Category: Economic Policy

Monday Wake Up Call – July 17, 2023

The Daily Escape:

Comb Ridge, UT & AZ – July 2023 photo by RC Bullough Photography

Wrongo and Ms. Right were urban pioneers in NYC in the early 1980s. We rented a loft on Maiden Lane in the financial district. Back then, we had to go uptown or to Hoboken, NJ for groceries because there were so few people living amongst the downtown forest of office towers.

But by the 2020 census, lower Manhattan was the fourth fastest-growing residential neighborhood in NYC. Since the pandemic, downtowns have looked more like the ghost towns of the 1980s with so many workers adapting to remote work. And they seem to be staying away.

Things are going to get interesting. We may be at the beginning of a massive structural change, not just a temporary blip impacting office towers: It seems that companies have figured out they won’t ever need this vast amount of vacant office space. Brookings says that office utilization averages less than 50% across major US downtowns. While The Gothamist reports that national office vacancies are at a high of 19.2% (compared to 12.6% in early 2020). They also report that McKinsey predicts that remote work will erase $800 billion from urban office real estate values.

This has many cities thinking about conversion of office space into residential space. In NYC, 25 Water Street, which was once home to the Daily News and JPMorgan Chase, has a plan to gut the offices, carve out courtyards and add 10 floors to the 22-story structure. GFP Real Estate and Metro Loft bought the building, formerly known as 4 New York Plaza, in December for about $250 million.

One loophole is that the Financial District doesn’t require that the conversions include any affordable housing. So this project will not have any apartments with capped rents for low-income units. That isn’t true in other parts of the City, like Midtown, Queens or the Bronx.

Boston is testing an incentive program for developers to convert empty downtown offices into housing. Mayor Michelle Wu announced that the owners of repurposed buildings could get up to 75% off on their property taxes. Boston’s office market vacancy rate climbed to 14.2% in the second quarter, the highest level in 20 years, according to data from CBRE Group Inc. And median monthly rent for a one-bedroom apartment has jumped 8% in the past year to $2,800.

Boston’s downtown has about half of the city’s office space. An October 2022 report commissioned by the city found that economic activity downtown remained 20% to 40% below pre-pandemic levels for industries like retail.

Back in NYC, Mayor Eric Adams is also proposing incentives to designate 136 million square feet of office space for conversion to residential development. It’s worked before: A 1995 tax break for conversions helped create 13,000 new apartment units in Lower Manhattan.

Brookings raises the question of what the taxpayers’ interest should be in these conversions:

“To what extent are current high office vacancies a market problem whose burden falls on the private sector (property owners and investors) and to what extent do they represent a market failure and policy problem to which government must respond with financial support from the public?”

The advocates of tax breaks and other financial incentives say it will:

  • Help drive foot traffic to downtown businesses struggling from a lack of commuters.
  • Bolster municipal coffers, as cities often rely on property taxes from office buildings.
  • Supply much-needed housing amid a shortage that has many paying exorbitant rents.

It seems that office-to-home conversions are no more a comprehensive remedy for housing than e-bikes are for transit issues. Few office buildings are truly suited for conversion. It’s often more straightforward for developers to knock down the existing structure and build condos from scratch.

Moreover, the best thing that cities can do to encourage more housing is to loosen zoning restrictions, allowing multi-use and apartment buildings to be developed rather than just supply tax breaks.

The battle lines are drawn. The 25 Water St. developer said state and city lawmakers will have to pay up if they actually want to turn vacant offices into homes:

“The politicians, if they want to create housing in New York City out of these buildings, they will need to provide significant incentives….And if they want to provide affordable housing, those incentives would have to be even higher.”

Time to wake up America! We can’t let our mayors give away more tax revenues to developers! We’re unsure if the current rate of office utilization will improve or not, so cities need to be smart about what they do next. To help you wake up, we dust off an oldie. Here are the Rolling Stones with “Salt of the Earth” from their album “Beggars Banquet”. Performed live at the Rolling Stones Rock and Roll Circus in 1968. This was the first tune where Keith Richards had the lead vocal:

Sample Lyric:

Raise your glass to the hard-working people
Let’s drink to the uncounted heads
Let’s think of the wavering millions
who need leaders but get gamblers instead

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Two Data Points That Say Much About Our Economy

The Daily Escape:

Another Alaska pic: Wrongo was in a kayak about 20 yards from this big guy asking himself whether he could out-paddle a charging grizzly. June 21, 2023 photo by Kristina Rau for the cruise line.

Today let’s talk about two interrelated economic issues. First, with more than 200,000 jobs created in the US economy in June, nearly 4 million more people are now employed than just before the pandemic.

