February 2008

Obama and Subprime

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While the political cheering leading goes on, you might want to read these two articles:

Subprime Obama

There's been less emphasis from the Obama campaign on the really dysfunctional role of the financial industry in the subprime mess," says Josh Bivens of the Economic Policy Institute. "Edwards and Clinton talk much more about regulation of the financial industry going forward, and to the extent that blame is placed, they tend to place it on the lenders for steering people into loans they couldn't afford.

Hours Worked Declined Sharply and Wages Fell

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Today's BLS report: total hours worked DECLINED sharply in Q4 and AVERAGE real wage/benefit compensation per hour FELL.

After years of denial and spin about the financial condition of US households/consumers, you might think the newswires and salesmen on cable would be buzzing with the key findings in today’s BLS report on US hours worked, real compensation, output and productivity. You would be wrong; the debt industry’s misleading confidence game prevails with the key findings either not mentioned at all or they are relegated to an afterthought as space permits.

The key finding in today’s report is that the total number of hours worked (and paid) in non-farm businesses during 2007-Q4 FELL at an annual rate of -1.5%. Indeed, THE TOTAL NUMBER OF HOURS WORKED IN Q4 WAS LESS THAN IN 2006-Q4. The report shows total non-farm jobs also falling at a -0.5% annualized rate in Q4 and rising by only 0.4% yr/yr.

BusinessWeek exposes how Industry really uses H-1b workers

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Listening to Compete America one would think that H-1b workers are the "best and brightest" in the world, contributing to "U.S. global competiveness." But as the 1/31/08 BusinessWeek article "Are H-1B Workers Getting Bilked?" exposes, H-1b are being used by Indian consulting firms to bring in cheap labor, driving American consulting firms out of business, and displacing highly-skilled U.S. workers.

Flaws in University of Buffalo Spectrum's call for H-1b increase

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The original article is here:

http://spectrum.buffalo.edu/article.php?id=35050

 This is an image of the front page where it run in the printed edition.

http://spectrum.buffalo.edu/images/frontpage/fp.pdf

ARTICLE: "Companies are very welcoming to international students because they can pay them less money than the local workers, even if their ability is equal," said Ping Lu, a sophomore management major from China

FACT: Industry would dispute this, claiming that H-1b has a "prevailing wage" requirement. We thank Ping for setting the record straight: H-1b workers are often preferred because they are willing to work cheaper for the opportunity to stay in the USA - and the "prevailing wage" is a sham.

Two Simple Proposals for Restoring Middle Class Market Power

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The U.S. jobs market is broken. The causes of the breakdown are readily identifiable, and there are simple cures that would go a long way towards fixing them without undermining the general benefits of a free market. The Shared Economic Growth proposal (explained below and further at www.sharedeconomicgrowth.org) would be particularly helpful. As with antitrust enforcement, product safety regulation, and other facilitators of an efficient market, these steps would increase wealth for everyone, but particularly for middle class and working class people, helping our nation to deliver on the promise of the American dream. Further, like those other basic underpinnings of the success of the U.S. economy, they do not require “Big Government” interference, but rather just some simple common sense changes to address basic problems.

Submarine telecom/datacom cables cut in Middle East -- another "good" reason to outsource to India/Asia ?

From someone I know in kuwait:

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Most of you by now have heard that several major submarine cables have been damaged and cut: Two in the Mediterranean Sea, and now one here in the Gulf (off the coast of Dubai). Here is what I've gathered so far from this outage...

These cables are critical, as they link several continents together, and route not just internet traffic, but phone communications. This outage affects almost the entire Middle East. Some internet providers are completely down, while others are limping along. And if you're on satellite, well good for you. The rest of us are screwed.

What isn't really clear is why the cables went down. The current story is that a ship dropped anchor in an unusual spot, and that's what triggered all this. That doesn't sound right to me. But we'll see. Regardless of what happened, it will be weeks before the region is returned to normal capacity.

The Rising Tide of Reality

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God Helps Those Who Help Themselves

Brad DeLong is generating some sharp criticism for his Would Marx Say A Rising Tide Raises All Boats article which tries to rationalize the growing wealth inequality distribution and that the solution to our current economic malaise is market competition

DeLong states:

The consequence has been a loss of morale among those of us who trusted market forces and social-democratic governments to prove Marx wrong about income distribution in the long run - and a search for new and different tools of economic management

and concludes:

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