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Employment to Population Ratio in China

Dean Baker directs us to this data on China. It seems China has about 1322 million people of which 79.6% are 15 and over. An adult population around 1052 million is pretty large. It also seems that those with jobs number 798 million or 75.8%.

I raise this in light of how Dean is having fun with Edward Cody who wrote:

Migrant workers – as many as to 900 million have left farms to find jobs – typically get dormitory-style housing and basic food as part of their benefits.

Dean notes that 45 percent of China’s approximately 800 million workers are employed in agriculture. Does Mr. Cody think China’s employment to population ratio exceeds 100%? And did anyone at the Washington Post bother to proofread Cody’s article?

Update: AB reader Henry Cobb directs us to the official data:

A survey by the Ministry of Agriculture shows China’s migrant worker population has grown to 114.9 million with an estimated 6.7 million new migrant workers this year. China’s vast rural areas have provided cheap labor for the country’s industrialization drive since the 1990s with an average annual increase of 4.03 million migrant workers from 1998 to 2005. The ministry estimated the migrant worker population would increase on average by four million annually in the next few years … According to the ministry, migrant workers have seen their average wage increase to 852 yuan (106 U.S. dollars) per month in 2006 from 803 yuan in 2005. Migrant workers mainly work in the service sector, with 24.2 percent in industry, 21.1 percent in construction and nearly half in the commercial and restaurant sectors.

Henry suggests that the official statistics might understate the number of migrant workers but it is highly unlikely that China has 900 million workers who have migrated to the cities.

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All We Want is an Up or Down Vote

The Carpetbagger documents that Mitch McConnell is using every procedure in the Senate arsenal to shut down the Senate. In the midst of the overwhelming evidence that Senator McConnell is a hypocrite, we get:

For literally years, Republicans, with a 55-seat majority, cried like young children if Dems even considered a procedural hurdle. They said voters would punish obstructionists. They said it was borderline unconstitutional. They said to stand in the way of majority rule was to undermine a basic principle of our democratic system. And wouldn’t you know it; the shameless hypocrites didn’t mean a word of it. Why hasn’t the Democratic Congress had greater success passing legislation in its first six months? Because 239 separate pieces of legislation have passed the House, only to find Senate Republicans “objecting to just about every major piece of legislation” that Harry Reid has tried to bring to the floor. It’s not only shameless, it’s cynical. Republicans expect to get away with this nonsense because they assume most Americans don’t even know what a filibuster is. They figure, the more they obstruct, the worse Congress looks — and with a Democratic majority, that means the GOP will blame Dems for the Republicans’ delay tactics. Indeed, it’s quite a vicious cycle. Dems bring up a bill … Republicans block the bill … Dems tell voters to be patient … Republicans blame Dems for failing to deliver on their policy agenda. And if Americans aren’t paying attention, they fall for the con.

This was posted the day before the immigration bill that President Bush wants to see passed couldn’t get past McConnell’s two-faced behavior. McConnell claims he supports this bill, but another dies for a lack of cloture as even Republicans who helped author the bill joined in on the fun of stabbing the supports in the back. But as Steve Benen notes, the press is going to blame Senator Reid and the Democrats. But Steve fires back:

Republicans may be accusing Dems of coming up short, but NBC viewers might benefit if they knew whether those accusations are accurate … Indeed, Senate Republicans – the ones accusing Dems of being a “do-nothing Congress” – are proud of their efforts. Senate Minority Whip Trent Lott boasted, “The strategy of being obstructionist can work or fail. So far it’s working for us.”

So what is the next thing this President needs – besides that immigration bill, which of course his own party doomed? Funding for the Iraq War? Funding for anything else? A judicial nomination to get through the Senate? The Democrats should slow roll everything until Senator McConnell changes his tune. If this is the game the GOP leadership wants to play, I say shut down all functions of the Senate except those investigations of this corrupt White House. Full steam ahead with these – now that it’s clear that McConnell has decided to procedurely block everything that Reid is trying go get done.