Heather Long at the WaPo looked at who’s getting them. Along the way, she busts a few Right Wing myths:

“The mistaken notion that Americans don’t want to work can now be put to rest. Nearly 81% of Americans ages 25 to 54 are working, the highest share since 2001.”

Long reminds us that in March 2022, Fed Chair Powell argued the labor market was “unhealthy”:

“There was a misguided belief that it would take a recession to get supply and demand for goods — and workers — back to more normal levels. But what many experts missed was how many workers of color and immigrants wanted to work and were still looking for opportunities.”

Long provides the demographic breakdown for our recent job gains:

“Fewer White people are employed now than pre-pandemic. In contrast, over 2 million more Hispanics are employed now, over 800,000 more Asian Americans and over 750,000 more African Americans.”

Before the pandemic, companies were complaining that they couldn’t find workers, while the experts were saying the nation was at “full employment.” However, every month, Black and Hispanic people (largely women) kept entering the labor force and getting jobs.

Also, more than 2 million more foreign-born people are employed now than before the pandemic. This means that more than half of the new workers have been immigrants.

This is partly a result of low unemployment. Blacks and Hispanics often do not get hired until late in an economic recovery. In the past year, there’s also been a strong uptick in jobs in government and health care, two sectors in which women of color have historically found employment opportunities.

Employers have also loosened their hiring criteria, offering improved pay and benefits, and removing requirements for college degrees for many positions. Long says:

“This past spring, for the first time, Black Americans were as likely to be employed as White Americans.”

What a change! Hard to see much “socialism” in this new jobs analysis.  This is good news that disputes the old Right wing bromides about how “these folks don’t want work; they want to sit back and get free stuff”.

Second, the WaPo’s Department of Data, a new statistical analysis feature, answered the question:

“Which states contribute the most to the federal budget in taxes, and which get the most back in terms of benefits?”

They start by reminding us where tax revenue comes from:

“The vast bulk of the $4 trillion in revenue the federal government received in 2021 came in the form of income taxes and payroll taxes for Medicare and Social Security. Most of the rest comes from corporate income taxes and excise taxes on goods such as gasoline and alcohol.”

And just 4.5% of that income (customs duties and earnings on Federal Reserve deposits) cannot be traced to individual states.

But let’s get to the good stuff. Just eight blue states, (CA, NY, NJ, MA, CT, WA, NH, and CO) pay more in taxes to the federal government than they receive in federal benefits. They therefore subsidize all other states. Every other state receives more federal money than they pay in taxes.

And unsurprisingly 9 of the 11 top recipients of federal benefits are red states (KY, WVA, MS, AL, AK, LA, OK, AK, SC).

Nine of the 10 states that sent the most to the federal government, per person, voted for Biden in 2020. Nine of the 10 states that sent the least voted for Trump. So who’s got the bigger stake in socialism?

Its important to remember that when Republicans complain about “out of control” federal spending, most of them live in a state that receives more from the federal government than they contribute.

If we ever called their bluff, Republicans would scramble to decide what federal benefits their home states would be willing to give up in order to cut federal spending.

But of course, they would simply bluster on about socialism in the cities.

Maybe we should divide America into the MAKER states and the TAKER states. It’s nice to see that the data again shows Blue states are far more productive. Maybe another question for the Department of Data is:

“Why is higher income so closely aligned with support for Democrats?”

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How To Think Differently About Housing

The Daily Escape:

Sunrise, Outer Banks, NC – June 2023 photo by Stephen P. Szymanski

Wrongo and Ms. Right have 12 grandchildren, only one of which is still in high school. The other 11 are out of school and pursuing their careers or are finishing their education. Only one of the 12 owns a home. Their experience with real estate is representative of what most younger Americans face in today’s real estate market. Ben Carlson uses data from Redfin to show us that mortgage payments are way up over prior years:

The median mortgage payment was up by more than $1,000 over four years. Carlson reminds us that this is just the monthly mortgage payment, it doesn’t include insurance, property taxes or upkeep. This is part of the reason that housing affordability is more excruciating — the pace of the increases has happened so quickly. We’ve simply never seen prices and rates rise this fast in such a short period of time. And asking prices are up as well:

Note that at the end of May 2023, the median asking price was $397k, up from $300k in May 2020, a 32% increase in four years.

But high mortgage rates and rising home prices aren’t deterring all buyers. John Burns Research shows buyers still outnumber sellers by a wide margin in today’s market. They report that as of April, even with 7% mortgage rates, 78% of all real estate agents say that buyers outnumber sellers in their markets.

