The only intro I'm going to give you to this short film is that it deals with getting fired and the title refers to what optimists do when they get handed a big lemon, or bunches of them:
Lemonade
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Category Archives: Economics
America’s Middle Class: Hacked, Chipped and Pulled to Death
| The Daily Show With Jon Stewart | Mon – Thurs 11p / 10c | |||
| Elizabeth Warren | ||||
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Triad Lost 20K Jobs, Mostly in GSO and High Point
Here's some not-so-surprising news from the Triad Biz Journal:
The Greensboro-High Point and Winston-Salem metro areas lost a
combined total of 20,400 jobs between November 2008 and November 2009,
according to the latest data from the U.S. Bureau of Labor Statistics.Most of those, 15,800 jobs, were lost in the Greensboro-High Point
area, a drop of 4.3 percent during the year. Winston-Salem lost 4,600
jobs, or 2.1 percent, during that time.
This part of the article was a little shocking:
The pace of job losses in Greensboro was among the 20 fastest in the
nation, tied with other areas including Tampa, Florida and Cleveland,
Ohio.
For all the talk of economic recovery and the celebration of the Dow's return to over-10,000 land, it doesn't mean much until people start working again. Let's hope that November 2009 to November 2010 sees a return of at least some of those jobs.
Duke Professor Helps Make Money Less Abstract
Here's a video from Big Think featuring Duke Professor of Behavioral Economics Dan Ariely about how to better think about money. (Cool note: he's developing an iPhone app to help).
Tete a Tete on the Hill
Sometimes Congress provides really good entertainment. Today we have Rep. Brady vs. Mr. Geithner:
Don’t Worry, Be Happy
For some reason I've been in a great mood today despite coming across a litany of not-so-positive economic news. To wit:
- Commercial real estate pros say no recovery until 2011
"The fourth quarter 2009 LoopNet Pulse Poll said the number of respondents that think commercial real estate transactions will rebound in 2011 jumped to 46 percent, compared to 13 percent in its third quarter survey.And 50 percent said they anticipate a rebound in 2010, which is down from 66 percent in the survey taken in the third quarter."
- Foundation giving likely to fall 10%
"When the year wraps up, foundation giving likely will be down by more than 10 percent. The Foundation Center predicted a fall of 8 percent to 13 percent earlier this year.The Foundation Center, a New York City organization supported by nearly 550 foundations, also predicts that foundation giving will decrease even more in 2010."
- Bankers slow hiring, cut costs
According to a survey of chief financial officers and senior comptrollers conducted by Grant Thornton LLP, only 20 percent said their company will increase hiring in the next six months while 55 percent said executive bonuses will be trimmed.Only 40 percent believe the U.S. economy will improve by the first quarter of 2010, compared to 49 percent of financial officers across all industry sectors. The majority of bankers, about 53 percent, expect the economy to come out of the recession in the second half of 2010.
What the hell, we're all gonna die eventually anyway. As the song says, "don't worry, be happy!"
AP Economic Stress Index
Fec linked to the AP Economic Stress Index and he apparently heard about it from a commenter. The index is very interesting, and according to it Guilford County (12.56) is slightly more stressed than Forsyth (11.02). FYI, 100 indicates maximum stress. In October 2007 the Guilford number was 5.52 and Forsyth's was 5.64, but I don't think anyone would be shocked to learn that we're more than twice as stressed as we were two years ago.
Of course it's all relative. 12.56 is a walk in the park compared to these places:
- Nye County, Nevada – 23.73
- Yuma County, Arizone – 25.82
- Imperial County, California – 33.52
Bizarro Banking
If we've learned nothing else the last year or so it's that we can't count on the folks running our financial system to be, you know, wise. Check out this paragraph from an article in the Washington Post about the trouble Bank of America is having meeting the Obama administration's November deadline for modifying 125,000 home loans:
The company's effort has been hamstrung by a staff shortage and by adapting its computer systems and even fax machines to the scale of the program, which began in March. The company was also slow out of the box because it initially took a more conservative approach than some other banks, requiring that borrowers document their income and complete other paperwork before granting preliminary approval for a modification. In August, Bank of America softened the requirement and began authorizing some modifications without getting all the documents first. (Emphasis mine)
So a bank is struggling, in part, because it is doing what we'd normally expect a bank to do when it's loaning money to a consumer? Obviously they're doing this because they don't want to risk any more of their capital than they have to, right? Maybe not so much:
Under the Making Home Affordable program, lenders are paid with taxpayer funds to reduce borrowers' mortgage payments by lowering their interest rates, for example, or by extending the terms of their loans…
Bank of America and other lenders have a lot riding on the foreclosure prevention program. The company stands to collect about $6 billion — some of which will be passed on to investors — of the $75 billion the administration has set aside for the Making Home Affordable program.
