Deborah JamesAlterNet, December 13, 2015

Mark Weisbrot
Página/12, 11 de diciembre, 2015

Last week, CEPR released a report titled The Anomaly of U-3: Why the Unemployment Rate is Overstating the Strength of Today’s Labor Market. The report shows that the U-3 unemployment rate, also called the official unemployment rate, is out of line with eleven alternative measures of labor market slack.

Five of these measures — the U-1, U-2, U-4, U-5, and U-6 unemployment rates — are calculated at the state level. These five alternative measures allow us to examine the strength of each state’s job market. By all but one measure, the U-3 unemployment rate is overstating the strength of the economy in a clear majority of states. This can be seen in Table 1 below, which summarizes the results from Tables 2-7.

Why is it so hard for reporters to simply tell us what people say instead of what they think? I'm sure many of these reporters are very insightful, but the reality is they do not know what people think, it is just their speculation.

Therefore, when a Washington Post article on the prospects in Congress for the Trans-Pacific Partnership (TPP) told readers:

"Obama has said the pact is central to his economic agenda, but it is also viewed inside the administration as an important foreign policy initiative to balance the growing economic clout of China."

The Washington Post does not know that the administration actually views the TPP as an important foreign policy initiative, it knows that people in the administration make this claim. While the claim may actually reflect their thinking, it is also possible that they would seek to sell a deal with few obvious economic benefits for most people in the United States on foreign policy grounds. Politicians sometimes do things like that.

There are a number of other comments in the piece that are not quite right. At one point it refers to proponents of the TPP as "trade supporters." This is not accurate. Trade supporters might well oppose the deal because of the increased protectionism in the form of stronger copyright and patent protections. These will raise the price of drugs and other affected products by several thousand percent above the free market price.

Trade supporters may also be unhappy with the TPP since it does nothing to address currency management by parties to the deal. Through currency management countries can prevent the currency market from adjusting, thereby maintaining large trade surpluses that would otherwise not be possible. Using intervention to keep down the value of a currency, as is currently done by many countries, has the same effect as imposing a tariff on all imports and having subsidies for all exports. The Obama administration chose not to pursue this issue in the TPP.

For these reasons, many supporters of trade may oppose the TPP. It would have been more accurate to describe the people referred to in the piece as "trade deal" or TPP supporters.

The following is written by Beatrice Lindstrom, Staff Attorney at the Institute for Justice and Democracy in Haiti, and has been cross-posted from Medium.

“It is with great sadness that I write you this letter to remind you that human rights are something that all people must respect no matter how powerful you are.”

So reads the opening line of a letter from Viengeméne Ulisse, one of over 2,000 cholera victims who have handwritten letters to the UN Security Council to demand that the world body take action and provide justice and reparations for the suffering they have experienced due to cholera introduced by UN peacekeepers in 2010.

Viengeméne lives in Thomazeau, Haiti. In May of 2011, he suddenly fell ill with cholera and was hospitalized for eight days. “I learned that it was MINUSTAH that brought this disease to my country. In this sense, I ask the president of the United Nations and all of its allies to compensate us and bring justice and reparations,” he writes.

UN peacekeepers brought cholera to Haiti in 2010 by discharging untreated human waste into Haiti’s largest river. Haiti now has the world’s worst cholera epidemic?—?over 9,000 people have died and over 760,000 have sought hospital care.

The victims are delivering their letters in connection with Human Rights Day. The UN celebrates Human Rights Day every December 10th, the anniversary of the signing of the Universal Declaration of Human Rights. Using slogans like “rights for all,” it is an opportunity for the UN draw attention to the universality and equality that underpin the modern human rights system.

But to Haitians who have been employing every advocacy tool in the book to enforce their rights against the UN itself?—?including holding press conferences, demonstrating, filing lawsuits, and now, writing letters?—? these UN campaigns ring hollow.

“How does the UN have the moral standing to promote respect for human rights and dignity in Haiti when it is violating cholera victims’ rights?” asks Mario Joseph, Managing Attorney of the Bureau des Avocats Internationaux, who has been championing the victims fight for justice for over four years.

In late 2007, the Federal Reserve (“Fed”) began pushing down interest rates in hopes of boosting the economy and providing job opportunities for American workers. The downside to lower interest rates is the risk of higher inflation; at the time, the Fed correctly believed that inflation wasn’t a problem, given that all measures of inflation were near their stated targets and falling.

