Good Morning, Occupy Boston!

December 15, 2011 by · Leave a Comment 

By Karin Friedemann, Boston

On December 8, Judge Frances McIntyre lifted the restraining order protecting Occupy Boston from being shut down. McIntyre said that while the protesters are exercising their rights to freedom of expression, the occupation of state land is neither speech “nor is it immune from criminal prosecution for trespass or other crimes.” This does not mean eviction is imminent, but the restraining order against the police no longer applies. Throughout the day, occupiers were handed a notice warning them that they would be subject to criminal trespass if they remained in the park. The ACLU of Massachusetts was actively involved in informing occupiers of their rights.

While some protesters packed up and went home on Thursday, others decided to stand their ground. A few even moved their tents to the middle of Atlantic Avenue just before 2am on Friday. Two protesters were arrested for blocking traffic, but there were no other police confrontations with the demonstrators who gathered at the site as the deadline loomed.

Expecting a possible police crackdown, thousands of supporters from nearby areas flooded into the campsite awaiting the midnight deadline, yet midnight came and went with no response from police officers, as they stood around the perimeter looking into the swelling crowd.

Occupy Boston’s newswire reports that the protesters “rallied at midnight, making circles two deep around tents, as the Veterans for Peace stood guard, white flags snapping in the wind.”

Police blocked off the streets surrounding Dewey Square just before 1am on Friday as hundreds of Occupiers and Occupy supporters packed the encampment. Boston Police Superintendent William Evans said that the police would not be moving in on Dewey Square early Friday morning. He stated that even though Mayor Thomas Menino set the deadline, he did not specify when the camp would be shut down.

As the news came in that no raid was coming, and no was eviction imminent, protesters danced in the streets to celebrate.

“I have no intention of leaving,” said 20-year-old Brandon Cloran of Lynn, Massachusetts, who has lived at the camp for the past six weeks.

FOX News reported that “the encampment site in Dewey Square in the city’s financial district looked noticeably smaller Friday than it had since the protesters first began occupying the site on Sept. 30. Only about 40 protesters and 35 tents remained, covering less than half the area the protest once did…

“Hours later, as dawn approached, the scene was markedly quieter, with only a handful of police officers keeping eye on the remaining protesters, a few of whom were still packing up tents and gathering belongings. One protester was raking part of the greenway that had been vacated by other members of the movement.”

While there is no obvious victory for the protesters as they continue their standoff with the City of Boston, it is clear that the voices of the many are influencing current events. Two weeks ago, a federal judge blocked a settlement between the Securities and Exchange Commission and Citigroup, saying that he could not be sure that it was “fair, adequate, or in the public interest,” while last week, a District Attorney announced she was suing the banks for fraudulent foreclosure practices.

MoveOn reports: “Senate Democrats are proposing an extension of small but helpful tax cuts for the 99%—paid for by a surcharge on millionaires… With votes on unemployment benefits, Medicare payments, and a Wall Street tax likely before the end of the year, this final month of 2011 will force every member of Congress to show who they really represent.”

The very next day after their feared eviction, on December 9, Boston Occupiers amassed against the Department of Housing and Community Development to demonstrate against the lack of affordable housing and ongoing evictions of homeowners, connecting it with the plight of their tent city, citing such statistics:

Each year, 600,000 families with 1.35 million children experience homelessness in the United States, making up about 30% of the homeless population over the course of a year

In any given day, researchers estimate that more than 200,000 children have no place to live

A full time worker earning minimum wage cannot afford a one bedroom unit priced at Fair Market Rent anywhere in the United Stated.

Federal Support for low income housing has fallen by 40% from 1980-2003

15% of all American families and 32% of single parent families live below the poverty line

During a visit to the site 8am Friday, Boston Police Commissioner Edward Davis wouldn’t say what the city plans to do about the remaining protesters.

“We have learned over the past ten weeks just how powerful the people can be,” stated a spokesperson for Occupy Boston. “Unproductive wealth struggles to justify its inefficiency, and deceit grows helpless before a truth that has found its people.”

Karin Friedemann is a Boston-based freelance writer. See karinfriedemann.blogspot.com

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The Texas Unmiracle

August 18, 2011 by · Leave a Comment 

By Paul Krugman

As expected, Rick Perry, the governor of Texas, has announced that he is running for president. And we already know what his campaign will be about: faith in miracles.

