Work in Progress

US Economy: Green Shoots or shot through the heart?

We are seeing signs almost daily now that the economic free-fall that started last autumn and lasted through the winter in the United States has ebbed and some economists are actually calling for some tiny growth to resume as soon as this quarter. For the most part, analysts expect this quarter to experience "negative growth" but the growing consensus is that this brutal recession which began in Q4 2007 will end soon. We remain in a one step forward, two steps back phase but this is exponentially preferable to the hurtling into the abyss that appeared inevitable a few months ago.

From Reuters.com:

The U.S. economy will likely see moderate growth in the second half of 2009, but the recovery will be considerably slower than usual, the president of the Federal Reserve Bank of New York said on Wednesday.

A modest recovery in housing activity and car sales, the impact of fiscal stimulus and a sharp swing in the pace of inventory investment should give the economy a boost, William Dudley said in a speech to the Association for a Better New York.

Read the rest here.

Another area of improvement:

From Marketwatch.com:

WASHINGTON (MarketWatch) -- First-time claims for state jobless benefits crept up in the latest week, the Labor Department reported Thursday, but the trend of initial claims fell and fewer people were continuing to collect unemployment checks.

Initial weekly jobless claims rose by 25,000 to a seasonally adjusted 584,000 during the week ended July 25, about in line with economists' expectations. These claims are getting back to more normalized levels after going through a period of volatility related to automobile-industry layoffs.

Meanwhile, the four-week average of claims fell by 8,250 to stand at 559,000, the government reported. The average smoothes out one-time events such as strikes or weather-related incidents.

Economists surveyed by MarketWatch had been expecting claims to rise to a seasonally adjusted 583,000 in the latest week. 

At this time last year, claims stood at 442,000.

Read the rest here.

Even the long left-for-dead housing market is showing signs of finally hitting a bottom after 3 crushing years of declines. While prices are expected to continue to weaken through this year, they have shown signs of stabilizing recently. (Check out the truly stunning Detroit area numbers - literally off the chart)

NEW YORK (Reuters) - U.S. home prices rose in May for the first time in three years, the latest sign suggesting the battered housing market is stabilizing, but a weakening job market hit consumer confidence in July and could prevent near-term economic recovery.

The most severe housing slump since the Great Depression helped propel the U.S. economy into recession and its turnaround is considered essential.

Potential home buyers afraid of committing to a fast- depreciating asset have been clamoring for signs of stabilization in house prices.

Home prices have plunged more than 32 percent on average from their 2006 peaks, yet the pace of the annual declines slowed in May for the fourth straight month, according to Standard & Poor's/Case-Shiller home price indexes on Tuesday.

"This could be an indication that home price declines are finally stabilizing" after tumbling to 2003 levels, David M. Blitzer, chairman of the index committee at S&P, said in a statement.

Read the rest here.

This has been a miserable period for a lot of people. Here's hoping the turnaround is for real.

a sign of our times?

Here is a headline Jay Leno would have loved.
I mean, come on, isn't it usually the other way around?

Toronto Strike: Not so fast!

It turns out it may have been premature to praise the terms David Miller was able to negotiate on behalf of the city in its dispute with unionized outside workers because apparently the deal may not do away with the banking of sick days, which was the whole point of the impasse.

One of the main issues of the strike was the city's insistence on ending employees' ability to bank unused sick time. However, the proposed agreement gives current employees the option of getting an immediate cash payout or continuing to accumulate pay for unused sick time.

New employees will not have the option of banking unused sick days. Current employees can cash out their banked days at a discount and move into a new short-term disability plan, or may have their sick bank frozen to draw on for days that may not be covered by the new plan.

Employees must decide by Nov. 18 what to do with their banked days.

Otherwise, the deal has been delayed because someone, somewhere, forgot to dot the i's and cross the t's on an agreement now 38 days overdue.

However, a last-minute glitch in talks with one of the two striking CUPE locals means that only the inside workers began voting this morning on whether to ratify the deal.

