Tag: economics

This report certainly won’t surprise the socionomists:

Suicide rates in the U.S. tend to rise during recessions and fall amid economic booms, according to study from the Centers for Disease Control and Prevention. Suicides reached a record high of 22 people per 100,000 in 1932 during the Great Depression, CDC officials said in a report published online today in the American Journal of Public Health. That was double the rates seen in 2000, when 10 people per 100,000 took their lives as the economy prospered, the study found.

What I’m wondering is if this might make for an effective check on the, shall we say, heavily massaged government statistics. If GDP is reportedly up in tandem with the suicide rate, then one would tend to suspect that the economy was not actually growing despite the statistically reported growth. For example, it is interesting to note that the suicide rate has been on the rise since 2000.

The six-year analysis found that the U.S. suicide rate rose 5 percent, from 10.5 per 100,000 people in 1999 to 11 per 100,000 people in 2005.

This suggests that if the economy is still in a contraction, as I have been insisting, then the suicide rates should still be rising from 2008 through 2011.

Standards & Poor finally begins to consider downgrading U.S. debt, but lack the guts to point out the obvious.

Standard & Poor’s on Monday downgraded the outlook for the United States to negative, saying it believes there’s a risk U.S. policymakers may not reach agreement on how to address the country’s long-term fiscal pressures.

“Because the U.S. has, relative to its ‘AAA’ peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable,” the agency said in a statement.

Of course, remember that debt rating services don’t downgrade debt until it is completely obvious to everyone. If you still think U.S. debt merits AAA status, well, you probably borrowed a lot of money to invest in real estate sometime after 2007. To say that the outlook is “negative” is a serious understatement.

Overstuffed bank accounts and a broad panoply of investments are of little protection from those who have been screwed over and have nothing left to lose. The banksters believe they are immune from the Great Depression 2.0 by virtue of their ability to pay off their losses with taxpayer money, but justice has a way of being served one way or another:

A wealthy businessman was shot and killed on the doorstep of his country house by a gunman who was later found dead in a village churchyard. Ray Masters, 58, bled to death in front of his horrified family after being shot in the chest at point blank range.

The gunman, Michael Harper – who was last night described as a disgruntled business associate – then fled before turning his weapon on himself. Sources claimed that Mr Harper, 46, had lost his wife and home as a result of a financial dispute with Mr Masters. The private contractor had apparently done work for which he was owed a six-figure sum….

A builder who claims to have done work for Mr Masters said he is owed close to £100,000 and is taking legal action to recover the debt. He said: ‘There’s a list of people as long as your arm of people who have had dealings with him and come out badly.’ Another man said: ‘I’m not surprised by this. He has conned a lot of people. I went into business with him and he duped me too. And there’s dozens more like me.’

Wealthy individuals and corporations often think they can use the expense of the legal system to rip people off. However, the reality is that when legal means of recourse are denied, it is assured that at least some of those being screwed over will quite understandably resort to illegal means. How long will it be before a victim of the student loan scam seeks vengeance against a university president or a former homeowner was foreclosed by a bank that didn’t own the home metes out extra-legal justice to the CEO of a mortgage bank?

Unless I am wrong and the Federal Reserve can somehow pull an economic rabbit out of its hat, I suspect these sorts of vengeful acts will become alarmingly common in the near future. This and other unusual criminal actions are socionomic indicators that the so-called recovery is, in fact, nothing more than a statistical illusion.

I knew that housing prices had declined since their 2006 apex, but I hadn’t realized just how far they had fallen. The highwater mark of NAR’s median existing home price was $227,100, which is $71,000 more than last month’s $156,100. That amounts to a 31.3% decline in home prices, which is 37.4% when corrected for CPI-U inflation. The chart below puts it in perspective.

It may be worth keeping this ongoing price collapse in mind before concluding that rising metal, commodity, and stock market prices prove the inflationary case, especially since the effects of that price collapse still remain unaccounted for.

The Nobel prizewinner finds himself in over his head:

There is, if you think about it, an immediate logical problem here: Republicans are saying that job destruction leads to lower wages, which leads to job creation. But won’t this job creation lead to higher wages, which leads to job destruction, which leads to …? I need some aspirin. Beyond that, why would lower wages promote higher employment?

Seriously? Krugman is seriously asking why lower prices promote higher demand? Unbelievable. Apparently the devotees of the Keynesian Cross have forgotten how to draw a basic SD curve. Because lower prices promote higher demand, ergo lower wages promote higher employment.

As for Mellonism, it was never put into practice… which brought about Great Depression I.

Economic Prediction #7: The national median existing-home price will fall below 160k from the present 170,600.

The median home price dropped 5.2 percent in February from a year earlier to $156,100, the lowest since April 2002. “If the price declines persist, even with the job market recovery, that could hamper recovery in the housing market,” said NAR chief economist Lawrence Yun.

Needless to say, this doesn’t bode well.

Relatively speaking, anyhow:

On Thursday, the Census Bureau revealed that 18% — or 1.6 million — of the Sunshine State’s homes are sitting vacant. That’s a rise of more than 63% over the past 10 years…. In Florida, the worst-hit county is Collier — home of Naples — with a whopping 32% of homes empty. In Sarasota County, 23% of the housing stock sits vacant, while Lee County (Cape Coral) has a 30% vacancy rate. And Miami-Dade County has a vacancy rate of about 12%.

This isn’t quite as bad as it sounds, since Naples is one of the primary second-home markets in the country. No one was actually living in a lot of those houses outside of “the season” as they called it down there. But it is really bad from financial and real estate perspectives, as it indicates that a) rich people can’t afford those second homes anymore and b) the housing market is far more overstocked than the real estate statistics indicate. It’s a classic example of Austrian malinvestment in action, with the perverse incentives created by the credit expansion of the last ten years.

Jeffrey Tucker points out that it didn’t take long for the Neo-Keynesians to resort to the Broken Window Fallacy:

“It may lead to some temporary increments, ironically, to GDP, as a process of rebuilding takes place. In the wake of the earlier Kobe earthquake, Japan actually gained some economic strength” – Lawrence Summers, president emeritus of Harvard University and former director of the White House National Economic Council.

Based on this logic, the U.S. military should set off a series of nuclear explosions in the Atlantic, the Gulf of Mexico and off the California coast to trigger a series of tidal waves that will trigger instant economic growth all along the coasts. I’m not sure what we could do to help the Upper Midwest, but perhaps our intrepid biologists could do something about breeding a horde of giant rampaging beavers to destroy all the dams and bridges from Michigan to Idaho.

Now, as I explained in RGD, there are certain specific situations where broken windows will lead to economic growth, but earthquakes and tsunamis aren’t among them.