Economics


The union, which was behind the strike at Hostess Brands that was cited by the company in its decision to shut down operations, is hopeful that not only will a buyer emerge to save the company, but a new owner would offer higher wages than they were previously receiving.

According to a report in The Wall Street Journal, Frank Hurt, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers Union which represented 5,600 workers at Hostess, told the paper that a buyer could be encouraged to offer worker’s a better deal after seeing the negative reaction to Hostess’s proposal.

Say what?  The union head thinks that because the workers resoundingly rejected the company’s contract proposal which was aimed at cutting costs that a new owner would automatically pay the workers more?

What universe is he living in?

There have been plenty of rumors swirling around that buyers are looking into the possibility of buying the iconic Hostess and Wonder Bread brands, but it is more than likely that they will just absorb the brands into current operations and will need few of the former Hostess Brands workers and their costly union wages and benefits.

Hurt is just trying to put a good face on a disastrous situation for his union.  Accepting lower wages and benefits is never easy, but throwing  his 5,600 striking members out of a job along with the nearly 13,000 employed by other unions, shows just how badly he misjudged the company’s threat to close down unless the workers accepted a new contract.

Well at least he lived up to his name by putting a big Hurt on his members, just before the holidays.

The nation’s Gross Domestic Product (GDP) came in Friday below expectations, but you might not know it if you read the headline of the Washington Post on Saturday.

Rather than lead with the GDP number, the Post ran the headline- Economy continues on path of growth and talked about how consumer spending is up even though the savings rate dipped.

As for the GDP number though, readers didn’t find out about it until the 14th paragraph in the jump, where the jump was -economic growth cools but was buoyed by an uptick in consumer spending.

So the economy is both on a path of growth and is cooling at the same time?

And why is the GDP number not mentioned until the 14th paragraph when it’s one of our most important economic indicators?

Perhaps it’s because the slowing of GDP below economists forecasts and that of the Obama administration is not good news for a president seeking re-election.

But the Post has too much journalistic integrity to try and bury the bad news to help Obama, so that couldn’t be the reason for the subterfuge.

The fact of the matter is that the economy is indeed slowing down and could possibly slip back into a another recession as Great Britain has just done.

Maybe the editors at the Post still have hope for Obama, but the rest of the country needs a change.

 

CNN is in need of a detail oriented copy editor.

From TVNewser.

If you’re a self-appointed grammar cop and can’t stand the sight of a typo, listen up. CNN is looking for a copy editorto join its New York-based team.

In this role, you’ll fact-check and proofread every script before it goes to air. You’ll be responsible for elevating the level of copy, and scanning every piece of tape in program. Copy should be conversational and easy to understand for a morning audience, so you should be able to break down a complicated story and tell it in a clear and concise way.

To be considered, you should have at least three years of experience as a writer or copy editor at a cable news organization, broadcast network, or top ten market local TV newsroom. Naturally, you’ll need to be a creative mind with strong writing and editing skills, and you should be up on current events. Knowledge of libel laws is another must-have. Interested? Apply here.

It’s always encouraging when a news organization has a job opening considering how much they have been cutting back recently- CNN just pink slipped 50 staffers a couple of weeks ago.

Even more since they want  someone who is detail oriented.  Maybe that will also lead to fewer biased stories as well.

We can always hope even if it is CNN.

Even though Barack Obama’s Twitter Town Hall consisted largely of carefully selected softball question tweets that didn’t stop users of the microblogging service from generating 169,395 tweets.

The breakdown according t TVNewser:

  • Jobs – 18,957
  • Budget – 15,000
  • Taxes – 14,777
  • Education – 8,833

Despite the preferential treatment and controlled questions Obama still managed to muff the answers according to the Associated Press who did  a quick fact check on the president’s answers.

My recommendation is that maybe next time e could have the answers appear to him in a tweet format via his teleprompter.

The Republican Party has talked  a lot about controlling spending when they take over Congress next month but their recent choice for the Chairmanship of the Appropriations Committee sends a message that nothing has really changed.

For some reason the GOP thinks that just because they passed a two year earmark moratorium that members won’t try to find a way to bring home the bacon to their districts.

What’s worse is that by naming Rogers as the chairman it not only gives the liberals fodder about the  seriousness of the Republican agenda but is an insult to voters who want the government to cut spending.

If John Boehner and Eric Cantor were really serious about this issue they should have looked to someone like Jeff Flake from Arizona who has been a champion of earmark reform rather than pick an old dog who will resist learning new tricks.

 

Two years ago presidential candidate Barack Obama promised that he would create 5 million green jobs and was elected president  less tha a month later based on the country’s dissatisfaction with George Bush and the hope that he wasn’t just spinning another empty campaign promise.