CUPE Local 416, which represents outside workers including trash collectors, indefinitely postponed a vote set to begin at 7 a.m. today because negotiators hadn't signed a memorandum of agreement to end the strike, or negotiated a back-to-work protocol following the tentative agreement reached early Monday morning.

There is still no agreement on whether outside contractors should be allowed to help with the clean-up, or rules covering overtime.

Read the whole story here.

Watching this story play out has become comical for the utter ineptitude of all involved. Long strikes demonstrate intransigence and lack of creativity for both sides and the last-minute stumbles here give us a glimpse of just how poorly the leadership at the city and with the unions have handled themselves. The workers have lost almost 6 weeks in pay, the citizens have been inconvenienced and really, not much has been accomplished.

What a waste of time and energy.

TED talk: Alain de Botton on a kinder, gentler view of Success

Chalk one up for Mayor Miller

From the rumoured terms of the settlement the city of Toronto reached with its striking workers, it appears the contentious sick-day banking that led to the strike will be no more after the deal is ratified. If that is the case, Mayor David Miller accomplished his objective of ending the practice and the 35 days days the city was inconvenienced (which really wasn't that bad, let's face it) would have been worth it.

From the Toronto Star:

It was compromise by both sides on the strike's key issue – city employees' ability to bank sick days until a rich retirement payout – that let exhausted negotiators finally shake hands after 35 days of bruising discord, sources say.

The 30,000 workers hit the bricks June 22 determined to preserve the system allowing them to accumulate up to six months of unused sick time to be paid out when they left or retired.

Mayor David Miller has argued the city is no longer able to afford the provision and should scrap it, giving employees an immediate but partial payment for banked time, estimated to average $8,500.

Three sources confirmed that yesterday's wee-hours breakthrough gives workers an option: take the immediate cash, or freeze what's now in the bank and collect the payout upon retirement.

No further sick days can be accumulated, as the city moves to a short-term disability plan that provides benefits only to those who are ill or injured.

The compromise lets the city say it ended the sick-bank system, because no further days will accumulate and many workers will want the instant cash.

But it also allows the leaders of the two striking Canadian Union of Public Employees locals to say they protected the banked time of members who want to hold on to it until retirement

Miller, asked yesterday if sick day banking is over, would only say: "Any issue at the table, to reach agreement there has to be flexibility on all sides.''

Read the rest here.

Miller is a good friend to the unions so he would be loathe to be seen as gloating today but if the terms being reported are accurate, dude made a good deal for the city.

LOL! BTW, OMW. C U soon... HLY CRP!

A study released today showed it would be safer to get in a car with a driver who's been doing tequila shots all night than one who is texting as he/she drives.

From the NY Times:

The first study of drivers texting inside their vehicles shows that the risk sharply exceeds previous estimates based on laboratory research — and far surpasses the dangers of other driving distractions.

In these videotape stills, a truck driver, whose image is blocked to protect his identity, is shown texting while at the wheel, top left. The other camera angles show the truck’s actions as the driver was texting, including views from the left and right side-view mirrors, bottom right.

Driven to Distraction

The new study, which entailed outfitting the cabs of long-haul trucks with video cameras over 18 months, found that when the drivers texted, their collision risk was 23 times greater than when not texting.

The Virginia Tech Transportation Institute, which compiled the research and plans to release its findings on Tuesday, also measured the time drivers take their eyes from the road to send or receive texts.

In the moments before a crash or near crash, drivers typically spent nearly five seconds looking at their devices — enough time at typical highway speeds to cover more than the length of a football field.

Even though trucks take longer to stop and are less maneuverable than cars, the findings generally applied to all drivers, who tend to exhibit the same behaviors as the more than 100 truckers studied, the researchers said. Truckers, they said, do not appear to text more or less than typical car drivers, but they said the study did not compare use patterns that way.

