An Inquiry into the Nature and Causes of the Wealth of Nations - Adam Smith

Adam Smith's most famous book, published in 1776, is An Inquiry into the Nature and Causes of the Wealth of Nations. Click the link above to access an online copy of the book.

Obama rumbles with House GOP

In the January 29, 2010 Politico article "Obama rumbles with House GOP," Patrick O'Connor and Tim Grieve report on the verbal sparring between President Barack Obama and the House Republicans that invited him to their policy retreat:

BALTIMORE — President Barack Obama on Friday accused Republicans of portraying health care reform as a "Bolshevik plot" and telling their constituents that he’s "doing all kinds of crazy stuff that's going to destroy America."

Speaking to House Republicans at their annual policy retreat here, Obama said that over-the-top GOP attacks on him and his agenda have made it virtually impossible for Republicans to address the nation’s problems in a bipartisan way.

“What happens is that you guys don’t have a lot of room to negotiate with me,” Obama said, silencing the smattering of Republicans who had applauded when he said “Bolshevik plot.” "The fact of the matter is, many of you, if you voted with the administration on something, are politically vulnerable with your own base, with your own party because what you've been telling your constituents is, ‘This guy's doing all kinds of crazy stuff that's going to destroy America.' ''

Obama’s comments came in the midst of an extraordinary back-and-forth with Republican House members – a scene straight out of the House of Commons that played out live on cable TV.

Republicans invited Obama to appear at their annual conference; the president surprised them by accepting – and then by asking that cameras and reporters be allowed into the room.

Republicans immediately agreed to the request, but they may be regretting it now.

Obama was clearly energized by the exchange – and again and again, he turned the Republicans questions against the GOP, accusing the party of obstructing legislation for political purposes and offering solutions that won’t work.

"I've read your legislation. I take a look at this stuff. And the good ideas we take," Obama said. "It can't be all or nothing, one way or the other … If we put together a stimulus package in which a third of it is tax cuts that normally you guys would support, and support for states and the unemployed and helping people stay on COBRA, that certainly your governors would support … and maybe there are some things in there, with respect to infrastructure, that you don't like … If there's uniform opposition because the Republican caucus doesn't get 100 percent or 80 percent of what you want, then it's going to be difficult to get a deal done, because that's not how democracy works."

After Obama made opening remarks, House Republican Conference Chairman Mike Pence (R-Ind.) asked him whether he’d embrace “across the board” tax cuts as a way to revive the economy, and Rep. Paul Ryan (R-Wis.) asked him to support a line-item veto to help achieve a balanced budget.

Obama pushed back backed hard, accusing Republicans of putting party before principle and voting against his 2009 stimulus plan but then attending “ribbon cuttings” for stimulus projects in their own districts.

If Republicans believe in both across-the-board tax cuts and a balanced budget, Obama said he’d like to see their math.

House Minority Leader John Boehner (R-Ohio) began the session by handing Obama a stack of Republican alternatives to his policies. The president then began speaking in a conciliatory tone telling the Republicans that he expects them to challenge his ideas – and that he understands that there are sometimes fundamental policy differences between the parties.

"Having differences of opinion, having a real debate about matters of domestic policy and national security, that's something that's not only good for our country, it's absolutely essential,” he said.

But he also criticized the Republicans for reflexively opposing his policies – even when, he said, they were in line with GOP principles. And the encounter got progressively more raucous from there.

Obama urged Republicans to come to the table and work with him on policy compromises, saying Americans "didn't send us to Washington to fight each other in some political steel cage match."

What voters don’t want, he said, is "for Washington to continue being so Washington-like."

The president asked the Republicans to support his proposal to provide small businesses with a $500 tax credit for each new employee they add — an idea Republicans panned before he even made the offer. He also asked them to support his plan to freeze non-military discretionary spending for three years.

"Join me," Obama asked. "Nothing in this proposal that runs contrary to the ideological predisposition of this caucus."

"We have seen some party-line votes that have been disappointing," he said, recalling the stimulus fight. "I didn't understand then, and I still don't understand, why we got opposition in this caucus for almost $300 billion in badly needed tax cuts for the American people" and other assistance and infrastructure projects.

Obama jabbed: "Let's face it, some of you have been at the ribbon-cuttings for some of these important projects in your communities."

Continuing on a confrontational tack, Obama defended key components of his agenda, including the proposed fee on bailed-out banks – telling Boehner: "If you listen to the American people, John, they’ll tell you they want their money back."

At the end of his remarks – before taking questions – Obama told Republicans it's time to make a choice between aiming for "success at the polls" or "lasting success" for the country. "Just think about it for a while," he said. "We don't have to put it up for a vote today."

Freshman Rep. Jason Chaffetz (R-Utah) went after the president harder, accusing him of breaking promising about transparency, lobbyists and partisanship.

“I can look you in the eye and tell you we have not been obstructionists,” he said.

Obama acknowleged that Chaffetz had a “legitimate complaint” about not putting health care negotiations on C-SPAN – as the president had vowed they would be – but he also asked Chaffetz what he was doing within his own caucus to make sure that Republicans were working with him in bipartisan way.

Mid-way through the questions and answers, Pence said that there would be just a few more questions.

Obama said he wasn’t in any hurry to leave.

Who to Blame for the Financial Crisis

Who to Blame for the Financial Crisis

Economy soars 5.7 percent, fastest in 6 years

Click on the image above to enlarge it.

In the January 29, 2010 Reuters article "Economy soars 5.7 percent, fastest in 6 years," Lucia Mutikani reports that the U.S. economy showed unexpectedly strong growth in the fourth quarter of 2009:

WASHINGTON (Reuters) – The economy grew at a faster-than-expected 5.7 percent pace in the fourth quarter, the quickest in more than six years, as businesses made less-aggressive cuts to inventories and stepped up spending.

The robust performance closed out a year in which the economy contracted 2.4 percent, the biggest decline since 1946.

After falling off a cliff at the start of the year, gross domestic product turned higher in the third quarter, and the quickening fourth-quarter pace reported by the Commerce Department on Friday suggested a sustainable recovery was building.

"Wow, great number. It's very solid and gives us a running start into the second half of the year when we can't rely on government stimulus," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

"That's part of the plan, to get us moving as fast as possible so when life support is removed we'll have a pulse."

U.S. stocks opened higher on the surprisingly strong data, while Treasury debt prices deepened losses. The dollar rose against the yen. Economists had expected GDP to rise at a 4.6 percent pace.

Getting the economy on a sustainable growth track remains one of the key challenges facing President Barack Obama, who on Wednesday outlined a raft of measures to create jobs and nurture the recovery.

In a further boost to recovery hopes, the Institute for Supply Management-Chicago said its business barometer rose to 61.5 in January, the highest in four years, from 58.7 in December.

Consumers grew more confident this month, another survey showed, which should support spending in the months ahead. The Reuters/University of Michigan Surveys of Consumers' January consumer sentiment rose to 74.4 from 72.5 in December.

Growth in the fourth quarter was buoyed by a sharp slowdown in the pace of inventory liquidation.

When businesses are selling off inventories, there is less need to step up production and therefore weighs on GDP. The slowing rate of inventory reduction in the fourth compared to the third quarter lifted GDP by nearly 3.4 percentage points.

It was the biggest percentage contribution inventories have made since the fourth quarter of 1987.

But even stripping out inventories, the economy expanded at an annual rate of 2.2 percent, accelerating from the 1.5 percent increase in the third quarter, reflecting relatively strong performance from other segments of the economy.

Still, this measure of final demand is meager compared with most normal recoveries, implying the Federal Reserve can bide its time before raising interest rates.

"The economy continues to improve, but we do not have an economic boom here," said John Silvia, chief economist at Wells Fargo Securities in Charlotte, North Carolina.

CONSUMER SPENDING SLOWS, BUSINESS INVESTMENT RISES

Consumer spending increased at a 2 percent annual rate in the fourth quarter, contributing 1.44 percentage points to GDP. In the third quarter, consumer spending had risen at a 2.8 percent pace, supported by the government's "cash for clunkers" auto incentive program.

Business investment grew at a 2.9 percent rate, the first increase since the second quarter of 2008, as the drag from the troubled commercial real estate sector was offset by robust spending on equipment and software.

The growth of spending on new home construction braked sharply in the fourth quarter to an annual rate of 5.7 percent from an 18.9 percent pace in the third quarter. Home building has received a lift from a popular tax credit for first-time buyers, but recent data have hinted at some weakness starting to creep in.

Export growth outpaced imports, narrowing the trade gap and adding half a percentage point to GDP growth in the last quarter.

A separate report from the Labor Department showed employment costs rose 0.5 percent in the fourth quarter, just a touch higher than analysts had expected.

Wages and salaries, which make up about 70 percent of compensation, and benefits were both up 0.5 percent, showing little inflation pressure arising from wages.

For a graph comparing U.S. GDP and productivity, please see: http://graphics.thomsonreuters.com/0110/US_ADVGDP0110.gif

Elizabeth Warren discusses how reckless behavior by banks led to the meltdown of financial markets.