And for rentals, the national median rent for a one-bedroom apartment has climbed to $1,504, according to research from Zumper. That’s significant: It’s only the second time in history that it has risen past $1,500. But the median doesn’t represent what you’ll pay in big cities:

In America, buying an investment property near work is more lucrative than actually working. The growth of asset values has outstripped returns on labor for four decades. Last year, one in four home sales was to someone who had no intention of living in it. Investors are incentivized to buy the type of homes most needed by first-time buyers: Inexpensive properties generate the highest rental-income cash flows.

Harvard’s Joint Center for Housing Studies found that in 2019, the median net worth of US renters was just 2.5% of the median net worth of homeowners: $6,270 versus $254,900. There’s no better example than the economic challenges to America’s young persons than trying to find (relatively) affordable housing near where they work.

A very interesting article in the May 23 NYT Magazine suggests a possible solution to housing inflation. Vienna, Austria began planning it’s now world-famous municipal housing in 1919. Prior to that, Vienna had some of the worst housing conditions in Europe. Vienna’s housing program is known as “social housing” (Gemeindebauten), a phrase that captures how the city’s public housing and other limited-profit housing are a widely-shared social benefit:

“The Gemeindebauten welcomes the middle class, not just the poor. In Vienna, a whopping 80% of residents qualify for public housing, and once you have a contract, it never expires, even if you get richer.”

Vienna isn’t a small town. Its population is just under 2 million, and if it were in the US it would be our fifth largest city, between Houston and Phoenix.

The availability of Vienna’s social housing also helps to keep costs down even for private housing:

“In 2021, Viennese living in private housing spent 26% of their after-tax income on rent and energy costs on average, which is…slightly more than the figure for social-housing residents overall (22%).”

One of the reasons Vienna’s social housing works is that it is not means-tested; it is open to middle class people. And as a result, the residents care more about whether their grounds stay clean and beautiful. In the US we restrict public housing to the poorest of the poor, making public housing something to escape from, not to enjoy.

Meanwhile, 49% of American renters are paying landlords more than 30% of their pretax income, In New York City, the median renter household spends 36% of its pretax income on rent.

The key difference is that Vienna prioritizes subsidizing construction, while the US prioritizes subsidizing people, like with housing vouchers. One model focuses on supply, the other on demand. Vienna’s choice illustrates a fundamental economic reality, which is that a large-enough supply of social housing offers a market alternative that improves housing for all.

Calls for a federal social-housing plan in America might sound far-fetched but the US government is already deeply involved in the housing market. There’s generous support for homeowners and deliberately insufficient support for the lowest-income households. In 2017, the US gave $155 billion on tax breaks to homeowners and to investors in rental housing and mortgage-revenue bonds, more than three times the $50 billion spent on affordable housing.

For many, housing expense can be an economic burden. And it’s hard to even contemplate what it would mean to have it not be a problem. What’s mind-boggling is how social housing gives the economic lives of Viennese an entirely different shape.

Imagine where the rest of America’s young adults’ income might go if they were able to spend much less of it on housing. Vienna’s program is a look into a world in which homeownership isn’t the only way to secure a financial future.

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Monday Wake Up Call – June 5, 2023

The Daily Escape:

Blue Ridge mountains, NC – June 2023 photo by Michele Schwartz

It’s getting to be long enough into our economic recovery that we’ve started to ignore the monthly jobs report by the Bureau of Labor Statistics (BLS). Luckily, Simon Rosenberg doesn’t let us forget: (brackets by Wrongo)

“The…BLS jobs report is out and it’s another good one – 339,000 net new jobs, [plus] 432,000…upward revisions from previous months. With this new data my monthly jobs tracker clocks in at:

-33.8m jobs – 16 years of Clinton, Obama

-13.1m jobs – 28 months of Biden

-1.9m jobs – 16 years of Bush, Bush and Trump

Biden’s 13.1m jobs is almost 7 times as many jobs as were created in the 16 years of the last 3 Republican Presidencies, combined.”

Since the end of the Cold War, the US has seen 49 million new jobs created. Remarkably, 47 million of those 49 million jobs were created under Democratic Presidents.

On the Democratic Party’s watch we’ve seen strong economic growth. OTOH, during the same time, Republican presidents have overseen three consecutive recessions. It’s not a stretch to say that the GOP’s economic track record over the past 30 years has been among the worst in US history.

Consider Biden’s record of economic growth:

  • GDP growth under Biden is 3+%, or 3 times what it was under Trump.
  • Almost 7 times as many Biden jobs as last 3 GOP Presidents combined.
  • Best post Covid economic recovery among the G7 countries.
  • Lowest unemployment rate in a peacetime economy since WWII.
  • Lowest poverty/uninsured rates ever.
  • Real corporate earnings up in 2022.

