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Thursday, July 30, 2009

What You Might Not Know About the Recovery

Mr. Biden's recent travels seem to have left him out of touch with what is going on in the States across our country (What You Might Not Know About the Recovery, New York Times, July 28, 2009).

From California to Maine, States are cutting into vital services in order to balance their budgets as they are constitutionally required to do. Mr Biden is correct that stimulus money is going to the states, but it is insufficient to stem the hemorrhaging due to massive declines in state income due to loss of capital gains taxes, and sales and income taxes. Worse still, states are cutting aid to local municipalities; these in turn have to make further cuts in their services.

We need another stimulus directed aat the states. About 20% of each states 2007-2008 budget would be enough to make state finances whole. If we do not do this, Federal and State governments will be working at cross purposes and the present stimulus funds will be all but wasted.

Yes, more stimulus means more debt, but when the economy recovers, this can be paid off if wise fiscal policies are followed.

Sent to New York Times

Traders Profit with Computers Set to High Speed

I'd call it "front running" (Traders Profit With Computers Set at High Speed. New York Times, July 24, 2009: A1). And isn't it illegal?

Sent to New York Times

Fifty ways to kill recovery

Where has James Surowiecki been for the past nine months (Fifty ways to kill recovery, New Yorker, July 27, 2009: 23). Last October, Paul Krugman predicted this in the New York Times.

What I cannot understand is why Congress doesn't approve a second stimulus that gives each state 25% of its 2007 budget. This would enable each to maintain employment and services and prevent state and federal governments working at cross purposes.

It is still not too late to do that. It might even be something that Democrats and Republicans could agree on.

Sent to New Yorker

Tuesday, July 21, 2009

Kabuki and Judge Sotomayor

I am glad that Jeff Jacoby had the intellectual integrity to include Justices John Roberts and Samuel Alito as candidates for the Supreme Court who did not reveal their positions during their Senate confirmation hearings (Kabuki and Judge Sotomayor, Boston Globe, July 15. 2009).

However this was really only a concern with chief Justice Roberts. Both Judge Alito and Judge Sotomayor had many years on the Appeal Courts and revealed their positions clearly in the decisions that they wrote.

By all accounts Judge Sotomayor is a careful jurist who writes narrowly drawn legal opinions. There is no need for the Senate to carry out an inquisition into her positions. They are clearly stated in her record.

Thursday, July 16, 2009

Minimum Wage Folly

Mr. Jacoby is selective in marshaling the evidence against increasing the minimum wage (Minimum-Wage Folly, Boston Globe, July 8, 2009).

The best estimate from aggregating the results of over multiple studies of the effect in the US [provided by H. Doucouliagos and T. D. Stanley (British Journal of Industrial Relations, June 2009)] is that raising the minimum wage has no adverse impact on employment.

Furthermore the estimates that Jacoby cites of 300,000 lost jobs if the minimum wage is raised is equal to about half the average monthly job losses of the last six months.

Yes, such losses, if they were to occur, would be regrettable but, in the current context, they would not be the disaster that Jacoby is worried about.

Sent to Boston Globe

Tuesday, July 7, 2009

Citigroup Has a Plan to Fatten Salaries

Citigroup has a plan to fatten salaries (New York Times, June 24, 2009: B1). Not on my buck they don't.

Top management at Citibank must be living in a dream world of their own creation. After taking two giant bailouts, they want to spend the money internally by boosting salaries rather than lending it out which was what they were supposed to do.

There is little reason to raise salaries while all around, excellent bankers are losing their jobs. If some Citibank people get hired away, so be it. There are plenty of good candidates in the job market who can replace them.

As a major shareholder of Citibank, in my role as taxpayer, I want the directors of Citibank to put a stop to this nonsense immediately