15.6 percent unemployment

So, the latest update from the number crunchers means:

the Obama administration operated on the assumption that the unemployment rate would reach 8.9 percent by the end of the year — without the extra federal spending. Three months into the year, the unemployment rate has already soared to 8.5 percent, from 7.6 percent, the highest level in more than a quarter-century.

But, 8.5 percent feels low, right? I mean, doesn't it feel like the unemployment rate is a lot more than that? If you think so, there is a reason.
Here is how Daniel Gross explained it a few months ago:

Back in the 1990s, the Bureau of Labor Statistics recognized that in a changing economy, in which outsourcing, self-employment, and contracting were becoming more commonplace, the traditional methods of measuring unemployment and job growth might not accurately portray the economic situation. And it knew its methodology had some quirks—the unemployment rate doesn't account for people who have given up looking for jobs, or who have taken themselves out of the work force. So since 1994, the BLS has been compiling alternative measures of labor underutilization. There are many different varieties of labor underutilization. There are marginally attached workers: "persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past." There are discouraged workers, a subset of the marginally attached crowd, who have "given a job-market related reason for not looking currently for a job." There are people who work part-time because they can't find—or their employer can't provide—full-time work. There are people who have left the work force entirely. Neither the unemployment rate nor the payroll jobs figure captures the plight of many of these folks.

So, what does this long paragraph mean?

The U6 is sort of the summa of job angst, a shorthand tally for the aggregate of job-related frustration. (Moneybox covered some of this terrain back in 2004.) To compile the U6, the BLS takes the number of unemployed, plus all marginally attached workers, plus all of those employed part-time for economic reasons, and then calculates that total as a percentage of the sum of the entire civilian labor force plus marginally attached workers.

And where does this number stand? According to the LA Times:

The Labor Department’s broadest measure of unemployment reached a stunning 15.6% in March, seasonally adjusted. That was up from 14.8% in February and 9.1% in March 2008.

China and the US: Mutually Assured Destruction!

China is trying to get some momentum going on some kind of a new global currency. Good luck on that. I don't see anybody even shifting big time to the euro, and it was kind of a profound statement that as the world slipped into a deep recession, the dollar started appreciating.

I have blogged before about this, and have quoted James Fallows quite a bit.
Paul Krugman has his comments on it in his NY Times column. Frankly, there is nothing new in Krugman's column--nothing new that Fallows did not describe in his two pieces in the Atlantic. Almost as if Krugman just woke up to this issue; given his Nobel and his public intellectual perch, well, I suppose most of us will always expect a Nobel-prize winning idea in every column, which is not fair to Krugman .... Anyway, an excerpt from Krugman:

So what Mr. Zhou’s proposal actually amounts to is a plea that someone rescue China from the consequences of its own investment mistakes. That’s not going to happen.

And the call for some magical solution to the problem of China’s excess of dollars suggests something else: that China’s leaders haven’t come to grips with the fact that the rules of the game have changed in a fundamental way.

Two years ago, we lived in a world in which China could save much more than it invested and dispose of the excess savings in America. That world is gone.

Yet the day after his new-reserve-currency speech, Mr. Zhou gave another speech in which he seemed to assert that China’s extremely high savings rate is immutable, a result of Confucianism, which values “anti-extravagance.” Meanwhile, “it is not the right time” for the United States to save more. In other words, let’s go on as we were.

That’s also not going to happen.

The bottom line is that China hasn’t yet faced up to the wrenching changes that will be needed to deal with this global crisis. The same could, of course, be said of the Japanese, the Europeans — and us.

Bonus for reading until here :-)
The following is an excerpt from Larry Summers' speech five years ago!

I am reluctantly convinced that the most serious problem we have faced in the last 50 years is that of low national saving, resulting dependence on foreign capital, and fiscal sustainability, which has far-reaching implications for the US and the global economy. ....

[Let] us imagine that it were possible at this level of national saving to continue to borrow on this substantial scale to finance investment and that this situation were sustainable into the indefinite future, a situation of which none of us can be confident. Is it healthy for the US economy or for the global system? I would suggest not for three reasons. ....

First, it’s not our capital. The saving rate is what reflects the accumulation of wealth by Americans, and if we are not saving, regardless of how much investment we finance, the returns from that investment will not be available for the United States. Now Pete Peterson would argue—and I think he is right—that the saving rate that is appropriate today in the United States is one that is substantially greater than the rate that was appropriate 10, 20, or 30 years ago because the baby boom generation will begin retiring in 2011. Even if he is not right in that supposition, it is hard to see why wealth and savings should be lower than they have been at any point historically, or how they are going to get better automatically.

