Thursday, February 25, 2016

Why Did Michael Moore Invade Other Countries?

The answer is so simple, and sad.  Mr. Moore’s latest eye-opening documentary, “Where To Invade Next” visits countries that have learned from, and adopted our laws and policies, policies that no longer exist in the U.S. of A.; such as tuition-free public colleges (Slovenia), prison systems that rehabilitate rather than punish (Norway), where drug use is not a crime (Portugal), and 8 weeks paid vacation is the law (Italy).
His film shows America on the way to becoming a Third World country, somewhat lost in the last century and falling behind other developed countries and many developing countries, in caring for our citizens.
Perhaps the most moving segment was that on women’s rights. We who were not able to pass the Equal Rights Amendment that prevented discrimination against women in the 1970s, were imitated in countries like Iceland with the first democratically elected President in 1980, and where women’s rights are enshrined in their constitution (Tunisia, a Muslim country).
For some reason, beginning in the 1970s, these countries began to give more rights to their citizens, while America, the world’s oldest democracy, took them away.  Germany has enshrined collective bargaining in their corporations, where 50 percent of the governing board has to be made up of its employees, whereas many states in the U.S. have either banned collective bargaining, or the paying of dues to support collective bargaining, in 25 right to work states. 
And Icelandic corporations must have at least 40 percent of each gender on their boards, which was made law after 2008 and the collapse of their banking system.  The 3 largest banks all filed for bankruptcy, and some of their all-male executives went to jail, the result of “excessive, testosterone-driven risk taking” said a commentator on their trials.  The result was a mass revolt by Iceland’s women that demanded a greater role in the running of their own country.
Michael Moore interviewed Iceland’s special prosecutor for financial crimes, Olafur Hauksson, who said he had learned his prosecution techniques from Bill Black, a U.S. special prosecutor who had convicted bank executives resulting from our Savings and Loan scandal.  But no U.S. executive has been prosecuted since, much less convicted, for their excessive risk-taking and disregard of financial regulations during the subprime meltdown and Great Recession.
Why have such more modern democracies passed us by?  Moore hints that maybe they have learned from their horrific past of religious and world wars to care better for their citizens.  But the U.S. hasn’t learned from the biggest stain on our democracy—slavery.  We still enslave mostly African Americans in our prisons, thanks to the war on drugs initiated by President Nixon, after President Johnson had signed the Civil Rights Act that finally gave Blacks the same rights as other American citizens.
While crime rates have gone down, the number of people incarcerated has gone up in U.S. prisons. According to Human Rights Watch, 2.3 million people were incarcerated as of 2007. The United States has the largest incarceration rate in the world with a staggering 762 per 100,000 residents. Compare this to the U.K. whose rate is 152 per 100,000 residents, or Canada whose rate is 102.

So many prisoners create a large workforce. According to truth-out and the Left Business Observer, “the federal prison industry produces 100 percent of all military helmets, ammunition belts, bullet-proof vests, ID tags, shirts, pants, tents, bags, and canteens. Along with war supplies, prison workers supply 98 percent of the entire market for equipment assembly services; 93 percent of paints and paintbrushes; 92 percent of stove assembly; 46 percent of body armor; 36 percent of home appliances; 30 percent of headphones/microphones/speakers; and 21 percent of office furniture. Airplane parts, medical supplies, and much more: prisoners are even raising seeing-eye dogs for blind people.”
And why do we no longer have tuition-free public colleges?  It perhaps began when Ronald Reagan was elected Governor of California in 1966, UC Berkeley was a hotbed of protests, and tuition-free for California residents. 
Governor Reagan didn’t believe such an education should be free for rebellious college students.  His most infamous action of that time was the firing of the UC Berkeley Chancellor Clark Kerr for not following his orders to ban the student protests. Reagan vowed to “clean up that mess in Berkeley,” warned audiences of “sexual orgies so vile that I cannot describe them to you,” complained that outside agitators were bringing left-wing subversion into the university, and railed against spoiled children of privilege skipping their classes to go to protests, according to Dissent Magazine, describing that time.

            He cut state funding for higher education, laid the foundations for a shift to a tuition-based funding model, and called in the National Guard to crush student protest, which it did with unprecedented severity. But he was only able to do this because he had already successfully shifted the political debate over the meaning and purpose of public higher education in America.”

