Fiscal and Monetary Policy

Morning Must Reads: Banks Profit From Secret Loans

After a lengthy battle failed to prevent publication, Bloomberg Markets Magazine has released an analysis of data obtained from the Federal Reserve on previously undisclosed loans the Fed made to banks during the financial crisis. As of March 2009, the Fed provided $7.7 trillion in loans and guarantees to troubled banks, according to Bloomberg, which also reported that the bank bailout lasted from August 2007 to April 2010.  By comparison the Troubled Asset Relief Program (TARP) of the U.S. Treasury was just $700 billion.

Third and State This Week: A $56 million Marcellus Oops, Fiscal Austerity and Why It's Good to Be King

We hope you enjoyed your Thanksgiving holiday and are ready to take a break from the shopping mall to see what you missed this week at Third and State.

We blogged about the Pennsylvania Department of Revenue's Britney Spears moment, the challenges of reading all the way to the end, and why it's good to be king (or at least a well-paid CEO).

IN CASE YOU MISSED IT

  • On the Marcellus Shale, Michael Wood blogged about a $56 million "oops" by the Pennsylvania Department of Revenue in estimates it made earlier this year of Marcellus Shale industry tax contributions in 2010.
  • On jobs and the economy, Mark Price explained why it's a good idea to read to the end before criticizing the work of others. He also highlighted in the Morning Must Reads The Philadelphia Inquirer's series "America: What Went Wrong" and the Pittsburgh Post-Gazette's series on what happened to the middle class.
  • In other Morning Must Reads, Mark Price shared news stories on the fallout of fiscal austerity across the Commonwealth and wrote about the big bucks the new CEO of Pittsburgh-based American Eagle Outfitters will be making. As King Louis XVI of France was fond of saying, it's good to be king.
More blog posts next week. Keep us bookmarked and join the conversation!

Morning Must Reads: Fiscal Austerity Means Higher Taxes, Job Losses, Fewer Resources to Help Abused Kids

The Congressional Budget Office (CBO) has released new estimates of the American Recovery and Reinvestment Act's impact on employment and output (the quantity of goods and services in the economy). Commenting on the new ARRA estimates, Paul Krugman argues that the U.S. has been practicing austerity since the middle of 2010.

  • Paul Krugman, The Conscience of a Liberal — The Big Drag:

...the U.S. federal government has been practicing destructive fiscal austerity since the middle of 2010 (and that’s not even talking about what’s happening at the state and local level). Here’s the average of CBO's high and low estimates of the impact of the ARRA on the level (not the rate of growth) of [Gross Domestic Product] by quarter:

Failing to do more to boost employment growth means tax revenues remain depressed for state and local governments. And this means higher local taxes and more layoffs at a time when the unemployment rate remains higher in most cities and counties in Pennsylvania than it was even at the worst of the last two recessions.

Morning Must Reads: What Went Wrong and the Confidence Fairy Is Back!

Over the next year, The Philadelphia Inquirer will be updating a series from 1991 titled "America: What Went Wrong," by Donald L. Barlett and James B. Steele. This morning, Barlett and Steele take on the legacy of Apple Computers. 

The death of Steve Jobs was followed by an avalanche of superlatives — brilliant, genius, and visionary among the more common. He was likened to Leonardo da Vinci, Albert Einstein, and Thomas Edison.

But in the case of Edison, there was one significant difference that went unmentioned. For more than a century, just one of Edison's inventions alone — the incandescent lightbulb — was manufactured at numerous locations in the United States, providing employment for millions of Americans across family generations.

The Apple home computer, not at all. After only one generation, all the Apple manufacturing jobs in America disappeared, as the work of building and assembling the machines was turned over to laborers in sweatshops in China and other countries. Jobs that should have provided employment for Americans for decades to come were terminated

While Barlett and Steele explore what went wrong, the Pittsburgh Post-Gazette's series Middle of Nowhere continues today with a survey of major events and policy choices that are thought to be important to creating the middle class in America.

Third and State This Week: Marcellus Shale Action, Pat Toomey's Deficit Plan and Latest PA Job Numbers

This week, we blogged about October job growth in Pennsylvania, legislative action on a Marcellus Shale fee, and a deficit plan from Senator Pat Toomey that would increase after-tax income inequality even further in the U.S.

IN CASE YOU MISSED IT

More blog posts next week. Keep us bookmarked and join the conversation!

Morning Must Reads: Income Inequality and Finally Somebody Speaks Up for the Bankers

The Pittsburgh Post-Gazette has published the first in a series of stories on inequality this morning. The conservative position is apparently "What inequality?" followed by "I'm not conceding there is any inequality, but if there were, I'm sure I like it a lot!" Enjoy.

Third and State This Week: Weak Drilling Fee, More Bad Employment News and Ranking Social Well-being

This week, we blogged about the latest developments in enacting a Marcellus Shale drilling fee, more bad employment news for Pennsylvania and a new study ranking nations based on indicators of social well being (the U.S. doesn't do so good).

