News Cut Category Archive: Economy

A letter to my loan shark

Posted at 9:27 AM on November 7, 2009 by Bob Collins (5 Comments)
Filed under: Economy

This week the House closed the barn door as the horses galloped over the horizon, voting to freeze interest rates until a credit card law passed 8 months ago kicks in. The credit card companies have been wallpapering consumers' homes with notices of increased rates.

Many credit card companies, which had offered no-annual-fee accounts, are now slipping in charges. In many cases, the card companies are trying to "test" how much you love your credit card, and how much money you're willing to fork over to keep it, according to Marketwatch.

And this week, Pew's Safe Card Card Project released a study showing credit unions as a far more logical source of credit cards than commercial banks:

In July 2009, median advertised interest rates on cards from the 12 largest credit unions were between 9.90 and 13.75 percent annually, depending on a consumer's credit profile approximately 20 percent lower than comparable bank rates. Meanwhile, credit union penalties were generally less severe than those of banks.

That was all I needed to hear to write letters to the half dozen credit card companies, whose notices arrived in the mail this week:

To whom it may concern:

Thank you for your notice of the above date informing me that you're raising the APR on my Discover (Account #XXXXXXXXXXXX) card to 22.9%, raising the APR for cash purchases to 25.9%, increasing the penalty for APR to 29.9%, and the late payment fee up to $39.99.

As you probably know, I pay my balances every month, and am not foolish enough to get cash advances from this account. That should suggest to you that I manage my finances relatively conservatively. I wish you had.

As I understand it, your industry is not raising your fees to confiscatory levels because of new credit laws. That's just a coincidence. Your industry says you're trying to recoup massive losses from your customers.

Whatever the reason, during these difficult economic times, I'm sure you understand that I cannot enter into any business agreement with financial institutions that are so clearly in peril. For that reason, I am rejecting the changes per the terms of this account, which we agreed to when you were a more solvent institution.

You are certainly free to close the account, although I can't say I understand why you'd want to. Customers who use your card, allow you to skim the purchase price from merchants. Customers who pay their bills on time do not seem to be the people responsible for bringing you to the apparent precipice of bankruptcy.

No doubt, when that occurs, you'll be seeking a bailout from me - the taxpayer. So this letter is to inform you that when that time comes, you will immediately be charged 25.9% for the cash advance, and 22.9% for any outstanding balance each month. Trust me, you don't want to know the late payment fee. On the other hand, I will offer you the same reward your credit card statement offered me this month: A discount on Beano tablets. Enjoy!

Please be sure I'm taken off the mailing list for your daily solicitations for me to become an account holder again. You had your chance.

Sincerely,

Robert B. Collins

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Rising by Degrees

Posted at 12:04 PM on November 6, 2009 by Bob Collins (1 Comments)
Filed under: Economy, Schools

I'm calling your attention to an American RadioWorks documentary, airing at this hour on MPR's Midday program. Rising by Degrees looks at a developing problem. The fastest-growing segment of our society -- young Latinos -- are the least likely to graduate from college. What does this mean for the future of the country?

You'll meet Veder Garcia, who spoke no English when he arrived in the U.S. from El Salvador as a high school junior, and is now completing his Ph.D. in plant biology at UC Berkeley. Community college was a critical step along the way. And the program introduces us to Mike Carvalho, who "always knew he would attend community college. What the 20-year-old didn't know is that he would drop out two years after he started."

If you can't listen, you can find the Web site for the project here.

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Help for the struggling homeowner

Posted at 3:32 PM on November 5, 2009 by Bob Collins (0 Comments)
Filed under: Economy

Lost in the breaking news of the day was an announcement out of Fannie Mae in Washington that most certainly will be of interest to those struggling with the possibility of foreclosure, including many of the people, perhaps, whom I've profiled on the The Unemployed series.

The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.

Some of the qualifications can be found here.

Borrowers cannot have 12 or more past-due payments on their mortgage. And they must have made at least three payments since the loan was first taken out--or since the last time it was modified. Borrowers can't be in the process of declaring bankruptcy.

People in danger of foreclosure should call their lender. If you do, please let me know how it works out for you.

And while I'm at it, I'm looking for more people who are struggling with unemployment (or unemployed but not struggling, even). Contact me here.

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Your overdraft stories wanted

Posted at 1:24 PM on October 30, 2009 by Bob Collins (4 Comments)
Filed under: Economy

"Don't do favors for people without asking them," said Rep. Barney Frank, D-Mass., said at a House Financial Services Committee hearing at which he unveiled a bill preventing banks from enrolling you in a high-fee overdraft plan without your permission.

Most banks automatically allow customers to overdraft their accounts, then charge them $25 to $35 per "infraction." It's either that or suffer the embarrassment in public of being told your debit card is no good, banks say. Most banks don't allow checks to bounce anymore. They pay the check amount and then charge you for it.

But with regulators heading toward new regulations, many banks -- Wells Fargo is one -- are allowing customers to opt out of the plan.

The legislation also would prohibit banks from imposing more than one overdraft fee a month, or six per a year.

If you knew banks could only charge you one overdraft fee a month, would you be more inclined to bounce a check?

Banks have a habit of coming up with new ways to make up for fees that are outlawed. Free checking, for example, could disappear, the New York Times reported this week.

What's your experience with bank fees, including overdrafts? Answer below.

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For many in Congress, it's not the economy

Posted at 9:24 AM on October 29, 2009 by Bob Collins (7 Comments)
Filed under: Economy, Politics

At this hour, an utterly amazing exchange is taking place on Capitol Hill on an issue that is clearly the most important and fundamental issue facing the nation.

It's a brutally honest discussion between Tim Geithner, the Secretary of the Treasury, and the few members of the House Financial Services Committee who showed up for work today.

Geithner is, basically, calling out Congress for its inaction on closing loopholes that led to financial meltdown in the first place

It's a rare honest debate in which both sides are speaking frankly.

For example, Geithner was incredulous when one member of the committee suggested the "too-big-to-fail" banks should not be subject to the same regulation that smaller, community banks are.

"The important thing to recognize is -- and it's just worth going back to what it was like last fall -- without the ability for the government to step in and manage the failure of a large firm, to contain the risk of the fire spreading, we will be consigned to repeat the experience of last fall. It's a stark, simple thing. And there is no... I know of no person who has stood in my seat -- this is true of (Fed) Chairman Paulson -- in any central bank in any major country that would say the country should be run with no authority to step in and act in that case."

"They are getting into the fundamental issue of regulatory reform and that is the issue of pre-emption by the authority; do they have the right to go in and tell a bank they can't do a certain business, what is the right to take over a certain company if there's deemed to be a systemic risk?" a CNBC analyst noted. "This whole concept of prevention has been out there for, really, decades, that Congress has decided not to do because of these issues that have just been brought up."

Is that an important discussion -- the fundamental philosophical on the role of government -- for the people who were elected to Congress to hear? Not for many of them.

I count at least seven empty chairs. Even the committee chair, Rep. Barney Frank, left after his opening statement, in which he defended Congress by saying the committee has passed legislation that further regulates the banking industry. In fact, however, that legislation has not become law.

Three Minnesotans -- Rep. Michele Bachmann, Rep. Keith Ellison, and Rep. Erik Paulsen -- sit on the committee.

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Twin Cities real estate market is now among country's hottest

Posted at 8:54 AM on October 27, 2009 by Bob Collins (2 Comments)
Filed under: Economy

The hottest real estate market in the country when it comes to the resale value of homes? It's Minneapolis-St. Paul, according to the monthly Case-Schiller Index, which tracks these things. Here's the results for August, which were released this morning (seasonally unadjusted).

City	Increase/Decrease
Minneapolis	3.2%
San Francisco	2.8%
Detroit	1.9%
Chicago	1.7%
Phoenix	1.6%
Los Angeles	1.6%
San Diego	1.6%
Washington	1.4%
Miami	1.1%
Atlanta	1.0%
Denver	1.0%
Boston	0.9%
New York	0.5%
Tampa	0.4%
Portland	0.3%
Dallas	0.2%
Seattle	0.1%
Las Vegas	-0.3%
Cleveland	-0.5%
Charlotte	-4.0%

It's the fourth consecutive month of home value increases in the Twin Cities -- up over 12% over that time. The impressive rebound over the last few months has also pushed the local index into positive territory for the year -- up 1.9%. The index, however, shows the home resale value is still 13% lower than a year ago.

And when it comes to green shoots, when's the last time you saw any economic survey that Detroit near the top of the positivity heap?

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Has 'the media' told the economic story from Main Street?

Posted at 12:21 PM on October 5, 2009 by Bob Collins (2 Comments)
Filed under: Economy

The Pew Center's Project for Excellence in Journalism is out with a report on coverage of the recession today. It finds that "the media" has largely ignored covering the economic woes from the perspective of anyone or anything other than big banks, big companies, and politicians:

Three storylines have dominated: efforts to help revive the banking sector, the battle over the stimulus package and the struggles of the U.S. auto industry. Together they accounted for nearly 40% of the economic coverage from February 1 through August 31. Other topics related to the crisis have been covered much less. As an example, all the reporting of retail sales, food prices, the impact of the crisis on Social Security and Medicare, its effect on education and the implications for health care combined accounted for just over 2% of all the economic coverage.

It's an interesting report that -- at least for those of us here in flyover country -- is bound to flunk the "smell test," depending on how you define "the media."

Network news, which mostly comes from New York and Washington, is bound to focus on things in New York and Washington, a city a relative always described as "12 square miles surrounded by reality."

But for the most part, Minnesota media -- and I'll define that by the local papers and public radio -- have covered the recession's effect on people. The Star Tribune today, for example, published an insightful look at how the banks are calling the shots on whether homeowners get any mortgage assistance. MPR, like other media, has beaten the drum on the Rosemary Williams story, News Cut is profiling the lives of The Unemployed and earlier this year took a generational look at the economy.

Is it enough? Probably not. Is it non-existent? Certainly not.

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Capitol showbiz

Posted at 10:05 AM on October 1, 2009 by Bob Collins (1 Comments)
Filed under: Economy, Politics

Congress hasn't done much in the last year to close some of the loopholes in the nation's banking system that led to the worst economic crisis in America since the Great Depression, and it's not hard to figure out why. They're not that interested in the subject.

Today, Federal Reserve Board Chairman Ben Bernanke testified before the House Financial Services Committee, which is "considering" changes in regulations.

Bernanke did something, however, that a lot of members of the committee didn't do: He showed up. Here's the revealing image off CNBC this morning:

What's the point of being on an important committee, if you don't show up -- preferably for the entire hearing -- to listen and participate in the discussion?

But discussions are rarely part of these hearings. Congresspeople show up for a few minutes when it's their turn to ask questions, then use most of their time to make a speech, and leave.

Rep. Michele Bachmann, R-Minn., for example, had five minutes to quiz Bernanke this morning, but used all but 3 seconds of her time to read a statement criticizing the possibility of the dollar not being the international standard, criticizing President Obama for saying he 'inherited' the financial mess, and wondering whether a new regulatory agency would regulate funding to ACORN. She then invited Bernanke to respond.

That earned her a rebuke from committee chair Rep. Barney Frank, D-Mass. "I've asked you before... there's only 3 seconds left in your time.... This practice of going right up to the end and then taking another minute or two is unfair to the other members."

Frank gave Bernanke 30 seconds to answer Bachmann's "questions," and said the dollar is in danger and punted on the question of funding for ACORN.

People watching on TV tend to get more information about the state of the economy and the options for fixing it than people who are elected to fix it. That might explain why it's broken.

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The amazing shrinking airline business

Posted at 10:22 AM on September 30, 2009 by Bob Collins (0 Comments)
Filed under: Economy

Back when the Northwest-Delta merger was announced, a lot of the questions being posted on News Cut were from pilots of the regional carriers involved -- Mesaba, Pinnacle, and Comair.

A few years later, it's becoming clear: More business for the regional airlines.

The blog Things in the Sky has noticed that some of Mesaba's jets have been moved to Atlanta. Some former Northwest and Delta routes are being flown by the regional carriers now (the planes are all gussied up to look like Delta , but they're not Delta.

Many of the flights from Minneapolis St. Paul to the Northeast are also now being flown by regional carries, using smaller jets.

But it's still not a great time to be an airline pilot (or any other airline employee) whether you're flying for a legacy carrier, a regional, or a no-frills airline, according to the Department of Transportation. The agency reports a 5.9% decline in employment at the airlines. The number jumps to 6.9% at regional carriers.

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When is good news bad news?

Posted at 8:54 AM on September 29, 2009 by Bob Collins (1 Comments)
Filed under: Economy

It's fairly safe now to say the housing price "crisis" has reached bottom and is on its way back up. That much is clear with today's release of the Case-Schiller Index, which measures the resale price of homes.

The Minneapolis area prices jumped 4.6% in July (3.1% on a seasonally-adjusted basis). That's the third straight month of increases. And it's the largest one-month increase since Minneapolis was added to the index in 1989.

Half-empty: Home prices here are still 1.4% below what they were in January.

Half full: That's a lot better than being 9.6% below January, which was the situation last April.

Half full: How do we rank compared to other cities in July? At the top of the heap:

City	Change June/ July
Minneapolis	4.6%
San Francisco	3.3%
Chicago	2.7%
San Diego	2.5%
Atlanta	2.3%
Phoenix	1.8%
Los Angeles	1.8%
Washington	1.8%
Denver	1.5%
Cleveland	1.5%
Tampa	1.4%
Miami	1.3%
Boston	1.2%
Dallas	1.2%
Detroit	1.1%
Portland	1.1%
New York	0.8%
Charlotte	0.6%
Seattle	-0.1%
Las Vegas	-1.1%

Half-empty: How do we rank since the start of the year? Middle of the pack.

City	Change Jan/Jul.
Dallas	7.5%
Denver	5.3%
Cleveland	4.9%
San Francisco	3.6%
Washington	2.5%
Boston	2.5%
San Diego	1.8%
Atlanta	0.6%
Charlotte	0.3%
Minneapolis	-1.4%
Los Angeles	-1.6%
Chicago	-1.9%
Portland	-2.4%
Seattle	-3.2%
New York	-4.0%
Tampa	-4.3%
Miami	-7.4%
Phoenix	-8.9%
Detroit	-9.4%
Las Vegas	-15.6%

The folks at the blog Calculated Risk have examined all of this and declared it bad news:

The debate continues - is the price increase because of the seasonal mix (distressed sales vs. non-distressed sales), the impact of the first-time home buyer frenzy on prices, and the slowdown in the foreclosure process (with a huge shadow inventory), or have prices actually bottomed? I think we will see further house price declines in many areas.