In the January 26, 2010 episode of The Daily Show, “Elizabeth Warren, Congress’ chief economic watchdog, talks about her work overseeing the bank bailout.”

15 Things You Never Noticed on a Dollar

According to the January 24, 2010 Grandparents.com article "15 Things You Never Noticed on a Dollar":

Pull a buck from your wallet now and prepare to be amazed.

We’re serious. Did you know a dollar bill has hidden pictures, flecks of color, and mysterious symbols? And that’s just the beginning. What do all those seemingly random letters and Latin phrases mean, anyway?

The Basics: How much is a dollar worth?

The question seems simple, but the answer is quite complex. Since 1973, the dollar bill has had no value tied to it. You cannot trade in a dollar to the government for gold, silver, or any other commodity. The value of the nation's currency is related to the decree by the government that a dollar is legal tender for all debts. This means if someone attempts to pay a debt using dollars, the person being paid must accept the money or the law no longer recognizes the debt. This is important enough that the phrase is printed on every bill the government creates.

It is also vital for the nation's citizens to agree that the bills have value. If the members of a society decided that they did not believe in the currency, it would quickly be worth no more than the paper it is printed on. For the record, each bill costs the government 6.4 cents to print.

What kind of paper are the bills made from?

Bills are made from a blend of linen and cotton, which is why they don't fall apart in the wash the way paper does. If you look closely, you can see red and blue silk fibers woven throughout the bill. The threads are thought to be an anti-counterfeit measure.

Hint: Look in the white spaces on the face of the bill for little bits of the colored thread. They look like lint but you can't scratch them off!

On the face of a dollar, what does the letter inside the circular seal mean?


The black seal with the big letter in the middle signifies the Federal Reserve bank that placed the order for the bill. A = Boston, B = New York City, C = Philadelphia, D = Cleveland, E = Richmond, Va., F = Atlanta, G = Chicago, H = St. Louis, I = Minneapolis, J = Kansas City, K = Dallas.

The letter also corresponds to the black number that is repeated four times on the face of the bill. For example, if you have a bill from Dallas with the letter K, then the number on the bill will be 11 because K is the eleventh letter in the alphabet.

Can you find any tiny owls or spiders hidden on the front of the bill?


Many people believe they can see a tiny owl (some say it is a spider) next to the large "1" on the upper right of the bill. If you look at the shield shape that surrounds that "1," the tiny owl rests on the top left corner.

More than likely, the markings are nothing, just a point where the webbed design of the border varies. That won't stop some people from associating the peculiar detail with Masonic symbols, or with more practical things, like anti-counterfeit measures.

The Great Seal of the United States

The green back of the dollar bill features the two sides of The Great Seal of the United States. The founding fathers approved its design in 1782. Ben Franklin, John Adams, and Thomas Jefferson all had a hand in devising it. The seal provides great insight into the values of the newborn nation and, like the Constitution, provides a direct link to its formative days.

What does Annuit Coeptis mean?

The first of three Latin phrases on the back of the bill is translated as "God has favored our undertakings." Many founders, Franklin and George Washington among them, believed that God's will was behind the successful creation of the United States.

Beneath the pyramid, what does Novus Ordo Seclorum mean?

These Latin words mean "New order of the ages." Charles Thomson, a statesman involved in the design of The Great Seal of the United States, proposed the phrase to signify the beginning of what he called "the new American Era," which he said began in 1776 with the signing of the Declaration of Independence.

Why is MDCCLXXVI on the bottom of the pyramid?


The letters are Roman numerals for 1776. M is 1,000, D is 500, CC is 200, L is 50, XX is 20, VI is 6. Add the numerals on the pyramid together and you get the year 1776, when the Declaration of Independence was signed, and when the Novus Ordo Seclorum began.

Why is there an unfinished pyramid with a glowing eye?

Thomson explained the sturdy pyramid as a symbol of "strength and duration". He did not explain its unfinished state, but many believe it signified that our nation remained unfinished. The pyramid also stops at 13 steps, the number of the original colonies.

The "Eye of Providence" is a visual representation of the words Annuit Coeptis, and reinforces the founders' notion that God looked upon the endeavor of the new nation with favor. Many theorists mistakenly believe the symbolism of the eye is related to the Freemasons (a secret society whose members believed they were under the careful scrutiny of God), but the symbolism of the glowing eye is far older than any Freemason thinking. Scholars have traced versions of the symbol as far back as the ancient Egyptians.

What does E Pluribus Unum mean?

"Out of many, one." The 13 disparate colonies came together to form one nation.

Why a bald eagle? The founders wanted an animal native to America to be the new nation's symbol. In its talons the eagle holds arrows and olive branches, signifying war and peace.

Fun activities you and the kids can do with a dollar bill

Track your bills. Go to the website Where's George? and enter the serial number of the bill. If the bill has been in circulation long enough, you might be able to see where your bill has been as it travels from wallets to registers and back. After you enter your bills, check back later to see where they have gone.

Play dollar-bill poker. Each of you takes a dollar bill and examines the green serial numbers as if they were a hand of playing cards. Make your best poker hand and see who wins.

Big nations with major debt dangers

In the January 15, 2010 Business Week article "Debtor Nations," Mark Scott explains how excessive public debt is threatening the global economy:

The Debt Bomb Facing the World

If policymakers focused their attention in 2009 on dragging the global economy out of recession, this year looks likely to center on reining in the massive piles of government debt built up by big bailout packages. Failing to wrestle down the fiscal debt monster could stall the nascent worldwide economic recovery.

Already this year, international rating agencies have warned about unsustainable budget deficits in Greece and Ireland, and most members of the euro zone have sailed past the 3% budget deficit cap required for membership in the common European currency. Government debt ratios in the U.S. and Britain could take decades to return to normal levels.

Countries are fiendishly trying to tackle the problem. On deck for this year are spending cuts, tax increases, and other belt-tightening measures designed to corral overstretched government accounts. Yet politicians must balance tougher fiscal policy with maintaining continued support for weak domestic production. Economists fear pulling back too soon could ruin attempts to reignite the economy.

Read on to see how indebted some of the world's largest countries are—and who are the deepest in the red—as well as what they're doing to deal with the problem.


ICELAND

Sovereign Credit Rating: BBB-
Debt-to-GDP Ratio (2009*): 310%
Current Account Balance, 2010 (Estimate**): 0.7%
GDP Growth, 2010 (Estimate): –2.0%
Budget Deficit Ratio, 2010 (Estimate): –9.9%

Iceland made headlines in 2009 as the world's first "subprime nation." The implosion of the country's financial-services industry left it with debt three times domestic GDP, and forced Iceland to go cap-in-hand to the International Monetary Fund for a $2.1 billion bailout. Yet when President Olafur Grimsson vetoed legislation on Jan. 6 that would have repaid $6 billion to British and Dutch authorities for covering their local depositors in a failed Icelandic bank, the country's international financial lifeline was put in jeopardy.

* Latest available figure
** All 2010 figures here and subsequently are forecasts.


GREECE

Sovereign Credit Rating: BBB+
Debt-to-GDP Ratio, 2010: 124.9%*
Current Account Balance, 2010: –9.0%
GDP Growth, 2010: –0.1%
Budget Deficit Ratio, 2010: –9.0%

With the largest debt burden relative to the size of its domestic economy in Europe, Greece is viewed as the sick man of the region. Not helping matters, the European Commission criticized the country on Jan. 12 for publishing false economic numbers. That comes after local policymakers were forced to revise the 2008 budget deficit figure to 12.7%—three times an earlier forecast. To get the country's books in order, politicians want to raise an extra $6.5 billion this year through pay freezes for government workers and new taxes.

* Source: European Commission


UNITED STATES

Sovereign Credit Rating: AAA
Debt-to-GDP Ratio, 2010: 93.6%
Current Account Balance, 2010: –2.2%
GDP Growth, 2010: 1.5%
Budget Deficit Ratio, 2010: –9.9%

The $787 billion economic stimulus package and the further billions of dollars pumped into the financial-services sector have pushed America's debt burden to almost 100% of annual GDP. That's unsustainable in the long term, but expected 1.5% growth in the domestic economy this year has reassured investors that debt levels remain manageable. While no widespread tax increases are on tap this year, the Obama Administration is planning some targeted taxes to fill the gap. But health-care reform currently working its way through Congress could add billions of dollars to the federal budget.


GREAT BRITAIN

Sovereign Credit Rating: AAA
Debt-to-GDP Ratio, 2010: 81.7%*
Current Account Balance, 2010: –1.9%
GDP Growth, 2010: 0.9%
Budget Deficit Ratio, 2010: –13.2%

With one of the worst budget deficits in the European Union, Britain must tighten its belt or face dire fiscal problems. No definite plans are expected before a national election later this spring, although all major political parties agree government spending must be cut and taxes will increase. The official retirement age also may rise to ease the country's financial woes, which are particularly dire due to the British economy's reliance on the financial-services industry.

* The European Commission pegs the ratio at 80.3%.