Thanks partly to an overeager candidate and a brutal recession Obama has struggled to keep that promise and nowhere is that more eveident than in Ocala, Florida where workers that were retrained for green jobs with stimulus money are still waiting for them to materialize.

From the Washington Post

After losing his way in the old economy, Laurance Anton tried to assure his place in the new one by signing up for green jobs training earlier this year at his local community college.

Anton has been out of work since 2008, when his job as a surveyor vanished with Florida’s once-sizzling housing market. After a futile search, at age 56 he reluctantly returned to school to learn the kind of job skills the Obama administration is wagering will soon fuel an employment boom: solar installation, sustainable landscape design, recycling and green demolition.

Anton said the classes, funded with a $2.9 million federal grant to Ocala’s workforce development organization, have taught him a lot. He’s learned how to apply Ohm’s law, how to solder tiny components on circuit boards and how to disassemble rather than demolish a building.

The only problem is that his new skills have not resulted in a single job offer. Officials who run Ocala’s green jobs training program say the same is true for three-quarters of their first 100 graduates.

“I think I have put in 200 applications,” said Anton, who exhausted his unemployment benefits months ago and now relies on food stamps and his dwindling savings to survive. “I’m long past the point where I need some regular income.”

With nearly 15 million Americans out of work and the unemployment rate hovering above 9 percent for 18 consecutive months, policymakers desperate to stoke job creation have bet heavily on green energy. The Obama administration channeled more than $90 billion from the $814 billion economic stimulus bill into clean energy technology, confident that the investment would grow into the economy’s next big thing.

The infusion of money is going to projects such as weatherizing public buildings and constructing advanced battery plants in the industrial Midwest, financing solar electric plants in the Mojave desert and training green energy workers.

But the huge federal investment has run headlong into the stubborn reality that the market for renewable energy products – and workers – remains in its infancy. The administration says that its stimulus investment has saved or created 225,000 jobs in the green energy industry, a pittance in an economy that has shed 7.5 million jobs since the recession took hold in December 2007.

The industry’s growth has been undercut by the simple economic fact that fossil fuels remain cheaper than renewables. Both Obama administration officials and green energy executives say that the business needs not just government incentives, but also rules and regulations that force people and business to turn to renewable energy.

Without government mandates dictating how much renewable energy utilities must use to generate electricity, or placing a price on the polluting carbon emitted by fossil fuels, they say, green energy cannot begin to reach its job creation potential.

“Green energy investment has been a central talking point of the Obama administration’s job growth strategy,” said Samuel Sherraden, a policy analyst at the New America Foundation, a nonpartisan research organization. “It was a little bit too ambitious given the size and depth of the recession and the small size of the renewable energy industry.”

Sherraden said it was unwise for the administration to invest so heavily in green energy, at least if short-term job creation was the goal. He said green energy comes with “political and market uncertainty” that has overwhelmed its job creation potential.

Despite that, Obama has described the surge of clean energy spending as crucial both to the nation’s economic and environmental future.

“Our future as a nation depends on making sure that the jobs and industries of the 21st century take root here in America,” Obama said in October. “And there is perhaps no industry with more potential to create jobs now – and growth in the coming years – than clean energy.”

But other administration officials acknowledge that it is likely to be years before the spending on green energy produces large numbers of jobs. And they add that only part of the money earmarked for green energy has been spent. They also agree that the government will have to help create demand to support green energy.

Still, they are optimistic for the long term, even if the spending will not significantly ease the nation’s unemployment crisis in the short run.

Anton isn’t the only one wating for a job.

Carols Arandia, 59, has earned seven green jobs certificates since beginning classes this year, while renting a room from a friend to weather the hard times.

Often studying well into the night, Arandia is familiar with hard work. He ran a small manufacturing business in his native Venezuela before arriving in the United States in 1996. For years, he lugged around a dictionary and a notebook in which he religiously wrote down words and phrases until his English became passable. He worked seven years at Boston Chicken. Later, he sold cars.

But now, after nearly two years of being out of work and a series of classes that have not led to a job, his optimism is dimming.

“What is the point of giving somebody the tools to do something but to have nowhere to use them?” he asked. “I think it’s a great program, but I don’t see the connection with all the training and jobs. And I need a job.”

Christine Bageant, 45, also jumped at the opportunity to train in green jobs, after losing her position at the county library. She viewed the new classes as an opportunity to “get in on the ground floor of something big.”

Since then she has earned similar training certificates as Arandia. A few months ago she started looking for work as a painter. She thought her newly acquired expertise in abating lead paint would make her a hot commodity.

But many of the painting contractors she has interviewed with are tiny companies, with no more than two or three employees. They are struggling to survive, and Bageant’s expertise in lead abatement has left them unimpressed.

“Right now they are blowing it off,” she shrugged. “They don’t think it’s important.”

Officials who helped develop the training program nod knowingly when asked about the difficulty graduates are having landing jobs.