California was becoming more conservative, in other words.  Instead of seeing the education of the state’s youth as a patriotic duty and a vital weapon in the Cold War, Reagan cast universities as a problem in and of themselves—“both an expensive welfare program and dangerously close to socialism”. He even argued for the importance of tuition-based funding by suggesting that if students had to pay, they’d value their education too much to protest.
Reagan’s assault against higher education was only the beginning of the neo-cons attack on our educational system.  Their real purpose was an attempt to dumb down the electorate by crippling our public school and university systems.  The fewer that were well educated meant the fewer could challenge the power of those that supported the so-called Reagan Revolution.
So there is a reason our educational system ranks lower than 20 or more countries in the world.  M Moore visited Finland to learn why they are ranked #1 in the world, according to the Programme for International Student Assessment (PISA), “a standardized test given to 15-year-olds in more than 40 global venues.”
He interviewed teachers, students, and education officials. They all said their students’ welfare came first, and standardized tests should be abandoned.  They had learned from our educational system that once upon a time allowed more free time for social interaction, little or no homework, when music and art were an important part of our educational curriculum from elementary school onward.
            Perhaps that is the saddest revelation of Michael’s film.  How we have come to undervalue the lives of so many American citizens, including our own women and children.

Harlan Green © 2016

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Wednesday, February 24, 2016

Huge Jump In Existing-Home Sales

Wow!  Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 0.4 percent to a seasonally adjusted annual rate of 5.47 million in January from a downwardly revised 5.45 million in December. Sales are now 11.0 percent higher than a year ago – the largest year-over-year gain since July 2013 (16.3 percent).
 This is creating a bottle neck for home buyers, as the unsold inventory of homes is down to 4 months, with such a hot sales market.  Yet first-time home buyers are hanging in there with 32 percent of sales, up from 28 percent last year, and below the 40 percent during more normal times.
            The median existing-home price for all housing types in January was $213,800, up 8.2 percent from January 2015 ($197,600). Last month's price increase was the largest since April 2015 (8.5 percent) and marks the 47th consecutive month of year-over-year gains.

            Lawrence Yun, NAR chief economist, says existing sales kicked off 2016 on solid footing, rising slightly to the strongest pace since July 2015 (5.48 million). "The housing market has shown promising resilience in recent months, but home prices are still rising too fast because of ongoing supply constraints," he said. "Despite the global economic slowdown, the housing sector continues to recover and will likely help the U.S. economy avoid a recession."

            The S&P/Case-Shiller U.S. National Home Price Index, a more accurate measure of overall existing-home prices because it uses a 3-month average of same existing-home prices, recorded a slightly higher year-over-year gain with a 5.4 percent annual increase in December 2015 versus a 5.2 percent increase in November 2015.
            Portland, Denver and San Francisco prices continue to rise the fastest, with more than 10 percent annual increases.  But Tampa and Seattle are close behind.  These prices reflect the growing prosperity of high growth regions, and are reflected in a recent survey of cities and regions with the most job creation.

            This incredible graph captures where job growth is actually happening—on the coasts for the most part.  Marketwatch says cost-estimating website used data from the Bureau of Labor Statistics to create this three-dimensional representation of the number of jobs added by metro area. It should be no surprise that California with its Silicon Valley led all states with more than 464,000 jobs related.
The Greater New York metropolitan area, which includes Newark and Jersey City, showed the highest increase for any single metro area in the country with 156,400 new jobs. And, the Los Angeles metro area, including Long Beach and Anaheim, was second at 135,100 jobs.
            This means more housing is needed and the construction industry is finally beginning to respond, with housing starts now above a 1 million unit rate, and permits for new housing even higher.  Why are first-timers able to buy?  The medium household income has also risen, up 6.5 percent since 2013, and interest rates are back to historical lows, making home buying more affordable.
            But continuing housing recovery is dependent on more and higher paying jobs.  We know the millennial generation, from 18 to 36 years, will be key to this happening.  They now make up 53 percent of the working age work force. 
            However, their pay is still at the low end, according to data from the Minnesota Population Center's 2014 "American Community Survey" in the Integrated Public Use Microdata Series.  The medians ranged between a low of $18,000 per year in Montana and a high of $43,000 in the District of Columbia. It’s because so many are still teenagers or in school.  But that should change in coming years.

Harlan Green © 2016

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Monday, February 22, 2016

How Extreme Is Bernie's Vision?

Major progressive economists are protesting Bernie Sanders predictions of robust economic growth and jobs if his policies are enacted.  What are his policies?  Policies he claims will give Americans what the other developed countries already offer to their citizens, including a higher minimum wage, tuition-free public university education, universal health care, and better retirement benefits.
Then why are progressive economists protesting, who presumably have similar goals?  Because we are not like other developed countries, and so shouldn’t be exaggerating the benefits of such assertions, says Paul Krugman.

“On Wednesday four former Democratic chairmen and chairwomen of the president’s Council of Economic Advisers — three who served under Barack Obama, one who served under Bill Clinton — released a stinging open letter to Bernie Sanders and Gerald Friedman, a University of Massachusetts professor who has been a major source of the Sanders campaign’s numbers,” said Krugman. “The economists called out the campaign for citing “extreme claims” by Mr. Friedman that “exceed even the most grandiose predictions by Republicans” and could “undermine the credibility of the progressive economic agenda.”