Despite what the GOP is saying to the press about their being deficit hawks, the federal deficit went up every year under Trump, and has come down every year under Biden. Rosenberg adds this helpful chart of GDP growth by president:

So why is it that Americans aren’t convinced that the economy has improved since the pandemic? In a new poll from the AP-NORC, asking if the nation’s economic conditions are in good shape, the percentage who agree is down from 30% last month to 24%. Only a third of Americans in the new survey approve of how Biden’s handling the economy, while two-thirds disapprove.

In the survey, Democrats were more likely than Republicans to view economic conditions favorably, but just 41% of them say the economy’s good and only 7% of Republicans agree. And both numbers are down from the previous month for both Parties.

Now this may be at least partially due to the Republicans scare tactics about the Debt Ceiling. The Hill reports that this AP-NORC poll is in line with other recent surveys that suggest most Americans think the country’s economy is in poor shape, Other polls also indicate low confidence in the economic leadership team.

Axios suggests a different way to view the economic issue. They looked at Federal Reserve survey data from 2017-2022, which shows that people think they’re personal economy is doing just fine, while they think the national economy is in terrible shape:

This is most likely because of the media’s awfulizing about our economy. Obviously, consumer prices are high, but inflation is coming down. But even if inflation went to zero, today’s prices will still be much higher than Americans were accustomed to pre-pandemic, so people will be complaining.

And we can’t discount the negative impact of Congressional dysfunction about the Debt Ceiling, or all the news bunnies crying about our unsustainable national debt.

Still, our economy continues to do better than even the economists think. The May employment report marked the 14th straight month that more jobs were created than economists expected. Our GDP continues to grow (it’s up more than 5% from its pre-pandemic peak), even after accounting for inflation.

The average US employee now makes $33.44 per hour, 17.5% more than before the pandemic. The stock market is up 10% so far this year, but still, Americans aren’t buying it. Axios’ Felix Salmon reports that while Americans say that they’re broadly happy with their personal finances (above chart), in other polls, a majority consistently think (erroneously) that we’re currently in a recession.

Time to wake up America! Things are rolling along reasonably well, even if they’re not fantastic. We have the best job market in 50 years, and there’s no recession on the horizon. As the Rolling Stones said: “You can’t always get what you want…”. Maybe it’s time to look at the glass as half full.

To help you wake up, watch and listen to Alan Jackson cover Eddie Cochran’s 1958 “Summertime Blues” in 1994. The Blue Cheer had the radio hit with it in 1968. Wrongo loves three versions of this song: Blue Cheer, the Who, and this Allen Jackson cover:

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Saturday Soother – May 20, 2023

The Daily Escape:

Daffodils, Laurel Ridge, Litchfield CT – May 2023 photo by Dave King

The oil industry enjoys special economic status in the US. That is demonstrated by the tax breaks and outright subsidies we give them. Hannah Dunlevy notes that:

“In 2020, the explicit and implicit fossil fuel subsidies cost the United States $662 billion, around $2,006 per capita. Cutting just two tax breaks for the fossil fuel industry — the intangible drilling costs subsidy and the percentage depletion tax break — could generate $17.9 billion in government revenue over ten years, according to Congress’s non-partisan Joint Committee on Taxation.”

Biden’s fiscal year 2024 budget proposed cutting some of tax subsidies for oil and gas companies, which would save the US $31 billion over ten years. It will probably not survive the current Debt Ceiling and budget discussions.

One hidden subsidy that the oil industry enjoys is when wells are no longer productive – they are idled. If it’s no longer profitable to return idled wells to production, they need to be plugged. And the cost of plugging a well can be $100,000 or more.

The problem is that when wells start to decline, they are sold by Big Oil to smaller producers. When the well is sold, the plugging and cleanup liability passes to the new buyer. And often, the new buyer simply walks away from the uneconomic well, creating what the industry calls “orphaned wells”. But if a company doesn’t plug its wells before walking away, the cleanup costs will ultimately fall to taxpayers and current operators.

This has already happened with thousands of wells in California and may happen to millions more across the country. Pro Publica reports that there are more than two million unplugged oil wells scattered across the US. California is just the tip of the iceberg.

Petroleum reservoir engineer Dwayne Purvis laid out the reality at a recent conference. His research shows that more than 90% of the country’s unplugged wells are either idle or minimally producing and unlikely to make a comeback.

California is the canary in a coal mine. Shell and ExxonMobil recently agreed to sell more than 23,000 California wells which they owned through a joint venture, to a German asset management group IKAV for an estimated $4 billion. This means that a subsidiary of IKAV now owns about a quarter of California’s oil and gas production, largely in Kern and Ventura counties.