Compared with other sources of driver distraction, “texting is in its own universe of risk,” said Rich Hanowski, who oversaw the study at the institute, which is affiliated with Virginia Tech.

Mr. Hanowski said the texting analysis was financed by $300,000 from the Federal Motor Carrier Safety Administration, which has the mission of improving safety in trucks and buses. More broadly, the two studies yielding the results represent a significant logistical undertaking. The cost was $6 million to equip the trucks with video cameras and track them for three million miles as they hauled furniture, frozen foods and other goods across the country.

The final analysis of the data is undergoing peer review before formal publication.

Tom Dingus, director of the Virginia Tech institute, one of the world’s largest vehicle safety research organizations, said the study’s message was clear.

“You should never do this,” he said of texting while driving. “It should be illegal.”

Thirty-six states do not ban texting while driving; 14 do, including Alaska, California, Louisiana and New Jersey. New York legislators have sent a bill to Gov. David A. Paterson. But legislators in other states have rejected such rules, and some elected officials say they need more data to determine whether to ban the activity.

One difficulty in measuring crashes caused by texting drivers — and by drivers talking on phones — is that many police agencies do not collect this data or have not compiled long-term studies. Texting also is a relatively new phenomenon.

The issue has drawn attention after several recent highly publicized crashes caused by texting drivers, including an episode in May involving a trolley car driver in Boston who crashed while texting his girlfriend.

Over all, texting has soared. In December, phone users in the United States sent 110 billion messages, a tenfold increase in just three years, according to the cellular phone industry’s trade group, CTIA.

The results of the Virginia Tech study are buttressed by new laboratory research from the University of Utah. In a study over the last 18 months, college students using a sophisticated driving simulator showed an eight times greater crash risk when texting than when not texting.

That study, which is undergoing peer review and has been submitted for publication in The Journal for Human Factors, also found that drivers took their eyes off the road for around five seconds when texting.

David Strayer, a professor who co-wrote the University of Utah report, offered two explanations for the simulator’s showing lower risks than the Virginia study. Trucks are tougher to maneuver and stop, he noted, and the college students in his study might be somewhat better at multitasking.

But the differences in the studies are not the point, Mr. Strayer said. “You’re off the charts in both cases,” he added. “It’s crazy to be doing it.”

Read the rest here. Please make sure you're not doing so while behind the wheel.

there's no honour among thieves

From the Globe & Mail:

Quebec provincial police arrested financial adviser Earl Jones on Monday, nearly three weeks after he disappeared amid allegations he swindled investors out of as much as $50 million.

Jones was led out of a Montreal office tower accompanied by his lawyer, Jeffrey Boro.

Neither man spoke as detectives loaded Jones into the back of an unmarked police car and whisked him away.

Jones, 67, had not been heard from since disappearing earlier this month.

Boro said last week that Jones was co-operating fully with authorities.

Quebec's financial securities regulator froze his accounts earlier this month and issued a statement saying he did not have proper credentials.

The Autorite des marches financiers alleges Jones may have bilked clients out of between $30 million and $50 million.

The regulator has said the alleged fraud has the appearance of a Ponzi scheme.

A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors from their own money or money paid by subsequent investors rather than from any actual profit earned in the stock market or other investment vehicle.

Such a scheme usually offers abnormally high returns that other investments cannot guarantee to entice new investors. But the scheme usually collapses because the returns require an ever-increasing flow of money from investors to keep the fraud going.

The scheme is named after Charles Ponzi, who became notorious for using the technique after emigrating from Italy to the United States in 1903. Ponzi spent some time in Montreal before applying the fraud in Boston.

In such frauds, the victims are often friends, family or members of the same organization.

Boro said last week that Jones was alone, depressed and possibly suicidal. He said Jones left the home he shared with his wife and went underground after he received death threats from irate clients.