SPAIN

Sovereign Credit Rating: AA
Debt-to-GDP Ratio, 2010: 66.3%*
Current Account Balance, 2010: –4.7%
GDP Growth, 2010: –0.7%
Budget Deficit Ratio, 2010: –12.3%

After Spain's credit-fueled construction and real estate sectors imploded, the country's once prosperous economy turned into one of the worst performers in Europe. A large budget surplus before the crisis began will likely turn into a 12% deficit this year, and Spain's uncompetitive workforce has exacerbated the country's current account deficit. To turn things around, analysts reckon the Iberian country must overcome its many structural problems, such as a low caliber of tertiary education and relatively high labor costs.

* Source: European Commission


IRELAND

Sovereign Credit Rating: AA
Debt-to-GDP Ratio, 2010: 82.9%*
Current Account Balance, 2010: 0.6%
GDP Growth, 2010: –2.5%
Budget Deficit Ratio, 2010: –13.5%

Once known as the Celtic Tiger, Ireland had the wind knocked out of its sails by the credit crunch. The local housing market contracted 19% last year and the economy shank 7.5%. In response, the Irish government has slashed $5.8 billion from its 2010 budget, including pay cuts for government workers and reductions in subsidies for parents of young children. Affected workers haven't taken the belt-tightening lying down: Thousands took to the Dublin streets in late 2009 to protest.

* Source: European Commission


MEXICO

Sovereign Credit Rating: BBB
Debt-to-GDP Ratio, 2010: 49.3%
Current Account Balance, 2010: –1.3%
GDP Growth, 2010: 3.2%
Budget Deficit Ratio, 2010: –2.5%*

Last year wasn't kind to Mexico. Slumping oil revenue and lowered export demand from the U.S. hit the Latin American country hard. Rubbing salt into its wounds, international ratings agencies downgraded Mexico's debt late last year. Yet rising energy prices and a gradual rebound in exports have lifted the country's spirits, and its budget deficit is relatively mild. On Jan. 11, Mexico even raised $1 billion in a 10-year bond offering that was oversubscribed by 1.6 times.

* Domestic government estimate
Data provided by the International Monetary Fund and Standard & Poor's, unless otherwise indicated.

See the full list of Debtor

Nations.

States on the brink of a budget crisis

In the January 15, 2010 CNNMoney article "More and More States on Budget Brink," senior writer Colin Barr reports "some states are facing shortfalls as much as 40% of what they need to operate."

California is hurtling into the budgetary abyss -- and it's not alone.

Across the nation, state tax collections in the first three quarters of 2009 posted their steepest decline in at least 46 years, according to a report this month from the public policy research arm of the State University of New York.

At least 30 states raised taxes in their most recently completed fiscal year -- which ended in most cases in mid-2009. Even more cut services. All told, states raised $117 billion to fill last year's budget gaps, the Pew Center on the States estimates.

Yet despite all those new taxes and deep cutbacks, pressure on state finances continues to build. Economists warn that without a new round of federal stimulus spending, states could face another round of layoffs that could kneecap an already shaky economic recovery.

"We could see a real ripple effect if the states don't take a balanced approach" by balancing cutbacks with tax raises and other new revenue, said Jon Shure, deputy director of the state fiscal project at the Center on Budget and Policy Priorities in Washington.

State and local governments have cut 132,000 jobs since August 2008, the center says. Fiscal problems appear most acute in California, whose general obligation bonds were downgraded this week after Gov. Arnold Schwarzenegger declared a fiscal emergency.

The state has already said it will increase tuition by a third in the University of California system, among other cash-raising moves. At one point, it was projected to spend nearly 50% more than it stands to garner in revenue in this fiscal year, by one count. California has asked for federal help and warned it could run out of cash in March.

And California's not the only state facing an almost unfathomable shortfall. Like California, Arizona and Illinois face budget gaps above 40% of projected general fund spending, according to Pew data.

Arizona put its state office buildings on sale this week in a bid to raise $700 million. The University of Illinois furloughed some workers this week after the state failed to come up with $436 million in expected funds. Budget officers in those two states describe their outlooks for fiscal 2010 as "dire," according to a National Conference of State Legislatures report.

Alaska, Nevada, New Jersey and New York face gaps of at least 30% of their planned general fund spending by the end of this fiscal year. A dozen more states face a fiscal 2010 budget gap of between 20% and 29%.

"California is playing out on the biggest stage, but there are states around the nation facing problems of equal or greater magnitude," said Corina Eckl, who runs the fiscal affairs program at the National Conference of State Legislatures in Denver. "We are seeing some frightening situations."

Big shortfalls scare legislators because states by law must balance their budgets every year. After revenue and spending rose steadily in the middle of this decade, bolstered by a housing bubble that boosted employment and fed a stream of property transfer fees, state funding went into freefall when the recession started at the end of 2007.

Given the depth of the recession, few states are expecting an uptick in employment or consumer spending that would translate into bigger tax collections anytime soon. Nine states are forecasting they won't return to their peak revenue years of 2007 or 2008 until at least 2014.

Adding to the pressure, job losses spur demand for the services states devote the lion's share of their budgets to: education and Medicaid, which provides healthcare for low-income people.

"The needs grow as states' ability to meet those needs declines," said economist Andrew Reschovsky, a professor at the University of Wisconsin in Madison.

So far, the worst cuts have been avoided with the help of billions of dollars of federal stimulus money -- including $135 billion for education and Medicaid.

But the flow of those funds will start to slow down in the second half of 2010 and will stop altogether at year-end, unless Congress appropriates more money for state assistance.

States have used $53.6 billion in Medicaid funding through Jan. 8, according to government data. If Congress doesn't extend the Medicaid funding beyond the end of the year, "states are looking at a stimulus cliff," said Robert B. Ward, deputy director of the Rockefeller Institute of Government at the State University of New York at Albany.

The only way to make up those shortfalls is through more new taxes, cutbacks and borrowings.

Local and state governments have had little problem borrowing in the bond market, where analysts expect issuance of $400 billion or more this year. California has had to pay higher-than-average interest rates to sell its debt, but there seems to be little fear of a default, given the state's giant economy and its relatively small $64 billion worth of general obligation bonds outstanding.

But borrowing is no help in fixing so-called structural deficits, in which spending exceeds revenue over a prolonged stretch. And so far there has been little sign legislators are willing to make the obligatory tough choices, particularly issuing more or higher taxes.

Many of the so-called fixes for current state deficits are mere Band-Aids that push the problem forward rather than address it, observers said.

"It's surprising that political leaders don't seem to be taking seriously the magnitude of the problems," said Reschovsky. "You would hope it wouldn

't come to this, but it might take schools closing and programs being eliminated to create a sense of urgency."

Even in a Recovery, Some Jobs Won't Return

In the January 12, 2010 Wall Street Journal article "Even in a Recovery, Some Jobs Won't Return," Justin Lahart explains some of the structural changes in the U.S. labor market.

Even when the U.S. labor market finally starts adding more workers than it loses, many of the unemployed will find that the types of jobs they once had simply don't exist anymore.

The downturn that started in December 2007 delivered a body blow to U.S. workers. In two years, the economy shed 7.2 million jobs, pushing the jobless rate from 5% to 10%, according to the Labor Department. The severity of the recession is reshaping the labor market. Some lost jobs will come back. But some are gone forever, going the way of typewriter repairmen and streetcar operators.

Many of the jobs created by the booms in the housing and credit markets, for example, have likely been permanently erased by the subsequent bust.

"The tremendous amount of economic activity associated with housing, I can't see that coming back," says Harvard University economist Lawrence Katz. "That was a very unhealthy part of the economy."

Unhealthy but a boon for men without a college education. One in three jobs, or six million total, have been lost in the manufacturing sector since 1997, the last year the sector posted job gains. The upsurge in construction jobs accompanying the housing boom provided these workers in manufacturing with an opportunity to earn decent wages.

Now that door, too, has shut. With 1.6 million jobs lost over the last two years, the construction sector has accounted for more than a fifth of the jobs lost since the recession began.

For more highly educated workers, finance may no longer offer as many high-paying jobs as it has in the past. Thomas Philippon, an economist at New York University's Stern School of Business, estimates that the financial sector's share of the economy was nearly 20% larger than it should have been. Since the start of the recession, the financial sector has lost 548,000 jobs, or 6.6% of its work force. Mr. Philippon's estimate suggests there will be further pressure on financial jobs.

In other areas of the labor market, the recession accelerated job losses that were probably coming anyway. In November, there were 36% fewer people working in record shops than two years earlier, according to the Labor Department. There were 23% fewer people working at directory and mailing list publishers, and 46% fewer at photofinishing establishments. Those are jobs that, with the advent of mp3 recordings, Google and digital photography, were likely disappearing anyway.

But as the recession hurt already ailing businesses, workers were forced into a sudden adjustment rather than the gradual one they would have otherwise faced. The recession also provided companies with an opportunity to cut jobs no longer as critical as they once were. That may be particularly true of the secretaries and mailroom clerks that advances in information technology have made less necessary. The ranks of people doing office and administrative work have fallen 10.1% since the recession began.

