Maybe Obama is on to something....

clipped from krugman.blogs.nytimes.com from Andrew Gelman: Church attendance and income by state: Notice the cluster of poor Southern states at the upper left, which accounts for most though not all of the relationship.

Boone Pickens: ‘I Missed’

clipped from blogs.wsj.com Texas oilman T. Boone Pickens said he expects the price of oil to rise “substantially higher,” reversing an earlier short position. he had erred in predicting earlier this year that the price of oil would fall to $90 a barrel by the second quarter. “The position is long, not short,” Mr. Pickens told reporters when asked about his current position after addressing a group of Georgetown students. “I covered the short position. It was a mistake on my part. I missed.” “There are only 85 million barrels of oil in the market every day,” Mr. Pickens added. “I don’t think you can get it above 85 million – lock that number in, and we’ll see if I’m right.” “I’m hoping that he’ll get better informed and come up with better ideas about energy than I’ve seen up to now,” Mr. Pickens said of Mr. McCain. Asked his opinion of Mr. McCain’s overall energy platform, Mr. Pickens replied “what is his energy platform?”

Understated spreads?

clipped from krugman.blogs.nytimes.com The WSJ has an interesting, slightly scary article about LIBOR. It includes a nice chart showing the three waves of the financial crisis as indicated by the TED spread, and the failure of even the Fed’s huge interventions to bring things back to normal: But the big news in the WSJ piece is that LIBOR may be higher than reported, and the spread even worse than it looks, because banks aren’t honestly reporting the interest rates they have to pay: The concern: Some banks don’t want to report the high rates they’re paying for short-term loans because they don’t want to tip off the market that they’re desperate for cash. The Libor system depends on banks to tell the truth about their borrowing rates.

Volcker: Fed ‘at Edge of Its Lawful and Implied Power’

clipped from blogs.wsj.com Former Federal Reserve Chairman Paul Volcker roundly criticized the central bank’s extraordinary response to the financial crisis that’s been gripping markets since late last summer in a speech Tuesday. “The Federal Reserve judged it necessary to take actions that extended to the very edge of its lawful and implied power, transcending certain long embedded central banking principles and practices,” Volcker said, according to a copy of his speech. Actions taken by the Fed “will surely be interpreted as an implied promise of similar action in times of future turmoil.” “What appears to be in substance a direct transfer of mortgage and mortgage-backed securities of questionable pedigree from an investment bank to the Federal Reserve seems to test the time honored central bank mantra in time of crisis - ‘lend freely at high rates against good collateral’ to the point of no return,” Volcker said.

Economic Cleansing

clipped from bp1.blogger.com clipped from angrybear.blogspot.com The unemployment rate rose from 4.8 to 5.1 percent in March, and nonfarm payroll employment continued to trend down (-80,000) clipped from corner.nationalreview.com An Economic Cleansing   [Larry Kudlow] Recessions are part of capitalism. They happen every so often. We’ve had two in the last 25 years. And it looks like we are entering a third one after today’s jobs-loss report. A lot of Keynesian economists expect the tax rebates will promote recovery Recessions are therapeutic. They cleanse excess from the economy. Recessions are curative: They restore balance and create the foundation for the next recovery Despite the housing and credit problem and the sub-prime virus, banks are still lending to businesses. So we don’t have a genuine credit crunch across the board. That is very good. domestic corporate profits are down 20 percent from their peaks of late 2006. Since profits are the mother’s milk of stocks, businesses, and the economy, we will need to see profit improvement before the recovery-turn can be called.

Boston Fed President is surprised that housing isn’t recovering.

clipped from krugman.blogs.nytimes.com Barry Ritholtz tells us that the president of the Boston Fed is surprised that housing isn’t recovering. This is truly bizarre Like Calculated Risk, my working assumption throughout the housing boom and bust has been that history, if it doesn’t repeat itself, at least rhymes: the rise in housing prices looked a lot like bubbles past, and we should expect the bubble’s deflation to follow past patterns too that tells us that we should expect a prolonged, grinding decline in home prices, back to more or less their pre-bubble inflation-adjusted levels. Those who refuse to learn from history …

Food for thought...

If you invest this is worthwhile reading. Follow the link for the complete story.

clipped from www.nytimes.com These days you hear a lot about the world financial crisis. But there’s another world crisis under way — and it’s hurting a lot more people. I’m talking about the food crisis. There have already been food riots around the world Paul Krugman Food-supplying countries, from Ukraine to Argentina, have been limiting exports in an attempt to protect domestic consumers First, there’s the march of the meat-eating Chinese Second, there’s the price of oil Third, there has been a run of bad weather in key growing areas. Governments and private grain dealers used to hold large inventories in normal times, just in case a bad harvest created a sudden shortage. Over the years, however, these precautionary inventories were allowed to shrink, mainly because everyone came to believe that countries suffering crop failures could always import the food they needed. Cheap food, like cheap oil, may be a thing of the past.

EF Hutton: Labor market deterioration

clipped from krugman.blogs.nytimes.com I’ve argued on many occasions that the official unemployment rate has been a poor guide to the reality of the labor market in recent years. One alternative is “U6″, which the BLS lists under “alternative measures of labor underutilization.” It’s defined as Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons, as a percent of all civilian labor force plus all marginally attached workers This measure shows what most people sense: the labor market has gotten a lot worse over the past year, not just in the last few months.