Second, a situation of substantial dependence on foreign capital and a substantial current account and trade deficit, when it has taken place in the United States, has historically at every point been associated with a substantial increase in protectionist pressure. Whether the protectionist pressure derives from the relative level of the dollar or the relative level of the trade deficit is a question that econometricians and politicians can debate—I don’t think the data really permit a distinction—but it is hard to believe that the protectionist pressures would be as serious as they are if the United States did not have a trade deficit of the current magnitude, and it is hard to believe that trade deficits of the current magnitude will not lead to increases in protectionist pressure in the future.

The third troubling aspect of this dependence on foreign capital is its geopolitical significance. Here it is most difficult to speak with definitiveness. There is surely something odd about the world’s greatest power being the world’s greatest debtor. In order to finance prevailing levels of consumption and investment, must the United States be as dependent as it is on the discretionary acts of what are inevitably political entities in other countries? It is true and can be argued forcefully that the incentive for Japan or China to dump treasury bills at a rapid rate is not very strong, given the consequences that it would have for their own economies. That is a powerful argument, and it is a reason a prudent person would avoid immediate concern. But it surely cannot be prudent for us as a country to rely on a kind of balance of financial terror to hold back reserve sales that would threaten our stability. (emphasis added)

Foreign Aid: to give or not to give?

A few weeks ago I blogged about the Q/A with Dambisa Moyo, which was in the NY Times magazine. In that interview Moyo had a neat argument:

Think about it this way — China has 1.3 billion people, only 300 million of whom live like us, if you will, with Western living standards. There are a billion Chinese who are living in substandard conditions. Do you know anybody who feels sorry for China? Nobody.
Forty years ago, China was poorer than many African countries. Yes, they have money today, but where did that money come from? They built that, they worked very hard to create a situation where they are not dependent on aid.

Here is Dambisa Moyo jousting with Stephen Colbert:

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Yet another family-murder-suicide ....

Late last year, I blogged about a horrific murder-suicide in an Indian American family:

Karthik Rajaram was a former employee of PriceWaterhouse Coopers and Sony Pictures in Southern California, but had been unemployed for a few months. He committed suicide, after killing his family — his wife, mother-in-law, and three children aged 19, 12 and 7. It is unfortunate that this Indian-American resorted to guns, reinforcing the notion that guns and violence, too, are as American as the oft-repeated apple pie and mom.

When I went to India later in December, a high school classmate said he was Karthik Rajaram's college-mate during their undergrad years at IIT-Madras.

Now, another such incident--this time in the Northern California

The police identified some of the victims of a murder-suicide that left six people dead in Santa Clara but were still trying to uncover a motive. The police said that on Sunday night, Devan Kalathat, 42, an engineer at Yahoo, fatally shot his 11-year-old son and his 4-year-old daughter and wounded his 34-year-old wife. Before committing suicide, Mr. Kalathat also killed his brother-in-law, Ashok Appu Poothemkandi, 35, a Hewlett-Packard employee; Mr. Poothemkandi’s wife, Suchitra Sivaraman, 25; and the couple’s 11-month-old daughter.

In Rajaram's case, it seemed like his worsening financial situation might have contributed to his going beserk. In this recent incident, the motive is not clear at this stage. Tragic ....

As we get deeper into spring, we will all be reminded of Columbine and Virginia Tech. I hope we will not experience anymore such tragedies.

Carmageddon and the Car-Dealer-in-Chief :-)

I was listening to President Obama's remarks on the continuing GM/Chrysler saga when I was driving, and I could not understand why he talked about the government standing behind auto warranties. It felt bizarre. I felt the same way when he talked about weather-proofing roofs in the context of the stimulus bill discussions; remember that?

Thus, I was eagerly looking forward to Jon Stewart's satire, because I was that confident that it was one strangely humorous press conference. The Daily Show did not let me down. But, first, an excerpt from David Brooks' column:

by enmeshing the White House so deeply into G.M., Obama has increased the odds that March’s menacing threat will lead to June’s wobbly wiggle-out. The Obama administration and the Democratic Party are now completely implicated in the coming G.M. wreck. Over the next few months, the White House will be subject to a gigantic lobbying barrage. The Midwestern delegations, swing states all, will pull out all the stops to prevent plant foreclosures. Unions will be furious if the Obama-run company rips up the union contract. Is the White House ready for the headline “Obama to Middle America: Drop Dead”? It would take a party with a political death wish to see this through.

And now, Jon Stewart:

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Carmageddon '09 - Lemon Aid
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Bush had an "assassination wing"?