Some of these miracles will involve things that you’re liable to read in the Bible. But if he wins the Republican nomination, his campaign will probably center on a more secular theme: the alleged economic miracle in Texas, which, it’s often asserted, sailed through the Great Recession almost unscathed thanks to conservative economic policies.

And Mr. Perry will claim that he can restore prosperity to America by applying the same policies at a national level.

So what you need to know is that the Texas miracle is a myth, and more broadly that Texan experience offers no useful lessons on how to restore national full employment.

It’s true that Texas entered recession a bit later than the rest of America, mainly because the state’s still energy-heavy economy was buoyed by high oil prices through the first half of 2008. Also, Texas was spared the worst of the housing crisis, partly because it turns out to have surprisingly strict regulation of mortgage lending.

Despite all that, however, from mid-2008 onward unemployment soared in Texas, just as it did almost everywhere else.

In June 2011, the Texas unemployment rate was 8.2 percent. That was less than unemployment in collapsed-bubble states like California and Florida, but it was slightly higher than the unemployment rate in New York, and significantly higher than the rate in Massachusetts. By the way, one in four Texans lacks health insurance, the highest proportion in the nation, thanks largely to the state’s small-government approach.

Meanwhile, Massachusetts has near-universal coverage thanks to health reform very similar to the “job-killing” Affordable Care Act.

So where does the notion of a Texas miracle come from? Mainly from widespread misunderstanding of the economic effects of population growth.

For this much is true about Texas: It has, for many decades, had much faster population growth than the rest of America — about twice as fast since 1990. Several factors underlie this rapid population growth: a high birth rate, immigration from Mexico, and inward migration of Americans from other states, who are attracted to Texas by its warm weather and low cost of living, low housing costs in particular.

And just to be clear, there’s nothing wrong with a low cost of living.

In particular, there’s a good case to be made that zoning policies in many states unnecessarily restrict the supply of housing, and that this is one area where Texas does in fact do something right.

But what does population growth have to do with job growth? Well, the high rate of population growth translates into above-average job growth through a couple of channels. Many of the people moving to Texas — retirees in search of warm winters, middle-class Mexicans in search of a safer life — bring purchasing power that leads to greater local employment. At the same time, the rapid growth in the Texas work force keeps wages low — almost 10 percent of Texan workers earn the minimum wage or less, well above the national average — and these low wages give corporations an incentive to move production to the Lone Star State.

So Texas tends, in good years and bad, to have higher job growth than the rest of America. But it needs lots of new jobs just to keep up with its rising population — and as those unemployment comparisons show, recent employment growth has fallen well short of what’s needed.

If this picture doesn’t look very much like the glowing portrait Texas boosters like to paint, there’s a reason: the glowing portrait is false.

Still, does Texas job growth point the way to faster job growth in the nation as a whole? No.

What Texas shows is that a state offering cheap labor and, less important, weak regulation can attract jobs from other states.       

I believe that the appropriate response to this insight is “Well, duh.”

The point is that arguing from this experience that depressing wages and dismantling regulation in America as a whole would create more jobs — which is, whatever Mr. Perry may say, what Perrynomics amounts to in practice — involves a fallacy of composition: every state can’t lure jobs away from every other state.

In fact, at a national level lower wages would almost certainly lead to fewer jobs — because they would leave working Americans even less able to cope with the overhang of debt left behind by the housing bubble, an overhang that is at the heart of our economic problem.

So when Mr. Perry presents himself as the candidate who knows how to create jobs, don’t believe him. His prescriptions for job creation would work about as well in practice as his prayer-based attempt to end Texas’s crippling drought.

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Getting Past the Paralysis on Jobs

June 16, 2011 by · Leave a Comment 

By Fareed Zakaria

TV CNN ZakariaEvery week brings fresh evidence that America’s unemployment crisis is much deeper and more systemic than predicted — yet Washington seems unwilling or unable to do anything about it. Fears of the budget deficit and a dysfunctional political climate have paralyzed people on both sides of the political aisle. The result is that America is “sleepwalking” through its biggest crisis, writes Mohamed El-Erian, the low-key co-CEO of PIMCO.

Around 24 million Americans are unemployed or underemployed (the latter in part-time jobs that average $19,000, half the median wage). If these people don’t find jobs soon, they will lose skills and work habits and become permanently unemployable, with grim consequences for their families, communities and the country. And if employment growth does not pick up significantly, tax revenue will stay depressed, unemployment costs will rise and the deficit will balloon well beyond current projections.

