Car News

Fresh on the heels of a snow job where Bernanke warned economists to disregard effects that did not happen (and anyone doing any semblance of research should have known would not happen) we now see media trumpeting up census hiring as if it was not temporary.

In case you missed the snow job analysis please see …

• Range of Snow Impact on Jobs: Negligible to 220,000; Have Your Snow Job Decoder Ring Handy?
• Jobs Contract By 36,000; Unemployment Rate Steady At 9.7%; No Snow Effect

Having expected to see job losses up to 220,000 in last Friday’s report, economists have now gone the other direction trumpeting part-time census jobs that will vanish by June or July.

Census Hiring Hype

Please consider this unthinking headline Obama Job Losses May Turn on 300,000 March Payrolls.

The U.S. may add as many as 300,000 jobs in March, the most in four years, setting the stage for what some economists say will be sustained employment gains.

Better weather, hiring of temporary government workers and a growing economy may bring the biggest job increases since March 2006, said David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. The rise would be the second since President Barack Obama took office in January 2009.

February payrolls dropped by 36,000, the Labor Department reported last week, depressed in part by East Coast snowstorms that closed many businesses. Excluding the effects of the weather and the hiring of government workers to conduct the 2010 Census, payrolls would have climbed by about 100,000, Greenlaw said today in a Bloomberg Radio interview.

“If you get a plus 100,000 number again in March, then you’d be talking about a headline reading of a little bit better than 300,000 when you factor in the weather bounce-back and the census effect,” he said.

Mish Comment: Hello Greenlaw – Is the headline all this is important? Does the fact that all of these jobs will vanish by June mean anything?

The February drop in payrolls was smaller than the 68,000 median decline forecast by economists surveyed by Bloomberg News before the March 5 report. The jobless rate, which hasn’t increased since October, held at 9.7 percent, even as more people entered the workforce.

Mish Comment: Go figure. Bernanke trumped up the affect of snow and economists upped their job loss estimates to ridiculous levels, some over 200,000. I called this in advance, as the above links show.

“We expect a sharp snapback in March payrolls as well,” said Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York, the most accurate forecaster in a Bloomberg News survey in December. He didn’t give a specific estimate.

Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York, said in a March 6 e-mail to customers that he anticipates payrolls this month will climb by about 275,000. About 50,000 of that represents the “underlying trend” in employment, he said, with about 100,000 attributable to the weather and another 125,000 to the census.

Mish Comment: Even after analysis shows that snow had no effect, economists are attributing 100,000 jobs to snow.

Joseph LaVorgna is more upbeat about the employment outlook, anticipating payroll gains averaging about 300,000 for the next three to four months.

“We have overcut inventories, we have overcut capital spending and we have overcut jobs,” said LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. A March payroll gain of as much as 450,000 “can’t be ruled out,” he said, and further increases are “going to convince people of the sustainability and durability of the recovery.”

“We could easily see” 300,000 jobs added this month, Brian Wesbury, chief economist at First Trust Portfolios in Wheaton, Illinois, said today in a Bloomberg Radio interview. “I don’t expect to see consistent gains of that size, but clearly March could be that number.”

I’ll Take The Under

“We have overcut inventories, we have overcut capital spending and we have overcut jobs,” said LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. A March payroll gain of as much as 450,000 “can’t be ruled out,” he said, and further increases are “going to convince people of the sustainability and durability of the recovery.”

Even if by some miracle we see 450,000 jobs in March, they will all vanish by June. Not one of the clowns quoted in the article mentioned either of these points

1. These jobs are part-time
2. They will be gone by June or July

Economist clowns were wrong about snow last month, and now they are massively wrong in the other direction, confusing part time, temporary hiring with a sustainable recovery.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

In my post San Francisco Infested with Union Parasites and Pestilence; Outrage Over Transit Worker Pay I noted how greedy public unions finally overplayed their hand by rejecting an 8% pay raise with a contract that guarantees they get the second highest pay in the nation.

In a followup story, Supervisor Sean Elsbernd is now going ahead with his initiative to address Muni pay, because the city council wimps did not have the courage or the decency to take on the unions. Please consider Proposed initiative aims at Muni drivers’ pay

A San Francisco supervisor is following through on his plan to curb Muni’s labor costs and on Monday submitted a proposed initiative for the November ballot.

The plan takes direct aim at a controversial salary formula enshrined in the city charter that for more than four decades has guaranteed Muni drivers their spot as the second highest-paid transit operators in the nation.

It also would eliminate a trust fund for Muni operators that has resulted in yearly payouts of up to $3,000 for full-time operators. The fund originally was established to help defray health care costs for dependents, but operators can use that money any way they choose.

Elsbernd turned his proposal over to the city attorney for official review Monday and hopes to start collecting signatures by month’s end to qualify it for the fall ballot.

He has until July 6 to collect the valid signatures of nearly 47,000 voters registered in the city.

Elsbernd has the backing of the San Francisco Chamber of Commerce and the San Francisco Planning and Urban Research Association, a civic think tank, but many at City Hall and in the transit-advocacy community are taking a much more cautious approach.