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Recession-proof jobs: Crop duster

Posted at 12:22 PM on September 21, 2009 by Bob Collins (3 Comments)
Filed under: Economy

If the cubicle-bound day job doesn't work out, maybe you can be a crop duster. The Associated Press reports today the demand for crop dusters has -- ummm -- taken off this year.

"Some new products came out to control disease in corn and soybeans, and those are applied when crops are mature, so the demand has been tremendous," said 56-year-old crop duster Tim Steier, of Blue Earth, Minn.

The surge in demand is largely because of corn and soybean crops.

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Will a tax/fee cost jobs? 'Yes,' Minnesota DFLers say

Posted at 12:15 PM on September 18, 2009 by Bob Collins (1 Comments)
Filed under: Economy

This week, Minnesota senators Amy Klobuchar and Al Franken have made it clear they oppose Sen. Max Baucus' proposal that would impose $4 billion in annual fees on the makers of products like heart pacemakers and artificial hips.

Both seemed to embrace Republican principles on taxes in asking the provision be dropped. "he proposed fee will seriously threaten thousands of American jobs and deter innovation in the industry," the letter they wrote said.

Both, of course, are trying to protect a hometown company -- Medtronic, whose former CEO, Bill George, appeared on CNBC this morning to make the same point. Ignore the first answer from the other guest who disagreed with him. He was on another planet until the anchor refocused him.



By the way, has anybody picked up on the fact that Democrats are calling taxes "fees" now?

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The Unemployed: Moira Webster-Larranaga

Posted at 11:03 AM on September 17, 2009 by Bob Collins (0 Comments)
Filed under: Economy, The Unemployed series

New data today shows people in Minnesota have given up looking for work, even as the unemployment rate fell again in August. Officially, 14.9 million people are unemployed. Thousands -- perhaps millions -- more have given up and are not counted. Last month alone, 466,000 people lost their job. They're not numbers; they're individuals with a story to tell. Here's one.

Moira Webster-Larranaga, 41, of Burnsville, has seen layoffs from both sides. For 6 1/2 years, she was the human resources director at the Greater Minneapolis Crisis Nursery. HR people know how layoffs work since they're usually the ones who have to do the dirty work. "You just have to stay calm and expect them to be angry," she told me on Wednesday. "There's no sense beating around the bush."

It's tough, she said, knowing that a layoff is coming and not being able to tell anyone. She didn't know for sure that she was in the crosshairs, but her layoff last September didn't surprise her. The non-profit world was getting raked by the recession.

She worked in a temporary position until last March, but she's been looking for full-time HR work. She says she's applied for at least 70 positions and had one interview.

"I just got a message on September 11th for a job I applied for last March, saying the opening was being removed," she said. "When you get 600 resumes for one position, what can you do?"

Webster-Larranaga seems to have taken it in stride, possibly because of another message she got in July: "You've got cancer."

The six weeks she waited between her diagnosis and her surgery on August 24th "were hard," but she was prepared to be honest with any potential employer who called. None did.

Moira's husband is an engineer. Health insurance isn't a problem and, for the most part, it seems, neither is unemployment, a possibility they planned for in recent years. They didn't live a high lifestyle when times were booming. They each drive old cars, they haven't had to touch their long-term savings, there's still a salary in the house, and the bills are getting paid. An annual snowboarding vacation in Aspen this winter is probably out, however.

Moira collected the maximum unemployment benefit from the state after her job ended in March, but it ended when she underwent surgery. The state doesn't provide unemployment compensation when you're physically unable to work. There's always the concern that she now has a pre-existing condition in the eyes of a health insurance company, but it won't be an issue, she says, as long as she doesn't go without health insurance for 63 days, and her husband's job appears safe, she says, knocking on nearby wood.

She was unemployed twice before -- the last was during the 2001 recession. But this one is different. "I don't feel stigmatized this time," she said. Back then, she'd recently graduated from the University of St. Thomas with an MBA, and MBA's aren't supposed to be unemployed.

Now, the picture is different. "I'm less concerned about what my title is," she said. "When you get your MBA, your title is important." She says she's conflicted about whether to stay in the non-profit sector "I want to make more money than the non-profit sector typically pays, but I also want to know I'm making a difference." She says when she worked at the Crisis Nursery, she ended every day knowing that she'd done her part to ease the pain of child abuse and neglect.

She expects Thursday's unemployment data in Minnesota will show more people have joined her out of work. But she thinks companies will soon be confident enough to start hiring again. "I try to stay positive," she says. "It's just so boring being negative."

She admits to one panic attack since her unemployment began "when I realized I was labeled 'unemployed' and 'cancer patient' at the same time." If her economic analysis is correct, and the radiation she's soon to undergo does what it's expected to do, she'll likely lose both labels soon.

(Unemployed? Let me tell your story. Contact me.)

Check out the map below to read what people in MPR's Public Insight Network are telling us about the job climate around them. You can find other stories in this series here.

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The white-paint index

Posted at 2:47 PM on September 15, 2009 by Bob Collins (2 Comments)
Filed under: Economy

A few weeks ago, men's underwear was cited as an economic indicator. Today we have a new category: White paint.

Here's the theory:

The price of Titanium Dioxide, a key ingredient of white paint, fell 7.3 percent over the 12 months ending in August, the Labor Department reported today. That would indicate that the demand for white paint -- used on cars and many consumer goods, of course -- is softening.

"I think the white paint index is signaling that the manufacturing recovery may be short-lived," said Richard Yamarone, economist at Argus Research.

It also spells bad news for real estate. When people are buying homes, one of the first things they do is paint the walls white.

As with everything else, economists appear to be surprised by the falling index. Just a few months ago, an increase in the price had them projecting a significant recovery.

In other economic news, Federal Reserve Board Chair Ben Bernanke says the recession is likely over.

Photo credit:

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Eyes on Jobs

Posted at 3:10 PM on September 9, 2009 by Bob Collins (3 Comments)
Filed under: Economy

There may be no company more dependent on the health of its CEO than Apple. Today, Steve Jobs appeared at a company event in San Francisco, his first appearance in one year to the day.

He unveiled new iPod Nanos with video cameras and lower prices, and iPod Touches with more storage.

But people were more focused on how Jobs looked. He's suffered from several health problems since revealing he had pancreatic cancer in 2004. He had a liver transplant last year.

For many pundits, however, there was rejoicing that he was on the stage at all. Investors, however, were not impressed, sending the stock price lower on fears that an Apple without Steve Jobs and his intellect is a different investment.

Here's a look at him at company appearances over the last decade and how the company's stock price performed the same day. The numbers have been adjusted to reflect stock splits and dividends.

January 5, 1999 - Up $.52

July 17, 2002 - Up $.33

September 10, 2002 - Down $.02

January 6, 2004 - Down $.04

October 12, 2005 - Down $2.24

September 9, 2008 - Down $6.24

September 9, 2009 - Down $1.79

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Happy days are...

Posted at 2:07 PM on September 9, 2009 by Bob Collins (2 Comments)
Filed under: Economy

I guess I thought the end of the recession would be announced with a bigger deal. But there it was buried in a stack of wire copy, just another story.

Fed findings indicate recession may be over, the Associated Press declared today in a story about a Federal Reserve Bank survey of the country's regions.

In the new survey, all but one of the Fed's 12 regions indicated that economic activity was "stable," showed "signs of stabilization" or had "firmed." The one exception was the St. Louis region, which continued to report that the pace of decline in economic activity appeared to be "moderating."

The full Federal Reserve report -- called The Beige Book -- is available here.

The Minneapolis region's report, however, is hardly the stuff that leads to cartwheels.

On consumer spending:

Overall retail spending remained soft, except for auto sales, which were boosted by the cash-for-clunkers program. A major Minneapolis-based retailer reported that same-store sales in July were down 7 percent compared with a year earlier. Same-store sales at two Minneapolis area malls were down 4 percent and 8 percent, respectively, compared with last year.

On construction:

Commercial construction activity mostly decreased, with some bright spots noted in public construction projects.

On agriculture:

... lenders expect overall agricultural income and spending to decrease in the third quarter

On employment:

In Minnesota a defense contractor laid off over 300 workers, a boat manufacturing plant also cut over 300 workers, about half of its labor force, and a medical device manufacturer announced plans to reduce staff by 200 companywide. A meatpacker in South Dakota laid off 30 workers. Competition for seasonal work was much greater this summer compared with a year ago in many areas of the District.

But, the Fed says, some month-to-month employment gains have occurred.

Reuters, however, wasn't quite as upbeat as the Associated Press, noting only that there are some signs of improvement.

Wall St. seems to be siding with that sort of shoulder shrug. At mid-afternoon, the Dow was up an uninspiring 33 points.

Aside: Be sure to spend some time with American Public Media's Marketplace program. It's just launched an impressive series about people who've started over in the recession.

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The Unemployed: Rick Miller

Posted at 12:01 PM on September 8, 2009 by Bob Collins (3 Comments)
Filed under: Economy, The Unemployed series

Today's employers can learn a few things from yesterday's employees. Rick Miller's lesson would be a simple one: When the job's filled, call or e-mail the applicants to let them know.

Miller, 52, of Stillwater, lost his job as a project manager/sales coordinator at a company in Circle Pines in January and he says he hasn't had a decent interview for a job in months, not since he almost got one in March. He'd survived the first round of interviews and the second one a week later went 2 1/2 hours -- on his birthday -- with three people and the company's owner.

"We'll get back to you on Friday," he said he was told. But no call came on Friday. He followed up with a phone call on Monday, but it wasn't returned. Over the next six weeks, he called with the same result. Finally, he gave up.

"How long would it have taken?" he asks. "Nobody has the common courtesy anymore."

It's another frustrating aspect of the frustration of the unemployed.

His $430 a week unemployment just ran out, but he considers himself one of the lucky ones. "It would be hard to be positive if you're the breadwinner," he says. "I'm lucky in my case. Otherwise, it'd be tough." His wife is an attorney with her own practice. The couple has some rental property in Hudson, which he has more time to work on. That's a good thing now that the most recent renters didn't pay rent for three months, "and left the place a total disaster."

He also gets up weekdays at 3 a.m. and hits the health club. "I have been on this type of schedule for 20-plus years. A good early-morning workout gets me ready for the day and gives me the energy to keep looking for work and also take on all of the other activities I am involved in."

But it's easier being chipper in a bad economy when the weather is good. He says it's going to be harder when winter comes and there's not as much around-the-house work to do.

In the meantime, he'll continue making dinner and networking for leads. He's tried social networking sites, such as LinkedIn, but he's not sure it's working. Still, he says "the mundane task of looking and keeping it all organized" helps keep him motivated. He applies for jobs and keeps track of his contacts. "I check back with them every two weeks and when eight weeks hits, I throw it out," he says. "If I keep at it, something is going to pay off."

His advice to those who might become unemployed? Try to negotiate fewer hours. He wishes he had. "See if there's any way they can keep you on," he says. "Then you can say, 'OK, in three months I'll be out of a job. I'll start looking now and I can be fussier.'" He's not being fussy now. He's applying for part-time positions. "Most of what's out there isn't paying anything," he says. And the rest aren't calling back.

(Unemployed? Let me tell your story. Contact me. See other posts in this series. )

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Check out the map below to read what people in MPR's Public Insight Network are telling us about the job climate around them.

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The job search

Posted at 8:02 AM on September 7, 2009 by Bob Collins (2 Comments)
Filed under: Economy

Today's New York Times repeats several themes I've encountered in the early stages of the News Cut series, "The Unemployed."

The exception is that in Out of Work, Too Down to Search On, the Times profiles people who have given up the job search.

"When you were in high school and kept asking the head cheerleader out for a date and she kept saying no, at some point you stopped asking her," one job-seeker said. "It becomes a 'why bother?' scenario."

Several said they've given up looking because "it's a waste of time." One is taking care of his parents, a 62-year old gave up and filed for Social Security benefits, another is a stay-at-home mom, and a fourth isn't really doing anything.

One even said he gave up looking "for economic reasons." Unless one has a luxury of choice, it's unclear -- at least to me -- what a suitable alternative to looking for a job is.

On NPR's people on Weekend Edition Sunday, we heard a follow-up on the lives of several people to whom the network talked in the days after the financial crisis a year ago. One woman had started her own landscape business, another worked at Target and worked as a substitute teacher rather than take unemployment. "I decided I could make more money off unemployment, and unemployment was kind of depressing because you sit home a lot... being useful and mentally being engaged is much more positive than sitting there collecting a check."



Almost 15 million Americans are officially unemployed, a situation that's approached in 15 million different ways.

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The new economic indicators

Posted at 11:51 AM on August 31, 2009 by Bob Collins (0 Comments)
Filed under: Economy

You know we're near the depths of recession when men's underwear is used to gauge the nature of the economy.

The Washington Post says the economy, apparently, is turning around:

Here's the theory, briefly: Sales of men's underwear typically are stable because they rank as a necessity. But during times of severe financial strain, men will try to stretch the time between buying new pairs, causing underwear sales to dip.

"It's a prolonged purchase," said Marshal Cohen, senior analyst with the consumer research firm NPD Group. "It's like trying to drive your car an extra 10,000 miles."

It's a theory first publicized by former Federal Reserve chairman Alan Greenspan with NPR science correspondent Robert Krulwich.

Other consumer staples have been variously portrayed as the coalmine canaries of the economy:

Lipstick - The theory was that when times are hard because women who cut back on clothing purchases will turn to buying lipsticks for a relatively inexpensive pick-me-up, according to the Wall St. Journal.. It's a theory, however, that has now been dismissed.

Cardboard boxes -- Makes sense, right? If people are buying things, more cardboard boxes need to be produced. Earlier this month, industry analysts said cardboard box sales have risen to a level not seen since last October.

Scrap metal prices -- Greenspan was fond of tracking scrap metal prices, the Wall St. Journal said, because it indicated higher industrial production. Prices have risen only slightly over the last year, but the indicator may not be valid this year since Cash for Clunkers is flooding salvage yards with scrap metal.

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A bank goes belly-up

Posted at 9:01 AM on August 29, 2009 by Bob Collins (0 Comments)
Filed under: Economy

At the Mainstreet Bank branch in Woodbury on Saturday morning, it was a far cry from the scene in It's A Wonderful Life when depositors stage a run on the Bailey Savings and Loan. The FDIC took over the failing bank on Friday night and sold it to Central Bank of Stillwater.

But there was a hint of slight tension.It didn't take more than a couple of seconds of photographing the FDIC notice on the bank's front door, before Central Bank President Scott Faust emerged -- a Minnesota State Patrol trooper watching from just inside the lobby. He said it'll be a few days before the Mainstreet Bank signage is wiped away, and the bank will open only a half-hour late on Saturday morning. Good news, perhaps, for a couple of people sitting in their cars in the parking lot waiting for the bank to open.