The importance of saving money. Or not!

This is a carbon-starved planet!

A colleague recently returned from a trip to the UK--he was there for the Darwin experience, given that this is the 200th anniversary of his birth, and 150th anniversary of his famous treatise. This colleague was thrilled that it was Darwin's poster everywhere he turned. Which is exactly the way it ought to be. More so in this century, which I am convinced is the century of biology, as much as the 20th century was of physics.

Meanwhile, here in the US? Well, watch this Congressional hearing--yes, at the US Congress--and see for yourself where Darwin might fit :-(

How do you like this nutcase's argument that we are right now carbon-starved!!!
Thanks to the DailyDish for the Youtube link.

The Nazi Swastika: In Eugene and in Lebanon

About a year ago, in an op-ed in the Register Guard, I wrote about seeing a Nazi swatika on a lamp-post by the river/bike path. I was shocked to see that. Of course, I called the city personnel right away, and it was wiped clean.

I was reminded of that when I read this piece by Christopher Hitchens. Hitchens is simply an amazing scholar/journalist/intellectual. Not many of his kind around, unfortunately. He is no arm-chair academic mouthing off from the comforts of the ivy-covered college buildings, but ventures out to the problem areas, like Lebanon (near Israel, not the one here in Oregon!) that he writes about here. He does something though that I know I would not have had the guts to do; Hitchens writes:

Well, call me old-fashioned if you will, but I have always taken the view that swastika symbols exist for one purpose only—to be defaced. Telling my two companions to hold on for a second, I flourish my trusty felt-tip and begin to write some offensive words on the offending poster. I say “begin” because I have barely gotten to the letter k in a well-known transitive verb when I am grabbed by my shirt collar by a venomous little thug, his face glittering with hysterical malice. With his other hand, he is speed-dialing for backup on his cell phone. As always with episodes of violence, things seem to slow down and quicken up at the same time: the eruption of mayhem in broad daylight happening with the speed of lightning yet somehow held in freeze-frame. It becomes evident, as the backup arrives, that this gang wants to take me away.

I am as determined as I can be that I am not going to be stuffed into the trunk of some car and borne off to a private dungeon (as has happened to friends of mine in Beirut in the past). With my two staunch comrades I approach a policeman whose indifference seems well-nigh perfect. We hail a cab and start to get in, but one of our assailants gets in also, and the driver seems to know intimidation only too well when he sees it. We retreat to a stretch of sidewalk outside a Costa café, and suddenly I am sprawled on the ground, having been hit from behind, and someone is putting the leather into my legs and flanks. At this point the crowd in the café begins to shout at the hoodlums, which unnerves them long enough for us to stop another cab and pull away. My shirt is spattered with blood, but I’m in no pain yet: the nastiest moment is just ahead of me. As the taxi accelerates, a face looms at the open window and a fist crashes through and connects with my cheekbone. The blow isn’t so hard, but the contorted, glaring, fanatical face is a horror show, a vision from hell. It’s like looking down a wobbling gun barrel, or into the eyes of a torturer. I can see it still.

Doctor Zhivago, and Lara's Theme

Today's news bulletin reports that the music composer Maurice Jarre died at the age of 84.
A fantastic tune it is that he created in "Lara's Theme". In his memory, here is a clip:

Obama to monitor Facebook for slackers!

A primer on research methods

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Globalisation and trade: world trade shrivels

I blogged earlier that trade limits and recession are a bad mix. Not a blog post per se--it was a newspaper op-ed piece. Along that line of logic, I am not sure if I should be happy that I am right, or if I should worry that I am right; here is an excerpt from the Economist:

Trade is contracting again, at a rate unmatched in the post-war period. This week the World Trade Organisation (WTO) predicted that the volume of global merchandise trade would shrink by 9% this year. This will be the first fall in trade flows since 1982. Between 1990 and 2006 trade volumes grew by more than 6% a year, easily outstripping the growth rate of world output, which was about 3% (see chart 1). Now the global economic machine has gone into reverse: output is declining and trade is tumbling at a faster pace. The turmoil has shaken commerce in goods of all sorts, bought and sold by rich and poor countries alike.

It is too soon to talk of a new protectionist spiral. Nevertheless, errors of policy risk making a bad thing worse—despite politicians’ promises to keep markets open. When they met in November, the leaders of the G20 rich and emerging economies declared that they would eschew protectionism and will doubtless do so again when they meet on April 2nd. But this pledge has not been honoured. According to the World Bank, 17 members of the group have taken a total of 47 trade-restricting steps since November.