If enough valid signatures are gathered, the proposed amendment would be on the Nov. 2 ballot.

What Took So Long?

That’s all it takes? So, what took so long? If voters approve this, expect to see more such initiatives.

Irwin Lum, president of Transport Workers Union Local 250-A, responded by saying “To just focus on operators isn’t right and isn’t fair.”

Yes, indeed, San Francisco needs to do something about all union termites and parasites, not just the union termites and parasites at Muni. Moreover, it is sad to gather all those signatures only to do a wimpy job on an initiative that does not go far enough.

“What this will do is divide people instead of dealing with the bigger issue of funding” said, Irwin Lum.

No. What will do is unite voters against city hall and unions. When this passes, and I expect this to easily pass because the proposal is so modest, citizens will be even more encouraged by such measures. It’s the perfect out for council wimps who do not have to challenge unions directly yet, it offers what seems to be a relatively easy process for citizens to take matters into their own hands.

Although Elsbernd did not go far enough (perhaps on purpose to make sure this passes), he must be commended for having the courage to start the city on the road to curbing union termites and pestilence.

Expect this initiative to pass, and emboldened citizens to follow up with more termite ridding measures.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Today I got a letter in the mail with official markings on it, U.S. Census. But it seemed awful skinny to be a census form. Sure enough, it was a letter informing me that in a week, I will get a census form, and that it is very important that I fill it out.

What a stupid waste of money and trees.

Today I got a letter in the mail with official markings on it, U.S. Census. But it seemed awful skinny to be a census form. Sure enough, it was a letter informing me that in a week, I will get a census form, and that it is very important that I fill it out.

What a stupid waste of money and trees.

From coast to coast, mass transit is under attack. Decreased ridership due to the economy and reduced state subsidies are leading to cuts in service and fare increases.

Visit msnbc.com for breaking news, world news, and news about the economy

For us in Connecticut, New York’s MTA and its $800 million budget shortfall could affect our daily commute. The NY transit agency is holding public hearings on plans to cut bus and subway service, eliminate student discount fares and, yes, even target Metro-North service.

Starting this June, the MTA wants to shorten Metro-North trains (achieving a $2.8 million annual savings) and eliminate others (a $1.6 million savings). Targeted for cuts in Connecticut are two mid-day trains between Grand Central and New Haven, and a late night local from GCT to Stamford.

But neither of these cuts will happen, thanks to our Governor.

First, many New Haven line trains are already standing room only so it would be impossible to reduce their length. Some 6 – 7% of our trains don’t have enough cars to handle the passenger load, let alone see the number of cars get reduced.

Second, under our operating contract with Metro-North, none of these service reductions can be unilaterally dictated by MTA without agreement by the state of Connecticut. And Governor Rell has said “no way” to any service cuts in Connecticut.

Having for years sought a voting seat on the MTA or Metro-North board and been ignored, Governor Rell is quite correct in reminding those NY agencies that their current economic problems are of their creation, not Connecticut’s. Decades of over-zealous bonding for massive projects like East Side Access (a $7 billion project to bring LIRR trains into Grand Central) have left a pit of pain which New Yorkers dug, but have the chutzpah to now ask our state’s riders to fill. No way, MTA!

As I reminded the MTA Board when I testified at a recent public hearing… “Metro-North is a vendor to the state of Connecticut. We hire you to operate our trains. But we are not equal partners in the operation of this railroad.”

Governor Rell has told CDOT Commissioner Joseph Marie to block those proposed service cuts, and the dutiful transportation czar is following orders, much to the chagrin of Metro-North which, doubtless, will get their revenge at a later date.
If cuts in Metro-North service are needed, let them be in NY State, not Connecticut. New York already has more trains and lower fares than we do, so they can bear a loss of service with less pain.

While there are two trains operating each hour between Stamford and Grand Central, we have only one train an hour between New Haven and GCT. So, let them cut the Westchester trains, not Connecticut’s.

The final piece of good news is that we will not be looking at any fare increase here in Connecticut for the foreseeable future. A rumored 10% fare hike last fall to balance the state’s budget was postponed and a planned 1.25% fare hike January 1st 2010 (to help pay for the new M8 rail cars) was delayed, keeping the Governor’s promise of no fare hike until the (now delayed) rail cars go into service.

Our neighboring states have entered a death spiral of less mass transit at higher costs, discouraging ridership even further and eventually forcing more service cuts or fare hikes. But here in Connecticut, for a change, we remain a leader in maintaining fast, on-time Metro-North rail service with no price increase. And the credit all goes to our Governor, Jodi Rell, for holding firm against the MTA.

Read more “Talking Transportation” (c) at:
http://talkingtransportation.blogspot.com/

Inquiring minds are reading about student riots at the University of California.

Students at the University of California’s flagship Berkeley campus took to the streets on Friday night, vandalizing university buildings, burning trash cans and clashing with police in the latest expression of frustration over cuts to the educational budget in California.

