 28542 1/9/2006 28595 1/10/2006 28786 1/11/2006 29222 1/12/2006 29507 1/13/2006 29689 1/14/2006 29899 1/15/2006 30415 1/16/2006 30391 1/17/2006 30707 1/18/2006 30817 1/19/2006 31085 1/20/2006 31457 1/21/2006 31463 1/22/2006 31497 1/23/2006 31607 1/24/2006 31766 1/25/2006 31830 1/26/2006 32142 1/27/2006 32002 1/28/2006 32477 1/29/2006 32458 1/30/2006 32512 ...

January 31, 2006 · 3 min

Iraq war costs underestimated--could reach $1 trillion

In 2003, the Bush administration said that the $200 billion estimate of the cost of the war in Iraq from Larry Lindsey, Bush’s economic advisor, was too high. Paul Wolfowitz suggested that the cost of reconstruction would be financed entirely by Iraq. Congress has so far appropriated $251 billion for military operations, and the Congressional Budget Office has indicated that we should expect another $230 billion in costs over the next ten years. Now a paper by Nobel prizewinning economist Joseph Stiglitz and Harvard budget expert Linda Bilmes argues that the CBO’s estimate leaves out some significant costs, like healthcare for injured soldiers–lifetime care for brain injuries alone may cost $35 billion. Their paper argues that $1 trillion is a conservative estimate of the total costs. (Story at The Guardian.) ...

January 10, 2006 · 2 min

2006-2007: Years of Mortgage Default?

Over the next two years, $2.5 trillion in U.S. mortgages that are based on adjustable rate mortgages will reset to higher interest rates. There is little question that many people who have been using creative financing to speculate in the real estate market are going to have some serious financial difficulties as a result. More at Ben Jones’ Housing Bubble blog.

January 1, 2006 · 1 min

The Economics of Church Attendance

The current (December 24, 2005) issue of The Economist features a story, “Wealth from worship," summarizing a paper by MIT economist Jonathan Gruber, “Religious Market Structure, Religious Participation and Outcomes: Is Religion Good for You?” Gruber claims that regular religious participation leads to better education, higher income and a lower chance of divorce. His results (based on data covering non-Hispanic white Americans of several Christian denominations, other faiths and none) imply that doubling church attendance raises someone’s income by almost 10%.The summary points out that ethnic density can make a group worse off (“ghettoization”), which Gruber controls for by looking at “the density of ‘co-religionists’” not of the same race. He says that “a 10% increase in the density of co-religionists leads to an 8.5% rise in churchgoing” and that a 10% increase in the density of co-religionists leads to a 0.9% rise in income. In other words, because there are lots of non-Polish Catholics in Boston and a few in Minnesota, Poles in Boston both go to church more often and are materially better off relative to, say, Swedes in Boston than Poles in Minnesota relative to Swedes in Minnesota.If this is accurate, what’s actually going on here? Suggestions offered in the Economist summary: Churchgoing increases one’s network of connections, making business dealings smoother; churchgoing provides a form of insurance against social or economic setbacks; churchgoing promotes an increase in education; churchgoing reduces the stress of life. The first two of these, and perhaps the last, strike me as plausible; whether or not churchgoing promotes education likely depends a great deal on the particular sect or denomination. ...

December 30, 2005 · 2 min

Outsourced to India: lawyers

The December 17th issue of The Economist has an article (“The next wave”) about projected growth in India’s “Business Process Offshoring” (BPO) industry. While today two-thirds of the $250 billion of annual spending on legal services goes to the United States, 28% of the available global workforce with the requisite language and technical skills is in India. Since India’s law is based on English common law, it is in a good position to take a large portion of that business from lawyers in the United States, with a 75% reduction in cost for the buyer. The Economist notes that this is “not just a question of ‘paralegal’ hack work such as document preparation’ but includes ‘drafting contracts and patent applications, research and negotiation.’" Let’s all weep a few tears for U.S. lawyers being put out of work.

