John Irons's Blog


Economic News, Data and Analysis

From the “I told you so” department

Irons/Bivens – May 1, 2008:

While it will be many months before an “official” recession is declared, evidence shows that the economic expansion that began in 2001 has almost surely ended.1 Furthermore, if these trends continue, the start of a new recession will likely be dated either at the end of the last quarter of 2007, or at some point during the first quarter of 2008.

Business Cycle Dating Committee, National Bureau of Economic Research – December 1 2008

The Month of the Peak
The committee identified December 2007 as the peak month, after determining that the subsequent decline in economic activity was large enough to qualify as a recession.

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No rest

Things have been crazy at the day job with the economy melting down and the election. Any hopes for a post election letdown are slipping away. Here’s my public event schedule for the next few weeks…

  • Nov 13th – Kerner Commission/Eisenhower foundation event at EPI, talking about revenue options for progressive reform
  • Nov 18th – CAF event on the hill re: economic stimulus and investment in infrastructure
  • Nov 19th – CBPP/SFAI conference on the current and projected state of the economy, prospects for stimulus
  • Dec 1 – Innovation conference (EPI/UC Davis) on green jobs

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Obama wins… change in the air.

Now on to the hard work of fixing the economy…

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Economist and FT endorse Obama

Obama gets endorsements from two <sarcasm>socialist</sarcasm> publications: The Economist and Financial Times
An endorsement of Barack Obama | It’s time | The Economist / Comment & analysis / Editorial comment – Obama is the better choice

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Infrastructure and Economic Recovery

It’s been a busy couple of weeks. Below is some of what I’ve done…

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A Concrete Stimulus Plan: Infrastructure and Recovery

Quoted on stimulus in CQ below. Also, stay tuned – I’m scheduled to testify before the House Transportation and Infrastructure Committee next week.

CQ Politics | A Concrete Stimulus Plan: Infrastructure and Recovery

The research and policy director at the liberal-leaning Economic Policy Institute, John Irons, says that if the nation goes into a recession — and there’s a growing consensus that it’s already there — employment opportunities will be needed not just in the short term, but for months down the road. “With recessions the job market takes a lot longer to recover,” Irons said. “So whatever we can put into the pipeline, it’s not like we won’t need it in six months or a year.”

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Welcome to the 21st century

Obama is advertising on Xbox 360 online games. See pics:
here, and here.

Confirmed: Obama Is Campaigning on Xbox 360! – GigaOM

Last week we noted unconfirmed sightings of an “Obama for President” billboard in the Xbox 360 racing game Burnout Paradise. Today we’re able to report that it is, in fact, an official advertisement placed by the senator’s campaign team.
“I can confirm that the Obama campaign has paid for in-game advertising in Burnout,” Holly Rockwood, director of corporate communications at Electronic Arts, the game’s publisher, told me via email, noting that EA regularly allows ad placements in their online games. “Like most television, radio and print outlets, we accept advertising from credible political candidates,” she continued. “Like political spots on the television networks, these ads do not reflect the political policies of EA or the opinions of its development teams.”

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Paul Krugman wins Nobel Prize

The Prize in Economics 2008 – Press Release

The Royal Swedish Academy of Sciences has decided to award The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008 to
Paul Krugman
Princeton University, NJ, USA
“for his analysis of trade patterns and location of economic activity”
International Trade and Economic Geography
Patterns of trade and location have always been key issues in the economic debate. What are the effects of free trade and globalization? What are the driving forces behind worldwide urbanization? Paul Krugman has formulated a new theory to answer these questions. He has thereby integrated the previously disparate research fields of international trade and economic geography.
Krugman’s approach is based on the premise that many goods and services can be produced more cheaply in long series, a concept generally known as economies of scale. Meanwhile, consumers demand a varied supply of goods. As a result, small-scale production for a local market is replaced by large-scale production for the world market, where firms with similar products compete with one another.
Traditional trade theory assumes that countries are different and explains why some countries export agricultural products whereas others export industrial goods. The new theory clarifies why worldwide trade is in fact dominated by countries which not only have similar conditions, but also trade in similar products – for instance, a country such as Sweden that both exports and imports cars. This kind of trade enables specialization and large-scale production, which result in lower prices and a greater diversity of commodities.
Economies of scale combined with reduced transport costs also help to explain why an increasingly larger share of the world population lives in cities and why similar economic activities are concentrated in the same locations. Lower transport costs can trigger a self-reinforcing process whereby a growing metropolitan population gives rise to increased large-scale production, higher real wages and a more diversified supply of goods. This, in turn, stimulates further migration to cities. Krugman’s theories have shown that the outcome of these processes can well be that regions be

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Read the Fine Print!

I think we all know now to read the fine print when it comes to mortgages….
Gene and Jared note the fine print of the McCain bailout.

Jared Bernstein and Gene Sperling: Ouch! McCain’s Housing Solution Is a Gift from Taxpayers to Banks

But today we learned of a detail that makes his plan significantly different — and much worse. The McCain plan uses taxpayer dollars to buy distressed mortgages at their full, face value from the banks and lending institutions that are currently stuck with them. Only then, after we the taxpayers have fully absorbed the cost to the lender of these troubled loans, does the homeowner get the benefit of the lower principal.

That’s right folks…it’s private profits and social losses. Instead of an effort to safeguard taxpayers as Senator Obama has called for and the Frank-Dodd bill goes to great lengths to do, this plan takes from taxpayers to provide unjustifiable subsidies to financial institutions – even those who engaged in deceptive or outright fraudulent practices to induce people into homes they could not afford.

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Speak American!

What did I say?

Finance et Investissement : Le plan Paulson toujours entre les mains du Congrès

Le plan Paulson toujours entre les mains du Congrès
Le temps presse…
23 septembre 2008
Par Léonie Laflamme Savoie
« Un plan de sauvetage ne doit pas être simplement un cadeau pour des compagnies qui ont pris de mauvaises décisions », soutiennent les économistes de l’Economic Policy Institute (EPI).
Alors que le Congrès américain est toujours divisé sur son intention d’approuver ou non le plan de sauvetage que le secrétaire au Trésor Henry Paulson a conçu afin de sauver l’industrie financière américaine, les débats font rage quant à la validité et à la viabilité du plan en question.
« De la façon dont le plan Paulson est structuré, les payeurs de taxes vont vraisemblablement payer pour des dettes dites toxiques avec peu de certitudes qu’ils rentabiliseront leurs dépenses », souligne John Irons, directeur de la recherche à l’EPI.
Il suggère plutôt que le gouvernement américain agisse un peu plus comme un investisseur privé en suivant la ligne de pensée démocrate et en exigeant des titres d’entreprises en échange de chaque dette achetée.
« Si le prêt fonctionne et que la compagnie se remet à faire des profits, le gouvernement pourra les vendre à son avantage alors que si la firme fait défaut, il aura le droit de réclamer une part des actifs qui resteront », suggère John Irons.

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