“I think this is a great program,” said Peter J. Tesch, president and chief executive of the Ocala/Marion County Economic Development Corp. “Applying it to real life, that is the challenge. In a place like Florida everybody’s talking the talk, but they’re not walking the walk. The market place has not caught up to the technical training and skill sets that have been provided these people.”

That much was obvious at a recent ceremony for 15 graduates of a solar electric training class. The students beamed proudly as family members took pictures and program officials offered words of wisdom.

Then, one-by-one, they walked up front to receive their certificates. But rather than serving as a passport to a job, the certificates were more like IOUs to be redeemed sometime in the distant future.

Ocala’s goal was to create 665 jobs in the renewable energy industry but to date graduates of the program are no better off than they were before despite their training.

“There is significant job creation potential in clean energy. But it is not revealing itself quickly or clearly,” said Jerone Gamble, executive manager of continuing education at the College of Central Florida, and a chief architect of the green jobs training program. “In the time being, we’re really selling hope.”

While it would have been difficult to predict the depth of the recession he should have known that the green jobs depends on a combination of government regulations, a relatively healthy economy and lots of federal subsidies to make solar and wind energy attractive to homeowners and businesses.

And you can’t put a solar panel on a foreclosed home which there is an abundance of in Florida so the very idea that Ocala is still bothering to train people for non-existent jobs shows what a waste of taxpayer money this program has been.

The graduates shouldn’t set their sights too high because as Jerone Gamble said in the article, they are “selling hope” much like Obama did two years ago to the American public.  And we all know how well that turned out.

Forner vice-president and noted environmental activist Al Gore issues a mea culpa of sorts when he admitted that his support fr corn-based  ethanol was a mistake.

From Reuters

Former U.S. vice-president Al Gore said support for corn-based ethanol in the United States was “not a good policy”, weeks before tax credits are up for renewal.

U.S. blending tax breaks for ethanol make it profitable for refiners to use the fuel even when it is more expensive than gasoline. The credits are up for renewal on Dec. 31.

Total U.S. ethanol subsidies reached $7.7 billion last year according to the International Energy Industry, which said biofuels worldwide received more subsidies than any other form of renewable energy.

“It is not a good policy to have these massive subsidies for (U.S.) first generation ethanol,” said Gore, speaking at a green energy business conference in Athens sponsored by Marfin Popular Bank.

“First generation ethanol I think was a mistake. The energy conversion ratios are at best very small.

“It’s hard once such a programme is put in place to deal with the lobbies that keep it going.”

He explained his own support for the original programme on his presidential ambitions.

“One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president.”

U.S. ethanol is made by extracting sugar from corn, an energy-intensive process. The U.S. ethanol industry will consume about 41 percent of the U.S. corn crop this year, or 15 percent of the global corn crop, according to Goldman Sachs analysts.

A food-versus-fuel debate erupted in 2008, in the wake of record food prices, where the biofuel industry was criticised for helping stoke food prices.

Gore said a range of factors had contributed to that food price crisis, including drought in Australia, but said there was no doubt biofuels have an effect.

“The size, the percentage of corn particularly, which is now being (used for) first generation ethanol definitely has an impact on food prices.

“The competition with food prices is real.”

Gore supported so-called second generation technologies which do not compete with food, for example cellulosic technologies which use chemicals or enzymes to extract sugar from fibre for example in wood, waste or grass.

“I do think second and third generation that don’t compete with food prices will play an increasing role, certainly with aviation fuels.”

This is a little bit like a “Come to Jesus” moment for Hore as he admitted that not only was he mistaken in supporting corn-based ethanol but he largely did so because he was going to run for president and needed the farm vote.

Conservatives have been saying for years that corn-based ethanol is not cost effective only to be drowned out by environmentalists like Gore and the liberal media who jumped on every green energy scheme that crossed their path regardless of the facts.

Hopefully Gore’s statement will help kill the subsidy which amounted to $3 billion in credits in 2007 and was expected to reach $5 billion this year but the corn lobby will fight hard for the chance to continue feeding at the government trough.

the free market should decide what renewable energy sources succeed and fail but the problem with allowing that to happen is that mot of them would fail without heavy government subsidies which we all pay for so green energy isn’t as cheap as the left would have us believe.

For now I’m sticking to corn on the cob.

The unexpected victory by Scott Brown in last week’s Massachusetts special election to fill the vacancy created by the death of Sen. Ted Kennedy last year has cast a pall for the Democrats over tonight’s State of the Union address.

Just a few weeks ago the White House was preparing for what they thought was the guaranteed passage of the president’s health care reform package and the retention of a Senate seat that has been in Democrat hands since 1952.

Well what a difference a few weeks make.