"But I shouldn't be talking," Faust said as he handed me the phone number for the bank's CEO, Larry Albert.

Here's what the notice on the door said:

*Central Bank, Stillwater, Minnesota, Assumes All of the Deposits of Mainstreet Bank, Forest Lake, Minnesota*

*FOR IMMEDIATE RELEASE

Mainstreet Bank, Forest Lake, Minnesota, was closed today by the Minnesota Department of Commerce, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Central Bank, Stillwater, Minnesota, to assume all of the deposits of Mainstreet Bank.

The eight branches of Mainstreet Bank will reopen on Saturday as branches of Central Bank. Depositors of Mainstreet Bank will automatically become depositors of Central Bank. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use their existing branches until Central Bank can fully integrate the deposit records of Mainstreet Bank.

This evening and over the weekend, depositors of Mainstreet Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual.

As of June 30, 2009, Mainstreet Bank had total assets of $459 million and total deposits of approximately $434 million. Central Bank will pay the FDIC a premium of 0.10 percent to assume all of the deposits of Mainstreet Bank. In addition to assuming all of the deposits of the failed bank, Central Bank agreed to purchase essentially all of the assets.

The FDIC and Central Bank entered into a loss-share transaction on approximately $268 million of Mainstreet Bank's assets. Central Bank will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers.

Customers who have questions about today's transaction can call the FDIC toll-free at 1-800-405-7869. The phone number will be operational this evening until 9:00 p.m., Central Daylight Time (CDT); on Saturday from 9:00 a.m. to 6:00 p.m., CDT; on Sunday from noon to 6:00 p.m., CDT; and thereafter from 8:00 a.m. to 8:00 p.m., CDT. Interested parties can also visit the FDIC's Web site at http://www.fdic.gov/bank/individual/failed/mainstreet-mn.html.

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $95 million. Central Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Mainstreet Bank is the 83rd FDIC-insured institution to fail in the nation this year, and the second in Minnesota. The last FDIC-insured institution to be closed in the state was Horizon Bank, Pine City, on June 26, 2009.

# # #

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,195 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars - insured financial institutions fund its operations.

Friday night is close-a-bank-night at the FDIC. Banks were also closed last night in California and Maryland. Eight-four have failed this year, mostly because of rising defaults on loans.

Hundreds more are expected to fail in the next few years largely because of souring loans for commercial real estate, the Associated Press reported.

The insurance fund has been so depleted by the epidemic of collapsing financial institutions that some analysts have warned it could sink into the red by the end of this year, the AP said.

Watch CBS Videos Online

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Cash for Appliances?

Posted at 10:50 AM on August 28, 2009 by Bob Collins (2 Comments)
Filed under: Economy

We got this note from a listener today following this morning's Midmorning broadcast about the Cash for Clunkers program:

A comment on Kerri Miller's guests discussing cash for clunker appliances. I totally disagree with their comments-- I have been hoping and waiting for a cash-for-appliances program. We have not been able to take advantage of any of the house or car programs, but we are limping along with an ancient stove and fridge. News flash for your guests-- people do wait and get along with crummy, old appliances and even get them fixed if they can't afford to go out and buy new, even though they know new appliances would be much more energy efficient. I only hope ours keep working until a cash for appliance program begins.

It may not be long. Such a program is coming this fall, though it won't be anywhere near as impressive. Rebates will only be in the $50 to $200 range, according to reports. It's also not apparent whom the program is intended to help. Many of the appliance makers moved their jobs overseas years ago.

St. Cloud's Electrolux, for example, closed down its small chest freezer production in 2004 and moved the jobs to China. The company still employs about 1,200 people in the city, but that's down by about 650 jobs since 2004.

While the Cash for Clunkers program proved popular, a poll out today says most Americans do not favor a rebate program for appliances. Almost half of those surveyed disapproved, according to Rasmussen Reports. Only 39 percent favor such a program.

Support -- or lack of it -- for both the appliance program and the cars program appears to break down along party and generational lines, the poll said.

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Are haycations the answer to struggling farms

Posted at 11:53 AM on August 26, 2009 by Bob Collins (2 Comments)
Filed under: Economy

Two "farm" stories in the news this week -- one bad, one good.

Bad: A survey of farm management instructors in the Minnesota State Colleges and Universities system suggests the state's farmers are facing a difficult couple of years. The report finds 40 percent of the farmers enrolled in the farm business management program expected to lose money this year, and projections suggest many farmers be forced out of business in 2010.

Good: Some enterprising farmers have figured out how to make a buck. Tourists will pay to do the work some farmers may consider drudgery, the New York Times reports.

These new farm stays are profitable. For three years, Scottie Jones has been subsidizing her small lamb and turkey business by renting out a cabin on her 60-acre Leaping Lamb Farm, about two hours from Portland, Ore. For $125 a night, visitors can feed the animals, bring in hay and learn the basic rule of farming: closed gates stay closed and open gates stay open. It now brings in seven times what she makes on her meat business, plus a little free labor.

"Even those people sitting on the porch drinking a glass of wine will come help me feed eventually," she said.

It's a haycation!

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Verdict is in on Cash for Clunkers

Posted at 11:11 AM on August 26, 2009 by Bob Collins (7 Comments)
Filed under: Economy

Earlier this month, I wrote that it was difficult to find a standard by which Cash for Clunkers, the government giveaway program to help people buy new cars, would be judged. First it was funded with $1 billion, then when it became a hit, another $2 billion was added. In both cases, there didn't seem to be firm economic analysis ahead of time on what the payback to the economy would be.

In a subsequent conversation in the comments section, I said:

Why don't we commit to programs that DO have a meaningful measure of success? Because we don't WANT to because then someone might say we failed. So now we don't even try.

We just keep things open-ended. Maybe after we see the "results," we'll come up with the standards for measuring so we can say, "Yep, it was a success all right."

The program ended Monday evening. Today, it was declared a success according to this release from the White House:

The CARS program came to a close Tuesday night with nearly 700,000 clunkers taken off the roads, replaced by far more fuel efficient vehicles. Rebate applications worth $2.877 billion were submitted by the 8 p.m. deadline, under the $3 billion provided by Congress to run the program.

Cars made in America topped the most-purchased list, from the Ford Focus to the Toyota Corolla to the Honda Civic.

"American consumers and workers were the clear winners thanks to the cash for clunkers program," said U.S. Transportation Secretary Ray LaHood. "Manufacturing plants have added shifts and recalled workers. Moribund showrooms were brought back to life and consumers bought fuel efficient cars that will save them money and improve the environment."

"This is one of the best economic news stories we've seen and I'm proud we were able to give consumers a helping hand," Secretary LaHood said.

According to a preliminary analysis by the White House Council of Economic Advisers, the CARS program will:

Boost economic growth in the third quarter of 2009 by 0.3-0.4 percentage points at an annual rate thanks to increased auto sales in July and August.

Will sustain the increase in GDP in the fourth quarter because of increased auto production to replace depleted inventories.

Will create or save 42,000 jobs in the second half of 2009. Those jobs are expected to remain well after the program's close.

Ford and General Motors recently announced production increases for both the third and fourth quarters as a result of the demand generated by the program. Honda also said it will be increasing production at its U.S. plants in East Liberty and Marysville, Ohio and in Lincoln, Alabama.

In addition, the program provides good news for the environment. That's because 84 percent of consumers traded in trucks and 59 percent purchased passenger cars. The average fuel economy of the vehicles traded in was 15.8 miles per gallon and the average fuel economy of vehicles purchased is 24.9 mpg. - a 58 percent improvement.

"This is a win for the economy, a win for the environment and a win for American consumers," Secretary LaHood said.

With the end of transactions under the program, the Department of Transportation is augmenting a team that already includes more than 2,000 people processing dealer applications for rebates

LaHood makes an odd prediction in that release; that the program will "sustain the increase in the GDP in the 4th quarter."

According to the Bureau of Economic Analysis at the Department of Commerce, the latest data is for the 2nd quarter of the year and it dropped 1 percent. Car sales added only .2 percent to the GDP in the 2nd quarter.

The third quarter results won't be released until October. If LaHood is right, the Cash for Clunkers program will be responsible for ending the recession. Now that's a yardstick!

Some of the consumers may be having "buyer's remorse," according to a study in USA Today:

A survey of nearly 1,000 participants in the program found 17% say they have some doubt or serious doubts about having bought a new car, says CNW Market Research. Most said they regret now having a $275 to $350 per month car payment that didn't have before the purchase. Typically, buyers' remorse hits roughly 6% to 8% of new-vehicle buyers within a month. But dealers don't have any regrets.

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Housing prices on the upswing in Twin Cities

Posted at 10:48 AM on August 25, 2009 by Bob Collins (1 Comments)
Filed under: Economy

Twin Cities housing prices are making a comeback.

The Case-Schiller Index, which tracks the resale price of homes, shows an impressive 3.14% increase for June. That's the largest one-month jump in prices since the national survey started including the Minneapolis area in 1989. It's also the first back-to-back increase in home resale prices since last summer.

Prices are still 19.8 percent lower than a year ago, and 5.7 percent lower than the beginning of the year. Only two other cities -- Cleveland and San Francisco -- had a bigger upswing:

City	% Change
Cleveland	4.18
San Francisco	3.78
Minneapolis	3.14
Washington	2.85
Dallas	2.72
Boston	2.65
Denver	2.54
San Diego	1.55
Atlanta	1.45
National Avg	1.39
Phoenix	1.13
Los Angeles	1.08
Chicago	1.06
Portland	1.02
Charlotte	0.72
Miami	0.54
New York	0.42
Tampa	0.39
Seattle	0.38
Detroit	-0.8
Las Vegas	-1.99

Here's the spreadsheet from the Case-Schiller survey. Meanwhile, Teresa Boardman, who writes the St. Paul Real Estate blog, has done her numbers-crunching thing for St. Paul and finds things are looking up:

Buyers are writing offers. The market is becoming more balanced. In 2007 it seemed like everyone wanted to sell and no one wanted to buy and the inventory of homes on the market kept rising. This year the inventory of homes for sale is much lower than in 2007 or 2008 and it continues to drop. There are currently 1611 homes on the market, or about half as many as there were last August. At the same time almost twice as many homes sold in July of 2009 when compared with July of 2008.

The big economic news today, of course, is President Barack Obama's decision to nominate Ben Bernanke for another term as head of the Federal Reserve Board. Good? Bad? You'll want to listen to today's first hour of Midmorning on MPR (Archived audio here). David Wessel, economics editor for The Wall Street Journal and author of "In Fed We Trust," argued that there were times during the financial collapse when the Fed acted as a fourth branch of government. "If we were attacked by a foreign power, and the president of the United States has the ability and power to fire back missiles, the president of the United States does not have billions of dollars in his pocket to save the financial system. Only the Federal Reserve has that," he said.

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Unemployment bright spot

Posted at 8:45 AM on August 20, 2009 by Bob Collins (0 Comments)
Filed under: Economy

The state has released its unemployment figures for July, and like the national figures (released a few weeks ago), it's being hailed as a bright spot.

"Minnesota Employers Add 10,300 Jobs in July", the press release's headline from the Department of Employment and Economic Development said. The unemployment rate fell .3 percent in July, to 8.1 percent (seasonally adjusted).

235,167, however, are out of work in the state. That's 17,000 fewer than June, according to the data, but it's 6,000 more than May, when the unemployment rate was also 7.8 percent. It's possible this signals a turnaround. Of course, it was possible May signaled a turnaround, too.

Here's the release:

Minnesota employers added 10,300 jobs in July, the state's first monthly employment gains since August 2008, according to figures released today by the Minnesota Department of Employment and Economic Development (DEED).

The state's unemployment rate fell 0.3 percent from June to a seasonally adjusted 8.1 percent. The U.S. unemployment rate in July was 9.4 percent.

"This is encouraging news, particularly because the job gains were widespread across industry sectors," said DEED Commissioner Dan McElroy. "We are hopeful that this is the beginning of an upward trend for our economy. As always, we continue our efforts to help businesses grow and to help people find jobs in Minnesota."

Eight of the state's 11 industry sectors gained employment during the month, led by leisure and hospitality, which added 3,900 jobs. Other gains were posted by government (up 2,800), manufacturing (up 1,700), professional and business services (up 1,700), education and health services (up 1,200), construction (up 700), logging and mining (up 200), and financial activities (up 100).

Job losses occurred in trade, transportation and utilities (down 1,300), information (down 500) and other services (down 200).

Over the past year, education and health services added 13,600 jobs and government added 6,000 jobs.

Jobs losses occurred over the past year in manufacturing (down 38,900), professional and business services (down 31,900), trade, transportation and utilities (down 20,600), construction (down 17,000), other services (down 3,900), financial activities (down 3,600), information (down 3,000), logging and mining (down 2,200), and leisure and hospitality (down 600).

In the state's Metropolitan Statistical Areas, over-the-year job losses occurred in the Minneapolis-St. Paul MSA (down 3.5 percent), Duluth-Superior MSA (down 4.4 percent), Rochester MSA (down 1.6 percent) and St. Cloud MSA (down 2.7 percent).

The agency also announced the results of its second quarter job vacancy survey, which showed 31,400 job vacancies in the state between April and June 2009, down 39.4 percent from the same period a year ago. The survey showed that there were 7.7 unemployed people for each vacancy statewide during the quarter. The survey also indicates that over 95 percent of Minnesota employers expect to increase or maintain current employment levels through the end of the year.

I'm still soliciting people who are unemployed to tell me their stories for News Cut's The Unemployed series. Contact me here.

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The Unemployed: Rhoda Quick

Posted at 1:52 PM on August 18, 2009 by Bob Collins (14 Comments)
Filed under: Economy, The Unemployed series

14.5 million people in America are officially unemployed. Thousands -- perhaps millions -- more have given up and are not counted. They're not numbers; they're individuals with a story to tell.

Rhoda Quick, 43, of St. Louis Park has led a group of Girl Scouts for eight years. She's a block captain in her neighborhood. She volunteers helping women in crisis. She serves on two boards in her city. She even volunteered her time helping the company that laid her off. If there is such a thing as karma, karma, this would be a great time to show yourself.

Quick lost her job as a legal assistant at HSBC in Minnetonka in a cost-cutting layoff on May 15, 2009. "I thought I was safe," she told me today. There had been a layoff in her department in December and she and two attorneys were the only ones left. She had three weeks to wrap up her work before the job ended. "I wanted to leave things better than I found them," she said. A few weeks later, her former colleagues called her for assistance with some tasks.