This ownership shift moves the subsequent environmental liability from Big Oil powerhouses to firms with smaller capitalization, increasing the risk that aging wells will be left orphaned, unplugged and leaking oil, brine and methane. For California and other states, this could repeat what was seen in coal mining, which led to taxpayers bearing all of the cleanup costs.

The oil industry has created layers of LLCs that are used to screen Big Oil from the dirty end of the oil business, like responsibility for cleaning up the messes that they make. And these firms can easily declare bankruptcy rather than pay for cleaning up orphan or idle wells.

ProPublica reports on an analysis by Carbon Tracker Initiative, a financial think tank that used the California regulators’ draft methodology for calculating the costs associated with plugging oil and gas wells and decommissioning them along with their related infrastructure.

The cost categories included plugging wells, dismantling surface infrastructure and decontaminating polluted drilling sites. That would cost California about $13.2 billion. Adding inflation and the price of decommissioning miles of pipeline could bring the total cleanup bill to $21.5 billion.

Meanwhile, Purvis estimates that California oil and gas production will earn only about $6.3 billion in future profits over the remaining course of operations; nowhere near sufficient to pay for the cleanup, even if those profits could be captured by the state.

That’s just California. These costs are what economists call “Externalities”. An externality is an indirect cost (or benefit) to a party (taxpayers) that arises as an effect of another party’s (Oil Companies) economic activity. The problem is that the price of their product doesn’t include the externalities. That means there is a gap between the profit of these corporations and the aggregate loss to society as a whole.

Republicans have a tried and true solution for this problem. Taxpayers pay the bills. We’re back to the “privatize profit, socialize the losses” game that corporations have played forever. Maybe the correct terminology should be socialism for the rich.

They prefer to call it keeping government off the backs of job creators.

Time to let go of California’s messy problem and find a few minutes to center ourselves before next week which will bring either financial Armageddon, or a diminished Biden. At the Fields of Wrong, we had a freeze last Wednesday that caused us to cover the newly planted vegetables and bring the Meyer Lemon tree indoors. Spring in Connecticut can always show up with a backtracking nod towards winter.

But on this rainy Saturday, grab a chair by a big window and listen to Debussy’s “Nuages” (‘Clouds’) from his “Trois Nocturnes”. Leopold Stokowski and the Philadelphia Orchestra made the first American recording of Debussy’s “Three Nocturnes” for a 1950 LP.

Here is the first “Nocturne”, a musical impression of slow-moving clouds:

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Links You Can Use

The Daily Escape:

Santa Rita prickly pear in bloom, AZ – May 2023 photo by Wilson Goodrich

Today Wrongo returns to his “Links you can use” format from several years ago.

First up, Bloomberg reports that Trump’s takeover of the GOP helped him to rewrite the rules on how primary delegates to the GOP presidential convention will be awarded. Since leaving office, Trump has gotten 10 more states to award delegates through winner-take-all primaries, even if the winner receives fewer than a majority of the votes. The number of winner-take-all states has grown from seven to 17.

Needless to say, if it’s crowded field and he gets the most votes, even if it’s only 30%, he’ll win.

Second, Republican governors have discovered that they’re getting significant political mileage out of championing people who have engaged in vigilante violence that dovetails with the GOP’s culture wars. Brian Klaas writes about the Right’s open embrace of political violence. In Texas, Governor Abbott has said that he was “looking forward” to pardoning Daniel Perry, who murdered a Black Lives Matter protester. Perry was sentenced to 25 years in prison. He had previously texted a friend that he “might have to kill” some people on his way to work.

Over the weekend, Florida Governor DeSantis tweeted his support for Daniel Penny (Perry and Penny?) after Penny killed the homeless Black man Jordan Neely, on NYC’s subway. DeSantis didn’t hold back:

Lots of dog whistles right there from the governor. NBC 4New York reported that the legal defense fund had raised more than $2 million after DeSantis tweeted the link to Penny’s donation page. This shows MAGAs have found another way to wealth and fame as Daniel Penny now joins Kyle Rittenhouse as a violent millionaire funded by the Republican Right.

Brian Klaas wrote about a study that shows “Who Supports Political Violence?”, conducted by Miles T. Armaly, Assistant Professor of Political Science at the University of Mississippi and Adam M. Enders, an Assistant Professor of Political Science at the University of Louisville. Their findings show some key traits that predict support for political violence:

Perceived victimhood is highly correlated with support for political violence. This is different from actual victimhood. While previous research found that people who are actually being oppressed are more likely to turn to violence, this study shows that it doesn’t really matter whether someone is actually being oppressed; instead, the feeling of being oppressed is sufficient.

This was the strongest predictor of support for violence.