We still seem to be hoping that somehow this problem will resolve itself, but it won’t. Federal Reserve Chairman Ben Bernanke explained this week that the economy has gone through the worst financial crisis and the deepest housing collapse since the Great Depression. In fact, the problem is even worse. Employment growth has been stalled since 2000. If not for the housing and credit bubble, this jobs crisis would have revealed itself much earlier.

We’re in a new world for the American worker. Technological change and globalization allow companies to get more output with fewer workers. Emerging markets provide millions of skilled workers who can produce the same products at a fraction of the price that Americans can. The Bureau of Labor Statistics notes that from 1947 till 2000, productivity growth was correlated with employment growth. Since 2000, they have diverged. Productivity has risen while employment has fallen. The Nobel Prize-winning economist Michael Spence has concluded that in America, growth and employment will diverge in the future.

Does this mean that we are stuck in a low-growth, low-employment future? No, but the crisis is structural, and we have to recognize its scope and urgency. “Shutting off the alarm and pulling the blanket over one’s head is not a solution,” says El-Erian.

Republican concerns about government spending over the long term are understandable, but cutting spending in the short run will result in more unemployment and slower growth. President Obama talks about jobs but seems too paralyzed to do something ambitious to help create them. Even Bernanke said this week that there isn’t much he could do about the slow-growth, high-unemployment trajectory we are on. Have we all become fatalists?

In fact, we could enact some measures that would spur job creation, many with a limited effect on the deficit. Most immediately, Washington needs to find ways to employ the millions of workers whose jobs disappeared with the housing bust. The simplest way to help them, and the country, would be to create a national infrastructure bank to repair and rebuild America’s infrastructure — which is in a shambles and ranks 23rd globally, according to the World Economic Forum — down from sixth only a decade ago.

House Majority Leader Eric Cantor has played down this proposal as just more stimulus, but if Republicans set aside ideology they would see it is actually an opportunity to push for two of their favorite ideas: privatization and the elimination of earmarks.

The United States builds infrastructure in a remarkably socialist manner; the government funds, builds and operates almost all American infrastructure. In many countries in Europe and Asia, the private sector plays a large role in financing and operation of roads, highways, railroads and airports, as well as other public resources. An infrastructure bank would create a mechanism by which such private-sector participation would become possible here as well. Yes, some public money would be involved, mostly through issuing bonds, but with interest rates at historic lows, this is the time to rebuild. Such projects, with huge long-term payoffs, could genuinely be called investments, not expenditures.

A national infrastructure bank would also address a legitimate complaint of the Tea Party — earmarks. One of the reasons federal spending has been inefficient is that Congress wants to spread money around in ways that make political sense but are economically inefficient. An infrastructure bank would make these decisions using cost-benefit analysis, in a meritocratic system, rather than basing decisions on patronage and whimsy.

The country needs much more: a revival of manufacturing, emphasizing technical training and apprenticeship programs; aggressive measures to promote those industries that are booming, such as entertainment and tourism; an expansion of retraining; streamlining the patent process; more visas for skilled immigrants to stay and create companies and jobs in America. These should be part of a national plan for jobs that President Obama must lay out soon. But start with something that would have an immediate impact and put people back to work — the rebuilding of America.

comments@fareedzakaria.com

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Iraq Parliament Passes Key Investment Law

December 10, 2009 by · 1 Comment 

BAGHDAD (Reuters) – Iraq’s parliament passed an investment law on Monday that would allow foreigners to own land for housing projects, and is designed to streamline regulations and applications for foreign investment, lawmakers said.

Iraq hoped for a tide of foreign investment as the sectarian bloodshed triggered by the 2003 U.S. invasion subsided in the last two years, but bureaucracy, red tape and outdated land ownership laws have deterred businessmen.

“This is a huge achievement for everybody, the parliament, the cabinet and the Iraqi people. This will remove many obstacles blocking the investment process in Iraq,” National Investment Commission Chairman Sami al-Araji told Reuters.

The investment law does not cover the oil sector, nor hotel construction, but housing is a potentially huge growth industry.

Iraq hopes to build millions of new housing units. The old real estate laws only allowed the lease of land to foreign investors for a limited time.

