Relevant and even prescient commentary on news, politics and the economy.

Q4 Senior Loan Officer Survey says …

by New Deal democrat

Q4 Senior Loan Officer Survey says …

The Senior Loan Officer Survey is one of my list of long leading indicators. The Q4 report came out yesterday.

The news wasn’t good. This post is up at Seeking Alpha.

Meanwhile, since the dates for publication of neither housing permits nor Q4 GDP were announced last week, I am going to go ahead and put up a preliminary forecast for the second half of this year sometime this week.

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How To Go After The US Wealthy Reagan Style

How To Go After The US Wealthy Reagan Style

Ah yes, this is going to be another one of those ironic posts about what a big leftist liberal Ronald Reagan was compared to the current GOP gang in charge of so many of our policies, especially our tax policies. Certainly, the image of Reagan is one who cut taxes for the high-income wealthy, and in general that is the case. But there were a few items going the other way, and again, compared to current policies some combination of what came out of the two major Reagan tax cuts looks downright progressive by comparison.

Let us start with taxing wealth, with the Elizabeth Warren proposal to put a 2 to 3% annual wealth tax on those holding over $50 million. I am not opposed to this in principle, but worry that it faces very serious practical problems of implementation due to the high costs involved in simply determining the wealth of these large and complicated portfolios, especially given the hollowing out and reductions at the IRS, which would have to do all of it. As it is, whereas not too long ago 20 nations taxes wealth, that is now down to three: Norway, Spain, and Switzerland, with the latter lacking either a property tax or a capital gains tax. What have those other 17 nations done? Well, going in the opposite direction from where the US has gone under Trump with his tax “reform.” Indeed, a model might well be what we saw in the Reagan tax laws. So, one of the most important both as a redistribution mechanism taxing wealth while also raising revenue would be to return to the Reagan 1986 tax law’s taxing capital gains at the same rates as income is. The other one is also to undo the cuts in estate taxes Trump has put it and move back to what Reagan had in place after his 1981 tax law, a much more redistributive system than we see now. Both of these, especially the capital gains tax change, would be easily to implement and enforce.

On income taxes, the proposal by AOC for a top marginal income tax rate of 70% does not face the implementation problems the straight wealth tax faces. As noted, putting this only on those earning over $10 million per year should not be too damaging on various fronts, although it would probably not raise all that much revenue. It might be better to go with what came in with the 1981 Reagan tax law of a top marginal rate of 50%, but having it on a broader set of upper income people. This would arguably both raise more money than the AOC proposal while also arguably having fewer disincentive effects. So, returning to a combination of the Reagan 1981 and 1986 tax laws might be something that can be adopted, implemented, and enforced, which would both raise more revenues, and engage in wealth and income redistribution.

Barkley Rosser

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Foxconn update

UPDATE: Foxconn now says that it will indeed still build a factory, citing a conversation between CEO Terry Gou and Trump (h/t commenter Joel at Angry Bear). This is certainly clear as mud. As others have pointed out, several promised investments from Foxconn have failed to materialize at anywhere near the scale promised, including in BrazilPennsylvania, Indonesia, Vietnam, and India. So I am going to remain skeptical on what was a terrible deal in the first place.


Original AB post Foxconn is flailng in Wisonsin. Post on Wisconsin and Foxconn in 2017 Foxconn cashes in.

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Leading scenes from the employment report not so positive

Leading scenes from the employment report not so positive

I seem to have been the only person to pick up on the weakness in the underlying leading aspects of last Friday’s jobs report.

While the number of job gains was great, and that average wages for non-managerial workers had their second best showing, at 3.4%, of the entire expansion, just behind last month’s 3.5%, the leading aspects of the report, with one exception, were not so positive.

Let’s start with temporary and manufacturing jobs. Here are two graphs showing their month over month percentage gains over the last 20 years (manufacturing is multiplied *2 for scale purposes):

Both of these advance less than 0.2% m/m and ultimately decline m/m before a recession begins.

Now here is a close-up on the last year:

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The Bank is the Colour of Malpasspractice, not Dead Televisions

If you want to understand why Mark Thoma’s 12-year daily-and-then-some blogging effort has become intermittent, consider that President Shit-for-Brains has made his nomination for the person to ru(i)n the World Bank.

David Malpass.

This David Malpass.

The best part of the nomination so far? This Twitter feed from Charles Kenny.

Brad DeLong concurs.

And I’m not the only one bringing back my writings from almost a decade ago. David Glasner at Uneasy Money remains in fine form. (via Krugman on Twitter)

ETA: pgl, chez delong, notes this 2012 piece from Bruce Bartlett as well.

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The End Of The End Of The Cold War

The End Of The End Of The Cold War

It is a sign of how wacko things have gotten that the truly most important event of the past week has simply been buried in the news by all the huffing and puffing over Trump’s shutdown ending and these revelations about VA Governor Northam. This would be decision by the US on Feb. 1 to withdraw from the Intermediate Nuclear Force (INF) treaty with Russia, followed by Russia’s doing so as well shortly thereafter. This is both historic and very serious, far more so than Trump’s wall or Northam’s photographs.

The treaty was signed in 1987 between then US President Reagan and then Soviet President Gorbachev, culminating several years of negotiations. It led to the destruction of around 3600 short and intermediate range nuclear missiles, including most importantly all of those in Europe that threatened the potential outbreak of a war on that continent between NATO and the USSR. It was one of the most important moments on the way to bringing about the end of the Cold War, and indeed it is unfortunately accurate to describe the ending of this treaty as the end of that end.