Hey, it's easy to criticize the banks since they really and truly have earned condemnation on many fronts. It's also easy to laud a program that's set up to help people manage their mortgage expenses. It's damn near impossible to understand how this is going to end well.
Dell Hell, NC Version
A couple of years back Jeff Jarvis, author of What Would Google Do?, blogged about a very negative experience he had with Dell and he dubbed it Dell Hell. After yesterday's news that Dell is closing down their desktop plant here in Winston-Salem I'd say we're having our own version of Dell Hell.
Yesterday I wrote that Dell's move couldn't possibly have been a surprise to anyone who's been awake the last 18 months. Ed Cone quoted me on his blog and since at least one of his commenters suggested that it is a surprise to a lot of people I felt compelled to explain myself in the comments:
The reason I wrote that it shouldn't be a surprise was really an observation that given the overall economic environment of the last 18 months, the fact that the plant was built to produce desktops, that the market has been moving strongly towards laptops and Dell didn't seem to be interested in re-tooling the plant to produce laptops and that Dell has been reducing it's workforce at the plant, then it shouldn't really be seen as very surprising that this has happened. Abrupt? Sure, but these things tend to be.
As for Winston-Salem getting back its incentive money I heard an interview on WXII this morning in which the Dell rep said that the incentives were based on job creation and the Dell had met those conditions, so maybe Dell is planning on fighting the return of those incentive dollars.
In addition to my points in that comment I'd also like to put forward the following thoughts:
- I remain convinced that subsidies stink. I also remain convinced that if subsidies are a part of the economic development competition between states then state and local officials are pretty much forced to use them.
- Hopefully Mayor Joines is right when he says "The city, the county and the community will get reimbursed every dollar we put into the project." What worries me is that Dell might go to court to fight the reimbursements. Even if Dell is wrong they probably have less to lose in taking the issue to court and working for a settlement than they do in ponying up the reimbursements without a fight.
- Even if we get our money back we still have over 900 people being added to the unemployment rolls by January. That's a heck of a hit for an already overburdened unemployment system, not to mention a potentially chatastrophic impact on the employees.
- Some leaders have pointed out that the silver lining here is that we have a relatively new manufacturing facility that can now be marketed to another company. I guess that's a good long term view, but short term I wouldn't hold my breath. From the Fed's September 9 Beige Book report for the fifth district, which includes North Carolina:
"Vacancy rates climbed higher across office, industrial, and retail space in most District markets, while the amount of available office sublease space remained fairly steady since our last report. On the sales side, very little activity was reported in recent weeks."
Maybe we can re-purpose it as a fabulous new indoor soccer park.
- I've read some comments on other blogs and news stories that essentially say, "Hindsight is 20/20" or "It's easy to criticize the deal now, but no one could have known this was going to happen at the time the deal was struck." Those folks are right, and at this point I don't think it's appropriate to criticize the folks who put the deal together. I truly believe they were doing what they thought was best for the community and given that incentives are a tool that most state and local governments are using to attract business it's hard to criticize them for trying to compete. (We could argue that the price tag was too high, but that horse is out of the barn). What we should be focusing on is how we protect ourselves in the future. Winston-Salem is in the unfortunate position of having two deals (the downtown baseball stadium and Dell) go squirrelly on them in very short order and I think it's clear that we have to go into these deals with eyes wide open and assume that the worst can happen.
- Any which way you slice it, this situation stinks.
Rethinking GDP
The quote of the day comes from Dennis Leyden's blog on the subject of macroeconomics: "As Stiglitz says, 'If you don’t measure the right thing, you don’t do the right thing.'” He then links toan article in the NY Times about how we measure our economy. From that article comes this:
In a provocative new study, a pair of Nobel prize-winning economists, Joseph E. Stiglitz and Amartya Sen, urge the adoption of new assessment tools that incorporate a broader concern for human welfare than just economic growth. By their reckoning, much of the contemporary economic disaster owes to the misbegotten assumption that policy makers simply had to focus on nurturing growth, trusting that this would maximize prosperity for all.
About damn time.
Befuddled 