The next strongest correlate was a sense of “white identity.” And the two interact, as those who buy into the Right-wing narrative that white people are under attack in America (due to their loss of social dominance), are also likely to be the same individuals who feel perceived victimhood.

Also, past military service is correlated with a predisposition for vigilante violence. People who previously served in the American armed forces were more likely to express support for political violence than those who have not. None of this is good news for the US.

Third, the Debt Ceiling negotiations are resuming today in the White House after House, Senate and White House negotiators met for three hours Saturday, and then reconvened on Monday. Benjamin Studebaker worries that Biden may be about to repeat Obama’s errors in negotiations with Republicans in 2011:

“Back in 2011…Obama faced the same problem…Biden now faces. Congressional Republicans refused to raise the debt ceiling unless Obama agreed to budget cuts….Obama….Instead…cut a deal. He signed the Budget Control Act of 2011. It committed the federal government to…enormous cuts. Over the course of 2012, it became clear that these cuts would cause serious damage to the economy. So…Obama negotiated another deal that would save most of the cuts for 2013. Over the course of 2013, the same arguments were made again, but this time Obama was unable to secure another delay, and the cuts took effect.”

Sounds like what we’re going through right now. In 2013, we escaped the economic disaster, but at the price of the Fed adding several rounds of Quantitative Easing leading to our current economic situation. If Biden agrees to cut spending, the economy will again be damaged.

And the Federal Reserve will be pressured to limit the damage via lower rates or flooding the market with more dollars.

Republicans will, of course, oppose tax increases. That means the Biden administration won’t be able to raise taxes to help offset the growing deficit or pay for future expenses. Therefore it has to rely on the Federal Reserve’s monetary policies. The weaker economy created by rate hikes is an economy where the current tax rates will generate less tax revenue. That creates more political pressure to cut spending.

All of these stories look like rinse, lather, repeat. And not to the nation’s benefit.

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Sunday Cartoon Blogging – May 7, 2023

(The Monday Wake Up Call will be published on Tuesday this week.)

America has been waiting for more than a year for the Federal Reserve to get control over inflation. In that time, they’ve jacked up interest rates to over 5%. A year ago, raising rates that high seemed unthinkable, but here we are. Wages have also risen.

There was some damage: A few horribly managed banks collapsed. A couple of auto dealer-lender chains that specialized in selling overpriced used cars to subprime customers collapsed. And there were some fiascos in commercial real estate.

All of that has led the Fed to indicate that there could be a “soft landing” for our economy. But with the latest jobs growth numbers, maybe the Fed will have to keep circling the airport. In April, 253,000 jobs were created. There are now a record 155.7 million payroll jobs. Over the past 3 months on average, 222,000 jobs were created per month. So is a soft landing ahead?

Please raise your seat tables to the upright position and pass your trash to the attendant. On to cartoons.

Coronations aren’t just for the Brits:

(Wrongo watched the coronation of King Charles III yesterday. Seventy years ago, he also watched the coronation of Queen Elizabeth II  on a 9″ black & white Philco television. Yesterday’s was on a 55” Samsung.)

The reality about the GOP:

What to expect after the GOP talks with Biden about the Debt Ceiling:

Proud Boys found guilty, but who pulled the strings?

Kremlin complains:

Justice Thomas needs to be taller to take the ride:

Time to buy more cards:

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Sunday Cartoon Blogging – March 12, 2023

Let’s talk about Silicon Valley Bank (SVB). The tech industry’s go-to lender just became the second-largest bank failure in US history. The bank’s customers withdrew $42 billion from their accounts on Thursday. That’s $4.2 billion an hour, or more than $1 million per second for ten hours straight.

We ancient, moss-covered former bankers call this a bank run. That occurs when a large number of customers of a bank withdraw their deposits simultaneously over concerns about the bank’s solvency.

Nearly half of all venture-backed US companies were SVB customers. We’re unsure why the run started, but on Thursday, several Venture Capital firms started telling their client companies that pulling cash from SVB was prudent, and the run began.

While bank deposits are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, few of SVB’s deposits, by value, were FDIC insured, since its customers were overwhelmingly corporations with much more than $250,000 in the bank. By Friday, there was no cash left in SVB’s coffers. In fact, the cash on hand was negative, to the tune of $958 million.

Do you remember when Trump and Republicans rolled back some of the regulations Dodd-Frank placed on regional banks?:

“Some banking experts on Friday pointed out that a bank as large as Silicon Valley Bank might have managed its interest rate risks better had parts of the Dodd-Frank financial-regulatory package, put in place after the 2008 crisis, not been rolled back under President Trump.”

Trump signed the bill despite a report from Democrats on Congress’s joint economic committee warning that under the new law, SVB and other banks of its size:

“…would no longer be subject to nearly any enhanced regulations”.