"Those are the production jobs of the information age, and they're being to a substantial extent automated," says Massachusetts Institute of Technology economist David Autor.

The permanent loss of many jobs may keep the labor market from fully recovering for a long time to come.

Prior to the 1990s, jobs rebounded quickly once recessions ended. Payrolls fell by nearly three million in the deep downturn that extended from July 1981 to November 1982. But by the start of 1983, the economy was creating jobs again, and by the end of 1983, the U.S. job count had exceeded its old peak.

That was because more of the job losses were essentially temporary, with manufacturers and the like letting workers go with the implicit expectation that they would be hiring them back once the worst was over.

But since the early 1990s, jobs have been slower to recover from recession. After the 2001 downturn ended, job losses continued for nearly two years. It wasn't until 2005 that the job count returned to its prerecession high.

Productivity-enhancing technology and competition from low-wage countries like China made more job losses permanent. And it took time for new jobs to be created and for workers to acquire the skills needed to do them. In the wake of a far deeper recession, creating new jobs and retraining workers to do them could take even longer.

It is anyone's guess what those jobs will be. The Labor Department has done little more than extrapolate from recent trends. It expects growth in areas like health care, which has been one of the few bright spots. Given the exigencies of an aging population, that seems a fair bet.

One could also make the case that the U.S. is shifting from a consumer nation to a nation of producers, and that will lead to a resurgence in technology and high-tech manufacturing jobs.

But Harvard's Mr. Katz warns that past experience suggests such conjecture is likely fruitless. "One thing we've learned is that when we attempt to forecast jobs 10 or 15 years out, we don't even get the categories right," he says.

Reshaping the Job Market

Hotel Director Forced to Give Up Own Home

Tim Winters, Aspen, Colo. Age 39

After getting laid off in March from his job as operations director at a small hotel, Tim Winters could no longer afford his $1,200 a month apartment. He has been living at family members' homes, an ironic twist for someone who often used to stay for free at hotels when he traveled. "It takes a lot of understanding and time to get used to living with other people again," says Mr. Winters, who started his career in hospitality in 1996. Mr. Winters says he has applied for approximately 170 hotel-management positions and has had 14 interviews, but no job offers yet.

Economy Chips Away at Cabinet Maker's Business

Daryl Jones, Tulsa, Okla. Age 45

Daryl Jones misses the smiles that would appear on clients' faces after receiving the one-of-a-kind cabinets, bedroom sets and other wood furniture he built by hand while running his home-based business. But sales plummeted in recent years, prompting the third-generation craftsman to take a job building cabinets for corporate jets to make ends meet. Still, Mr. Jones is optimistic that one day he will return to his custom woodworking full time. "Once the economy bounces back and people feel comfortable again spending money, then things will start picking back up."

Auto Industry Executive Goes Back to School

Jeff Walker Brighton, Mich. Age 53

Jeff Walker, a former auto industry executive, doesn't mind being among the oldest students at Eastern Michigan University. "I'm happier than just being unemployed and looking for a job," he says. In April, Mr. Walker lost his job as a vice president of operations at a small auto equipment supplier in Brighton, Mich., where he had worked for 22 years. Mr. Walker is studying technology management in pursuit of the college degree he started but never finished after high school. Now, he says, he just wants to "get out of manufacturing."

Veteran Trucker Worries About Paying the Bills

Duane Dittbrenner, Cleburne, Texas Age 50

Duane Dittbrenner was laid off last month from his job at Arrow Trucking Co. He has been struggling to find another trucking job in the Dallas-Fort Worth area. "Where I live, most of it is hazmat and tankers," says Mr. Dittbrenner, who has hauled big rigs for the past 20 years throughout the U.S. Mr. Dittbrenner says he is worried he won't be able to pay next month's bills if a new job doesn't come along. "It's just getting out there and pounding the pavement," he says. "I'll have one soon. All you can do is be optimistic."

Growing Demand, but Low Pay, for Home Health

Debra Allicock, Brooklyn, N.Y. Age 42

Debra Allicock migrated to New York from Guyana in 2000 and took a job as a home-health aide, helping the elderly with errands, meals and light housekeeping. She says the relationships she gains are what motivates her to work 12-hour days despite low pay and no medical insurance. "You get to get very close and attached with them," she says of her clients. Ms. Allicock says her services are in high demand. "Why go to a nursing home when you can stay in your home surrounded by everything you love?" she says. "Maybe one day someone is going to return that favor for me."

Real Estate Executive Tries a New Path

Richard Hawthorne, Laguna Beach, Calif. Age 58

Richard Hawthorne has been out of work since June 2007, when he was laid off from a small commercial real estate investment firm where he was director of development. "In past downturns I've done well, but this downturn has me stumped," he says. Mr. Hawthorne enjoyed his more than 30 years in commercial real estate. "There was something new and totally unpredictable each and every day to solve," he says. But now, tired of being told he is overqualified for jobs in his field, he is launching a business advising financial institutions on how to eliminate investment property debt.

-- Interviews by Sarah E. Needleman

Road projects' disappointing effect on jobs

In the January 11, 2010 article "AP IMPACT: Road projects don't help unemployment," Associated Press writers Matt Apuzzo and Brett J. Blackledge report that recent road construction and maintenance projects have not generated the jobs many expected.

WASHINGTON – Ten months into President Barack Obama's first economic stimulus plan, a surge in spending on roads and bridges has had no effect on local unemployment and only barely helped the beleaguered construction industry, an Associated Press analysis has found.

Spend a lot or spend nothing at all, it didn't matter, the AP analysis showed: Local unemployment rates rose and fell regardless of how much stimulus money Washington poured out for transportation, raising questions about Obama's argument that more road money would address an "urgent need to accelerate job growth."

Obama wants a second stimulus bill from Congress that relies in part on more road and bridge spending, projects the president said are "at the heart of our effort to accelerate job growth."

Construction spending would be a key part of the Jobs for Main Street Act, a $75 billion second stimulus to revive the nation's lethargic unemployment rate and improve the dismal job market for construction workers. The House approved the bill 217-212 last month after House Speaker Nancy Pelosi, D-Calif., worked the floor for an hour; the Senate is expected to consider it later in January.

AP's analysis, which was reviewed by independent economists at five universities, showed that strategy hasn't affected unemployment rates so far. And there's concern it won't work the second time. For its analysis, the AP examined the effects of road and bridge spending in communities on local unemployment; it did not try to measure results of the broader aid that also was in the first stimulus like tax cuts, unemployment benefits or money for states.

"My bottom line is, I'd be skeptical about putting too much more money into a second stimulus until we've seen broader effects from the first stimulus," said Aaron Jackson, a Bentley University economist who reviewed AP's analysis.

Even within the construction industry, which stood to benefit most from transportation money, the AP's analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.

"As a policy tool for creating jobs, this doesn't seem to have much bite," said Emory University economist Thomas Smith, who supported the stimulus and reviewed AP's analysis. "In terms of creating jobs, it doesn't seem like it's created very many. It may well be employing lots of people but those two things are very different."

Transportation spending is too small of a pebble to quickly create waves in the nation's $14 trillion economy. And starting a road project, even one considered "shovel ready," can take many months, meaning any modest effects of a second burst of transportation spending are unlikely to be felt for some time.

"It would be unlikely that even $20 billion spent all at once would be enough to move the needle of the huge decline we've seen, even in construction, much less the economy. The job destruction is way too big," said Kenneth D. Simonson, chief economist for the Associated General Contractors of America.

Few counties, for example, received more road money per capita than Marshall County, Tenn., about 90 minutes south of Nashville.

Obama's stimulus is paying the salaries of dozens of workers, but local officials said the unemployment rate continues to rise and is expected to top 20 percent soon. The new money for road projects isn't enough to offset the thousands of local jobs lost from the closing of manufacturing plants and automotive parts suppliers.

"The stimulus has not benefited the working-class people of Marshall County at all," said Isaac Zimmerle, a local contractor who has seen his construction business slowly dry up since 2008. That year, he built 30 homes. But prospects this year look grim.

Construction contractors like Zimmerle would seem to be in line to benefit from the stimulus spending. But money for road construction offers little relief to most contractors who don't work on transportation projects, a niche that requires expensive, heavy equipment that most residential and commercial builders don't own. Residential and commercial building make up the bulk of the nation's construction industry.

"The problem we're seeing is, unfortunately, when they put those projects out to bid, there are only a handful of companies able to compete for it," Zimmerle said.

The Obama administration has argued that it's unfair to count construction jobs in any one county because workers travel between counties for jobs. So, the AP looked at a much larger universe: The more than 700 counties that got the most stimulus money per capita for road construction, and the more than 700 counties that received no money at all.

For its analysis, the AP reviewed Transportation Department data on more than $21 billion in stimulus projects in every state and Washington, D.C., and the Labor Department's monthly unemployment data. Working with economists and statisticians, the AP performed statistical tests to gauge the effect of transportation spending on employment activity.

There was no difference in unemployment trends between the group of counties that received the most stimulus money and the group that received none, the analysis found.