The Democrats not only lost the Kennedy seat but in doing so they may have lost the health care battle.  Scott Brown campaigned on the fact he would be the 41st vote against health care and there is no doubt that he will keep his promise.  In the meantime the Democrats who have been trying to work some back room deals in order to get a bill to the president have been bickering over what to do leaving the president little choice but to go ahead with his first State of the Union speech without the benefit of his key prop.

Now the president is left with trying t convince the American public that we are on the right track despite an unemployment rate that has risen to a twenty-six year high throwing another four million people out of work that has contributed to a rising tide of home foreclosures despite the administration having thrown billions of dollars at the industry in an effort to stem the flow.

Obama will also have to defend his $787 billion stimulus program which has failed to create the jobs or stimulate the economy as promised while running up a deficit that topped $1 trillion last year and will do so again in the current fiscal year.

So what is Obama’s answer to the deficit?  It is to freeze spending except for certain areas that are deemed essential.  This is from a man who previously said that spending freeze’s don’t work.  That’s one thing he has right.  With all the exceptions to the freeze and working from inflated baseline figures the budget will grow while tax revenues continue to lag.

We don’t need a spending freeze, we need spending cuts combined with tax cuts to stimulate the economy.

The Democrats who just a year ago were brimming with confidence and optimism that the 2008 election results would cement their power for decades to come thanks to Obama’s promises of bipartisanship and transparency are now fighting amongst themselves as they watch their health care bill die an ignominious death and face the prospect that they will lose control of the House in November.

For Barack Obama a night that was supposed to be a celebration of his first year in office has turned into a fight to regain the public’s confidence in him and his party.

There has been a lot of debate about the effectiveness of President Obama’s $787 billion stimulus program and the people at website verumserum.com have given us a little insight into where some of that money has gone.

1.  $9.3 million (!) to fund the design and development of a “coordinated colony of robotic bees“!

2.  A $54 million project to relocate one bridge for the Napa Valley Wine Train (!) in order to mitigate the possible impact of a “100 year storm event”.

3.  A $712,883 research grant to develop “machine-generated humor“. Project will design artificially intelligent “comedic performance agents”, and will “deploy them both on and off-line for the enjoyment and illumination of everyday citizens”.

4.  A $225,000 study at Ohio State University on the relative and combined impacts of air pollution and a high fat diet on obesity development.

5.  An academic study comparing outcomes of the concurrent and separate use of malt liquor and marijuana ($389,357).

6.  $10,346 for a heating and cooling company to provide “escort services” for other companies performing a laser scanning survey at a courthouse in Honolulu, Hawaii.

7.  Funding a $447,492 Univ. of North Carolina study on the development and use of “African American English” amongst 70 adolescents.

8.  Funding of a $168,300 SBA loan to the Escape Massage parlor in Midlothian, VA.

9.  Funding of a Dartmouth College study involving “sexual arousal in anesthetized female rats” ($9,870).

10.  A $427,824 research grant to design better video games for senior citizens based on their unique “game-play needs”.

The president hoped the stimulus money would get the economy back on track and keep unemployment below 8% but instead it has become another symbol of politicians feeding at the federal trough at the taxpayers expense.

On Wednesday night president Barack Obama told the American public that the economy is recovering and that things are better than they were seven months ago when he assumed office.

One of the statements he made to back up his claim was that home sales were increasing.

Yes it is true that home sales are on the rise but according to the National Association of Realtors Pending Home Sales Index the increases are being driven by two factors:-lower priced homes and an $8,000 federal tax credit that will expire on November 30th.

Home prices across the nation have dropped steeply partly because of the bursting of the housing bubble but also in large measure due to foreclosures (which exert downward pressure on home prices)  that as of August were up 18% from the year ago period and are at near record levels.

The NAR estimates that 2 million people will take advantage of the tax credit resulting in an additional 350,000 sales that wouldn’t have taken place without the credit.  That sounds good but according to calculatedrisk.blog.com taxpayers paid $45,000 per additional house sold when you factor in the total of the expected credits the government will issue.  Plus since they were for lower priced homes the impact on the economy will be minimal.

So even though home sales are increasing they are largely being driven by factors other than an improving economy as Obama claims.

The president is either ignoring or unaware of a ticking time bomb that will only put further pressure on the economy and home sales, interest -only loans.

According to an analysis of interest-only loans done for the New York Times there are 2.8 million active loans worth $908 billion.

A little more than half of those loans will reset within the next two years and provide a severe test for both the housing market and the economy as the interest-only provision expires and principal is added to payments

Estimates are that depending on the size and term of the loans the resets will increase mortgage payments anywhere from 20 to 75 percent.

That will push many homeowners to the brink as home prices have fallen dramatically during the recession and incomes have stagnated at best leaving many borrowers owing more than the house is worth.

As Yogi Berra said “It’s déjà vu all over again.”

The clock is ticking away on this bomb and growing a little louder every day.

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