IN CASE YOU MISSED IT

  • On the Marcellus Shale, Sharon Ward provided an update on legislative developments in the Pennsylvania House, and Michael Wood shared a new fact check from the Pennsylvania Budget and Policy Center comparing the effective rates of leading drilling tax and fee plans before the General Assembly.
  • On inequality, Stephen Herzenberg blogged about a new study that ranks the 31 Organization for Economic Co-operation and Development (OECD) countries on eight indicators of social well-being. The U.S. ranks 27th.
  • On jobs and unemployment, Mark Price wrote about more bad employment news for Pennsylvania, including a revised outlook from the Philadelphia Federal Reserve signaling that the state's economy will be shrinking through the first quarter of 2012.
  • In the Morning Must Reads this week, Mark Price summed up local unemployment data, shared an amusing video from The Daily Show suggesting that it is time for the 1% to go on strike, wrote about rising college tuition and budget strains for local governments, highlighted a lack of political will for fixing the broken economy, and noted that some in the U.S. Senate would just prefer that people that have to drive over structurally deficient bridges would just drop dead.

More blog posts next week. Keep us bookmarked and join the conversation!

Morning Must Reads: Local Governments Under Pressure, Students Under Pressure, State Policy Makers Not So Much

The Federal Open Market Committee (FOMC), the body that establishes monetary policy at the Federal Reserve, announced on Wednesday that it is expecting the economy to grow more slowly than previously thought over the next several years. 

In response to the deteriorating economic situation, the committee decided to do nothing. 

At his press conference explaining the FOMC decision, Federal Reserve Chairman Ben Bernanke urged Congress to do something about jobs.

'I think it would be helpful if we could get assistance from other parts of the government to help create more jobs,' Mr. Bernanke said.

Meanwhile, with unemployment high, federal assistance running out and the state cutting spending, local government finances are deeply in the red. Lackawanna County appears headed for layoffs and tax increases.

A bipartisan advisory panel recommended Wednesday that Lackawanna County increase real estate taxes to balance its 2012 budget, warning a steep hike will be required as county government contends with a financial crisis that will not be resolved quickly or painlessly.

The Philadelphia School District, also deeply in the red, has a plan to save up to $9 million by closing nine schools.

Turning to college kids, student loan debt rose by 5% in 2010. Public colleges, faced with significant cuts in state support, raised tuition nationally by 7.3% this year. 

Third and State This Week: Rising Unemployment, a Health Insurance Rate Hike and Momentum for a Drilling Tax

This week we blogged about momentum building for a natural gas drilling tax and rising unemployment in Pennsylvania. We also featured a guest post on the need for stronger insurance rate protections in Pennsylvania. And Mark Price kept us up to date with the Morning Must Reads.

IN CASE YOU MISSED IT

  • On jobs and unemployment, Stephen Herzenberg shared his media statement on the rising jobless rate in Pennsylvania.
  • On the Marcellus Shale, Sharon Ward highlighted a recent New York Times article on the problems that have come with Marcellus Shale growth in Pennsylvania. Kate Atkins urged readers to sign a letter to lawmakers in support of a drilling tax that would generate revenue to improve schools, fix roads, train workers, and protect the environment.
  • On health care, Athena Ford of the Pennsylvania Health Access Network penned a guest post on the need for better insurance rate protections in Pennsylvania.
  • Finally, Mark Price had Morning Must Reads on the economic polarization of the 99%, the need for more accountability in charter schools, how we can boost the economy, and what budget cuts and layoffs have in common.

More blog posts next week. Keep us bookmarked and join the conversation!

Morning Must Reads: Accountability in the Private and Public Sector or Making Money the Old Fashioned Way

While cruising by Allentown on I-78 with Billy Joel's greatest hits blaring on your stereo, you may have noticed just along the highway a big sign for the camera maker Olympus. Turns out the North American headquarters for the Olympus Corporation of the Americas is located in Allentown. The Allentown Morning Call reported Friday that the CEO of the parent company has been dismissed. Businessweek is reporting this morning there is more to the story:

Fired Olympus Corp. President Michael C. Woodford said he met with the U.K.’s Serious Fraud Office to request an investigation of payments made by the Japanese company to advisers in a 2008 acquisition ...

Olympus ... paid $687 million to two advisory companies related to its purchase of Gyrus Group Plc in 2008, the PwC report said. The fees were more than a third of the $2 billion purchase price, according to the report. Merger and acquisition advisory fees usually range from 1 percent to 5 percent.

As the Allentown Morning Call reported on Friday, the company had been seeking to aggressively cut costs via an undisclosed number of layoffs in Allentown over the summer. 

Two words. 

Job creators?

Rather than lay off workers while paying fat fees to "advisers," The Philadelphia Inquirer this morning reports on an emerging approach to job creation, spending money to fix things!

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