Despite the disconnect, Congress is moving quickly to give Obama the road money he requested. The Senate will soon consider a proposal that would direct nearly $28 billion more on roads and bridges, programs that are popular with politicians, lobbyists and voters. The overall price tag on the bill, which also would pay for water projects, school repairs and jobs for teachers, firefighters and police officers, would be $75 billion.

"We have a ton of need for repairing our national infrastructure and a ton of unemployed workers to do it. Marrying those two concepts strikes me as good stimulus and good policy," White House economic adviser Jared Bernstein said. "When you invest in this kind of infrastructure, you're creating good jobs for people who need them."

Highway projects have been the public face of the president's recovery efforts, providing the backdrop for news conferences with workers who owe their paychecks to the stimulus. But those anecdotes have not added up to a national trend and have not markedly improved the country's broad employment picture.

The stimulus has produced jobs. A growing body of economic evidence suggests that government programs, including Obama's $700 billion bank bailout program and his $787 billion stimulus, have helped ease the recession. A Rutgers University study on Friday, for instance, found that all stimulus efforts have slowed the rise in unemployment in many states.

But the 400-page stimulus law contains so many provisions — tax cuts, unemployment benefits, food stamps, state aid, military spending — economists agree that it's nearly impossible to determine what worked best and replicate it. It's also impossible to quantify exactly what effect the stimulus has had on job creation, although Obama points to estimates that credit the recovery program for creating or saving 1.6 million jobs.

Politically, singling out transportation for another round of spending is an easier sell than many of the other programs in the stimulus. The money can be spent quickly and provides a tangible payoff. Even some Republicans who have criticized the stimulus have said they want more transportation spending.

Spending money on roads also ripples through the economy better than other spending because it improves the nation's infrastructure, said Bernstein, the White House economist.

But that's a policy argument, not a stimulus argument, said Daniel Seiver, an economist at San Diego State University who reviewed AP's analysis.

"Infrastructure spending does have a long-term payoff, but in terms of an immediate impact on construction jobs it doesn't seem to be showing up," Seiver said. "A program like this may be justified but it's not going to have an immediate effect of putting people back to work."

Can Microfinance Make It in America?

In the January 11, 2010 TIME magazine article "Can Microfinance Make It in America?," Barbara Kiviat asks if the success of microfinance in developing countries can transfer to the United States:

Emily Medina isn't running a pyramid scheme, despite what people often think. As the petite 26-year-old works her way through some of New York City's poorer neighborhoods, she approaches women selling food and trinkets on the street and offers to lend them money to grow their businesses. The organization Medina works for, Grameen, is one of the world's largest microfinance outfits and has a Nobel Prize to its name for this work. But in New York neighborhoods where loans to street vendors tend to come with interest rates north of 40%, it can take a while to build trust. "I didn't believe it until I had the $1,500 check in my hand," says jewelry seller Rosa Lopez.

Thirty years ago Muhammad Yunus, the founder of the Grameen franchise, started lending small sums to poor entrepreneurs in Bangladesh to help them grow from a subsistence living to a livelihood. His great discovery was that even with few assets, these entrepreneurs repaid on time. Grameen and microfinance have since become financial staples of the developing world, but by coming to the U.S. Grameen is taking on a different sort of challenge: one of the planet's richest countries. Yes, money may be tight in the waning recession, but this is still a nation of 100,000 bank branches.

Yet Yunus believes that in just a few years Grameen America will be so successful that it turns a profit, thanks to 9 million U.S. households untouched by mainstream banks and another 21 million using the likes of payday loans and pawnshops for financing. Profit has long eluded U.S. microfinanciers. "If it's not profitable, it's not microlending — it's charity," Yunus said on a recent trip to the U.S. The question, then, is whether there is a role for a Third World lender in the world's largest economy.

Here is how Grameen is trying to establish one: on a Thursday afternoon, Medina and 10 borrowers gather in Ziomara Suarez's apartment in the northern prong of Manhattan. As the borrowers — all women, all immigrants — pack into a room with shelves full of the herbal health remedies Suarez sells, they each hand Medina a small blue ledger with a loan payment tucked inside. If any one of the women doesn't pay her weekly installment, credit will be cut off to the entire group — stunting the small businesses they've each developed. Collateral and credit scores may be missing, but peer pressure is powerful. The result: a 99% repayment rate in the U.S.

Since 2008 Grameen has collected 1,700 borrowers in New York City, and last June it opened a second branch in Omaha, Neb. Other cities in its sights include San Francisco, Boston and Charlotte, N.C. — anywhere local businesspeople raise seed capital and a bank will host low-cost savings accounts for borrowers with just a few dollars, since savings are a key part of the Grameen philosophy. "There are whole populations that aren't being reached by the banking sector," says Bob Annibale, director of microfinance at Citibank, which partners with Grameen in New York. Like other financial giants, Citi sees a lucrative new market in the unbanked. But attracting those customers isn't easy, and Citi is overjoyed to have Grameen deliver them.

That was also true when Grameen first came to the U.S., in the late 1980s, and tripped up. Under Grameen's tutelage, Southern Bancorp started making microloans to entrepreneurs in Arkansas. At first, the loss rate was a shocking 30%. Even after getting that under control, Southern found that what people really needed wasn't seed capital but broader help developing work skills and finding jobs.

The folks running Grameen America say that this time around results will be different because Grameen employees themselves are making the loans, not training an American bank to do it. In New York City, Shah Newaz, who started working for Grameen in 1982, hands out checks to borrowers at Grameen America headquarters — a sparsely furnished one-room office above a laundromat. In Omaha, Habib Chowdhury, who has worked for Grameen since 1985 and is a veteran of its Kosovo start-up, has found more than 250 borrowers since June and has already lent $378,000, mostly to Mexican immigrants stocking up on inventory for small businesses selling things like cosmetics, clothing and Herbalife weight-loss products.

Imported talent helped Grameen rival Acción, a big player in Latin American microfinance, establish a presence in the U.S. in the early 1990s. And yet even after years of making loans to small and upstart businesses, Acción still isn't profitable — an example of the challenge Grameen faces if it thinks it won't have to depend on donations for funding.

The working microfinance equation consists of borrowing funds cheaply and keeping loan defaults and overhead expenses sufficiently low. Microlenders overseas, including Grameen, do that by charging hefty interest rates — as high as 60% or 70%. (Yes, that's a colossal rate but one that's necessary to compensate for the risk and to attract bank funding.) But in the U.S., loans at rates much above Grameen America's standard 15% would most likely be attacked as usurious.

In the U.S., Acción has probably gotten closer to self-sufficiency than any other microlender by using technology and partnerships to boost efficiency. Acción Texas now underwrites loans for 12 different microfinance organizations, a pooling of talent designed to help all the groups more quickly remove their dependence on grants and community-reinvestment money.

Grameen's approach is different, since unlike most U.S. microfinanciers, it uses the group-lending model. Costs are kept down by having borrowers vet one another, tying together their financial fates and eliminating expensive loan officers entirely. Whether that setup will eventually allow Grameen to stand on its own two legs is a huge question mark.

And even if it can, it is still important to keep in mind exactly what a $1,500 loan can do. The ultimate promise of Grameen — and of microfinance more broadly — is to use business lending as a way for people to lift themselves out of poverty.

Grameen America provides a fascinating lens through which to view that ideal. More often than not, the borrowers Grameen finds in the U.S. already have jobs (as factory workers or home health aides, for example) as well as side businesses — selling toys or Amway products, cleaning houses or giving haircuts. The loans from Grameen, by and large, provide a steadier source of funding, but they don't create businesses out of nothing.

Take, for instance, Altagracia Familia, a former schoolteacher in the Dominican Republic who now lives in New York City and sells empanadas and coconut sweets. Her vending cart used to be wooden, but then she upgraded to metal. Not by way of a loan, though. Familia slowly saved profits and bought a new cart once she had amassed $7,000. What she spent her Grameen loan on is much less flashy: ingredients and cart repairs.

That's not to say the money isn't helpful. But according to Familia, one of the main things she gets from Grameen is something else: "their interest is in developing women workers," she says through a translator. "Women share their ideas and help each other out."

That correlates with what Jeffrey Ashe found in the 1990s when he ran a group-lending outfit. Working Capital, which had branches from Burlington, Vt., to Miami, eventually collapsed, but at its height the entrepreneurs were tremendous sources of support to one another, says Ashe. "I'd say that might have been more important than the loans," he recalls. "After they stopped borrowing, a lot of the groups would still meet — to help with bookkeeping, to refer customers to each other." Even if microlending isn't a clear-cut pathway out of poverty — and years of studies have yet to settle that debate — it could still be doing something very useful.

Back at Ziomara Suarez's apartment, the formal loan collection ends, but the women of the Progressives — what the group has named itself — stick around. As Emily Medina leaves to deposit the cash she's collected, the borrowers continue to chat and laugh and swap stories about the ups and downs of business. Then one of them opens up a suitcase and starts selling jeans and T-shirts out of it.