This also affects ordinary people. Wrongo has a California friend who banks with SVB. Here’s a quote from her:

“While I’ve been waiting to sign the purchase contract on a condo, I woke to the news that my lender Silicon Valley Bank has been closed and taken over by regulators. That concludes literally 8 months of working on this….and the end of my effort to buy a home.”

So don’t listen to the pleas for another bank bailout. Wrongo would be okay with bailouts if they were accompanied by personal accountability by management. Like, we’ll rescue your institution, but none of the bank senior management can ever work in finance again. On to cartoons.

Tucker’s mendacity:

It takes two teams to play:

Walmart’s OK with pills for boners, but not for pregnancy:

GOP wants to regulate Trans not Trains:

GOP loves doormats:

Most appropriately named movie of this or any year:

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Saturday Soother – March 11, 2023

The Daily Escape:

Sunset, Santa Elena Canyon, Big Bend NP, TX – March 2023 photo by Rick A. Ludwig. Cliff on left is in Mexico, the one on the right is in US. The Rio Grande is in the middle.

Signs that we’re starting to think about the 2024 election are everywhere. Wrongo wants to connect a few dots regarding Biden’s recent efforts to move the Democratic Party more to the middle on crime and immigration while staying left on financing the country’s social and military needs.

Biden proposed a budget to reduce the deficit, protect Medicare and Social Security, and raise taxes on wealthy individuals and corporations. From the NYT:

“In a speech in Philadelphia on Thursday, Mr. Biden said that his budget was designed to ‘lift the burden on hard working Americans’ and drew sharp contrasts with the proposals that Republicans have offered, which the president argued would threaten the nation’s social safety net programs and benefit the rich.”

This contrasts with Biden’s right-leaning position on the recent DC crime bill. Since DC is controlled by the Congress, it’s legislation can be vetoed by the US Senate. Also from the NYT:

“The Senate…voted overwhelmingly to block a new District of Columbia criminal code that reduces mandatory minimum sentences for some violent offenses, with Democrats bowing to Republican pressure to take a hard line on crime in a move that underscored the rising political potency of the issue ahead of the 2024 elections.”

By an 81-to-14 vote, with 31 Democrats voting with the Republicans, the Senate passed the Republican-written measure to undo the District’s law. It now goes to Biden, who after initially opposing it abruptly changed course and said he would sign it.

So, Biden’s tacking left on spending but to the center-right on crime. He’s making a series of calculated moves to position his Party to compete successfully in 2024. Still, it’s disappointing that Biden and 31 Democrats joined with the Right to deny DC residents the right to govern their own city.

But this shouldn’t be surprising. Last year, Biden and the Democrats turned their backs on labor during their contract battle with the railroads.

Here’s Nick Catoggio in the Dispatch: (Brackets by Wrongo)

“[Biden has]…begun to tiptoe toward the center lately on another major Democratic liability, immigration…..Centrist analysts…have warned Biden and his Party that their political viability depends on escaping the…“cultural bubble” in which an unsecured border is treated as a civic good.”

And last week Biden changed his immigration policy. He’s requiring asylum seekers to seek refuge in nations they pass through rather than waiting to do so in the US.

These new policies bring Biden closer to public opinion. Among Democrats, a plurality want to see the number of asylum applicants increased rather than reduced. Among the overall public, it’s the opposite. Biden is tilting toward the latter.

Biden wants to be seen as strong on crime. Democrats walk a fine line of being against crime but not wanting to wholly support the police. Doing that would risk looking anti-Black in cities that are so important to their political success. Dems support compassionate justice and not retributive justice, so they get tied up in knots when violent crime increases, which is rising in America. The problem of course is that the descriptor “violent” isn’t consistently applied.

Biden’s idea is to try to win more votes from people who are not fanatic MAGA types. That means picking off White suburban voters, Asian voters and Hispanic and Black voters, all of whom are concerned about crime.

Tom Sullivan points out that while the moderate-to-conservative White population is in slow decline, their votes remain significant, and that Democrats shouldn’t ignore them over the next two years:

“Sadly, Democrats often do. Campaigning in concentrated urban areas that tend to vote your way is simply easier and more cost-effective. What it means for largely rural states like North Carolina is that while it remains possible to elect a Democrat like Roy Cooper as governor, Democrats’ urban focus bequeaths him a Republican-dominated legislature…”

Sullivan says the Democrats need to start acting like the big-tent party that they used to be.

And that’s what Biden is attempting to do.

Time to say “enough” to war-gaming the 2024 election. It’s time for our Saturday Soother. The daffodils have sprung through the snow, a sure sign of spring. We turn back the clocks tomorrow night, another win for those who hate dark days.