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Reader Sammy on the Fairness Doctrine

Reader sammy sends along a link to this article at The Hill:

The House voted overwhelmingly Thursday to prohibit the Federal Communications Commission (FCC) from using taxpayer dollars to impose the Fairness Doctrine on broadcasters who feature conservative radio hosts such as Rush Limbaugh and Sean Hannity.

By a vote of 309-115, lawmakers amended the Financial Services and General Government appropriations bill to bar the FCC from requiring broadcasters to balance conservative content with liberal programming such as Air America.

Senate Majority Whip Dick Durbin (D-Ill.) said on Tuesday that the government should revive the Fairness Doctrine, a policy crafted in 1929 that required broadcasters to balance political content with different points of view.

“It’s time to reinstitute the Fairness Doctrine,” he said. “I have this old-fashioned attitude that when Americans hear both sides of the story, they’re in a better position to make a decision.”

Sen. Dianne Feinstein (D-Calif.), chairwoman of the Senate Rules Committee, said this week that she would review the constitutional and legal issues involved in re-establishing the doctrine.

Sen. John Kerry (Mass.), the Democratic Party’s 2004 presidential nominee, also said recently that the Fairness Doctrine should return.

In 1985 the FCC discarded the policy after deciding that it restricted journalistic freedom and “actually inhibit[ed] the presentation of controversial issues of public importance to the detriment of the public and in degradation of the editorial prerogative of broadcast journalists,” according to a Congressional Research Service report.

Sammy also sends comments:

Conservative talk radio is one of the most powerful weapons of the Republicans. It reaches, reinforces, and converts millions. It has resulted in, off the top of my head:

1) Derailing Nationalized Health Care (Hillarycare). It was on the fast track until a local conservative host in Seattle organized a protest that ended up spreading across the country.

2) Derailing recent Immigration Bill

3) Derailing Dubai ports deal

4) (Because of the narrow margin involved), electing George W Bush twice.

The democrat competition, Air(head) America, failed miserably in the market.

I figured conservative talk radio would be a huge and easy target for the Democrats in power. I guess not.

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Reader Dan on Crime

Apropos of our recent discussion here at Angry Bear about murder and guns… reader Dan sends along this link:

PHILADELPHIA – Baltimore, Philadelphia and other cities in a bloodstained corridor along the East Coast are seeing a surge in killings, and one of the most provocative explanations offered by criminal-justice experts is this: not enough new immigrants.

The theory holds that waves of hardworking, ambitious immigrants reinvigorate desperately poor black and Hispanic neighborhoods and help keep crime down.

It is a theory that runs counter to the widely held notion that immigrants are a source of crime and disorder.

“New York, Los Angeles, they’re seeing massive immigration — the transformation, really, of their cities from populations around the world,” said Harvard sociologist Robert J. Sampson. “These are people selecting to go into a country to get ahead, so they’re likely to be working hard and stay out of trouble.”

It is only a partial explanation for the bloodshed over the past few years in a corridor that also includes Newark, N.J., and Boston, but not New York City.

In interviews with The Associated Press, homicide detectives, criminal justice experts and community activists point to a confluence of other possible factors.

Among them: a failure to adopt some of the innovative practices that have reduced violence in bigger cities; the availability of powerful guns; and a shift in emphasis toward preventing terrorism instead of ordinary street crime.

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Dan: Everyone Suffers When an Economic Model Doesn’t Work

Reader Dan sends along a link to this article:

NEW YORK – Bear Stearns Asset Management CEO Richard Marin is taking a stronger role in managing its two troubled hedge funds and tapped mortgage unit head Thomas Marano to save one of the funds, two sources familiar with the decision said.

Marin appointed Marano last week to help with the funds managed by Ralph R. Cioffi, who retains his current role as portfolio manager for both funds, said one source.

Company spokesman Russell Sherman declined to comment.

Bear Stearns Cos. Inc. said on Tuesday it does not plan to bail out the High-Grade Structured Credit Strategies Enhanced Leverage Fund, the second of two struggling hedge funds.

Instead it will provide $1.6 billion of financing to save its High-Grade Structured Credit Strategies Fund. Days earlier the bank had said it would provide up to $3.2 billion in financing.

Marano is a longtime Bear Stearns banker who joined the firm in the 1980s and rose through the ranks to become head of the company’s mortgage and asset-backed securities business.