She made about $44,000 at HSBC. When the job ended, she realized it was just her and her 13-year-old daughter. Thirteen-year-olds don't understand unemployment for their sole parent. Thirteen year olds don't understand why asking for $20 for a concert is a big deal, why mom can't just can't get a job at Burger King, why there's no new clothes for school, or why it's possible they'll have to move to a neighborhood where the bus stop is a problem waiting to happen.

But legal assistants who lose their job understand what it means, which is why Quick worked from 10 last night until 5 this morning documenting her finances ("until the ink ran out in the printer," she said), grabbed a few hours sleep, met me for coffee, and then headed for the St. Louis Park Emergency Program, before stopping by HUD offices to photocopy material she needs to provide the agency if she can ever get an appointment. She's about to fall behind on her mortgage payments.

Since May, she says, she's applied for over 300 jobs. She's had two interviews. One job seemed perfect for her, but the company wanted her to start right away, and she was obligated, she said, to finish her work at HSBC first. "I should've said, 'I'll start tomorrow,'" she says now.

Another said she wasn't right for the job because the CEO said she "didn't have the personality for the job." The CEO didn't meet her. She is, for the record, as outgoing and personable as they come.

Things could be worse. She could still have the adjustable-rate mortgage she converted to a 30-year-fixed mortgage in March. She'd have an interest rate over 20 percent, she said. She assumed the mortgage in 1995 from her mother, who moved away with a new husband. She'd refinanced "several times" to make upgrades and now has a $1,707 mortgage payment.

With $1,542 a month in unemployment, and $335.38 in child support that only comes from April to October (her ex-husband is a landscaper), it didn't take long to burn through the $6,500 she had put away while employed. She still has a little money in a 401K, "but if I cash it in, there's a 30-percent tax penalty and if I lose every last cent, what would do I do if I still end up losing the house?" she asked. "It costs a lot to get off a sinking ship."

Last Thursday, she asked for help. She got "no" for an answer. "I've volunteered. I've worked all my life. I've never asked for help," she said. She went to Hennepin County after the county's Web site told her she could get some assistance and food stamps. But when she got to the office, with all of her financial records in plastic, tabbed and organized ("Just like a little attorney girl!"), "they looked at me like I was crazy and said, 'Wow, that's impressive,' then had me meet with a financial counselor who took one look and said, 'Are you kidding me? We can't help you!'"

Quick says she was told she makes too much money and has too much house. She owes $230,967. If she puts it up for sale, she'll never get that much.

So she did what any good administrative assistant would do. She called the lender to work out a deal to avoid falling behind on payments. Her lender is Bank of America, currently running TV ads touting their willingness to work with mortgage holders.

"They said, 'You're not behind; there's nothing we can do for you,'" Quick says. She calls the bank every Monday morning, to see if maybe the rules have changed and her March refinancing doesn't disqualify her from getting a break under a program to help people with mortgages stay afloat. Another agency told her "you need to walk away from the mortgage".

She's been trying to get a meeting with HUD officials to get some emergency help, but it'll take a few weeks to get an appointment. That's what she worked on all night. A hardship letter to explain to HUD why she needs help, why she'd rather pay, say, $700 a month now to keep the house, and add payments later when she gets a new job.

On September 1, she can start paying for health insurance under COBRA. It'll cost her $800 a month she obviously doesn't have. She's trying to find free health clinics.

"In the past few weeks friends have dropped off food (beef stew from Janine), and our neighbor, Sarah, dropped off homemade cookies and friends have taken us out to movies to try to keep our spirits up," she says. "I appreciate my friends all stepping up to show they care. This is the time when I really need a friend. I try to put on a happy face for my daughter, but when she goes to bed that's when I get busy trying to find solutions to my problems."

On a typical day of unemployment, she gets up at 7 in the morning and works until 3 looking for work and checking online sites. There are jobs, she says, "but there are a bazillion people looking." She wakes up at night wondering how it is she can make too much money to get help.

"I keep hitting brick walls and normally I'm the type of person who jumps right over them, but now I'm afraid of what's on the other side," she says.

"It's a full-time job just to try to save your home. At what point does someone say, 'We need to help this girl. She's done everything she can.'?"

If you're listening, karma, that point is now.

(Unemployed? Let me tell your story. Contact me.)

Check out the map below to read what people in MPR's Public Insight Network are telling us about the job climate around them.

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Live-blogging Midday: St. Paul and Minneapolis budgets

Posted at 11:04 AM on August 14, 2009 by Bob Collins (2 Comments)
Filed under: Economy, Politics

Both Minneapolis and St. Paul mayors have released their budget updates. Both call for increases in property taxes and reductions in some services. Mayor R.T. Rybak and Mayor Chris Coleman are Gary Eichten's guests on Midday. Listen to the program here. React below.

11:07 a.m. - Coleman says the city is "relatively strong," and looking at doing things "more efficiently." Says the city is focusing on "what really matters," which brings up the obvious question: "What doesn't matter?"

11:09 a.m. - You can watch Rybak's budget message here.

11:10 a.m. - Coleman says St. Paul is "down 40 officers." Gives props to Obama for stimulus. Rybak gives props too, and criticizes state cuts to cities and says stimulus money will go away. "Every budget I've presented in five years has been balanced, which is in sharp contrast to the state."

Rybak says more than 100 positions were eliminated yesterday.

11:12 a.m. - Gary plays sound bite of Pawlenty says some good things in Minneapolis wouldn't have happened without him. He cites Guthrie, Northstar, Twins stadium, light rail, and "all of the money pumped into the University of Minnesota."

11:14 a.m. - "I wish he'd stick around because I'd love to have him come on this program,' Rybak countered. He says spending in Minneapolis increased 1 percent, during Pawlenty's term, state spending jumped 12 percent. "I don't need a lecture." He says Pawlenty sat on his hands for Twins stadium. Rybak says he led initiatives and Pawlenty 'was there for the signing.'

11:17 a.m. - Coleman says Pawlenty did not solve budget problems this year. "He just pushed it into the future."

"This whole country has been engulfed in this negative tone where people get up and scream. I wish we could have a dialog about where we need to go and stop blaming everyone for our problems," Coleman said.

Q: Are you running for governor?

A: Coleman: I've made no secret I'm exploring that?
A: Rybak: "I'm likely to do that."

QUESTIONS AND ANSWERS

Q: Have you laid off more firefighters? (Question from wife of firefighter)

A: Everyone is taking a cut, public safety taking less of a cut. Didn't accept grant for firefighters because it required us to spend more money.

Q: To Coleman: How can you call a 6 percent hike in property tax, "more service at a better price"?

A: We have merged departments, invested up-front money to save money in the long run. We're making long-term investments in which we'll see huge paybacks. We're asking employees to do more with less. Layoffs after the first of the year.

Q: Caller: In 1967 the Legislature passed first sales tax. 100% were to go to reduce property taxes. That was the purpose. Now the state is fighting increases in sales tax and has no regard for local property taxes.

A: Rybak: Correct. We should say "let's have the sales tax but earmark it for property tax relief."

Q: Without Gang Strike Force, will gang activity increase?

A: Coleman; We have great anti-gang cops. "Unfortunate that the sideshow has taken away from what our officers are doing."

Rybak: "Doesn't have a significant impact on what we're doing in the city." Says Minneapolis cops have lots of intelligence (informers?)

11:29 a.m. - Coleman just mentioned the Harlem Children's Zone as a model. Here's the Web site.

Q: (Caller to Coleman) I live in Highland Park. We can save money by not cleaning the streets in the summer. They're not dirty.

A: Coleman: You're going to get your wish; it's one of the things we're going to have to clean the streets (Ah, but will there be towing on days you're not going to clean anymore?). It's not all about aesthetics; it ends up in the river.

11:36 a.m. - Why do the cities have different policies on things like trash collection?

Rybak: There's a whole long history of garbage in Minneapolis. It works well for us. St. Paul's works well for them. Same with snow plowing.

(Of course, this brings up an old question: Why do we need two big cities? Why not just be like businesses and merge)

Q: Does downtown St. Paul have a future?

A: Coleman: "It's unbelievable. I'm so excited it's impossible to contain (bob: Is a lunch joint staying open after 2 p.m. downtown?). Cray is coming downtown. Microsoft wants to be a part of downtown. Light rail is a critical piece of that. High-speed rail is a critical part of that.

Q: Block E has reputation for intimidation and violence. When is the mayor going to do something?

A: Crime in downtown is dramatically down, Rybak says. Putting more people on the street -- via the Twins ballpark -- will help. So does all the residential properties "we've built."

Q: Re: Central Corridor light-rail. There are still a lot of critics. Businesses are worried on University Ave., etc. Are these problems going to be resolved?

A: Coleman: "This line is going to be built. We've all but begun construction. I've sat through mitigation meetings at the University of Minnesota. Communities along the corridor have deep concerns and we are taking proactive steps -- adding money for parking mitigation and beautification of University Ave., and another stop on Western Avenue. How we get there is an open question.

It's like the 7 minute blackout when a rocket ship is coming back from space.

Rybak: We have to figure out how to get Uptown connected. We're doing bus rapid transit on 35W. None of these will be easy. Everyone needs to bring their points to the table, but stay at the table.

Wrapping up, Gary asked how they thought Obama is doing. Surprisingly, they both think he's doing great.

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Consumers aren't buying the idea of an improved economy

Posted at 8:55 AM on August 14, 2009 by Bob Collins (14 Comments)
Filed under: Economy

Today's item from "the economy doesn't make sense" file:

The University of Michigan consumer sentiment survey released today shows American consumers were less confident in July than June, when they weren't all that snappy, either.

According to the press release:

Consumer confidence slipped in July as consumers anticipated that their personal finances would improve more slowly than they had anticipated several months ago. "While consumers believe the economic free-fall is now over, consumers see little reason to believe that the economic stimulus package will improve their finances anytime soon," according to Richard Curtin, the Director of the Reuters/University of Michigan Surveys of Consumers. Financial reversals were reported with equal frequency across all income subgroups, as was the expectation that joblessness would continue to increase. "It is difficult to determine whether the recent loss in confidence simple reflects the impatience of consumers or the sprouting of changed assessments of the effectiveness of the stimulus policies," noted Curtin. In either event, "economic apprehensions can be expected to increase along with rising unemployment and stagnant incomes during the months ahead," according to Curtin. Although consumer spending will improve during the balance of 2009, total personal consumption expenditures will post an lackluster increase of 1.5% during 2010.

What's the confusion? Cash for Clunkers brought tens of thousands of Americans out of their shell to buy new cars, thanks to the government handout. And while it's true "free money" is attractive, many of those consumers also committed themselves to five (or more) years of loan payments. If you were apprehensive about the economy and your status in it, why would you do that?

The survey also said that buying plans for homes and vehicles declined in July.

Consumers also had less faith in the government's handling of the economy in July. Those holding an unfavorable view increased from 28 to 32 percent.

The "recession is almost over" narrative, and the one that says things are looking up, are increasingly getting attention in the media. But the public isn't buying it. At least, not yet.

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The Unemployed: Thomas Schunk

Posted at 2:10 PM on August 13, 2009 by Bob Collins (1 Comments)
Filed under: Economy, The Unemployed series

14.5 million people in America are officially unemployed. Thousands -- perhaps millions -- more have given up and are not counted. They're not numbers; they're individuals with a story to tell.

Software developer Thomas Schunk of Crystal had big plans for May 29, 2008. He was to release some software at his United HealthCare job, a job he'd held for 11 years. Then an e-mail arrived from his boss' boss. He was to report to a conference room immediately. There, he was told he was no longer needed after 11 years of employment, and that someone else would clean out his desk.

That's the last time he had a full-time job.

"You go through the five stages of grief," he told me today. It was two to three weeks before he was able to say, "Geez, I gotta do something." He says he knew there was a recession going on, but he didn't think it was going to be so bad.

He tried to get unemployment assistance from the state, but United HealthCare challenged his request for $538 a week. He lost. He didn't get along well with his boss, he acknowledged. Now in his 15th month of unemployment, and while politicians have extended unemployment benefits for hundreds of thousands of Americans, Schunk hasn't gotten a dime, and he knows time is running out.

He's got just four months left on his COBRA, the program that gives workers the opportunity to keep health insurance by paying the full cost of it. He's got Type II diabetes and a temporary crown on a tooth. "I figure I've got enough (money left) for (about) three months."

Schunk made $70,000 a year in his job and his financial conservatism has kept him afloat this long. While working, he made extra payments on his mortgage, and bought his house with 10 percent down. He sold -- at a loss -- his United HealthCare stock. He had $12,000 in savings.

That was then. This is now: He just submitted a "massive application" for mortgage modification. He pays $1,181 a month and he'd like to get it trimmed by about $250 a month. But because he was so financially conservative, he's not gotten much assistance so far. "In many ways, I'm a victim of my own common sense," he told me, although he's aware things would be far worse now if he hadn't planned for tough times.

Still, he's now going to a food shelf for help.

When he lost his job, he figured he'd get another one soon enough; he applied for jobs posted on "the usual online sites." But he says he realized that while there were hundreds of jobs listed, they were often the same job listed by different recruiters trying to drum up business.

Summer 2008 turned into late-summer 2008, and he took a job delivering phone books. He also volunteered his time "to pick up my spirits."

"By November, the leaves were off the trees, the landscape was looking pretty scummy and I noticed the job postings dried up. It was rare to even get a rejection letter." Nobody was hiring.

By winter, he was delivering copies of Auto Trader for $100 a week (a job that ended shortly thereafter when the publication turned to another distribution method), and turning the thermostat lower.

After a job interview in February, he was feeling he might be in line for a job, or might survive the first round of interviews. But, he learned later, the company had decided to close applications for external candidates, and hire internal candidates for open positions to avoid further layoffs. "I was kind of crushed," he said.

By all appearances, Schunk has the right strategy for finding work. He's created a spreadsheet with a list of companies, their Web sites, their job postings, and a record of his contacting them. The list is up to 350 companies now. He joined a job support group in the early spring. "In a typical week, up to four people in the group would find jobs," he said, " and 30-80 more people would join the group."

He uses social media (See his LinkedIn page), keeps in contact with former colleagues, and keeps asking family and friends if they've heard of anything. He acknowledges he could do more networking, but it's painful for him. "I'm a programmer," he said. "I'm not a sales person," a disadvantage in an economy where you have to sell yourself and look comfortable doing it.

When he hears that someone else got a job, he says he's genuinely happy for them. "I used to be generally pessimistic and critical of other people," he said. "But in the last two or three years, I've worked hard to become more optimistic and positive."