I have seen a number of people speculating that this action somehow shows Trump “standing up” to V.V. Putin, being a tough guy and all that. But the nearly immediate acceptance with virtually no complaint by Putin of this move suggests otherwise. US and also western European officials have argued that Russia has been in effective violation of the INF since 2014 when it developed a new cruise missile, 97M925, that can be easily modified to make it fly in the forbidden distance ranges. Russian leaders have argued that they were not in violation given that this missile also had as its main range adjusted and therefore are not in violation and none violating the limits had been deployed. Putting such missiles with the violating ranges in deployment would directly threaten western Europe. As it is, Putin is in a position now to rapidly deploy them in a way to threaten western Europe while the US has nothing to put in place to reply to this. So, Putin gets to gain a major military edge and threaten the western Europeans while getting to blame Trump for having ended the treaty by withdrawing and allowing him to do this. The Europeans in question had opposed Trump ending the treaty, with indeed this probably being one of those things Merkel was trying to maintain influence with Trump over by not complaining too loudly about the US pressuring German companies to stop dealing with Iran.

Another factor in this matter emphasized by US leaders is that China was never a part of the agreement, and I gather has been developing such intermediate range missiles. But those were unlikely to be deployed in Europe, where the removal of such missiles 32 years ago was a triumphant movement towards the reduction of mutual tensions and towards peace.

All the way around, there is nothing good at all about this development, and it most definitely doesn’t show Trump doing something that is against the interests or desires of V.V. Putin. The outcome may well be a new arms race, which will please the military-industrial complexes in both the US and Russia, and maybe China as well. No, this is not a good development at all

Barkley Rosser

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Reduction in Representation as the remedy for voter suppression

Reduction in Representation as the remedy for voter suppression

This is the second take prompted by my reading of David W. Blight‘s biography of Frederick Douglass.

In the “nothing is every really new” department, voter suppression was very much on the mind of Douglass and other radical Republicans during the Civil War and its immediate aftermath. Douglass was fond of saying that blacks would only gain equality once they exercised power through three “boxes: the cartridge box, the jury box, and the ballot box.” In other words, first equality would have to be fought for in the war. Then there would need to be legal equality. And finally, the only way to protect that legal equality would be via the right to vote.

Douglass and others were very clear-minded that the “copperhead” Democrats would continue to suppress freed blacks by denying them access to voting rights, all the while continuing to gain power via counting freed blacks towards representation in the Congress. Sound familiar at all?

While the ultimate step was the passage of the Fifteenth Amendment in 1969-70, the second Section of the Fourteenth Amendment addresses voter suppression directly, and mandates a specific remedy that is well worth renewed consideration today.

Here are the relevant texts of the first and second Sections of the Fourteenth Amendment.

Section One of the Amendment mandates that

“All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.”

Section Two states:

“Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed. But when the right to vote at any election … is denied to any … citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State.”

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Frederick Douglass, Andrew Johnson, and the Copperhead GOP

Frederick Douglass, Andrew Johnson, and the Copperhead GOP

I am currently reading David W. Blight’s biography of Frederick Douglass, the 19th century orator and champion of black equality. Today I wanted to briefly write on several timely topics inspired by that tome.

Douglass was biracial, or in the parlance of the day, a mulatto. His mother was a young slave named Harriet Bailey. His father was probably Aaron Anthony, the “overseer of overseers” of slaves at the nearby Wye Plantation on the eastern shore of Maryland. He was probably conceived in rape.

His earliest memories included Anthony giving his mother’s sister a vicious whipping for the crime of having a romantic relationship with a young male slave; and Anthony also gently leading him by the hand, patting him on the head, tousling his hair, and calling him “my little Indian boy.”


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January jobs report: a tale of two almost diametrically opposed components

January jobs report: a tale of two almost diametrically opposed components


  • +304,000 jobs added
  • U3 unemployment rate rose 0.1% from 3.9% to 4.0%
  • U6 underemployment rate rose 0.5% from 7.6% to 8.1%

Here are the headlines on wages and the broader measures of underemployment:

Wages and participation rates

  • Not in Labor Force, but Want a Job Now: declined -73,000 from 5.327 million to 5.254 million
  • Part time for economic reasons: rose +490,000 from 4.657 million to 5.147 million
  • Employment/population ratio ages 25-54: rose +0.2% from 79.7% to 79.9%
  • Average Hourly Earnings for Production and Nonsupervisory Personnel: rose $.03 from  $23.09 to $23.12, up +3.4% YoY.  (Note: you may be reading different information about wages elsewhere. They are citing average wages for all private workers. I use wages for nonsupervisory personnel, to come closer to the situation for ordinary workers.)

Is a recession close?


The more leading numbers in the report tell us about where the economy is likely to be a few months from now. These were mixed, with at very least a decelerating bias.

  • the average manufacturing workweek fell -0.1 hours from 40.9 hours to 40.8 hours. This is one of the 10 components of the LEI.
  • Manufacturing jobs rose by +13,000. YoY manufacturing is up +261,000.
  • construction jobs rose by +52,000. YoY construction jobs are up +338,000.
  • temporary jobs rose by +1000. YoY these are up +146,000.
  • the number of people unemployed for 5 weeks or less rose by +199,000 from 2,126,000 to 2,325,000.  The post-recession low was set eight months ago at 2,034,000.

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