Some investors believe this may be the tip of the iceberg.

PIMCO’s Gross said subprime mortgages could hit consumption and home building in the next 12-18 months. The Federal Reserve may cut short-term rates in the next six months, he added.

But not everyone is panicked. Fox-Pitt, Kelton analyst David Trone issued a report with 10 reasons why he was sanguine about Bear’s hedge fund issue, including the fact the hedge fund assets were legally segregated from the rest of the bank’s assets, so legal actions were unlikely to affect Bear itself.

Barney Frank, U.S. House Financial Services Committee Chairman, told Reuters on Tuesday that problems with home loans to less-credit-worthy individuals are not likely catastrophic.

“I don’t believe it’s going to lead to a financial meltdown,” Frank said.

And SEC Chairman Chris Cox told a U.S. House of Representatives Financial Services Committee meeting he sees little systemic risk arising from liquidity issues.

Bear’s shares edged up 25 cents, or 0.18 percent, to $139.35 on the New York Stock Exchange, not far off their lowest level since September.


The two Bear Stearns hedge funds made bad investments in CDOs that were portfolios of subprime mortgages.

Similar difficulty with CDOs likely spurred Everquest Financial Ltd., a company formed by Bear Stearns to invest in the securities, to withdraw on Monday its registration for a $100 million initial public offering.

Ralph Cioffi, co-chief executive of Everquest, was also the manager of the two troubled Bear hedge funds.

Everquest, which managed $720 million of CDOs as of the end of 2006, had filed plans on May 9 for an IPO. It is a Cayman Islands-registered business jointly run by Bear Stearns Asset Management and Stone Tower Capital LLC, a hedge fund firm specializing in debt.

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Cursed on the Bear Stearns Hedge Fund Meltdown

This one by is reader cursed…


The Bear Sterns hedge fund melt down has yet to be felt

I believe the Bear Sterns hedge fund melt down will have a far reaching impact, and it will directly affect the price of homes as well as all other asset classes.

The troubled Bear Sterns hedge funds contained collateralized debt obligations (CDO’s) that have been vastly overvalued, and they have leveraged to the hilt based on overvalued CDO’s. The rest of the investment banks in London and New York are likely also upside down on some of their positions.

In the late 80’s Drexel Burnham Lambert, home of the infamous junk bond king Michael Milken, started the CDO’s, although they did not really catch on till the last few years. Basically local banks sell the mortgages they originate to an investment bank, which repackages the mortgages into separate investment categories. The big investment banks sell these to one another, and then borrow huge sums against the supposed value of the CDO’s.

The problem is that few anticipated the high rate of home owners defaulting on their mortgage payments. Bear Sterns quickly infused their fund with a few billion dollars, but is seeking help with a larger fund. When they tried to sell some of the CDO’s on the open market the sale was quickly withdrawn, because nobody wanted to buy them.

There are about a trillion dollars of CDO’s floating around the big investment banks, so this is huge, and over the next couple of years about a trillion dollars of ARM’s will be reset upwards in the face of falling home values. Fannie Mae and Freddy Mac’s accounting shenanigans do not engender confidence, and I suspect that they too hold over valued assets.

The big investment banks are desperately hoping that this will not grow into a full blown crises, and I do not underestimate the bright, energetic and powerful people, who are working around the clock to prevent this contagion from spreading.

However, highly leveraged investment houses that in the past few years have bid up all asset classes into bubble territory will have to unwind many their positions as the fraudulently valued CDO’s are reappraised. Say the CDO’s are actually only worth 75 percent of what they had been valued, this wont simply mean a 250 billion dollar write down, because the investment banks leveraged their bets times ten, so actually this is going to take two and a half trillion dollars out of play. This is going to sop up more then just excess liquidity.

The Federal Reserve will soon be forced to lower its rates in the face of falling asset values, combined with a slowing economy. The rest of the worlds central bankers have indicated that their rate tightening cycle is not yet complete, so the US will be swimming against the current. This will most likely precipitate another down ward leg for the dollar.

Best of luck to all!