My first thought in reading this story was that, back in the day, when someone was caught red-handed, suicide was often the way out of choice. Today, we merely have lawyers telling us how depressed and saddened the crooks are, to the point where they are "possibly suicidal". I cannot understand how people can live with themselves after doing that much harm to those who had trusted them. I feel no twinge of sympathy for the guilt or depression they feel.

A final thought: if the alleged numbers are accurate, Bernie Madof stole one thousand times more than Earl Jones. Months after it came to light, Madoff's crime is still beyond my comprehension.

Thomas Friedman says the bad guys are down but not out

Thomas Friedman's column in Sunday's NY Times:

After spending a week traveling the frontline of the “war on terrorism” — from the aircraft carrier U.S.S. Ronald Reagan in the seas off Iran, to northern Iraq, to Afghanistan and into northwest Pakistan — I can comfortably report the following: The bad guys are losing.

Yes, the dominos you see falling in the Muslim world today are the extremist Islamist groups and governments. They have failed to persuade people by either their arguments or their performances in power that their puritanical versions of Islam are the answer. Having lost the argument, though, the radicals still hang on thanks to gun barrels and oil barrels — and they can for a while.

Because, while the radicals have failed miserably, our allies — the pro-Americans, the Muslim modernists, the Arab moderates — have not really filled the void with reform and good government of their own. They are winning by default. More on that later.

For now, though, it is obvious that everywhere they have won or seized power, the Islamists — in Iran, Pakistan, Afghanistan, Iraq, Algeria, Lebanon or Gaza — have overplayed their hands, dragged their societies into useless wars or engaged in nihilistic violence that today is producing a broad backlash from mainstream Muslims.

Think of this: In the late-1970s, two leaders made historic trips — President Anwar Sadat flew from Egypt to Israel and Ayatollah Khomeini flew from Paris to Tehran. For the last 30 years, politics in the Middle East and the Muslim world has, in many ways, been a struggle between their competing visions.

Sadat argued that the future should bury the past and that Arabs and Muslims should build their future based on peace with Israel, integration with the West and embracing modernity. Khomeini argued that the past should bury the future and that Persians and Muslims should build their future on hostility to Israel, isolation from the West and subordinating modernity to a puritanical Islam.

In 2009, the struggle between those two trends tipped toward the Sadatists. The fact that Iran’s ruling theocrats had to steal their election to stay in power and forcibly suppress dissent by millions of Iranians — according to the Committee to Protect Journalists, Iran has surpassed China as the world’s leading jailer of journalists, with 41 now behind bars — is the most visible sign of this. The Taliban’s burning down of secular schools that compete with its mosques, and its peddling of heroin to raise cash, are also not exactly signs of intellectual triumph.

The same day that President Obama spoke to the Muslim world from Cairo University, Osama bin Laden released a long statement on Islamic Web sites and on Al Jazeera. As the Egyptian Middle East expert Mamoun Fandy noted: “Obama beat Osama hands down. Ask anyone about the content of Obama’s speech and they will tell you. Ask them what Osama said and most people will say, ‘Did he give a speech?’”

Read the rest here.

I like to think I keep up on geopolitical news but I had no idea bin-Laden had released a tape the same day Obama made his speech in Cairo. I find that notion very encouraging.

Recipe for a GOP Revival

There was a very interesting column yesterday by the Globe & Mail's John Ibbitson on how the Republican Party can revive its sagging fortunes:

Thoughtful conservatives are in despair over the state of the GOP.

“It concerns me that the Democratic Party may not have enough worthy adversaries in the coming years to save us from the tyranny of sustained one-party rule,” columnist Kathleen Parker wrote recently in the Washington Post.

“The sad thing is that President [George W.] Bush spent America into debt, tore apart its conservative movement and left his own political party shattered,” conservative talk-show host Joe Scarborough concludes in a new book, The Last Best Hope .

The Republican Party, in the words of Reihan Salam, a young conservative pundit and co-author of Grand New Party , is “cocooning”: talking and listening only to itself, rather than to the broader body politic.