He hasn't been to the job support group in a month because it's telephone-book-delivering season, again, but he hears that 10-20 people a week in the group are now finding work.

Obviously, he wants to be one of them, but the fact he's not is taking an obvious toll. "I can't sleep for a full night, anymore, he says.

"I hope things turn around soon. Businesses are still making money, but still laying off people." He says he disagrees with President Obama that people will go back to work after the economy turns around. A one-tenth-of-one-percent drop in the unemployment rate isn't going to cut it.

He's come out of this with an education. "Unless you work someplace with a union, there's no such thing as job security," he said. He's also come out of this as a teacher with a lesson plan for others who find themselves in his position. "Try to put things in perspective, go through the grieving process, do something to keep busy, join job support groups, and make a plan."

"I'm smart, hard-working, and I have skills. Something's got to give," he says.

One of these days, he's going to be one of the people in his job-search support group who brings the treats to his last meeting, and tells the story of how he got his new job.

(Unemployed? Let me tell your story. Contact me.)

Check out the map below to read what people in MPR's Public Insight Network are telling us about the job climate around them.

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Subsidizing corporate travel

Posted at 11:27 AM on August 12, 2009 by Bob Collins (0 Comments)
Filed under: Economy

Let's jump into the minefield of corporate executive travel.

When the big automakers needed a Washington bailout, they arrived in their corporate jets, to the scorn of the public and the politicians. The public, they reasoned, shouldn't be subsidizing such excess.

"[When] corporate executives use the company aircraft for personal business, I think that rubs the public the wrong way," Rep. James Oberstar said.

But the taxpayer was already subsidizing corporate travel through the Essential Air Service program, which is intended to provide air service to small communities. Alaska is the big winner in the 1980s-era legislation, which was only supposed to last for 10 years.

It doesn't cost that much in the big scheme of things, $123 million this year.

Today, Oberstar announced a third commercial flight is being added to the Hibbing-Chisholm area, subsidized under the program.

The primary beneficiaries, according to Oberstar, will be mining executives.

One fallout from the program, however. The program from the government's left hand kicks in a wave of new bureaucratic regulations from the government's right hand. Once commercial air service comes to a smalltown, private pilots and the business who operate at the airports -- the ones who mostly use and benefit smaller airports and their communities -- are slapped with new security regulations.

A new Department of Homeland Security directive, which the agency refuses to make public, "puts undue burden on rural airports and general aviation personnel" and "stifles rural aviation, which is a lifeblood for many of these smaller communities," one activist wrote.

In Minnesota, that applies to Bemidji, Brainerd, Duluth, International Falls, St. Cloud, Rochester, and Thief River Falls.

In rural Minnesota, the government gives, and the government taketh away.

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The return of customer service

Posted at 5:11 PM on August 10, 2009 by Bob Collins (1 Comments)
Filed under: Economy

Any business school worth its money has taught its students that attention to customer service can get your company through some lean times. In recent years in the U.S., it seems, this simple point has been lost on most students.

Now, in the face of a crippling recession, some corporations are starting to "get it." Some aren't.

Act 1: A writer on the blog AdMelee hasn't been in a Ford automobile in years, he writes. But he's been hearing more testimonials on Twitter lately about Ford, so when he lease is nearing an end, he test drives one.

Now Ford, like many companies, is on Twitter and the writer sent a "tweet" to the Ford account.

"I'm test driving an Edge for the second time this week. Have Alan Mulally (Ford CEO) call to tell me I'm not crazy."

You can probably guess what happened next:

If you know me you know that was me just joking around like "ha ha I know you and Alan are hanging at a BBQ this weekend so why don't you guys ring me up when you have a few in you?". Something funny happened. Scott send me a direct message on Twitter asking for my phone number that following Saturday morning. "Hmm" I said. "That can't be. He's not going to have Alan call me". I honestly figured Scott was going to call to give me some insight into the Edge. When my phone rang with a Michigan number during my daughter's birthday party I let it go to voicemail. I would call Scott back after. When I finally checked the voicemail it was not from Scott Monty, but rather Alan Mulally. He was singing the praises of the Edge and what I thought was looking like a cute PR stunt ended up being a sincere message with the request to call him back. Let's pause for a second and process this...

Read the whole story here. (h/t: @tbrunelle via Twitter)

Act 2: A couple of weeks ago, my wife had to fly back to New England to visit her ailing father. She flew Northwest Airlines (actually, Pinnacle, but you know it's all one happy family, right?).

She got stuck in a smaller jet next to a large man who spilled over into her seat, and had to jam one of his legs under the seat in front of hers. She got to fly for three hours in half a seat.

When she got back to Minnesota, she wrote a letter to Northwest (dubbed "Northworst" by many over the years). Last week she made reservations for another trip (for the same reason, unfortunately) back East and referenced her letter to a more-than-helpful Northwest reservations agent. A voucher for half a round trip showed up in the mail and when she checked in on Sunday, she didn't get charged to check her baggage.

"What's up with that?" I asked the customer service agent.

"She has 'elite status,'" she said, whatever that is.

She also ended up with an aisle seat in an emergency exit row.

But her biggest prize was the opportunity to spend the five minute walk to the security checkpoint, reminding her husband that he rolled his eyes when she said she was going to complain, and suggesting she "pick her battles" better.

Act 3: A swift reaction doesn't always save your bacon, however. As I indicated in this morning's Five at 8 (you read that, right? I'm not wasting my time with that?), Continental Express left passengers sitting in an aluminum tube in Rochester for 9 hours, in defiance of all common sense.

Unlike Northwest, Continental initially took little responsibility for the actions of its little-brother airline, referring all questions to the little-brother airline, though it offered a too-little,too-late refund.

Much of the revitalized attention to customer service parallels the rise in social media, according to Aaron Strout, writing on Multichannel Merchant.

For starters, so many products and services have become commoditized, other than price - which is not an insignificant factor. Customer service is one of the last things left that differentiates one company from another. Do it poorly, and your customers will leave.

On the flip side, when done well, customer service can actually increase loyalty. And if you've ever read Fred Reichheld's manifesto titled "Leading with Loyalty" you know that companies that enjoy the "loyalty effect" grow at better than twice the average for their industry.

With Twitter and Facebook providing immediate details of great -- and poor -- customer service, the importance to corporations has never been higher. You haven't booked a flight today on Continental Express, I assume.

Have you found great examples of customer service that have made you a loyal customer of a company in these tough times? Tell me about it.

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The Unemployed: John Armstrong

Posted at 1:01 PM on August 10, 2009 by Bob Collins (7 Comments)
Filed under: Economy, The Unemployed series

14.5 million people in America are officially unemployed. Thousands -- perhaps millions -- more have given up and are not counted. They're not numbers; they're individuals with a story to tell.

John Armstrong, 39, of St. Paul knew there was "an air of streamlining" in the company for whom he managed a restaurant for eight years. But when he was let go in February, it still came as a shock. It was a lower-end restaurant and he thought he could survive the economic downturn that's claimed the more upscale eateries.

He describes himself as "sickeningly optimistic," but even the most optimistic job-seekers in America can occasionally suffer the debilitating reality that the first question we're asked when we meet people is "what do you do?"

Armstrong looks for work. "I identify myself by the job I want," he told me over coffee this morning. "There's still a little bit of shame over being unemployed, but lots of people have been through it." At times over the last five months, he acknowledged, he's felt that maybe he hasn't been able to get a job because "I'm not good enough to be employed."

That's when he looks at the numbers again. Everyone knows someone who's unemployed. They're losing their jobs and it's not their fault.

Armstrong made about $44,000 a year -- about $850 a week -- at the restaurant in Woodbury. On unemployment, he gets about $470. In one interview, he said he indicated a desire for a salary of at least $35,000, but the manager told him others were willing to do the same job for $30,000. His benefits were due to run out next week, but the stimulus package extended them at least into next year.

John's wife knows what he's going through. She has been laid off twice, but now has a job with the state that allows their health care coverage to continue. His son, 17, had just been accepted to Hamline University when dad lost his job. "We all as a family decided we'll make it work, that this is the right place to make it work." Scholarships and loans have helped.

Armstrong estimates he's had over a dozen interviews without success so far. Sometimes he's called back for a second interview. He says he tries not to get "too up" over a prospective job. It's not easy. "I sat down with a woman and interviewed with her for two-and-a-half hours. I realized I'd love to work for her. I've wanted to work for her company. She even sent me out the door with food."

The next day she called to say her boss had hired someone else without telling her.

At least she called, he said. More often, people don't call to say he didn't get the job, and he doesn't call them anymore to find out why not. "They're pretty paranoid about what they say," he said, a nod to the litigious society, perhaps.

The Internet makes unemployment easy, he notes. "I can sit at my desk and search for jobs." Craigslist has been the most productive, he said. Once a week he also goes online and tells the state he didn't work last week, and he did look for work. The dehumanization of the unemployment line is a thing of the past, at least in Minnesota.

He keeps in touch with another manager who lost his job at the same restaurant recently, passing along jobs that might not be a good fit for himself. "Isn't he a competitor for the jobs you want?" I asked. Armstrong says if his colleague gets a job, it might open the door for him to get one, too.

There are bright spots to unemployment. "We're managing to have a lot more fun. When I was working as a restaurant manager, I had to work weekends and holidays. Now we're finding more things to do to have fun that don't cost much," he said.

You'll note in the picture above, Armstrong has a shirt and tie. "I hope you didn't dress up for me?" I said.

He didn't. He has a job interview this afternoon.

(Unemployed? Let me tell your story. Contact me.)

Check out the map below to read what people in MPR's Public Insight Network are telling us about the job climate around them.

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What's the measure of success for Cash for Clunkers?

Posted at 8:29 AM on August 8, 2009 by Bob Collins (15 Comments)
Filed under: Economy

Philip Greenspun, the MIT prof and computer sciences guru, asks an interesting question today. If the U.S. didn't spend billions on Cash for Clunkers, what could it have spent its money on?

37 percent of Americans don't have broadband Internet at home (source). If we spent the Cash for Clunkers money on Let's Try to Catch up with Korea (95 percent of households with broadband, typically much faster than ours (one source)) a lot of Americans might not have needed to make so many trips in their cars because (1) they could work from home, (2) they could shop from home, (3) they could get information from home, (4) they could find out, from home, that some place they were planning to go was in fact closed.

Cash for Clunkers has been hailed as either an environmental program (generally discredited by most environmentalists) or an economic boost, the effects of which are far from clear.

Some analysts have suggested people who bought cars under the program, probably would've bought them anyway soon. In Annie Baxter's story, Scott Lambert, of the Minnesota Automobile Dealers Association, disagrees:

"Most of the dealers think these are just conservative people who had hung onto their cars for a long time and took advantage of this, and probably would not have come in if not for this program," said Lambert.

The problem is we don't know and never will know. If the unemployment rate drops over the next few months, does that mean it worked? If it goes up again, does that mean it doesn't? If Minnesota's sales tax collections go up, perhaps that's attributable to new cars, but what if it stays flat or goes down? We know that consumers have paid down their debt in recent months and that's now a bad thing. But now they've got car loans, a big sales tax bill, and higher auto insurance payments. Does the injection of cash into the economy now offset their inability to spend more later? Will the number of auto jobs saved/created, offset the number that are on a pace to be eliminated?

In the unemployment figures released Friday, factory employment in the U.S. dropped by 52,000 but some auto workers didn't get laid off for summer retooling. Considering that some union contracts call for them to get paid -- fairly generously -- during layoffs, there may not be an economic bounce from that fact unless jobs were going to be eliminated permanently. And that's still the plan for struggling U.S. auto industry. How do we factor in the big boost in advertising cash to radio and TV stations and newspapers?

What exactly will be the measurement for success of the program?

"There's no real way to calculate it without making a bunch of assumptions," Lee Schipper, a researcher at the University of California, Berkeley, and at Stanford said in a New York Times' attempt to measure the program.

... Seven years from now, when cars have to average 39 miles a gallon, what will we think of a government program that enticed hundreds of thousands of consumers to buy vehicles that got 30 miles a gallon (and that in 2016 will be middle-aged)? Had the program not existed, some of those buyers might have waited until 2012, when the new mileage rules begin to be phased in.

But in the end, "cash for clunkers" may help undo a previous government program: for years, small businesses got a tax break for buying S.U.V.'s, but only if they were the very largest -- at least 6,000 pounds.

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Consumer debt by the numbers

Posted at 3:05 PM on August 7, 2009 by Bob Collins (0 Comments)
Filed under: Economy

The Federal Reserve today reported that consumers have paid down their credit cards and reduced debt for the fifth straight month. The cut is much steeper than what analysts had expected. In June, the Fed says, Americans cut outstanding consumer debt by $10.3 billion.

Let's go behind the numbers on that one.

There are 304,059,724 million people in the U.S. On a per-capita basis, consumer debt was reduced by a little over $33.

Not everyone has consumer debt, of course, but almost every household does. There are an estimated 111,161,226 households. On average, households reduced their total debt in June by about $92.65.

How much more to go before we have this debt paid off? There's $2.5 trillion in consumer debt still out there, or $22,514 per household.

If we reduce that at the rate of $96 a month, we'll be good to go in about 20 years.

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Dealers running out of cars to sell

Posted at 3:44 PM on August 6, 2009 by Bob Collins (13 Comments)
Filed under: Economy

There's nothing about the Cash for Clunkers program that's going to come easy, apparently.

First, the program was so successful that the government ran out of money to give to people to buy new fuel-efficient cars. The Senate, after days of negotiations, has come up with another $2 billion.

Now there's a shortage of cars.

"Everything's gone," Jerry Haas, the sales manager at Sugarloaf Ford in Winona told me this afternoon when I asked him about the odds of getting a Ford Focus, the second-most-popular car in the Cash for Clunkers program. "We have none and there are no Focuses at any dealer within 100 miles of me."

Haas said one reason for the problem is the "poor timing" of the programming, coming at the end of a model year when dealers were trying to get rid of the older models and the new models haven't arrived at showrooms yet.

"We're trying to move (customers) into other units, but we're all sold out in the first wave of the program. If they allotted more money, we don't have enough cars to sell," he said.

Ford, maker of the Focus had only a 25-day nationwide supply of cars. And only one plant in the world makes them.

"Car production is not something that you can snap your fingers and all of the sudden all the components and materials show up on your loading dock from your suppliers," George Pipas of Ford said.

Toyota says it still has a decent supply of Corollas, at 37 days, according to the Associated Press. But there are shortages of the Prius gas-electric hybrid,
with a 13-day supply.