An Open Challenge to Advocates of Tax Cuts

Ranting about the unfairness of taxes has become a national sport. Yet, tax cuts (without commensurate reductions in spending) are a prime contributor to the more than $12 trillion U.S. public debt that has been accumulated largely since 1981.

I challenge you to state how the U.S. federal government should generate an additional $1.5 trillion (give or take a few hundred billion) every year. Please be specific. Who should pay more in taxes? Who, if anyone, should pay less? It would be even better if you could find a politician who would make such a statement on the record.

It is easy to rant about the unfairness of ANY tax. Anti-tax advocates are making U.S. fiscal problems worse, not better. They add to a culture of fiscal irresponsibility in which we demand government services, but are unwilling to pay for them. Please do not misunderstand me. I am not opposed to the reduction or elimination of ANY government programs. But until such a time as politicians are willing to upset the portions of the electorate that benefit from government largesse by reducing their benefits, the responsible behavior is to pay for current government services rather than passing trillions of dollars of debt to our children, grandchildren, and future generations.

Keep ranting if it makes you feel better. But unless you support HIGHER taxes (on someone) or reduced government spending (on things YOU benefit from), then you are part of the problem, not the solution.

I await your plans for increasing federal government revenues or specific recommendations for $1.5 trillion (or more) in cuts to government services.

Best wishes ...

Should the government help reduce the hoarding problem?

In the January 10, 2010 Boston Globe Sunday Magazine article "When clutter turns to crisis," Stephanie Schorow reports "hoarders’ private problems can become a public nuisance, putting neighbors and firefighters at risk and dragging down property values. Now several Massachusetts cities and towns have decided it’s time to get involved." The Preamble to the Constitution of the United States says that government is create to "promote the general welfare." Does this qualify as an appropriate role for government? According to the article:

No one walking by the neatly trimmed lawn of Shirley’s home west of Boston would see anything amiss. Inside, the small living room has enough space for her son and his friends to gather around the TV for a video game, although the room is lined with plastic tubs stuffed with old board games and toys. The kitchen is another matter; the table is piled high with papers -- newspapers, magazines, documents, letters -- which spill onto the floor. Shirley (who asked that her real name not be used) can’t throw paper away, or not without going through every sheet to ensure it’s not needed. She also has boxes of other belongings that she can’t quite get out the door. She can donate clothes that don’t fit her, but only if her husband helps her decide what to keep.

“It stresses me to get rid of things,” she says. “I think it’s more like memories, like some things have good memories and stuff like that. I think it’s a matter of letting go, you know.” Her words tumble out, scattered and disorganized. “It’s just a weird way of thinking.”

Shirley has a heart-shaped face framed by soft brown locks. She’s a pretty woman but she rarely smiles. She says she desperately wants to get organized. She attends group therapy for people who acquire or keep too much, even though she hates shopping and never goes to yard sales. She doesn’t have to in order to fill her house. American life creates a trail of detritus: old magazines, junk mail, bills, plastic containers, and rubber bands, as well as old clothes and outgrown toys. For Shirley, things just don’t go out the way they come in.

Such compulsive hoarding may strike as much as 5 percent of the US population, according to Gail Steketee, the dean of Boston University’s School of Social Work and one of the country’s foremost authorities on the disorder. In Massachusetts, complaints to public officials about hoarding number 26.3 per 100,000 individuals, according to Steketee’s research. Moreover, hoarding has become pop culture’s trauma du jour. A&E’s reality series Hoarders, which debuted last summer, shows therapists and professional organizers encouraging out-of-control clutterers to allow their spaces to be cleaned up. On the Style Network’s reality series Clean House: The Search for the Messiest Home in the Country, a crew of wisecracking designers and cleaners sweep into garbage-strewn pads and transform them into showcases of style. What these TV shows often sidestep are the public costs of hoarding: These homes are not only dangerous for occupants, they also pose hazards to the firefighters and police who may someday have to rescue those occupants. Junk-filled homes can become eyesores or be condemned, lowering property values in their neighborhoods. Too much accumulation can be traumatic for the family and friends of hoarders, who often see their possessions as more important than their own health.

At least 10 communities in Massachusetts have decided to address these public costs head-on. Gloucester has one of the newest hoarding task forces, launched in 2007, while Newton has one of the first, established in 2003, which serves as a model to other communities in the state and the nation. The task forces are typically made up of public health nurses, social workers, therapists, fire and safety inspectors, animal protection agents, and professional organizers. They want to identify hoarders who are packing their homes with so much stuff that they may endanger themselves and others, and they want to find solutions that don’t humiliate or demean those involved. As more attention is drawn to hoarding, other communities are likely to consider creating their own groups. Because if it takes a village to raise a child, it takes a task force to handle a hoarder.

Bill Burke, director of public health for the city of Beverly, got the call about 11 o’clock on a Friday night in May 2006. An 80-year-old woman had been reported dead in a home where she lived with her 60-year-old son. The police were ruling out foul play, but emergency personnel had found the home stacked floor to ceiling with belongings. The front and back doors were almost blocked, and the responders could barely move from room to room. Neither the kitchen nor bathroom seemed usable. The house was a firetrap. (Firefighters responding to blazes in homes jammed with possessions often call them “Collyer Mansions” in reference to the Collyer brothers, two wealthy recluses who shocked the nation in 1947 when their bodies were found in their rubbish-filled New York brownstone.)

Burke headed to the Beverly home, where he was faced with the difficult task of telling a man who had just lost his mother that he might lose his house as well. The man, an engineer, was pleasant and intelligent. He insisted all the stuff in the house really had value -- everything could be fixed or used.

Burke knew the man could not remain in the unsafe home, but he was troubled at the thought of simply kicking him out without a plan for him to return. So Burke connected with a Beverly social worker; together they became a good-cop/bad-cop team. Burke made it clear to the man that the house had to be restored to safety. The social worker encouraged the man to contact relatives, who helped with cleanup and repairs. Almost exactly a year after Burke’s first visit, the man was allowed to move back in.

“It wasn’t perfect,” Burke recalls. “But you could get out the back door; you could get out the front door. There was access to the bathroom, access to the kitchen. He had a place where he could lay down and sleep. The fire department was satisfied.”

The case struck a nerve. In the spring of 2007, officials formed the Beverly Hoarding Task Force to serve the city and neighboring communities.

On a bright July morning, task force members file into a small room in the Beverly Senior Center for their monthly meeting. Today they will work on a brochure to educate the public about hoarding -- although Teri McDonough, the center’s outreach coordinator, admits she prefers the word “cluttering” or even “over-treasuring.” Participants trade stories and tips. Dawn Boccelli, service coordinator of a Lynn housing complex, is puzzled about a resident who displays “tons” of holiday items -- in the summer. Could hoarding be a result of obsessive-compulsive disorder, she wonders. “I would argue that it defies one diagnosis,” answers Susan Kaplan, who investigates elder abuse and problems for Senior Care, a Gloucester-based nonprofit that helps the elderly to live independently. Experts agree that compulsive hoarding has elements of obsessive-compulsive disorder, but consider it to be a separate condition.

Kaplan talks about her current case: an ailing, elderly woman whose junk-filled home is in danger of being condemned. A utility worker had discovered the house was so filled that egress between rooms was blocked. Senior Care had been alerted; Kaplan was assigned to try to help the woman. Initially suspicious, frightened, and ashamed, the woman wouldn’t let Kaplan inside, telling her, “You’ll report me, and I can’t lose my home.” The woman did agree to sit with Kaplan in her car. “This is progress,” says Kaplan. But does she indeed have to report the woman? No, fellow task force members tell her. Kaplan says she will continue to work with the woman in “baby steps.” She will try to gain the woman’s trust and encourage her to open her doors to a cleanup service. Perhaps she can get the woman into therapy, or refer her for assistance with nutrition and medical care. Kaplan adds grimly: “The whole issue might be moot. She might get sick and die, and the house will be gutted.”

While the term “compulsive hoard-ing” is relatively new, the condition is not. In the 1800s, doctors often diagnosed something called “collector’s mania.” Hoarding is frequently seen as a problem of the elderly or a holdover from Depression-era frugality, yet the mean age of hoarders is 50, and the tendency often manifests as early as age 3, notes Randy Frost, a professor of psychology at Smith College and expert on the disorder. Compulsive hoarding affects both sexes and all economic classes.

“It isn’t merely that a house just has a lot of stuff in it. It is also that people acquire these things in a compulsive way,” explains Steketee, the BU dean. “They don’t seem to have a lot of control -- at least that they can exercise -- about what comes in. Nor do they exercise much control about what goes out.” Steketee and other researchers are developing plans to establish a hoarding information center in Boston, under the auspices of the Boston-based Obsessive-Compulsive Foundation.

As with alcoholism, more people are speaking up about hoarding, says Claudia Schweitzer, a social worker and therapist with the Gloucester Board of Health. “It’s more socially acceptable to say that I or a family member has a problem.” Schweitzer is a member of her city’s hoarding task force, which at a recent meeting discussed displaying photos at a health fair to illustrate the difference between a messy home and a dangerous hoarding situation.