The conservative core blames Mr. Bush for destroying the party's credibility by overspending. Lunatic fringers such as Rush Limbaugh and Glenn Beck are increasingly the voice of the movement. Thoughtful Republicans are in eclipse or on the run.

“There's a Republican Stalinism that exists,” believes Michael Moynihan, executive editor of the libertarian Reason magazine. “Moderates are being run out of the party.”

As a result, there's absolutely no hope that the Republicans will take the 10 Senate seats or 40 House seats needed to recapture one of those chambers in next year's midterm elections. And Barack Obama's confident, competent administration will be extremely hard to bring down in 2012.

Yet there are cracks. The President is having a hard time corralling the more conservative members of his own party in Congress. The push for massive and nearly simultaneous reforms in health care, the environment and immigration could, in fact, lead to either policy paralysis or deeply flawed legislation. The annual deficit threatens to entrench itself at trillion-dollar levels. Unless it is brought down to near zero, and soon, the national debt will cripple the economy.

A restored Republican Party promising fiscal reform could become politically attractive to independents worried that the Democrats are spending the country into ruin.

There is a Republican road to victory. To get there, the party need only embrace a few simple principles. Herewith, five steps for reviving the GOP.

1. Accept the Obama consensus . American federal politics mirrors the evolutionary theory of punctuated equilibrium. For long periods, society embraces a certain political consensus, expressed by one dominant party. Then events send things into flux, until a new consensus emerges.

During a period of consensus, the minority party can win government, but only by accepting the fundamentals of that consensus. So Grover Cleveland, a Democrat, became president by accepting the Republican consensus in support of small government and big business that dominated from 1860 until soon before the First World War.

Dwight Eisenhower governed as a Republican within the Franklin Roosevelt New Deal consensus that lasted from 1932 until the late 1960s.

And Bill Clinton governed as a Democrat within the Ronald Reagan small-government, personal-responsibility consensus that marked the last two decades of the past century.

Events and demographics have produced a new consensus, in favour of social reform at home accompanied by greater modesty abroad. It could be called the Obama consensus, and for as long as it lasts, the Republicans will be able to come to power only by accepting it.

“There is a new set of challenges” facing all politicians, believes the conservative commentator Jonathan Roach, “and sitting around saying ‘No, no, no' and ‘Cut taxes, cut taxes, cut taxes,' was never adequate, but now is blatantly inadequate, now that the voters have said that didn't work under Bush and they're ready to try something different.”

This doesn't mean Republicans need to stop being conservative. There are smaller-government solutions to global warming. Conservatives can embrace education or health-care reform, while insisting that personal choice should trump statist fiats. “You need more subtlety to the small-government, or to the cheap-but-effective government, message,” Mr. Salam argues.

The better line of reasoning is to accept that “the left has been right in diagnosing problem X, Y or Z, but their solution is wrong.”

Once the Republicans acknowledge the new consensus, it will be easier for them to embrace the second principle.

2. Love cities . Take a look at the map below.

It was prepared by Mark Newman, of the University of Michigan. It represents the 2008 electoral-college vote, with the states shrunken or enlarged to reflect their population. Republican victories (shown in grey) were mostly limited to states in the South and the High Plains.

With a few exceptions, the Republican message of tax cuts and social conservatism plays well only in small, mostly rural states that are growing slowly, if at all. Alabama. Mississippi. Wyoming. Oklahoma.

“Unless North Dakota suddenly gets 54 electoral votes, would someone please show me another way for Republicans to realistically conclude we can compete at the national level?” conservative commentator and Republican operative Bill Greener lamented on Salon.com.

In the United States, as in Canada, population is flowing from rural to urban. Consider Texas. According to a recent report by Susan Combs, the state's Comptroller for Public Accounts, 93 rural counties are experiencing population declines. But between 2000 and 2005, the population in the urban centres increased by at least 20 per cent.