"It's frustrating," Haas acknowledged. He also can't sell the cars in anticipation that Ford will deliver it later. "Without an MSRP sticker (manufacturer's suggested retail price), I can't sell the car."

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Newspapers without the paper

Posted at 11:15 AM on August 5, 2009 by Bob Collins (4 Comments)
Filed under: Economy, Media

In a world of a 24-hour news cycle, If you're not publishing daily, are you still a newspaper?

The Red Wing Republican Eagle announced today that it will publish only two days a week starting in September.

"We will deliver more local news to subscribers -- but twice a week in larger newspapers instead of in five smaller papers. This change will allow our staff to concentrate only on the local market," publisher Steve Messick said on the Web site today.

It's another attempt to save money but right off the bat, revenue from subscriptions will drop by about $50 per subscriber.

It's not a new concept, of course. The Capital Times of Madison switched to a twice-a-week print schedule more than a year ago, also promising to put more energy into its Web site. The Detroit Free Press publishes only three times a week.

More than 100 newspapers nationwide have made the cut, according to Editor & Publisher magazine. So far, nobody's died because of it, and most of the problems the move causes seem generally to involve the comics and Friday night high school football scores.

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Is high-speed rail for St. Paul a safe bet?

Posted at 3:32 PM on August 4, 2009 by Bob Collins (17 Comments)
Filed under: Economy

Supporters of a high-speed rail line between Chicago and St. Paul have posted a video to YouTube touting the benefits of bringing the city's Union Depot back to prominence in the transportation scheme of things.



The group, OnBoard Midwest, is trying to whip up support for getting the project included in a comprehensive transportation plan the Legislature mandated MnDOT to prepare.

The Obama administration's stimulus plan allocated $8 billion for the entire country, nowhere near enough to build much of a nationwide system, but enough to fund some planning. The Federal Railroad Administration will announce the recipients in September.

The local group wants to use existing Amtrak lines along the Mississippi. But a group in Rochester is lobbying for the rail line through that city, citing the population and economic growth in the region.

Would high-speed rail be a boost to St. Paul? Is it a good public investment?

Harvard economist Edward Glaeser, in a recent New York Times column, said it comes down to simple math. Forget subsidies. It's all about benefits outweighing the cost, he said:

I would be delighted to share the president's optimism about high-speed rail, but if benefits do not exceed the costs, then America will just be living through a real-life version of "Marge vs. the Monorail," where the residents of the Simpsons' Springfield were foolishly infatuated with a snazzy rail project oversold in song by Phil Hartman's character.

In a subsequent column, Glaeser provided the formula for evaluating the investment:

Number of Riders times (Benefit per Rider minus Variable Costs per Rider) minus Fixed Costs.

He found that high speed rail will cost four times the benefit.

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Death row

Posted at 1:25 PM on August 4, 2009 by Bob Collins (3 Comments)
Filed under: Economy

If you don't like the idea of taking a perfectly good Jaguar and killing it with hemlock, avert your eyes now.



Then what happens? They're sent to the scrap yard, like this one in Arizona:



Junk Salvage yards make most of their money from engines. But they're being ruined and are worthless under this plan. So salvage yards are stripping everything else from the clunker cars to sell, because you never know when someone might need the faux wood paneling from a Buick Roadmaster.

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Cash for Clunkers boosting foreign automakers.

Posted at 12:17 PM on August 4, 2009 by Bob Collins (4 Comments)
Filed under: Economy

The Associated Press is trying to find out if the Cash for Clunkers program is working.

In the era of "transparency," it's having a hard time getting any help from the Obama administration.

According to the AP, the Department of Transportation reports it's "too busy" to provide information that car dealers are providing to it about the program.

But from what little data has been released, it appears it's been a gold mine... for "foreign" car companies:

The limited information shows most buyers are not picking Ford, Chrysler or General Motors vehicles, and six of the top 10 vehicles purchased are Honda, Toyota and Hyundai. The Associated Press has sought release of the data since last week. Transportation Secretary Ray LaHood said Sunday the government would release it.

It's true that many of the popular models are made in the U.S., but the Prius -- one of the popular cars in this deal -- isn't one of them. It's only made in Japan.

The Honda Accord, on the other hand, is made in Marysville, Ohio. The V6 model comes from Alabama. Seventy-six percent of Hondas sold in the United States are made in the U.S.

So far, the Ford Focus is the top-selling vehicle under the government's program. It's made in Wayne, Michigan.

But not all fuel efficient car models are benefiting from the program. Sales of the Chevy Cobalt, GM's most fuel efficient car, tanked in July.

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Will 'clunkers' program deliver an environmental impact?

Posted at 2:11 PM on August 3, 2009 by Bob Collins (12 Comments)
Filed under: Economy

Supporters of Cash for Clunkers have suggested the program is both a floor wax and a dessert topping - it's both good for the environment and a boost to the economy. Good mileage automobiles use less fuel. Less fuel is less pollution. It's hard to argue with that logic.

But a study a few weeks ago raises more of a question about the drivers of fuel-efficient vehicles.

Quality Planning, a consultant to the insurance industry, studied the habits of drivers of hybrid vehicles. It found they drove their vehicles 25 percent more than drivers of non-hybrids.

"The additional miles driven by hybrid vehicle owners would seem to offset the net ecological benefit of owning a fuel-efficient vehicle. After all, a gallon of gas is a gallon of gas, no matter which type of engine is burning it," Dr. Raj Bhat, president of Quality Planning said on a posting on the firm's Web site.

Bhat says he doesn't know, however, if the lower per-mile cost encourages people to drive more miles each day or take more trips.

But why wouldn't it? It's an established fact, of course, that the cost of fuel changes our driving habits. As the price of gasoline went up last year, people combined trips and drove fewer miles. Why wouldn't a reduced per-mile cost similarly affect drivers' behavior?

A good question, perhaps, but one that doesn't have an answer. We'll have to do this anecdotally. If you've bought a hybrid -- or other "fuel efficient" vehicle -- in the last year or so, what was the bottom-line impact on the total amount of fuel you purchased? Did you change your habits from your gas guzzler days?

Update 3:03 p.m. - The Transportation Department released data on Monday showing the vehicles traded in so far averaged 15.8 miles per gallon, compared with 25.4 miles per gallon for the new purchases, or a 61 percent improvement. That's a lot of extra driving you can do and still be ahead of the game.

Update 3:41 p.m. - Here's the link to the Christopher Joyce piece on how long you have to wait to offset "new car carbon." Audio should be available by 6 p.m. The story runs this afternoon on All Things Considered.

Update 3:47 p.m. - MPR's Curtis Gilbert sends along this e-mail from Friends of the Earth:

Based on calculations done by colleagues of ours at CalCars (www.calcars.org), replacing an older, lower-mpg vehicle with a new, higher mpg vehicle reduces CO2 only if the replacement vehicle provides more than twice the fuel economy of the vehicle it replaces. This is why Cash for Clunkers is not an ultimately environmentally progressive program: the emissions avoided from transitioning to a 22 mpg vehicle from an 18 mpg vehicle does not, over the lifetime of the vehicle, make up for the energy embedded in the older car that is destroyed before its useful life is over, as well as the energy involved in manufacturing the new car--unless the mpg of the new car is double that of the old.

An important alternative to Cash for Clunkers is an idea that a colleague of ours, Felix Kramer of CalCars, has developed--i.e. to dedicate the cash that consumers would have put towards a new car to convert their older vehicles to electric vehicles. Please see more on this below and at the following link: http://www.calcars.org/scrap-or-retrofit.html

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Bezos business

Posted at 5:42 PM on July 22, 2009 by Bob Collins (1 Comments)
Filed under: Economy

Amazon announced today it's purchased Zappos.com, an online shoe store. That news is of little consequence to 99 percent of the world. But in announcing the sale today, Amazon's Jeff Bezos provided more in 9 minutes than -- it's obvious -- most business schools provide in four years.

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Airline that promised cheap fares folds

Posted at 4:58 PM on July 20, 2009 by Bob Collins (1 Comments)
Filed under: Economy

The apparent pent-up demand for cheap flights from the Twin Cities to Toledo will remain pent up.

Jet America, the firm that announced $9 fares to Toledo when it announced (to the disbelief of this blog) service to the Twin Cities earlier this year, has given up the idea.

The airline is promising refunds to customers who bought tickets.

A Northwest/Delta flight for Toledo is going for $365.

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The sin of wages

Posted at 4:01 PM on July 16, 2009 by Bob Collins (2 Comments)
Filed under: Economy

The recession is getting so deep, younger adults are cutting back on bar hopping. Booze and cigarettes are the items people 18-29 say they're giving up in deference to the economy.

A third of those surveyed by Pew say they've changed to a cheaper cellphone plan. One in five say they've moved in with a friend. The thing you can do when you're young!

The generation also is more hopeful than old-timers...

... which leads to the obvious question: Do the younger people know something the old timers don't? Or do the old-timers know something the younger people don't?

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Unemployment by the numbers

Posted at 9:45 AM on July 16, 2009 by Bob Collins (2 Comments)
Filed under: Economy

We figured the June unemployment numbers in Minnesota would be bad, especially considering the national figures -- released a few weeks ago -- took economists by surprise.

How bad? 8.4 percent bad, Minnesota's Department of Employment and Economic Development said today.

That's 16, 740 jobs that disappeared in June. Based on a 40-hour week, that's 95 jobs disappearing per hour for the entire month. Imagine the boss calling in three people every two minutes for an entire month to tell them they're losing their jobs. That's how bad.

The sectors that added jobs in June were trade, transportation and utilities, which gained 800 jobs, and financial activities, which added 600 positions.

The job losses appeared to occur right where the economic stimulus was aimed: Construction (down 3,900) and manufacturing (down 3,700).

"Government" added 2,500 jobs during the month year. It takes a lot more than a recession or a hemorrhaging state budget to slow down the growth of government.

Over the course of the year, the Duluth-Superior area was the hardest hit, with more than 4 percent of the jobs disappearing. By contrast, Rochester lost only 1.3 of its jobs; a testament, perhaps, to the axiom that health care weathers recessions.

The statewide map -- provided by DEED -- shows the extent to which Minnesota is a have/have not state when it comes to unemployment. This is based on the county breakdown, the latest numbers for which are May's:

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Window closing on new state park, Pawlenty says

Posted at 11:22 AM on July 10, 2009 by Bob Collins (0 Comments)
Filed under: Economy

Is the time still right for Minnesota to be buying land for a new state park?

Gov. Tim Pawlenty today said the window is closing for one of his pet projects -- a new state park around Lake Vermilion in northeastern Minnesota. The land is owned by U.S. Steel, which wants more money and thinks it can get it from developers anxious to build luxury homes.

That's business. Housing. Jobs. All the things that Gov. Pawlenty has been saying for 6 1/2 years should trump just about everything else in the state. But he says the plan could help save small campgrounds in the region. Back in 2005, however, some of those campgrounds said the problem is state regulations around the lake.

The Legislature appropriated $20 million to buy up the land during the 2008 session.

Who's the biggest landowner in St. Louis County now? The state of Minnesota.

"Our only request back to the DNR, which is a very reasonable request, is that they would sell other properties within St. Louis County," county commissioner Keith Nelson told MPR's Stephanie Hemphill back in 2007. "Waterfront properties that they hold presently, that would be of equal value to this new proposed park."

Of course, times were better back when Pawlenty came up with his idea. The economy hadn't yet tanked, and social services to people -- many of whom had no chance of using the new state park -- weren't yet being unalloted.

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How to get weatherization help

Posted at 12:33 PM on July 9, 2009 by Bob Collins (0 Comments)
Filed under: Economy, Energy

On MPR's Morning Edition on Thursday, Phil Picardi spoke with Gregory Gray, the director of government and external affairs for Community Action of Minneapolis, about how to access some of the $132 million the state is getting for making homes more energy efficient.



A listener wrote to say we should've provided more information about how to start the process. Right you are, citizen.

Here's Community Action's Web site on the subject, which includes income guidelines etc. That should help you if you're in Minneapolis.

The state has a page on the weatherization program here, although the links to its listing of providers is currently blank. So try this page instead. It has a county-by-county list of providers and Web sites for you to start your weatherization process.

Get cracking, though. Winter's coming.

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Stimulus roundup

Posted at 11:02 AM on July 9, 2009 by Bob Collins (5 Comments)
Filed under: Economy

The economic stimulus program doesn't appear to be working yet. Depending on whom you talk to, it's either because the money is going to the wrong places or is being misused at the right ones.

In Washington, officials point out that most of the stimulus money hasn't been spent yet so it's too early to conclude it isn't working. But official Washington is also abuzz with the suggestion that a second stimulus is needed. So, which is it?

Mere mortals cannot understand these things. "Obama not talking about second stimulus," the Washington Post says. "Top Obama Aides: Second Stimulus "Might Eventually Be Needed," is the headline at USNews.com today. Same source, different headlines.

USA Today's headline is "Billions in aid go to areas that backed Obama in '08." The suggestion is obvious, isn't it?

The reports show the 872 counties that supported Obama received about $69 per person, on average. The 2,234 that supported McCain received about $34.

It's not until well into the story we get the punch line:

Investigators who track the stimulus are skeptical that political considerations could be at work.

With a few exceptions, Obama won the more populous states. And even in states he didn't win, the population centers of those states -- that is, big cities -- showed strong support. Shouldn't the stimulus money go where people are?

The reason no one can say for certain that the stimulus is or isn't working is because months after its passage we still can't agree on what it was supposed to do.

"States aren't using money as intended," USA Today said this week.

Under pressure to spend stimulus money quickly, many states are using the federal funds for short-term projects and to fill budget gaps rather than spending on long-term improvements, according to a report by congressional investigators.

The assertion comes from no less than the General Accounting Office (read the full report).

Minnesota used the money to help plug its massive budget deficit. It shouldn't come as a surprise to anyone. Officials said that's what they were going to do last February. Minneapolis used the money to keep some cops employed, and that got a shout-out from Obama.

In Minnesota, stimulus money is supposed to create (or save) 66,000 jobs.

Minnesota arts groups are getting about $1 million in economic stimulus, MPR's Elizabeth Baier reported this morning. MPR is getting $50,000. "We will primarily use the funds to restore the position of assistant producer for Performance Today and for content support for Performance Today and Symphony Cast," according to Christina Schmitt, public relations manager for American Public Media.

The Weisman Art Museum is getting $50,000 in stimulus funs. It'll hire an assistant curator. Perhaps that's how the stimulus will work if it's going to work: One assistant at a time.