December 23, 2005 · 1 min

The Bush Medicare Fraud

I’ve been reading James Bovard’s book, The Bush Betrayal, which makes an overwhelmingly strong case that George W. Bush is not only a terrible president by liberal standards, but by conservative or libertarian ones (Bovard falls into the libertarian camp). The book is 278 pages of text followed by 43 pages of end notes (which, unfortunately, are mostly references to secondary sources) documenting Bush impropriety, dishonesty, and bad decisions regarding civil liberties, free trade, education, farm subsidies, Medicare, the war on drugs, and in war. I just finished reading the chapter titled “Spending as Caring,” which has a section on the expansion of Medicare to cover prescription drugs in 2003 (pp. 121-126), which the Bush administration estimated would cost $400 billion in its first decade (and the Congressional Budget Office estimated would cost $2 trillion in its second decade). The initial vote took place at 3 a.m. on November 23, 2003, and lost by two votes. The Republicans violated House rules, which limit votes to 30 minutes, with the longest floor vote in House history. The voting finished at 6 a.m., with two Republicans changing their votes to yes and passing the bill. Rep. Nick Smith (R-Michigan) was a Republican Congressman who opposed the bill and came under intense pressure to change his vote. Smith, who was in his last term and whose son was running for his seat, was told (according to Robert Novak–not a source I’d ordinarily rely upon) “business interests would give his son $100,000 in return for his father’s vote.” He declined, at which time “fellow Republican House members told him they would make sure Brad Smith never came to Congress. After Nick Smith voted no and the bill passed, Duke Cunningham of California and other Republicans taunted him that his son was dead meat.” Fortunately, Cunningham is now out of office after confessing to taking millions of dollars in bribes. A month after Bush signed the bill, Josh Bolton, Bush’s budget director, raised the estimate of the first decade’s cost to $540 billion. As it turned out, the Bush admnistration had known since June 2003 that the cost was higher than $400 billion, from an estimate by Richard S. Foster, the top actuary at the federal Centers for Medicare and Medicaid Services. Democratic staffers had contacted Foster asking for an estimate, which he was legally required to provide, but Thomas Scully, Administrator of the Centers for Medicare and Medicaid Services, reportedly threatened to fire Foster if he provided the information. Foster later said that “there was a pattern of withholding information for what I perceived to be political purposes.” Why was this information suppressed? Because 13 conservative House members had vowed to vote against any bill costing more than $400 billion–they were deceived by the Bush administration. Eighteen Democratic Senators requested the General Accounting Office to investigate whether any laws were violated (specifically a law that prohibits paying federal funds for the salary of any official who “prohibits or prevents, or threatens to prohibit or prevent” another employee from communicating with Congress). House Republicans blocked an effort to have Scully and White House aide Doug Badger testify before a congressional committee on this issue. The Congressional Research Service published a legal analysis which concluded that “such ‘gag orders’ have been expressly prohibited by federal law since 1912.” This position was backed by a 1927 Supreme Court ruling on that law which stated that a “legislative body cannot legislate wisely or effectively in the absence of information regarding conditions which the legislation is intended to affect or change." But the worst part about all of this deception is that the program itself is mostly a handout to people who don’t need it. The Medicare prescription drug benefit helps wealthy elderly, corporations, and insurance companies more than elderly without insurance coverage. This change in the law brought the date of Medicare insolvency from 2026 to 2019, and is projected to cost up to $7 trillion over the next 75 years. After the bill passed, the Bush administration then spent tens of millions of dollars on advertising to promote the law, including “video news releases” by fake reporters which the GAO determined in March 2004 were illegal “covert propaganda” with “notable omissions and weaknesses” and were “not strictly factual news stories." The above gives a small sampling of the content of Bovard’s book (though not his exact words, I’ve summarized), which is packed with equally damning criticism of the Bush administration. BTW, Capitol Hill Blue (an often criticized source, yet which seems to often be quite accurate) claims reports from three witnesses that George W. Bush said, in response to criticisms of the USA PATRIOT reauthorization act, “Stop throwing the Constitution in my face. It’s just a goddamned piece of paper!” (Hat tip to Scott Peterson from the SKEPTIC list.) ...

December 17, 2005 · 4 min

Speculators on an E-Ticket Ride of Blind Faith

Ben Jones’ Housing Bubble blog has an amazing piece about a couple of speculators making a living off their home appreciation, but with no other sources of income. They’ve made $1.3 million buying and selling properties, but all of their net worth is in home equity, and they have a negative monthly cash flow of $5,000 to $15,000. They hold $2.3 million in mortgage debt. What’s amazing is that the mortgage lenders are letting them continue to buy properties with no income other than what they pull out of their properties in loans. As the market turns from a seller’s to a buyer’s market, they’re likely to get crushed pretty quickly. Though at first I thought the new bankruptcy laws could potentially leave them in debt for the rest of their lives, their lack of actual income may save them, and leave their creditors with the short end of the stick. Favorite quote: “Some people call it a pyramid, but I don’t like to think about it that way.”

December 9, 2005 · 1 min

Gambling and Free Airfare

I just read in The Economist (I’m a few weeks behind and trying to catch up) that Ryanair wants to introduce gambling on flights by 2007, which it thinks may generate enough revenue to not have to charge passengers air fare. Ryanair has already offered free flights (you still have to pay about 15 pounds for taxes and fees) from London’s Stansted airport to some European destinations, as well as fares under five pounds. Ryanair took Southwest’s playbook and took it to the next level. They fly using smaller regional airports, make the flight crews pay for their own uniforms, etc. ...

November 23, 2005 · 1 min
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