In November, the University of California Board of Regents voted to raise tuition by 32 percent. At the same time, professors were asked to take pay cuts or be furloughed, classes were eliminated and class size increased. Protests erupted across the University of California system, particularly at UC Davis and UCLA.

Student Loan Defaults Soar

Please consider Defaults on student loans rising

Every year, tens of thousands of college students and graduates stop making payments on their student loans.

For more than a decade, that loan-default rate was in decline because the federal government toughened penalties for schools with high shares of defaults. Now, the rate is increasing again and not just because of the economy.

The problem is particularly acute in Arizona, which has the nation’s highest overall default rate on federal student loans: 9.8 percent in fiscal year 2007, the latest figures available.

But more than default rates, it is the high levels of debt that are provoking alarm among consumer advocates. That has heightened scrutiny of for-profit schools.

Tuition at for-profit schools can easily top $10,000 a year. The average loans for a student who earned a bachelor’s degree totaled $32,650 in the 2007-08 school year, compared with $17,700 at public universities. At community colleges, the average for two-year degrees was $7,125.

In Arizona, for-profit schools are booming. They have more than doubled the number of students they serve in the past five years, and more students are at for-profit schools than all three of the state’s public universities combined.

Last school year, for-profit schools enrolled nearly 468,000 students, according to the Arizona State Board for Private Postsecondary Education, a state agency that licenses and regulates most for-profit schools. About 55 percent were from Arizona, and the rest lived elsewhere and attended school online.

In December, the University of Phoenix settled a whistleblower lawsuit in federal court for $78.5 million over recruiter-pay practices. Two former enrollment counselors sued in 2004, alleging the school defrauded the government of billions of dollars in financial aid and violated federal law by paying recruiters based on enrollment. The company said the pay practices were legal because enrollment was not the sole determinant. The university did not admit any wrongdoing.

Nationally, for-profit schools had the highest share of defaults in the United States in 2007: 11 percent. Community colleges had a nearly 10 percent rate, and private, non-profit universities had the lowest rates, at 3.7 percent, according to the U.S. Department of Education.

Student Loan Scam

The article mentions various reforms such as curbing recruiters, requiring more up-front disclosure, and educating borrowers about the loan process.

The real problem is the entire student loan system is a scam. The government guarantees student loans so colleges have every reason to make the loans no matter how poor the student or how high the cost of education relative to job pay upon graduation.

Government guaranteeing the loans makes the money readily available to all takers driving up the cost of education.

My friend “BC” had this to say….

Millennials had better learn quickly that they face coming of age through middle age and end of life in a world in which they will be forced to consume one-third to half as much in per capita energy terms and associated material production and consumption.

Thus, they should be rioting to cut taxes and to cut government including cutting funding for places like “Berzerkley” and the many worthless programs and costly administrative and pension payouts.

What “Berzerkley” or a state or private university confers on the vast majority of students is a “credential” and “legitimacy” within the existing division of labor and state tax farm. Their “education” is mostly in terms of being conditioned to conform to the costly state superstructure, including submitting to tax, wage, and debt servitude for life.

What they will “learn” in terms of actual occupational skills, self-reliance, and productive wealth creation they could learn at a much lower cost (and higher return to them) than 4+ years of university “education” by actually doing something productive, paid or not, as a youth.

Rioting for more government largess extracted eventually from their meager paychecks in the future is suicide and merely sustains for a while longer the system they perceive themselves to be opposing or attempting to reform.

They are wasting their valuable time and youthful vitality rioting against the intractable state when they could be using their time and efforts to form productive private associations in parallel or outside the existing division of labor and social and political superstructure.

Expect More Riots

My friend “HB” countered with ….

There will be more riots, and over more issues. Students are traditionally always the first to riot, since most of them are young and rebellious, and therefore it’s easier to get them to engage in street protest and vent their anger.

The only groups that may even be more riot prone are French farmers and Greek public workers.

How Good Is That Education?

Pray tell what is someone going to do with a degree in English literature, social science, journalism, history, French, political science, or math?

Exactly how many jobs are available in those areas compared to the number of students getting such degrees?

Sadly, we can even ask the same questions about computer science. In the late 1970s all the way to 2000, a degree in computer science came with a near-guaranteed job. Now, computer science graduates must compete against someone from India or Russia who is willing to work for a lot less than they ever imagined.

In the early 1970s tuition at a top school like the University of Illinois was $250-$400 a semester. Now tuition is $10,000 with no guarantee of a job.

But hey, as long as government is guaranteeing student loans, places like the University of Phoenix are glad to offer an “education” to everyone coming their way.

Education System Benefits Recruiters, Administrators, Teachers, Staff

Funding schemes, loan guarantees, influence pedaling, and especially government meddling have combined to make education a great deal for recruiters, administrators, professors, and staff.

Unfortunately, there is little benefit to the students for the price they pay. Indeed, the biggest education many students will receive is to learn how compound interest combined with poor salaries will make them a debt slave for life.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.