The rural-to-urban shift is one demographic reason why Democrats are increasingly confident that Texas will soon belong to them. There's another. The Republicans will lose Texas, along with every presidential election, unless they learn to:

3. Love minorities . African-Americans constituted 13 per cent of the vote last November. More than 90 per cent of them voted for Mr. Obama. Latinos made up 9 per cent of the vote. They voted better than two-to-one for the Democrats. And that was before white, male Republican senators spent a week grilling the Supreme Court nominee Sonia Sotomayor over her “wise Latina” comments.

“The swing voters are Hispanic voters in most of the swing states,” former Florida governor Jeb Bush said in a recent Esquire interview. “And Republicans have done a poor job, sending signals that Hispanics aren't wanted in our party. Which is bizarre.”

Take Texas again. According to the Office of the State Demographer, the Latino population will surpass the non-Hispanic white population in Texas within 10 years. In 2040, whites will make up less than a third of the state's population. No wonder the Democrats are so certain Texas is trending their way.

John McCain won the white vote nationally by 56 to 43 per cent. But white voters don't elect presidents. Ethnic minorities, voting en bloc, do. And there's another bloc out there, which is why Republicans must also learn to:

4. Love the young . The Obama consensus didn't emerge from a sudden change of heart among Boomers and Gen-Xers. It emerged because voters under 30 surged to the polls in support of Mr. Obama's agenda. Millennials (those born between roughly 1978 and 2000) cast about 18 per cent of the vote, and two-thirds of them voted Democrat. In 2012, one voter in four will be a millennial. They are why the GOP simply must abandon social conservatism to return to power.

A recent poll from the liberal-but-fair Center for American Progress revealed that 58 per cent of millennials support gay marriage. And 64 per cent agreed with the statement “religious faith should focus more on promoting tolerance, social justice and peace in society, and less on opposing abortion or gay rights,” while only 19 per cent disagreed. And no, people don't become more conservative as they age. Repeated studies have shown that people keep their core values with them through life.

“The culture wars are over,” Mr. Moynihan believes. “The rank and file of the Republican Party just don't know it.” It's time someone told them.

If the leadership of the Republican Party is able to accept and act on these four principles, then it will be ready to embrace the fifth, the most important of all.

5. Be creative . Conservatives believe that the best way to preserve individual freedom is for government to be no larger, and taxes no higher, than absolutely necessary. But there are problems for which simply cutting taxes is not a solution. Republicans need to think clearly and creatively about health care, education, the environment, immigration, regulatory reform. They need to work with Democrats where possible, to show the party is on the side of getting things done, not just getting in the way.

All of the above will happen, just as soon as Republicans get tired of losing elections and watching formerly reliable states – Virginia, North Carolina, Colorado, New Mexico – switch to the Democrats. Hello, Texas.

The depressing news is that, right now, the ravers are in charge. There are a lot of them. Two of the top five books on the New York Times bestseller list are conservative screeds; Fox News is beating the competition two-to-one.

But the ravers are not the majority; they are an exercised minority. They are far fewer than the self-identified independents, who now outnumber registered Democrats and who far, far outnumber registered Republicans.

“The Republican Party is a zombie party,” Mr. Roach believes. “The defining characteristic of a zombie party is an inability to learn, to keep trying the same failed approaches, and consider it a virtue.”

Of course the Republicans could simply wait for the consensus to shift back in their favour. If history is any guide that's bound to happen, a generation or two from now.

Ibbitson five-step recipe adds up to one thing: bye-bye Sarah, but then again, there's a reason Carbiou Barbie remains my very favourite Republican and it is this: her nomination as the 2012 nominee would guarantee Obama's reelection and give him (and the world) four more years to repair the profound damage cause by the most incompetent malevolent Administration in history. However, I don't think this will come to pass because the election cycle resumes, the GOP will realize she's a non-starter as a mainstream candidate and she'll finish third or fourth among the candidates. Still, I'm hopeful she'll do better and maintain the GOP hegemony in all the empty states.

Who a needs a thousand words? This nails it in 12