November 1, 2012 (Housing Market Monitor)

November 1, 2012

Dean Baker
Al Jazeera English, October 30, 2012

Back in the 2000 presidential campaign, then Governor George W. Bush, described his plans for education and raised the famous question "is our children learning?" Unfortunately when it comes to former children who write on economic policy issues, the answer is a resounding "no!"

The Des Moines Registrar editorial encouraging readers to vote for Governor Romney managed to get just about every major aspect of the current economic situation wrong. For beginners, it told readers that:

"consumers must feel more confident about their own economic futures to begin spending on the products and services that power the economy."

Sorry, folks that one is clearly not a problem. A quick trip to the Commerce Department's website (Table 2.1, line 34 gives the saving rate, which is the percentage of income not consumed) will tell people that consumers are actually spending a much higher portion of their income than is typically the case. While the consumption share of income is not as high as the stock bubble driven peak of the late 90s or the housing bubble driven peak of the last decade, consumption is higher as a share of income now that it was in the 1960s, 1970s, 1980s, or even the 1990s.

 Source: Bureau of Economic Analysis.

Then the editorial told readers:

"A renewed sense of confidence will spark renewed investment by American companies."

Dean Baker
Truthout, October 29, 2012

"The whole south is under water," Haitian Prime Minister Lamothe told the AP this weekend. Four days of rain that saw accumulations surpass 20 inches have left over 50 dead and 20 missing throughout Haiti as floods hit the South and West departments especially hard. According to the most recent update from the Office for the Coordination of Humanitarian Affairs (OCHA), 52 are reported dead, with 20 and 18 in the West and South departments, respectively. OCHA notes that over 20,000 were evacuated and 90 camps damaged.

With some 370,000 Haitians still living in camps with nothing but tattered tarps to protect themselves, the rains were especially damaging. Kristen and Wawa Chege of the Mennonite Central Committee describe the situation:

whole camps flooded as streams emerged between tents, shelters fell under the weight of sitting water, dirt floors turned to mud, and precious possessions were ruined. Efforts to raise mattresses off the ground using cinder blocks, and string clothes from wires inside their tent made little difference as the rain poured in through holes in the tent, or seeped in below the walls. As one man succinctly put it, “everything is wet”.

Agriculture

In August, tropical storm Isaac inflicted massive damage to the agricultural sector in Haiti, resulting in an estimated $242 of damages. As food prices have risen, protests against the high cost of living and against the Martelly government have proliferated. The passing of hurricane Sandy will only exacerbate the problems. As Susan Ferreira reports for Reuters:

"Most of the agricultural crops that were left from Hurricane Isaac were destroyed during Sandy," he said, "so food security will be an issue."

…

A rise in food prices in Haiti triggered violent demonstrations and political instability in April 2008. Jean Debalio Jean-Jacques, the Ministry of Agriculture's director for the southern department, said he worried that the massive crop loss "could aggravate the situation."

"The storm took everything away," said Jean-Jacques. "Everything the peasants had in reserve - corn, tubers - all of it was devastated. Some people had already prepared their fields for winter crops and those were devastated."

In Abricots on Haiti's southwestern tip, the community was still recovering from the effects of 2010's Hurricane Tomas and a recent dry spell when Sandy hit.

"We'll have famine in the coming days," said Abricots Mayor Kechner Toussaint. "It's an agricultural disaster."

Ferreira adds that humanitarian workers are concerned because stocks of supplies have not been replenished since tropical storm Isaac.