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Dispatches from the economic front lines

Posted at 2:19 PM on July 7, 2009 by Bob Collins (1 Comments)
Filed under: Economy

One's ability not to get depressed was sorely tested by Tuesday's first hour of MPR's Midmorning, which focused on the unemployment picture. Three economists didn't just tell us what we already know -- things are bad -- but they told us what we'd rather not hear -- they're going to be bad for a good long time.

Just a few minutes before the show began, the Labor Department reported the job hiring rate in May was the lowest since it started tracking the rate in 2000. There was an uptick in hiring in retail, but that was offset by little hiring in state government and "accommodation and food services."

"What struck me is how bad it's been for sectors like health care... (it's) always been recession proof," Josh Bivins at the Economic Policy Institute told Kerri Miller. He figures the auto industry may start to rebound as people realize it's cheaper to get a new car than pour money into the old one, but he says that could be three years away.

The show, however, offered an opportunity to check in with callers who gave us an update on how things are in their little piece of the economy. Here's the anecdotal tales of woe from the front lines, which confirm that there are few safe havens at the moment.

High-end dining
"I became a statistic last week. The restaurant that I worked for for almost 12 years closed its doors for good. We eliminated our lunch shift at the beginning of the year. My management position was eliminated and I stayed on in an hourly role."

Wind energy development
"I've been in it for 6 or 7 years. I lost my job last December. I've looked all over the country and nobody's hiring. Everyone's waiting for investment capital."

Architecture
"My firm has gone from 93 employees to 32. Everyone left has gone to 80% pay."

Consumer bankruptcy attorney
"It's busy times. Most of us set our own hours. A lot of attorneys left the practice because of the changes in bankruptcy law. Now that we're in recession, a lot are jumping back in."

Wedding photographer
"We were prepared to raise our prices this year and we're not anymore. We're 'the splurge' now compared to when we were part of a package. We're seeing more videographers and wedding planners not doing very well right now."

Information technology
"I work for a major I.T. corporation. The jobs that are being lost are being lost overseas and it's strictly a matter of low pay rates. Companies are using the recession as an excuse. These jobs aren't coming back."

When will the good times come again? Guest Sophia Koropeckyj, a labor economist at Moody's Economy.com, suggested that for many, they won't.


Koropeckyj says many of the jobs being lost are being lost permanently, unlike most other recessions.

Looking for a glimmer of hope? Few economists saw this nightmare coming. Perhaps they're still inept at seeing the future. Otherwise, the economic news was mixed. Consumer loan delinquencies have risen to record levels, and Wall Street has realized the economic stimulus plan hasn't worked yet. But there are at least two green shoots today: Some autoworkers are going back to work, and an airplane parts company in Duluth is cranking up production again.

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The sound of one person not working

Posted at 3:01 PM on July 6, 2009 by Bob Collins (0 Comments)
Filed under: Economy

"The first thing I noticed when I went to work at the Mine was the noise," the writer of Mesabi Misadventures says at the beginning her outstanding post on the recession's effect on her slice of the Iron Range. We don't know her name, but we can determine she works at Hibbing Taconite because she notes her mine's shutdown has been extended into 2010, something that was announced last week.

And just like parents get nervous when their kids get too quiet because it usually means something resulting in a spanking is going to happen, it's hard not to get nervous when the Mine becomes this quiet.

I love to hear the birds in the morning at home. Or the squirrels when they yell at my dog for getting too close to their tree.

I don't want to hear birds and squirrels at work. And I do now.

What's the sound of a recession? Birds and squirrels.

(h/t: Aaron J. Brown)

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Being Denny Hecker

Posted at 1:08 PM on July 2, 2009 by Bob Collins (9 Comments)
Filed under: Economy

No matter how difficult your financial condition, reading the U.S. Bankruptcy Court filing for Twin Cities auto dealer Denny Hecker may make you feel comparatively lucky. Here's the filing.

Hecker owes millions to banks and automobile makers, as well as hundreds of thousands to Las Vegas casinos and credit card companies.

Hecker has $24,000 in cash in the bank. He's got $766,000 $766 million in debts.

Here's what the filing reveals about the lifestyle of Denny Hecker:

>> He has $35,000 worth of watches, including three 18k gold Rolex watches.

>> His wedding ring is worth $24,000.

>> He has seven snowmobiles, three scooters, and six four-wheelers, two pontoon boats, seven Jet-Skis and a yacht (which has been repossessed).

>> He owns $25,000 worth of clothing.

>> He owns three condos in Two Harbors, a home in Medina, a home in Crosslake, two condos in Bayport, a condo in Plymouth

>> He owes $450,000 in gambling losses at the Mirage, $400,000 at the Bellagio, and $100,000 at the Hard Rock in Las Vegas.

It doesn't appear that he personally owns a car.

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What's Plan B?

Posted at 11:19 AM on July 2, 2009 by Bob Collins (0 Comments)
Filed under: Economy

National Public Radio's Yuki Noguchi had an interesting answer when Morning Edition host Renee Montagne asked her this morning whether the $790 billion economic stimulus package was having any effect on the unemployment picture, which is a disaster.

"It's hard to say whether we're actually seeing that now," she said.

A better answer would have been this one: "No."

The stimulus package was supposed to create or save 3 million jobs. Its effect was supposed to be felt by now; at least a little bit.

But it has had no significant effect and we know that because of this continuing narrative when it comes to the economy. As NPR reported:

June's payroll reductions were deeper than the 363,000 that economists expected.

The economists missed it again. More people -- about 25% more people -- lost their jobs last month than these "experts" had predicted.

There was no pointing out that things are less bad than they were. They aren't. "News that's less bad is a poor substitute for good news," one analyst said on CNBC this morning.

"Employment and unemployment are lagging series," Christina Romer, chair of the President's Council of Economic Advisers said. "So we are in for some more job losses."

Romer pointed out that job losses are fewer than in recent months, but that's no sale for Edward Harrison, writing on the financial site Seeking Alpha:

We have now seen 22 consecutive weeks with jobless claims over 600,000. This is unprecedented. And while these figures are larger than in previous recessions because the workforce is larger, they are declining half as slow as they have done previously.

"What we are still seeing is too many jobs lost," President Obama said a few minutes ago in an interview with the Associated Press. You think?

Economists may not have a clue, but Wall Street knows a pig when it sees one, responding with a near 200-point drop by midday.

Even by the rhetoric of Economic Armageddon we've heard over the last year, today's is frightening:

William Gross, the founder of PIMCO, pointed out the obvious problem. People can't generate a recovery by spending if they're out of work:



A recovery by later this year? Forget it, Gross says. Think 2012.

"We're in the middle of a crash," Nassim Taleb, the author of The Black Swan said. "So if I'm going to forecast something, it is that it's going to get worse, not better."

One reason? On American Public Media's Marketplace program, Arizona State University economist Lee McPheters said the stimulus cash was spread evenly around the country rather than where the big problems are.

And Marketplace's Scott Jagow notes the fact average unemployment is lasting four months is especially troubling. It's double what it was when the recession started.

And these figures don't include the 3,300 to 4,700 jobs jobs expected to be lost under Gov. Pawlenty's unallotment, or the 200 jobs that were lost yesterday when a trucking firm in Duluth went toes up. Future numbers will also include 700 people at a Hibbing taconite mine, who were told today their mine will remain closed for up to a year.

Writing in the New York Times, David Leonhardt says the stimulus has helped somewhat, but the recession is too big for it to have made a difference. He says the Obama administration got a little carried away with hope.

Unfortunately, the administration's rose-colored forecast has muddied this picture. So if at some point this year or next the White House decides that the economy needs more stimulus, skeptics will surely brandish that old forecast.

Obviously, people can use some good news. What might that be? Perhaps that someone has a Plan B.

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Sharing the blame

Posted at 10:51 AM on June 30, 2009 by Bob Collins (2 Comments)
Filed under: Economy

After listening to most of today's Midmorning interview with New York Times economics reporter Edmund Andrews, the biggest question isn't "how can an economics reporter for the New York Times be so clueless when it comes to assuming a mortgage." The real question is "how can someone so financially clueless get a gig as an economics reporter for the New York Times?"

Give Kerri Miller credit for being tough on Andrews, who has written a book on how he fell into "a catastrophic binge on overpriced real estate and reckless mortgages. "

How could it have happened?

"The answer to that question takes you into the financial system and the recklessness that pervaded the financial system over the last few years," he said.

Well, maybe, but we also learned during a fabulous interview that Andrews never made any calculations on his $400,000 mortgage; a serious dereliction of duty by a homeowner even if the lender never asked for proof he could afford it. He also admitted he let the house become critical in his mind to making his second marriage work. Understandable, perhaps, but unbelievably ignorant.

It wasn't until well into the hour that Andrews strayed from his insistence -- which, for the record, has plenty of validity -- that the fault for his problems lay with mortgage-lending practices. "It was a stupid loan that never should've been taken and never should have been made," he said.

The meltdown in the nation's economy -- the meltdown that's taken hundreds of thousands of jobs from hard-working people -- clearly has its foundation in the lending practices of financial institutions. But there's also plenty of blame for people who couldn't be bothered "running the numbers" for the biggest purchase of their lives. Andrews is proof of that.

"In spite of people making poor decisions, it never happened in the past... because the mortgage lender wouldn't have let them," a Realtor called in to say. Clearly true. But if there's no one to save us from ourselves, who can we turn to besides... ourselves?

"Human beings make good decisions and bad decisions all the time, but there's nothing we've ever seen before where millions and millions of borrowers went over the cliff at the same time, " Andrews said. True, perhaps, but Andrews makes it entirely too easy to blame the victim. And that's the tragedy here. That people who did their due diligence and lost homes because of lender fraud, won't be able to get past the "how can you be so stupid?" questions that people like Andrews make all too easy to ask.

"There's no one out there who's as financially literate as you are," Miller said near the end of the show.

On that, she couldn't have been more incorrect.

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Signs suggest housing has hit bottom

Posted at 8:36 AM on June 30, 2009 by Bob Collins (9 Comments)
Filed under: Economy

"What impresses me no matter how you look at it... the story comes up again and again: there is some serious improvement. We've taken the first step toward beginning to turn this around," said David Blitzer, who runs the Case-Schiller Index. He fairly gushed today over the April results of his survey, which tracks resale price of homes around the country.

The index showed a .6% drop in home prices, which these days qualifies as great news.

In Minneapolis, the drop in resale prices mirrored the nationwide average (-.66%), the ninth consecutive month of declining prices, but the lowest drop during that period in which home resale prices dropped here about 16 percent. They've dropped 22 percent in the last year. Good times, indeed.

"In 13 of the 20 cities the decline is less than last month," Blitzer said this morning. "Some people out there are feeling a touch better and are willing to go out and look at a house and in some cases are willing to buy a house."

House resale prices in April 2009 are roughly the same here as they were in August 2000.

Meanwhile, another report today shows consumer confidence has dropped.

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How college kids can get a job

Posted at 10:05 AM on June 26, 2009 by Bob Collins (5 Comments)
Filed under: Economy

The Curse of the Class of 2009, the Wall St. Journal headline screamed last month. Grim job outlook for new college grads, the Minnesota Public Radio News story echoed.

"If I were a college graduate right now, it'd be enough to make me hide under the covers for the rest of my life, " Lindsey Pollak, a career columnist, told Kerri Miller on MPR's Midmorning this morning.

Got it. It's bad. But grads are getting jobs. We know that because many of them called in today.

Here are the tips we learned today:

Pay your dues
"You have to realize the path you thought you would take isn't the path you can. We're going back to the olden days when you have to pay your dues and some kids don't want to hear that," Pollack said.

Consider unpaid internships or waiting tables, said Steven Rothberg, the president and founder of CollegeRecruiter.com, based in Edina. "My parents did that, I don't see why this year's graduating class should feel they shouldn't have to do that," he said.

Nick, a recent college graduate, is one of the few who got a job. He called into the show to say he had an unpaid internship program with GE and was told all he had to do was work hard and he'd have a job. He's got a job.

Network with alumni

Caller Steve said he'd hand out business cards to everyone, including friends and other people he'd meet. He starts a job on Wall Street next week. "I had a list of 25 alumni and every month I'd make sure I'd go through the list and drop each a note."

"It's about taking the people you know and the people they know and talking to them about your career prospects. If you tap into the network of people who know you... that works," Pollack said.

"Networking isn't about asking people what they can do for you," Rothberg said, "it's what you can do for them." He said an accounting major, for example, may tell a friend in business, "I see you have a stack of bills to get out, what do you think about me coming in and helping you do it for free?"

An engineering student said his "network dried up with hiring freezes." Rothberg said he's networking incorrectly.

Use your summer jobs to get experience in your field

A business owner said most of the resumes he gets have summer jobs listed that have nothing to do with what career they want to pursue. "They're working as roofers because it pays more," he said.

"Talk to professors who may know of businesses who may need some help through the summer," Pollack said. "And just getting a sense of how a professional office works gives you a leg up."

A caller who graduated from law school, disputed that. She worked at Menard's for eight years. "If you can last at a job for eight years, you can do anything," she said.

Don't assume nobody's hiring. Take advantage of the college's career services

A St. Cloud State College career services pro said surveys sent out to area businesses
showed that while there are companies who don't plan to hire until fall, several have indicated they've got jobs to fill.

Rothberg said students aren't taking enough initiative to work with their college career services department. "You have to act like an adult," he said.

"Students drop a resume off at a career fair and they're shocked they didn't get a job," said Pollack. "The days of mailing in a resume and expecting to get a job are so over."

Rothberg said he's not much of a fan of college job fairs. He said many companies send "introverts" to them who don't like shaking hands and meeting people.

Be memorable in interviews

"You can look great on paper and have all the experience in the world," one young caller, Duncan, said. "But personality and humor is important in an interview, too."

"Actors are good because they prepare and practice and a lot of students walk in and just wing it," Pollack said. "It's important not to just say 'I'm great, I have a great personality or I have experience,' you have to explain why you're the best person for the job."

"Role play," said Rothberg. "Get your college roommate to pretend he/she's the hiring manager and practice. Get prepared for the stupid questions."

Remain optimistic

Find job-search support groups and don't let yourself get isolated. "You cannot put your eggs in one basket. A lot of students get all worked up about one or two job possibilities and sit by the phone. You've got to cast a wider net," Pollack said.

Go work with kids or volunteer at a hospital. It'll make you feel better about yourself.

It's great to hear success stories. If you've got some tips, add them below.

(Photo: Getty Images)

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Pork spending

Posted at 2:12 PM on June 25, 2009 by Bob Collins (9 Comments)
Filed under: Economy

Maybe this is a time when Washington pork really is pork.