The new law aims to speed up the process of applying for investment licenses and to clarify federal and provincial powers when dealing with investors.

It must now be approved by Iraq’s presidential council.

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China House Hunting to Rev up Economy

August 27, 2009 by · Leave a Comment 

By Simon Rabinovitch

BEIJING, Aug 18 (Reuters) – The Chinese government is attempting to pass the baton of growth from state-funded infrastructure investment to the private housing sector, a risky but necessary move to sustain the economic recovery.

Construction cranes sprouting in big cities, busy furniture shops and soaring property sales all show that the transition is going smoothly so far, though officials are wary that house prices may rise too high, too quickly.

China’s biggest listed property developer, Vanke <000002.SZ>, lifted its housing starts target for this year by 45 percent, while its rival Poly Real Estate <600048.SS> said sales in January-July rose 143 percent from a year earlier.

On the ground, construction firms, big and small, are trying to meet the demand, last years’ downturn now a distant memory.

“It’s been a long time since we’ve had a day off. Several months, I think, though I can’t remember exactly,” said Zhang Minghui, owner of a small building company in Beijing.

“From late last year to early this year, we basically had nothing to do. Everybody was careful with their money because of the crisis and so projects got delayed.”
Zhang cut his staff to three in November but is now back up to a crew of 14.

The economic importance of the property sector in China is hard to overstate. Investment in residential housing accounted for about 10 percent of gross domestic product before a property boom turned to bust in 2008, roughly the same as the contribution from the country’s vaunted export factories.

The government’s first steps last year to revive the stalling Chinese economy were to offer tax cuts to encourage home purchases, followed by rules to ease access to mortgages.

These are bearing fruit.

With housing investment up an annual 11.6 percent in the first seven months, Chinese growth momentum is broadening out and the central government has been able to slow the pace of its stimulus spending on infrastructure.

But Beijing must strike a fine balance in its bid to kick-start the housing market.

On the one hand, it wants rising prices to persuade house hunters to stop putting off purchases and to get developers to invest in new projects. On the other hand, it is wary of prices rising too quickly, luring speculators into the market and turning it into an asset bubble, not an economic driver.

“Because it is closely linked to so many industries, volatility in the real estate market will inevitably lead to macroeconomic volatility,” the government-run China Economic Times warned on Monday.

The housing market rebound in Beijing, Shenzhen, Guangzhou and other big cities means that prices are already back to their 2007 peak, the report noted.

While prices are high, a surge in sales has depleted housing inventories and developers need to break ground to catch up, Ken Peng, an economist at Citigroup in Beijing, said.

That the Chinese property sector is at a turning point, just getting back on its feet, is seen in the differing fortunes of shops at the Shilihe hardware market in east Beijing.

Those selling goods for early stages of construction, such as tiles, say business is strong. Vendors of lights, among the final purchases for a new home, say it is only now perking up.

“We have done some sales to attract shoppers. But we have actually started scaling these back,” said Chen Yu, a saleswoman at Jushang Lights.

The government can take heart in how most of the real estate money has been spent to date.

Investment in property construction was up a fifth in western China — the part of the country with the biggest need for new housing — in June compared with a year earlier. Wealthier coastal areas in the east, which are already heavily built up, saw a 4.4 percent rise.

But officials are wary of another boom in housing prices paving the way for yet another bust. A handful of Chinese cities have made mortgage lending terms on second homes stiffer to try to keep speculators at bay.

Several real estate agents said the market seemed to have cooled over the past few weeks.

Shanghai Xinyi, a real estate agency in China’s financial centre, said transactions in August fell by half from July.

A salesman surnamed Luo at a Shenzhen branch of Centaline China confirmed that business has slowed down from its brisk pace in the first half.

“It was not rare for house sellers to cancel their original contracts and lift their asking price, even if it meant paying a penalty,” he said by phone. “But the momentum has weakened in August. We could feel the effect of the government’s tightening-up of loans for second homes.”

However, Dong Tao, an economist with Credit Suisse in Hong Kong, offered another explanation of the drop in transactions.

Soaring demand gobbled up whatever homes were on the market and so developers simply must build more, he said in a research note. But it takes time to buy land and obtain approvals.

“After many sites have passed the paperwork phase, we expect housing construction to rise significantly over the summer time.”

(Additional reporting by Ben Blanchard; Graphics by Catherine Trevethan; Editing by Tomasz Janowski)

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