Why are the Sanders-Freidman claims so extreme?  Because Dr. Friedman claims he can achieve those goals in just ten years, if the body politic will back Bernie.  The late Supreme Court Justice Antonin Scalia over some 30 years led conservative attempts to turn the clock back at least one century to a time when the white male patriarchy still ruled. 

Whereas Senator Sanders wants to move the economic clock into the next century.  “Like the New Deal of the 1930s, Senator Sanders’ program is designed to do more than merely increase economic activity: the expenditure, regulatory, and tax programs will increase economic activity and employment and promote a more just prosperity, “broadly-based” with a narrowing of economic inequality,” says Professor Friedman in his economic analysis.

The increase in income concentration since the 1970s reverses the prior, long-term downward trend in concentration, says the non-partisan Center For Budget Policies and Priorities.  “After peaking in 1928, the share of income held by households at the very top of the income ladder declined through the 1930s and 1940s.  Consistent with the shared prosperity found in the Census data on average family income, the share of income received by those at the very top changed little over the 1950s, 1960s, and early 1970s.  The sharp rise in income concentration at the top of the distribution since the late 1970s was interrupted briefly by the dot-com collapse in the early 2000s and again in 2008 with the onset of the financial crisis and deep recession.” 

So Sanders and Friedman have a point—what economic policies will catch US up to those benefits that the citizens of all other developed countries have?  In fact, but for the record income and wealth inequality, we could already offer many of those same benefits.  We still have the worst income inequality since 1929, the beginning of the Great Depression, and it has not improved since the end of our Great Recession.
Can we blame our young for supporting his vision?  It could take more than ten years, as the so-called Reagan trickle-down revolution prevailed for more than 30 years, policies that created the record income inequality by the massive transfer of wealth upward; via the combination of lower tax rates with higher deficit spending that caused major cutbacks in government benefits and programs.
So really, the outcome of Bernie’s economic vision is very dependent on the “broad-based” support of his policies by independents voters, as well as Democrats.  The Nevada caucus and South Carolina primary should provide that answer. 

Harlan Green © 2016

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Tuesday, February 16, 2016

A 2016 Housing Update

What should happen to U.S. housing in 2016, with interest rates at record lows and a healthy job market?  Much will depend on population growth, and in particular the newest largest generation of all—the millennials, or Gen Y’ers, 18 to 35 years old and born somewhere between 1980 to 2000, say most demographers.  They are finally beginning to move out of their parents’ homes—50 percent of them at last count.

And that is why we are seeing the huge jump in household formation, the main driver of housing growth.  A missing ingredient needed to bolster the housing recovery has been a stronger pace of household formation—which is beginning to pick up after eight years of running at low levels, according to CoreLogic Chief Economist Frank Nothaft in the company’s recently released September MarketPulse.
The Great Recession of 2008, with its many job layoffs or employment losses, caused many young adults (and others) to either move in with relatives or share housing with roommates rather than get their own home. As a result, household formation rates fell to their lowest level since the end of World War II.
That trend might be reversing, Nothaft said. In the first half of 2015, the number of new households grew by 1.7 million from the same period in 2014, the largest growth experienced in a decade. Labor market improvements have also played a role in the recent acceleration in household formation, according to Nothaft.

“As the job market has improved, many millennials now have the financial independence to form their own household, and we anticipate that the pent-up desire of young workers to live on their own will sustain household growth of about 1.2 million per year, on average, for several years,” Nothaft said, citing a report from the Joint Center for Housing Studies at Harvard University that forecasted new household growth of between 11 million and 13 million over the next decade depending on the pace of immigration in the United States.

The result is that adult millennials, who will total more than their parent baby boomers by 2020, are boosting household formation.  And they also ‘own’ the labor force, with more than 53.6 percent of those that are working or looking for work in Q1 2016 and growing, according to PEW Research.

And interest rates are at or below historical levels, especially mortgage rates, which will continue to boost housing growth this year.  The 30-year conforming fixed rate has plunged as low as to 3.25 percent in California, with 1.5 originations points, on a given day.
Fed Chairman Janet Yellen is sounding more dovish about the need to raise rates further, as oil prices have plunged, keeping inflation at bay. Yellen reiterated on Wednesday that the Fed expects to have "gradual" interest rate increases. The Fed's committee meets next in mid-March. But many experts doubt that a March rate hike will happen because other central banks are moving in the opposite direction.
For instance, Japan's central bank recently introduced negative interest rates, China's central bank has spent hundreds of billions to prop up its currency and the European Central Bank could soon increase its stimulus program.

Harlan Green © 2016

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