Thursday, April 3, 2008

Economics roundup – lies about unemployment, from Paulson and on housing

First, it’s clear the federal unemployment rate doesn’t really measure unemployment:

This month's jobs report is a great example of how misleading the unemployment rate can be. In February, the economy shed 63,000 jobs, which is a strong indication a recession may be at hand. But the unemployment rate actually fell, to 4.8 percent from 4.9 percent.

As most people know, it only counts people actually looking for work. But, that’s not the worst of its pitfalls.

Here, if you work for a temp agency, even if you want a “regular job” instead, you're considered “employed.” In Germany (or it used to be that way, at least), you’re considered “unemployed.” (I don’t know about other European Union members.)

The Nation had an in-depth article on this in the late 1990s. At that time, Manpower was the largest employer in both the U.S. and Germany.

Other “apples and oranges” comparisons problems on U.S. versus E.U. employment stats?

Most European countries have some sort of universal service; whether you’re in the military or in alternative service, you're not counted in employment stats. In America, with the all-volunteer armed forces, you are.

And, the U.S. “War on Drugs” incarcerates many people who likely would be unemployed, plus creates (often low-paying) jobs that don't exist to that degree in most E.U. countries.

Meanwhile, Treasury Secretary Henry Paulson just can’t stop lying. This time, it’s about the definition of “regulation”:
The SEC should also consider streamlining the approval for any securities products common to the marketplace as the agency did in a 1998 rulemaking vis-a-vis certain derivatives securities products. An updated, streamlined, and expedited approval process will allow U.S. securities firms to remain competitive with the over-the-counter markets and international institutions and increase product innovation and investor choice.

Last I checked, “streamlining” wasn’t listed under “tighter regulations” in a financial dictionary. (Except for one paid for by Wall Street.)

And, that’s the problem. Other “regulating” in Paulson’s playbook include loosening Securities and Exchange Commission regulations per the 2000 Commodity Futures Modernization Act.

But, for Democrats who want to be smarmy about being “reform minded”? This was a bill that passed the House under suspension of the rules, requiring a two-thirds vote in exchange for killing off debate. It only had four no votes. (And, don’t forget, this contained the infamous “Enron loophole.”)

And, although nobody wants to break ranks, it appears a fair amount of what Congress is pegging as “housing relief” is also a lie. Sen. Johnny Isakson’s plan to give people who buy foreclosed houses a temporary tax credit sounds like the biggest part of the lie so far:
“Basically, you're giving money to builders that overbuilt and banks that issued bad loans,” said Dean Baker, co-director of the Center for Economic and Policy Research. “It’s giving money to the villains in this story.”

That’s really not the only part of the lie, though:
Economists also questioned how effective it would be to have local governments buy and refurbish foreclosed homes. Advocates of the idea say it would stabilize neighborhoods and protect home values, but the White House said it would benefit lenders most.

“The funding to purchase homes does nothing to help homeowners struggling to make their mortgage payments,” White House spokesman Tony Fratto said.

Well, even a stopped calendar is right once a year.