The Fed made a hard push to boost employment by lowering the Federal Funds Rate — the rate at which banks can lend to each other overnight — from 5.25 percent in early 2007 all the way to 0.16 percent in December 2008. The Fed has kept the Federal Funds Rate near zero for the last seven years.

When the Fed meets on December 15–16, it will consider raising rates despite the fact that the labor market by at least one key measure is only about halfway recovered from the 2007–2009 recession. Moreover, inflation is hardly a problem in today’s economy. By all measures inflation is low, and projections of future inflation indicate that the Federal Reserve is likely to remain below its target rate of 2.0 percent.

So when the Fed votes on whether or not to raise interest rates next week, it will be choosing between reducing the risk of a potential future problem (inflation) and a very real present one (low employment). There is substantial disagreement amongst members of the Fed about which problem is more important.

Matt O'Brien used his column this morning to take Obama to task for failing to fill vacant postions on the Fed's board of governors. I agree with O'Brien with one major exception.

O'Brien refers to the Taper Tantrum in the summer of 2013, when mortgage and other long-term interest rates soared after Chair Ben Bernanke indicated the Fed would soon begin to taper its quantitative easing program. He sees the market reaction as partly a result of the composition of the Fed's board of governors, which included two Obama appointees not fully committed to growth promoting policies. He argues that the tantrum unnecessarily slowed the housing market and growth.

I would disagree with the first part of this story. As we know, economists have a hard time seeing housing bubbles, but we were starting to see the beginnings of one at the time of the tantrum. House prices were rising very rapidly, especially in the bottom third of the market. According to the Case-Schiller tiered price index, in the period from April of 2012 to August of 2013 house prices in the Phoenix market had risen at a 32.6 percent annual rate. In the Las Vegas market they had risen at 44.0 percent rate and in the Atlanta market at a 47.5 percent annual rate.

These markets were badly depressed as a result of the crash, so large increases were a good thing, but on the other hand, it's not hard to see that a market rising at a 47.5 percent annual rate will soon be in bubble territory. And, we were seeing evidence of bubble behavior. People were giving up their day jobs and buying up homes to fix-up and resell. In many cases this involved maxing out on their credit cards or whatever other type of credit they could use. 

Guest Blog

by Eileen Appelbaum and Rosemary Batt

Co-authors of Private Equity at Work: When Wall Street Manages Main Street

The usually perceptive Deal Professor, Steven Davidoff Solomon has swallowed CalPERS’ staff’s spin on the more than $3.4 billion the California public employees’ pension fund has paid to private equity firms in performance fees (so-called carried interest) hook, line, and sinker. In Private Equity Fees Are Sky-High, Yes, but Look at Those Returns, Davidoff Solomon accepts uncritically CalPERS report of its return on its risky PE investments — a report that the industry publication, Private Equity International in its November 27 Friday Letter, labeled a private equity public relations coup. Those high fees are worth it in Davidoff Solomon’s view because of CalPERS stellar private equity returns. If only!

Davidoff Solomon failed to note that CalPERS’ staff did not provide information in this report on the risk-adjusted return to its risky private equity investments. The staff provided misleading information because its risk-adjusted PE returns were awful: CalPERS investments in private equity have underperformed its risk-adjusted benchmark over the last 10 years and in 3-year and 5-year sub-periods. The staff no doubt expected to pull the wool over the eyes of public sector workers and taxpayers in California, but has surely succeeded beyond its wildest dreams with this endorsement in The New York Times by someone who should know better. Indeed, over the last 10 years, the pension fund’s PE investments underperformed it stock market benchmark by about 300 basis points. In layman’s language, this means CalPERS would have had exactly the same return over this period if it had invested in the stock market index it uses in its benchmark. Actually, CalPERS would have had a much higher return from investing in this stock market index because it could have invested the $3.4 billion of its members’ retirement savings that it paid PE firms in performance fees. It’s amazing that these ginormous performance bonuses were paid to PE firms for delivering results that did not beat the stock market over 10 years and certainly did not provide a return high enough to compensate the pension fund for the greater risk and lack of liquidity present in PE investments.

Mark WeisbrotThe Hill, December 9, 2015

December 9, 2015

Dean Baker
Al Jazeera America, December 8, 2015