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Leggin v. PSKS: Economic Consultant’s Full Employment Act of 2007

With a hat tip to Mark Thoma, let’s notice how Tom Bozzo may be in store for more paid consulting work as a result of this recent Supreme Court decision:

Yesterday, the Supreme Court’s conservative majority decided that arrangements to fix minimum retail prices (“resale price maintenance,” or RPM) between manufacturers and their retailers are not “per se” anticompetitive and must instead be judged by the “rule of reason” on the merits or demerits of particular RPM deals. As an equity holder in an economic consulting firm, my first reaction was, “Woohoo! The economic consultant’s full employment act of 2007!”

Maybe I should send my resume to Tom. Tom then gets down to a discussion of the pros and cons of resale price maintenance (RPM):

Before going further, these RPM agreements are not the same sort of restrictions as are provided by minimum markup laws such as Wisconsin’s Unfair Sales Act Such laws directly affect the terms of interbrand competition – the Shell station is limited in its ability to try to underprice the Mobil station down the street – whereas the RPM agreements (directly) limit intrabrand competition. The former are much likelier to have adverse effects on consumers. The standard story (again via Mankiw) suggests that RPM agreements may be valuable in that they ensure retailers enjoy sufficient markups to pay for what the manufacturer considers to be valuable ancillary services – retail shop ambiance, demonstrations of complex products, etc. In the absence of such arrangements, it’s claimed, there’s a free-rider problem as cut-price retailers direct their customers to go to full-service stores for the free services and then to come back to buy the product on the cheap. In the end, the full-service retailers can’t provide the services (or underprovides them) and everyone’s worse-off. One thing about this type of arrangement is that it appears, on the face, to be allocatively inefficient. That is, in static resource allocation problems, the “market” puts resources to their best possible uses when prices and marginal costs are equal. RPM agreements increase the gap between prices and marginal cost of the affected retail products in order to subsidize the provision of ancillary services at zero price. Whether and how much consumers benefit depends on how they value the ancillary services; it seems uncontroversial that there are, indeed, some people who don’t need the hand-holding and/or don’t care about having a “free” skinny chai latte while they shop. The part of the theoretical story that I buy less is that the subsidy is necessary to solve the free-rider problem. An alternative is not that the provision of the ancillary services collapses, but rather than full-service retailers explicitly charge for them (or at least those with nontrivial costs). This happens quite a bit in some markets. For example, interior decorators can (and do) “unbundle” their design services by charging for design consultation; they can (and will) rebate the design fees for customers who subsequently purchase stuff through the designers. Car dealers in Wisconsin can charge a fee to cover “reasonable” costs related to the sales process. The stickers advertising these fees seem to have become much more prevalent since the advent of Intertube-assisted car buying. We haven’t yet had the opportunity to determine whether those fees are negotiable. Clothing stores charge for alterations on sale merchandise. The list, I’m sure, could go on … To the extent that the potential market failure doesn’t turn into an actual one, then it’s very hard to see how consumers would enjoy significant net benefit from RPM arrangements. The appearance of amici such as the American Petroleum Institute and National Association of Manufacturers – not exactly defenders of the Little Guy — in favor of the legality of RPM heightens my doubt that consumer benefits are what’s really at stake in the case. And I’m skeptical that maintaining brand images by keeping up the appearance of high prices has dynamic efficiency benefits to speak of. That said, the SCOTUS majority’s view that, in effect, the costs and benefits should be weighed isn’t that controversial. However, the end result may still be consistent with Justice Breyer’s expectation, in the dissent, that the main effect will be higher retail prices.

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Evolution, Religion, Other People, and Global Warming… Reasoning things Out

CoRev has another post on flawed measurement of global warming. He believes that the placement of US Historical Climatology Network survey stations in heat sinks is part of the reason people believe there is global warming.

I don’t know much about global warming, so I’m hesitant to step into the breach. I think CoRev is wrong, and I’ll explain why later. But I’d like to discuss how I reach a position in situations where I don’t know what I’m doing and I’m not in a position to check the data myself. (This was the subject of a past post.)

I just realized… this post is going to be long… apologies.