It took years for Jane, a 72-year-old Cambridge woman who asked that her real name not be used, to realize that her home was becoming uninhabitable. She just saw herself as a collector. “As I began to realize I had a hoarding problem,” she says, “I realized I collected everything -- just about everything.”

The word “hoarding” can be misleading. Often hoarders are generous-minded; they believe they are saving or acquiring something in case someone needs it. Others profess to be conscientious recyclers, horrified at a wasteful society. Many find it easy to give possessions away -- they just can’t throw them away. Jane describes herself as a crow that swoops in on shiny objects. “What attracts me, I collect. Rocks. Beads. Glass. Stones. Shoes. Clothes.”

Christiana Bratiotis examined the nation’s growing number of hoarding task forces as part of her doctoral dissertation last year. “There is recognition that mental health alone is not going to solve this problem,” says Bratiotis, now a postdoctoral fellow and project director of BU’s Compulsive Hoarding Research Project. “No one holds the key -- not building inspection nor public health nor animal control nor police and fire.” Rather, the fire inspector should work with social services; the board of health should coordinate efforts with elder advocates. External motivation comes from the threat of eviction, internal motivation from the behavior strategies and counseling provided by the “carrot dangler,” as Bratiotis describes herself.

One approach shown not to work is the tack often employed on the hoarding reality shows. With voyeuristic relish, cameras slowly pan mounds of clothes, broken furniture, rotting food, and empty containers, and then zoom in on the tense faces of hoarders as they watch other people hurl their possessions into dumpsters. Often, at the end of an episode, the hoarder walks into a pristine home. “I loathe [those shows],” Bratiotis says, “because they perpetuate the myth about the solution to the problem. Which is you go in, without the person being primarily involved, and that you clear things out and you bring in new things as if that were the answer.”

A total makeover is “built on someone else’s view of what the house should look like,” Steketee says. It’s far better if a task force determines the minimum necessary to make a home safe and livable and works closely with occupants to ensure they can keep it that way. “Because if it reverts to a dangerous situation, then you have really wasted your time,” Steketee adds.

Bratiotis acknowledges there’s not yet enough data to tell if task forces are effective in the long-term -- the first in the nation was established 11 years ago in Fairfax County, Virginia. But she believes that it’s a model worth pursuing and far more effective than the “clean sweep” of reality TV. Bratiotis is steadfast in her belief that hoarding tendencies can be overcome: “People can reclaim their life in a way they haven’t known sometimes for decades.” Cognitive behavior therapy can help hoarders gradually learn ways to discard possessions or stop acquiring them. Many hoarders find their greatest strength through one another in meetings of Clutterers Anonymous, a 12-step program based on the principles of Alcoholics Anonymous.

Working with a therapist, Jane, the Cambridge woman, has made tremendous progress, but she knows she will never be free of the desire to acquire. “It’s not something you get over,” she says. “It is something you always have to deal with.”

Stephanie Schorow is a freelance writer and the author of four books about Boston history. E-mail her at sschorow@comcast.net. Ann Silvio, a Globe senior multimedia producer, contributed to this report.

China Surpasses U.S. in 2009 Auto Sales

In the article "China Surpasses U.S. in 2009 Auto Sales," Associated Press business writer Joe McDonald reports that consumers in China now buy more cars than those in the United States. This is further evidence of the shift of economic power away from the U.S.

BEIJING (AP) -- China overtook the United States as the biggest auto market in 2009 and automakers should see more strong growth this year, an industry group reported Friday.

Boosted by Beijing's stimulus, 2009 passenger car sales soared to 10.3 million and total vehicle sales are estimated at 13.6 million, the China Passenger Car Association said. That represents growth of about 45 percent from 2008.

"This is even better than anyone expected," the group's general secretary, Rao Da, said at a news conference in Shanghai.

By contrast, U.S. sales of cars and light trucks plunged 21 percent in 2009 to 10.4 million as a shaky economy kept buyers away from showrooms. It was the first time any country bought more cars than Americans.

The Chinese group's data were in line with forecasts by J.D. Power and Associates of 12.7 million sales of cars and light trucks and 900,000 bigger vehicles in 2009 for a total of 13.6 million. The company in early 2009 expected sales of 9 million vehicles but raised that as Beijing rolled out measures to boost demand.

"It's very, very strong growth, far beyond the expectations we had in the early part of 2009," said John Bonnell, a J.D. Power analyst.

China's status as the top auto market is yet another sign of its rapid rise as a global economic power. After a two-decade economic boom, it is believed to have passed Germany last year as the biggest exporter and is expected to overtake Japan soon as the second-largest economy after the United States.

Global automakers including General Motors Co., Ford Motor Co. and Germany's Volkswagen AG looked to China to help drive revenues as demand elsewhere plunged and U.S. automakers laid off workers and shuttered factories. Volkswagen says China is its biggest market.

GM says 2009 sales by the company and its local partners in China rose 67 percent last year, while Ford says sales were up 44 percent.

China, with 1.3 billion people and a growing urban elite, was long expected to become the top auto market but not until as late as 2020. That date moved up as the U.S. crisis dragged down sales while China continued to grow with the help of a 4 trillion yuan ($586 billion) government stimulus.

Economic growth accelerated to 8.9 percent over a year earlier in the third quarter and the government says it should be 8.3 percent for the full year.

Beijing boosted purchases by slashing sales taxes on smaller, fuel-efficient cars and spending $730 million on subsidies for buyers of SUVs, pickup trucks and minivans. Stimulus spending on building highways and other public works also helped to boost sales of trucks used in construction.

China's monthly purchases exceeded those of the United States for all but two months last year.

Rao said auto sales in 2010 could grow by another 20 percent so long as China's economic recovery continues and oil prices stay stable. Bonnell said J.D. Power expects a lower but still healthy growth of 6 to 7 percent.

"The temptation is to say that with 45 percent growth in 2009 there must be a payback in 2010," Bonnell said. "But all indications are the government wants to continue to stimulate things, and our expectation is they will succeed in doing that."

Automakers are looking to first-time buyers in smaller Chinese cities to help drive sales as incomes outside the country's prosperous east coast rise.

"People there are getting richer and can afford cars. Younger people can work for two or three years and with the help of their parents can buy a car," Rao said. "Being able to afford a car in China is not so difficult any more. People with an average salary can afford to buy a car."

China's small but ambitious automakers are starting to expand abroad and some have set up factories in Ukraine, Iran and other developing markets. Some want to break into U.S. and Western European markets but have yet to satisfy safety and emissions standards.

"We don't see that they are ready, that they are achieving these levels of quality or safety," said Bonnell. "There is no indication that next step is right on the horizon."

Political addiction to tax cuts harms military personnel.

In the January 8, 2010 article "US troops, kin face cuts in base services," Associated Press writer Kristin M. Hall reports that the U.S. Department of Defense is cutting services for military personnel. This is a direct result of U.S. citizens' reluctance to pay more in taxes, even to support the men and women defending the country. The current wars in Iraq and Afghanistan are the first ones in U.S. history during which taxes were not increased to support the war effort.

FORT CAMPBELL, Ky. – Soldiers and their families on Army bases around the country could see cutbacks in trash pickup, lawn-mowing and other services as the military tries to hold down non-war spending while escalating the fight in Afghanistan.

Even as total defense spending rises, the portion of the Army budget dedicated to running its bases is down 20 percent this year, according to figures provided to The Associated Press by an Army official who requested anonymity because he was not authorized to speak about them.

The budgets for individual bases are not yet final. But the proposed cuts vary in size and run as deep as 40 percent at some major installations, including Fort Campbell, according to the figures.

Fort Campbell, the home of the 101st Airborne Division, is considering eliminating lawn-mowing and janitorial services and shortening hours at recreation centers, Fort Campbell spokeswoman Kelly Tyler said. But that may not be enough, she said.

Some members of the military are worried money will be pulled from programs that help spouses and children cope with soldiers' repeated tours of duty in Iraq and Afghanistan.

Lt. Gen. Rick Lynch, who as head of the Army's Installation Management Command is in charge of the budget for bases, said in a recent commentary distributed to Army post newspapers that the service has enjoyed unprecedented levels of funding in the past years, but that can't continue.

"As the country faces some stiff economic challenges, we are forced to reduce funding and exact a greater level of stewardship over our resources," Lynch said. Starting this year, "performance levels for some installation services will be notably less than we've had in recent years and will remain at that level for the foreseeable future."

Army posts provide many of the services that soldiers and their families have come to rely on, including child and youth programs, continuing education, dining and recreational facilities and help with overcoming drug and alcohol abuse.

Lynch said that certain services, such as police and fire protection, will be fully funded and that the Army is committed to continuing family-focused programs, such as child care. He did not specify where cuts would be made.

It wasn't clear how the military's other branches might be affected, though the Army is by far the largest. Officials with the Marines, Navy and Air Force did not respond to requests for information.

Some of the Army's biggest posts, where soldiers have completed four and five combat tours since the wars began, are facing significant spending reductions, according to the figures obtained by the AP.