So, it’s time to take a few minutes to center yourself. Start by sitting in a comfy chair and watch and listen to Lili Boulanger’s “D’un matin de Printemps” (On a spring morning). She wrote this piece in 1917 when she was 23. Boulanger battled bronchial pneumonia throughout her short life, dying a year later at age 24. Here, it is played by the Seattle Symphony conducted by Cristian Măcelaru.

Listen and think about her writing this during the darkest days of her life:

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Saturday Soother – February 25, 2023

The Daily Escape:

Death Valley sunset, Death Valley NP, CA and NV – February 2023 photo by Leila Shehab Photography

From the NYT:

“To Democrats, the train derailment and chemical leak in the hamlet of East Palestine, Ohio, is a story of logic, action, and consequences: Rail safety regulations put in place by the Obama administration were intended to prevent just such accidents. The Trump administration gutted them.

To Republicans, East Palestine is a symbol of something…more emotional: a forgotten town in a conservative state, like so many others in Middle America, struggling for survival against an uncaring mega-corporation and an unseeing government…”

If you follow FOX news you can be forgiven for thinking that the federal disaster relief teams just got around to dealing with the hazardous materials spill in East Palestine, Ohio.

Actually, those federal teams have been on the scene since it happened.

Republicans are trying to make a political meatloaf out of Biden’s visiting Ukraine rather than visiting Ohio. Or why it took Pete Buttigieg three weeks to visit the site. Even the East Palestine mayor Trent Conaway said Biden’s trip to Eastern Europe was “a slap in the face.” But if Biden had visited, you know the mayor would say he had better things to do than shepherd around a bigwig.

Their message is that Democrats are indifferent to working-class voters.

But maybe there’s something under the surface of these politics-as-usual arguments. The derailment presents issues that Republicans rarely like to grapple with: Corporate power and a clear need for government regulation.

What may be brewing is a new and different message by the GOP’s populist wing, one that breaks with Party orthodoxy and targets corporate America. And Norfolk Southern, owner of the derailed train and also behind a clear lobbying effort to keep the government from improving rail safety, is a big and very easy target.

Vox quotes Saurabh Sharma, the president of American Moment, a public policy organization that aims to influence young conservatives to become more populist:

“I think that this tragedy that happened in East Palestine is an opportunity for Republicans that have been looking for opportunities to distinguish themselves from the neoliberal set in the party to do so.”

The execrable JD Vance was in East Palestine with Trump, and told Axios afterwards that figures like Trump, Tucker Carlson and himself recognize that East Palestine residents and those like them were the GOP’s voters:

“The three of us, in our own ways, recognized instantly: This is fundamentally our voters, right? These are sort of our people. It’s a reasonably rural community. It’s been affected by industrialization,” Vance said. “These are the people who really lost when we lost our manufacturing base to China, And these are the people who are going to be forgotten by the media unless certain voices make sure that their interests are at the forefront.”

Wow, Yale grad Vance, trying to speak mid-western English says: “This is fundamentally our voters, right?”

The question is: Can Republicans build an economic populist base within their Party? It’s clear that Trump deserves criticism from the Democrats over the accident, since it’s easy to connect the derailment to Trump’s deregulation of ineffective train braking systems, the cause of the accident. That means Trump wouldn’t be exempt from political attacks by economic populist Republicans.

Conservatives like Jon Schweppe, the director at the American Principles Project, a conservative think tank, tried to link a few ideas together:

“There is a growing sense that all of these corporations are against us — not only are they trying to screw us over on the woke stuff, but generally, they just don’t care about ordinary people.”

The American Principles Project is virulently anti-woke, anti-trans and anti-voting rights. Can they also be anti-corporations? And how close are they to mainstream Republicans?

Can the East Palestine accident cause Republicans to embrace truly populist issues? Would the GOP tie corporate graft and greed to bureaucratic incompetence and Democratic indifference? They seem to fit easily within existing Tucker Carlson messaging.

BTW: All of it also fits very easily into Democratic messaging.

But let’s forget about who’s woke or, how will the second year of the Ukraine war go? It’s time for our Saturday Soother, when we disengage from the world as completely as possible and focus on finding a calm state to prepare us for the week to come.

Here in the Mansion of Wrong, we spent time upgrading our internet service to fiber optic. That wasn’t the promised slick changeover touted by the provider, but it’s finally working.

To get soothed, settle in a big chair by a south-facing window and watch Lang Lang play Debussy’s “Suite Bergamasque, or Clair de lune”. This performance was part of an album launched in Paris on Valentine’s Day, 2019. Listen as Lang Lang performs on a boat cruising along the Seine while you enjoy Paris at night:

 

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