The first thing I do is try to reason things out myself. As an example… I’m no biologist, but its obvious to me that Evolution, as a theory of how species come into existence, is largely correct. The concept behind evolution is simple… take a creature…. say for example, its some sort of wild cat. Now, if the species is unsuccessful, it dies out. If, on the other hand, it is successful, you end up with a bunch of things running around.

Now, over time, the population of these creatures gets widely scattered geographically, creating smaller subsamples of the population that mate only with each other, and not across subsamples. In our cat example… cats in Subsaharan Africa simply don’t come across cats in India. (This is true even for animals that migrate long distances, like birds… its not possible for every bird to show up where every other bird is in mating season, so little by little preferences for one or another geographic area develop.)

Evolution would predict that after a time, mutation and adaptation would slowly cause differences in disparate subsamples of the population. When these differences became significant enough, breeding between the samples would be difficult… This would increase the differences between the two populations, and eventually, breeding would be impossible.

So how would know if this is happening? Evolution would predict that it would be possible to find two creatures that we considered sufficiently different to be from different species, and they would be able to breed true. It would also predict that it would be possible to find two creatures that are just slightly more different, so they might still be able to breed, but the offspring will be sterile. And finally, Evolution would indicate that creatures sufficiently different cannot mate at all.

Now, consider… we all know the difference between a lion, a tiger, a jaguar, and a panther. They’re different species. But some combinations of these four species can mate and produce offspring. Some breed true, some don’t. Some cannot breed at all. And that’s not even throwing housecats or lynxes or other cats into the mix.

Now perhaps this is too exotic for you, in which case consider horses and donkeys and mules. Here are a whole bunch more.

Anyway, I can go on, and I can talk about behavioral traits or whatever, but my point is… its easy to find things that occur in nature that confirm what Evolution would suggest, and that don’t seem to make sense in the context of alternative explanations without a very, very convoluted explanation.

Now sometimes you can only reason about things indirectly. As an example… I don’t believe in a Deity, at least not as described by any of the Faiths with which I’m familiar. I’m in no position to reason out how a Deity would behave under various circumstances, but I am in position to reason out how people interacting with that Deity would behave, and in the stories told about Deities, the people do not behave as I would expect them to behave.

Consider the story of Moses, which is a part of the major Western Religions. Moses went before the Pharoah and said “Let my people go. I speak for God, and he is not to be trifled with.” The Pharoah didn’t do as he was told, and God visited plagues upon the Pharoah. At any point, the Pharoah could have put an end to it… but he held on. I don’t know about you, but at the point where the Nile was turned to blood, it would be enough to convince me you don’t mess with whoever it is for whome Moses speaks. Eventually, God sends the Angel of Death to kill every firstborn Egyptian and Pharoah relents.

And then… after all this, Pharoah changes his mind and goes after the Israelites. Think about this… forget about the other 9 plagues… God sent the Angel of Death after the Egyptians. I’m not a believer, but if I had any interaction at all with the Angel of Death, not only would I be a believer, I’d be doing everything possible not to incur any more of God’s wrath.

And then there is the behavior of the Israelites. They’ve witnessed all this. And they know God doesn’t want them worshipping idols. So naturally, when Moses goes up the mountain, they do the one thing guaranteed to anger God.

The story of Jesus’ Crucifixion is similarly problematic. If the Gospels are accurate, Jesus, on at least one occasion (the money changers in the Temple) was known to have displayed a violent temper. He was also known to have raised the dead, walked on water, and performed many other miracles. Is this the kind of guy anyone is going to try to nail to a cross? Who is going to risk making a guy with such powers angry?

Simply put, human beings do not behave like this. When a cop gets on the freeway, everyone slows down… unless they didn’t see the cop. And as to Faith being a choice that people reject, I don’t believe in vampires, but if I see a bat turn into a guy who starts sucking someone’s blood, you can bet I’ll be a believer. It won’t be possible for me not to be a believer, even if I didn’t want to believe. And a guy who walked on water and rose the dead who generally behaves in benevolent fashion… I’m nailing him to a cross, I’m not voting to have him crucified, and more… More, I will fight to keep him from being crucified because such a person can do a lot of good.