At Fort Campbell, where about 17,000 soldiers are leaving this year for Afghanistan, commanders have been told that the operating budget for the current fiscal year could drop 40 percent, from $177.5 million last year to $106.5 million, Tyler said.

Cuts could be 39 percent at Fort Stewart, Ga., 25 percent at Fort Bragg, N.C., 22 percent at Fort Drum, N.Y., and 21 percent at Bamberg, Germany, the figures show.

U.S. economy loses 85,000 jobs in December; unemployment rate remains at 10%

In the January 8, 2010 article "Economy loses 85K jobs, unemployment rate steady," Associated Press economics writer Christopher Rugaber summarizes the U.S. Bureau of Labor Statistic's employment situation report for December 2009. The BLS publishes its Employment Situation Summary on the first Friday of each month. It also provides other extensive U.S. labor market data.

WASHINGTON – Lack of confidence in the economic recovery led employers to shed a more-than-expected 85,000 jobs in December even as the unemployment rate held at 10 percent. The rate would have been higher if more people had been looking for work instead of leaving the labor force because they can't find jobs.

The sharp drop in the work force — 661,000 fewer people — showed that more of the jobless are giving up on their search for work. Once people stop looking for jobs, they are no longer counted among the unemployed.

When discouraged workers and part-time workers who would prefer full-time jobs are included, the so-called "underemployment" rate in December rose to 17.3 percent, from 17.2 percent in November. That's just below a revised figure of 17.4 percent in October, the highest on records dating from 1994.

Many analysts had hoped Friday's report would show the economy gained jobs for the first time in two years. While the revised figures found an increase in November, it was tiny. Job openings remain far too few.

"One word sums it up: Disappointment," said Jonathan Basile, an economist at Credit Suisse.

Referring to the drop in the labor force, Basile said, "that tells me that Main Street doesn't believe there's a recovery yet, because they're not out looking for jobs yet."

Revisions to the previous two months' data showed the economy actually generated 4,000 jobs in November, the first gain in nearly two years. But the revisions showed it also lost 16,000 more jobs than previously estimated in October.

The report caps a disastrous year for U.S. workers. Employers cut 4.2 million jobs in 2009. And the unemployment rate averaged 9.3 percent. That compares with an average of 5.8 percent in 2008 and 4.6 percent in 2007. Nearly 15.3 million people are unemployed, an increase of 3.9 million during 2009.

"The economy is in a rough situation," Labor Secretary Hilda Solis acknowledged in an interview with The Associated Press. She said she thinks companies are reluctant to ramp up hiring because they're waiting to see what new stimulative steps the government might take to provide relief.

The economy has lost more than 8 million jobs since the recession began in December 2007. And while layoffs have slowed, they haven't ended. UPS said Friday it will cut 1,800 jobs. And defense contractor Lockheed Martin Corp. said this week it is cutting 1,200 workers.

Most economists worry that 2010 won't be much better. Federal Reserve officials, in a meeting last month, expressed concern that unemployment will decline "only gradually," according to minutes of the meeting released earlier this week.

If jobs remain scarce, consumer confidence and spending could flag, potentially slowing the economic recovery. Many analysts estimate the economy grew by 4 percent or more at an annual rate in the October-December quarter, after 2.2 percent growth in the third quarter.

But the economy will need to grow faster than that to bring down the unemployment rate. And economists worry that much of the recovery stems from temporary factors, such as government stimulus efforts and businesses rebuilding inventories.

Debra Winchell has been seeking work since last January, when she lost her job as an administrative assistant at the health insurance company. Winchell, 50, of Latham, N.Y., said she's seen an uptick in online job postings, giving her some hope. But they're for jobs paying as little as $10. And she's still not getting any callbacks when she does apply.

With her unemployment benefits set to run out this spring, Winchell, who is single, said she will reluctantly sign up for temporary work.

"I'll be lucky if it pays the bills," she said.

Still, some economists said a recent trend of improvement remains in place. The economy lost an average of nearly 700,000 jobs in the first three months of last year, a figure that dropped to 69,000 in the fourth quarter.

And the private service sector added jobs for the second straight month, said Nigel Gault, chief U.S. economist at Global Insight, though the gains have been concentrated in temporary workers.

"Firms are still being very cautious, so the first thing they are turning to aren't full-time employees, but temps," he said. Companies have added about 166,000 temp workers since July.

The average work week remained unchanged at 33.2 hours, near October's record low of 33. Most economists hoped that would increase, as employers are likely to add hours for their current employees before hiring new workers.

Job losses remained widespread: manufacturing lost 27,000 jobs and construction shed 53,000, while retailers, the leisure and hospitality industries and government also cut workers.

EMPLOYMENT SITUATION - December 2009

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The latest Employment Situation news release
(http://www.bls.gov/news.release/pdf/empsit.pdf)
was issued today by the Bureau of Labor Statistics. Highlights are below.
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Nonfarm payroll employment edged down (-85,000) in December, and the
unemployment rate was unchanged at 10.0 percent. Employment fell in
construction, manufacturing, and wholesale trade, while temporary help
services and health care added jobs.


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please visit http://www.bls.gov/bls/list.htm
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Swiss court fines speeding millionaire $290,000

If the purpose of speeding tickets is to discourage driving at excessive speed, perhaps the fines should be based on a person's income. That is the logic used in Switzerland, where a court fined a wealthy speeder $290,000. According to the January 7, 2010 article "Swiss court fines speeding millionaire $290,000":

ST. GALLEN, Switzerland – A Swiss court has slapped a wealthy speeder with a chalet-sized fine — a full $290,000.
Judges at the cantonal court in St. Gallen, in eastern Switzerland, based the record-breaking fine on the speeder's estimated wealth of over $20 million.

A statement on the court's Web site says the driver — a repeat offender — drove up to 35 miles an hour (57 kilometers an hour) faster than the 50-mile-an-hour (80-kilometer-an-hour) limit.

Court clerk Heidi Baumann-Becker said Thursday the unidentified driver can appeal the decision, handed down in November, to the Swiss supreme court.

The Blick daily newspaper in Zurich reported the fine was more than twice the previous Swiss record of about $107,000.

Test your understanding of economics in the news: Is this a change in supply or a change in demand?

In the January 7, 2010 Reuters article "U.S. airlines align to start new year with higher fares," Karen Jacobs and Deepa Seetharaman report U.S. consumers can expect to pay more for air travel in 2010.

Can you illustrate these changes in the market for air travel using supply and demand analysis?

Do these changes include (a) an increase in the supply of air travel, (b) a decrease in the supply of air travel, (c) an increase in the demand for air travel, or (d) a decrease in the demand for air travel?

Read the article below and then illustrate these changes in the market for air travel with a graph that shows the initial positions of the supply and demand for air travel and the new positions of the supply and demand curves. (Hint: Do both curves shift?) There is a link at the bottom that provides the answer.

ATLANTA/NEW YORK – If you thought U.S. airlines would reduce fares following a laundry list of new security rules after an attempt to blow up a U.S.-bound plane on Christmas day, you would be wrong.

Rising oil prices and signs that business travelers are gradually booking more flights has emboldened some U.S. airlines to ring in the New Year with higher ticket prices.

UAL Corp's United Airlines instituted a $6 to $10 domestic roundtrip fare increase on December 30 that was matched by other major carriers, according to FareCompare.com.

"Given the pressure on (airlines') bottom lines and if oil continues to rise, the pressure is going to be there to find additional sources of revenue," said Brian Clark, general manager of fly.com, an airfare search engine that is a unit of TravelZoo.

The post-holiday period is among the most lackluster for travel companies as the reopening of schools and cold weather discourages travel. The success of fare increases hinges on whether airlines can align to prop up prices.

Clark said current fares are less than 5 percent higher than a year earlier, while Rick Seaney, chief executive of FareCompare.com, noted that some pricing is back up to pre-2008 levels.

"I don't expect prices to go up dramatically, but I do expect them to increase incrementally," Seaney said, adding that he did not expect the latest security concerns to cause as much disruption for airlines as the 2009 H1N1 swine flu outbreak, which soured demand for travel to Mexico.

Seaney said U.S. airfares reached bottom at the end of May and early June as carriers sought to occupy seats in the weak economy, while international ticket prices touched the lowest point of their declines in late July and early August.

Airlines have been encouraged by signs that business demand was recovering from the deepest recession since the Great Depression. Executives at carriers such as AMR Corp's American Airlines and US Airways Group last month cited evidence that business demand was improving.

This week, Continental Airlines, which depends heavily on business traffic, estimated that its mainline unit revenue fell between 4.5 percent and 5.5 percent in December. In November, this measure fell 9.8 percent and in October, it dropped 15.2 percent.

"The trends are definitely up for business travel coming back," Seaney said. "But it's a slow trickle, it's not a quick jump."

Shares of major U.S. carriers rose on Thursday as oil prices pulled back. The Arca Airline index was up 2.3 percent in morning trading.

Delta Air Lines shares gained about 5 percent, while Continental, UAL and AMR were up more than 4 percent in late-morning trading.

CLICK HERE FOR THE ANSWER.