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Business News Update

Labor Markets

The national labor markets rebounded in September.

The economy created the net sum total of 463,000 new jobs. Private-sector employers added the net sum total of 73,000 W-2 jobs. It turns out the economy generated a net payroll job gain of 89,000 in August, as opposed to the small decline that originally was reported.

The unemployment rate ticked up in September by 1/10 of 1%. Although total net employment increased by 463,000 a grand total of 573,000 people were counted as having entered the labor force, a measure that includes those actively seeking employment.

Wage Growth -- Lower-Tiered Workers

Since 2001 hourly wages for lower-tiered workers have increased above and beyond inflation:

$14.64 - avg. hourly wages, 9/01
$17.57 - avg. hourly wages, 9/07
20% - growth in hourly wages, 9/01 - 9/07
17% - total consumer inflation rate, 9/01 - 9/07

For obvious reasons the chances of the media reporting those numbers fall somewhere between zero and nada.

Bartender, Make it a Double

I got a kick out of this article about Irish liquor, free trade and the EU's highest court.

Rx for Lower Prices

Here's a link to a Reuters article -- without a stated or implied agenda -- concerning stepped-up efforts by the FDA to approve generic prescription drugs.

Mortgage Laws

The U.S. House spent a lot of time this week on mortgages and related items.

The full chamber passed a bill that would cease treating as taxable income forgiveness of mortgage debt. That's good.

Unfortunately the same bill offsets the costs of that tax relief by eliminating a tax break on sales of 2nd homes, i.e., a tax cut balanced with a tax hike. That's bad.

Simultaneously the media/Democrats on the salient House subcommittee cleared a bill along strict party lines that would toss out several decades worth of bankrupcty law. Basically the "Party of the (rich) People" wants mortgage lenders not to be able to foreclose their security interests against bankrupt borrowers. They want to give bankruptcy judges the ability to *order* lenders to renegotiate home loans once a borrower files for bankruptcy. That's U.G.L.Y. People out there in TV Land would be rewarded for their own fecklessness -- a true "nanny state" scenario. As a stand-alone measure there's not a chance that provision would escape a veto.

The Senate also is considering bills in this arena. As we approach the inevitable Conference Committee it remains to be seen whether the media/Democrats will try to tie all the bills together (they're certainly ruthless and savvy enough) and as such whether the Prez will sign or veto. If the tax relief plan is tied to that idiotic bankruptcy measure the Prez should veto the whole thing and let them pound sand.

If non-voting conservatives manage to elect HillaryObama this entire topic essentially will become moot. In that event the lunatic left basically will have unchecked power to enact ghastly laws not only against mortgage lenders but also against related businesses, both large and small. The gruesome irony is that deep down many conservatives could not care less. *sigh*

Nobody's Fault But Mine

Here's a link to a surprisingly-well-written and non-biased AP article about Florida's ongoing efforts to re-enact a no fault insurance system for auto accidents.

FWIW, I've never been a big fan of no fault laws. Yes, admittedly, trying to limit lawsuits is a good thing. But coupling that end with a means of requiring people to purchase insurance strikes a nerve with me -- for the same reasons why all paternalistic laws strike nerves. There's also the obvious problem of inviting fraud. The better approach would be to eliminate auto accident lawsuits altogether and to require mandatory binding arbitration with strict damages caps and no rights to appeal. In any event, it's an important issue, a good article, and certainly worth a perusal.

Stock Markets

The stock markets were volatile this week. On Monday the Dow Jones Industrial Average set an all-time record high. Thereafter the markets went sideways or down. On Friday a "Goldilocks" figure on net payroll job gains pushed up the Dow and the other major market averages.

Speaking of stocks, back in March 2003 you could have purchased payroll processor ADP for around $27 a share. That was a time during which the financial media severely was depressed about the country's labor markets (and its political direction too, of course). ADP was being sold off in a panic. Yesterday, however, ADP closed at $47.39 per share.

$ 27 - March 2003 - depression in the media and panic selling on Wall Street
$ 47 - October 2007
+ four years of dividends too

Morals of the story:

- Buy low, sell high. Not vice-versa.
- Being a media/market Lemming is no way to achieve one's financial goals.


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Comments (4)

RE: Wage Growth, item 2 - ... (Below threshold)

RE: Wage Growth, item 2 - it is well known among economists that the consumer price index, despite attempts to fix it, still overstates actual inflation by AT LEAST 0.75%. So, the inflation over the period was actually a cumulative 12.5% or less.

Mortgage laws, item 5 - Limiting the right to foreclosure would mean far fewer people would qualify for new mortgages, as lenders would be forced to drastically raise interest rates to compensate the increased risk. It's a stupid proposal made by stupid people who care only how it sounds politically. As so often happens, "feel-good" Democratic ideas hurt the very people they are designed to help.

No-fault, item 6 - It would go a long way towards eliminating lawsuits if we began executing the losing attorney in each case.

> The better approach wo... (Below threshold)
Arthur:

> The better approach would be to eliminate auto accident lawsuits altogether and to require mandatory binding arbitration with strict damages caps and no rights to appeal.

Expletive Deleted.*

As many problems as there might be with auto insurance and dealing with accidents I don't see your idea as doing anything but making it worse. As if "arbitrators" had some special insight or an immunity to corruption.

It reminds me of the appeal of a "strong man" to take charge of goverment when there's a feeling that things aren't going right.

*btw, nobody at Wizbang deleted a curse. I just felt like cursing and decided to put in "ED" instead.

Simultaneously the media... (Below threshold)

Simultaneously the media/Democrats on the salient House subcommittee cleared a bill along strict party lines that would toss out several decades worth of bankrupcty law. Basically the "Party of the (rich) People" wants mortgage lenders not to be able to foreclose their security interests against bankrupt borrowers. They want to give bankruptcy judges the ability to *order* lenders to renegotiate home loans once a borrower files for bankruptcy. That's U.G.L.Y. People out there in TV Land would be rewarded for their own fecklessness -- a true "nanny state" scenario. As a stand-alone measure there's not a chance that provision would escape a veto.

If it wasn't for the huge long term economic cost of this kind of bankruptcy law, I'd almost start cheering today. Every ARM in the nation would jump 2-3% almost overnight, and future borrowers with less than perfect credit will find it nearly impossible to get a loan for a house.
As for no down payment loans. Forgetaboutit!

If you make it impossible for banks to reclaim houses when the loan against the house is in default, and you have an environment where there are foreclosures every year, the sources of housing loans are going to do everything they can to either
a) never have a mortgage go into default
b) make enough in interest on their loan packages to be able to absorb the cost of a mortgage default.

Anyone who might default (and sub-prime default rates are 10-15% in some areas) is either not going to get a loan, or pay a lot more for the priviledge.
But then again, since when have the democrats considered the potential business reaction to their over regulation.

Exactly, Mvargus, Democrats... (Below threshold)
SPQR:

Exactly, Mvargus, Democrats remain wilfully ignorant of the economic consequences of their actions.




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