So I cannot say there is no God. I do not say there is no God. But I do say I’m reasonably certain if there is a God, he doesn’t resemble the God described

Which brings us to what I do when I have to make a decision and I have no ability to use reason on the subject at all. As an example… I trust that nothing that moves at less the speed of light can ever reach the speed of light. I trust that under some conditions, matter and energy are interchangeable. Why? Do I understand the Theory of Relativity? Heck no. I don’t say that with pride in my ignorance- I wish I did understand the Theory of Relativity.

But I trust the folks who tell me the Theory of Relativity is mostly accurate. (And for a long time, there were many people who denied that.) First, because Einstein was pretty damn transparent about it. As was everyone else that follows. The explanations and math are all out there for anyone to see. And the little bits and pieces that have been explained to me make sense.

Second, because people whose opinion I trust who are in a position to make an evaluation tell me its true. How do I know who to trust? Well, I trust people who generally share opinions with me. Nobody shares all opinions with me (and besides, we’re all wrong about some things)… but the question is, do they share a preponderance of views with me, and do I think they’re generally right on things which I can check or can reason out myself?

So let’s talk global warming… first, let me reason things out myself… the heat sink issue might be a problem. But there are other forms of measurement… satellites for instance, or pieces of Antartica the size of counties or states falling into the ocean. If the issue CoRev raises, or any other issue explains that, I’m not seeing it.

Second, are people behaving as they would in case of global warming? Well, there’s the tragedy of the commons issue going on, and the first people to react are those that rely exclusively on the commons. I understand that are low lying island nations making contingency plans for moving their entire populations. Seems like the folks closest to ground zero, so to speak, are acting as if they believe it.

And third, what about the people who are on both sides? With all due respect to CoRev, I have to pick between the oil companies, AEI, Heritage, and whole lot of people that believe that cutting taxes leads to increases in real revenue (something I can check myself) and folks who say they are nuts.

So right now, I’m in the global-warming-is-happening-and-people-are-having-some-effect-on-the-process school of thought. Now, I’m always open to changing my mind, but what evidence I can gather seems clear to me.

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Money Illusion at the AP

Is Lawrence Kudlow writing copy for the AP:

Consumers bolstered their spending in May as their incomes grew solidly, an encouraging sign that high gasoline prices have not killed people’s appetite to buy. Inflation moderated. It was the second consecutive month that consumer spending went up by 0.5 percent, the Commerce Department reported today. Incomes, the fuel for future spending, rebounded in May, growing by 0.4 percent.

I suspect they were looking at current dollar increases reported here. Just below the nominal increases is reported the real increases as in “chained (2000) dollars. As Dean Baker notes:

Real consumption spending grew by just 0.1 percent in May and real disposable income fell by 0.1 percent.

When the nominal increase in income is less than the increase in the price-level, most people know that real income has declined. But just in case one is an idiot, the BEA already reports the real change. Whoever wrote this copy for the AP should have picked up on this when reading the report. It’s not exactly rocket science. OK – Kudlow makes this stupid mistake routinely, but one would hope the AP would have higher standards than the National Review.

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Spending by the Executive Office of the President Spikes

AB reader K Harris asked a question in a comment under this post, which got my AB colleague Cactus looking at some OMB data – specifically table 4.1’s outlays by agency and what has been recorded as spending by the Executive Office of the President. I have provided this data from 1962 to 2006 in inflation adjusted terms (all figures in millions of 2000$).– with the projections through 2012 (I’ve assumed an inflation rate of 2%). Cactus suggested this spending rose significantly. Well YEA! Of course, in true Bushian fashion – the forecast is for it to decline rapidly (ha ha ha).

Speculation among AB readers has followed and Cactus promises a post on this later. I have no clue what this really means, but let me observe (if your eyes can follow the relatively small movements back then that real spending rose under Nixon (Watergate?). But if you are thinking it would revert back to the 1960’s levels when clean cut Gerald Ford became President, you’d be wrong. Of course, his chief of staff was named Dick Cheney.

For comparison sake, I have another graph that also includes spending by the legislative branch and the judiciary. What does this all mean? I’m leaving the hard part to Cactus.

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