This week, Republican Gov. Tim Pawlenty's agriculture commissioner, Gene Hugoson, and his Iowa counterpart, Bill Northey (Democrat), are asking that federal funds be used to buy pork, and then direct it to federal food programs, according to the Associated Press.

What's the problem? Swine flu has scared people from pork, even though it has nothing to do with the meat, and the name has since been changed to the H1N1 flu. The recession also has people eating less meat.

Like the big automakers, there's also the comparative inefficiency of small farms. "Producers that aren't efficient will be hit first," Shane Ellis, a livestock economist at Iowa State University in Ames said. "Those are the operators that we will see exit the market. Not the big operators." And farmers are raising more hogs than the consumer demand requires.

Republican opposition to federal spending and intervention in private business tends to soften when things turn tough for farmers -- a traditional Republican constituency. But is there a difference between an autoworker and a hog farmer? On scale, there's a big difference. But what about philosophy?

Consider Gov. Pawlenty's view of the government intervening in the banking and auto industries. "It's headed in the wrong direction in terms of government micromanaging or intervening, and, worse yet, funding and subsidizing and taking over entire parts of our economy," he said earlier this month.

When should the market prevail? And when should the government step in?

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Life after the recession

Posted at 12:30 PM on June 12, 2009 by Bob Collins (7 Comments)
Filed under: Economy

When the recession ends, how long will it take for U.S. businesses to recover from the way they survived it?

Lane Wallace of the Atlantic considers that question today:

A friend of mine who runs a management and innovation consulting business recently told me that almost all of his clients were responding to the recession by making drastic cuts in budgets and personnel, including innovation, R&D, product development and marketing efforts. "The problem with that," he said, "is that when the economy recovers, it's going to take them another two years to ramp up again. They won't even have the right personnel or teams in place anymore. They'll be way behind."

To explain risk vs. uncertainty, she uses the metaphor of a sailing race in a storm, in which the sailor who let out sails takes advantage not only of a favorable wind, but also of the sailors who trimmed their sails.

We forget that sometimes, in our canonization of the innovative heroes of America. Or ... maybe we don't forget it. Perhaps the reason we give such great lip service to taking innovative risks but don't, as a market whole, tend to follow suit ... especially in tough economic times ... is precisely because we understand quite clearly the risks involved. As the saying goes, "Nobody ever got fired for buying IBM." Playing it safe may not win the race, but it's less likely to end up with you going down in flames.

On the other hand, as the former CEO of Continental Airlines once said, if you're in the pizza business and you just keep cutting one topping after another, pretty soon, all you have is crust. And it's hard to sell crust.

I'm not asking you to reveal your company's secrets here, but what did your firm stop doing that was strategically important before the recession, but was deemed worthy of sacrifice once it started?

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What the TARP payback means

Posted at 11:46 AM on June 9, 2009 by Bob Collins (1 Comments)
Filed under: Economy

Ten banks have been allowed by the federal government to pay back the government's investment in their banks. What does this mean?

Q: Why are banks in such a hurry to pay back the TARP funds?

A: Because of the restrictions and stigma that come with taking them in the first place. Banks that accepted TARP money also were limited on the number of foreign workers they could hire, and had executive compensation restrictions placed on them. Richard Davis, the CEO of US Bancorp called it "a lousy program" last February and said the rules kept changing.

Keep in mind the original goal of the money was to purchase bad mortgages that led to the financial collapse last fall. Banks are still sitting on the toxic, mortgage-backed assets, however.

Q: Do these 10 banks now have a competitive advantage over banks who took the TARP funds?

A: Yes, some "industry experts" say. Those banks have to pay a high dividend on the government's shares that the 10 banks don't. And they could lose high-priced execs to banks that don't have restrictions on their compensation now.

Q: If the TARP money was meant to loosen credit, will paying it back tighten credit?

A: Possibly, although some of the banks are publicly saying they'll continue to lend money. The proof, however, will be in who can borrow. Have you tried to get a loan from a bank lately? How'd it go?

"We fully expect to continue to vigorously offer lending opportunities to our credit-worthy consumer, small business, corporate and institutional customers, invest for future growth and support the U.S. government's overall efforts to stimulate the economy," Richard K. Davis, chairman and CEO of U.S. Bancorp, said in a statement.

Q: Does this mean the banks are safe?

A: Not according to Elizabeth Warren, who administers a TARP oversight panel for Congress. "The notion that you can get out from under some restrictions but still want some government benefits, seems to me to have a foot in both boats, " she said today. She released a report today suggesting the government keep conducting "stress tests" of the nation's 19th largest banks to ensure their viability.

Even without TARP money, the banks are still getting their debt guaranteed by the Federal Deposit Insurance Corp. and credit lines are guaranteed from the Federal Reserve.

"None of this means that we're out of the woods yet; there's a lot of work that the banks have to do and the regulators have to do," Richard Spillenkothen, a director at Deloitte & Touche LLP in New York, told Bloomberg news.

Unemployment is still rising. More people are defaulting on loans because they've lost their jobs. Banks are poised to lose more money.

Q: What happens to the money the banks are paying back?

A: It goes into the Treasury to be used again if the economy gets worse. It's almost as if the Treasury Department isn't sure the recovery is taking hold.

Q: What do the stock markets tell us about today's action?

A: That it's not exactly the financial equivalent of VJ Day. At midday, the Dow industrials are about even. The stock of some of the banks -- including US Bancorp -- drifted lower after the announcement.

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The left-hand, right-hand economy

Posted at 5:28 PM on June 8, 2009 by Bob Collins (3 Comments)
Filed under: Economy

Two -- technically unrelated -- news stories this week have got us wondering what's wrong with this picture?

(1) The Treasury Department this week is going to announce which banks will be allowed to repay bailout money. The New York Post reports the banks shedding the "TARP" funds include Goldman, JPMorgan, American Express Co, Morgan Stanley, State Street Corp and U.S. Bancorp.

One goal of TARP -- Troubled Asset Relief Program -- is to encourage banks to resume lending to businesses and to each other, thereby getting the economy humming again.

So if the banks are repaying the Treasury Department, they must be loosening credit, right? Let's shift to #2.

(2) In Pipestone, as I wrote this morning, 160 people will be out of work by September because the India-based windmill manufacturer, Suzlon, can't get credit, according to MPR's Mark Steil, who writes:

Renewable energy consultant Martin Pasqualini with CP Energy Group says money is tight throughout the wind industry. He says some of the biggest financial backers of the wind energy industry were also some of the biggest firms to collapse in the credit crisis.

"Lehman had been a tax equity investor. AIG had an ambitious program in place to do large scale investing when they virtually came unwound. We also effectively lost Wachovia," says Pasqualini.

Wachovia struggled and was eventually purchased by Wells Fargo. The financial sectors problems meant plans for many wind farms were shelved. Pasqualini says he excepts construction this year of new wind turbines to fall significantly.

The "other side" of the story:

The layoffs are said to be "devastating" to Pipestone, but the Worthington Daily Globe says it depends on who loses their jobs.

Though Suzlon's manufacturing facility is in Pipestone, the company has also been busing in employees from Sioux Falls, S.D., Worthington, and other area cities.

The impact on Pipestone would be smaller if most of the workers who lost positions came from other cities -- though the impact on southwest Minnesota and the tri-state area would be the same.

That the company had to bus in workers from outside the area suggests a shortage of a trained workforce in Pipestone. And, indeed, the unemployment rate in the county in April -- the latest month for which data is available -- is far below the national and state rate.

Still, the windmill manufacturer's credit woes, and the banks' desire to give the money back to the federal government, makes one wonder whether TARP has really served its purpose?

MPR's Midmorning will attempt to answer that question on Wednesday morning at 9.

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Defense spending and the recovery

Posted at 2:40 PM on June 8, 2009 by Bob Collins (2 Comments)
Filed under: Economy

Apparently, this is "map day" on News Cut.

Vice President Joe Biden is out with another stimulus update, this time it's called "Roadmap to Recovery," that documents projects that have been funded to date.

The accompanying map -- above -- shows how heavily the Democrats' stimulus plan relies on military spending. They're the green dots. (Update: And, the Justice Department are also green dots. A News Cut reader with better ability to differentiate shades notes the projects may be directed to police departments)

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Riding the rails

Posted at 11:17 AM on June 5, 2009 by Bob Collins (3 Comments)
Filed under: Economy

One of the reasons I don't mind getting stuck at railroad crossings is it helps remind me that the economy isn't completely stuck. And sometimes you see interesting cargo, like today in South St. Paul.

There were dozens of them. They're windmills from Suzlon, a company based in India with no manufacturing facilities in the U.S. So by the end of the train, I realized it's the economy in India that's not entirely stuck, and I found myself wondering what the unemployment rate in this country would be if we still manufactured things here. For all the talk about "green jobs" from alternative energy in this country, a lot of them aren't jobs based here, apparently.

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Still sinking

Posted at 8:28 AM on June 5, 2009 by Bob Collins (10 Comments)
Filed under: Economy

The nation's unemployment rate was released this morning. It's now at 9.4 percent, higher than economists (who never seem to get it right) had expected. Add in all the people who've given up looking for work (question: who has this luxury? If you give up looking for work, what your plan?), and the rate is 16.4 percent.

The worse the economy gets, the better for Wal-Mart.

Meanwhile, Wal-Mart announced this morning it's going to add 22,000 jobs. The giant retailer is holding its annual shareholders meeting today. It's available via Webcast and should be particularly enjoyable for anyone who regularly follows Up With People.

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The same old

Posted at 12:41 PM on June 3, 2009 by Bob Collins (5 Comments)
Filed under: Economy

A little more fallout from All Things Considered host Robert Siegel's interview last evening with Wharton's Jeremy Siegel, in which Siegel (the Wharton Siegel) urged people to get into the stock market.

"Even in December of 1930, where you were 50 percent down from that all-time high in 1929, your five-year return was more than seven percent after inflation. The world looks different once you're down as much as we have been down," he said.

The Wall Street Journal's MarketBeat blog isn't buying it. "After the crash 1929, the Dow didn't return to its high of that year until 1954," it said.

The Motley Fool carried a Siegel quote worth considering:

Mr. Jeremy "Wizard of Wharton" Siegel apparently agrees, saying in a recent interview: "You are now investing when stocks are down 50% from their peak. ... Once you're down 50% from the peak there are almost no bad outcomes going ahead 10 years."

I'm not an equity market expert; I'm just a guy with a fraction of the retirement account I used to have. But the Siegel-on-Siegel interview suggests to me the American media is ready to make the same old mistake again -- using economists as predictors.

Economists make good analysts of what's happened, but for the most part they make lousy predictors of what's going to happen.

Take Siegel, for example.

July 4, 2005 - "I think stocks return is going to be somewhere between, say, 7, 9 percent per year over the next five years. I think real estate is high, and I don`t think real estate is going to compete with stocks, either." In fact, there was a link between real estate and the stock market that Siegel failed to recognize or acknowledge.

August 10, 2007 - "There are good values out there in equities -- especially in financial stocks -- and you will be rewarded in the long run if you start dollar cost-averaging now." At the time he recommended General Electric, Citigroup, and Bank of America.

October 17, 2008 - "I think these prices will be viewed as extremely cheap even a year from now. People will wish they'd had the guts to go in." The Dow is 247 points lower at midday today than it was then.

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Changing industrials

Posted at 12:05 PM on June 1, 2009 by Bob Collins (2 Comments)
Filed under: Economy

Traveler's -- the St. Paul-based (sort of) -- insurance company has made the big time. It has been added to the vaunted Dow Jones 30 industrials. It and Cisco have replaced the bankrupt General Motors and the teetering Citigroup.

Here's are the current "members" of the industrials:

3M
Alcoa Inc
American Express Company
AT&T Inc
Bank of America Corporation
Boeing Co
Caterpillar Inc.
Chevron Corp
Cisco
E.I. du Pont de Nemours and Company
Exxon Mobil Corp
General Electric Company
Hewlett-Packard Co.
Intel Corporation
International Business Machines
Johnson & Johnson
JP Morgan & Chase & Co
Kraft Foods Inc.
McDonald's Corporation
Merck & Co., Inc.
Microsoft Corporation
Pfizer Inc
The Coca-Cola Company
The Home Depot, Inc.
The Procter & Gamble Company
Travelers
United Technologies Corporation
Verizon Communications
Wal-Mart Stores, Inc.
Walt Disney Company

There are no longer any automakers on the list.

Compare it to the 30 Industrials of 1979, with an abundance of oil and steel.

Allied Chemical
General Foods
Owens-Illinois Glass
Aluminum Company of America
General Motors Corporation
Procter & Gamble Company
American Can
Goodyear
Sears Roebuck & Company
American Telephone & Telegraph
Inco
Standard Oil of California
American Tobacco B
International Business Machines
Texaco Incorporated
Bethlehem Steel
International Harvester
Union Carbide
Du Pont
International Paper Company
United Technologies Corporation
Eastman Kodak Company
Johns-Manville
U.S. Steel
Exxon Corporation
Merck & Company, Inc.
Westinghouse Electric
General Electric Company
Minnesota Mining & Manufacturing
Woolworth

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What's your American dream?

Posted at 12:17 PM on May 29, 2009 by Bob Collins (1 Comments)
Filed under: Economy

If you're a Midday listener, you've probably been hearing the American RadioWorks series, "A Better Life: Creating the American Dream."

Here's a video the ARW team produced on the subject:

On one segment earlier in the week, a commentator said the American Dream is still alive only because few enough people achieve it to keep them talking about it and keep others dreaming, sort of like Powerball.

In the first hour of today's Midday, Chris Farrell considered whether the recession is killing -- or has killed -- the American Dream.

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Deferring retirement

Posted at 2:56 PM on May 28, 2009 by Bob Collins (0 Comments)
Filed under: Economy

A survey from the Pew Center this afternoon says over half of adults 50-64 are thinking about delaying retirement. Sixteen percent say they expect to never stop working.

The Pew Research survey also finds that it may not be how much you earn but how much you lost in the investment market meltdown that determines whether you are re-thinking your retirement plans. Among the Threshold Generation as well as among other age groups, higher-income earners are only slightly less likely than lower-income adults to have considered postponing retirement. But regardless of income or age, those who have lost 40% or more of their investment nest eggs are roughly twice as likely as those who haven't lost money in the market meltdown to say they have thought about delaying their eventual exit from the workforce.

More women than men are thinking about delaying retirement.

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The battle for Target

Posted at 11:04 AM on May 28, 2009 by Bob Collins (0 Comments)
Filed under: Economy

MPR's Marty Moylan is at the Target shareholders meeting in suburban Milwaukee this afternoon, where hedge fund boss William Ackman is trying to get four of his allies voted onto the Minneapolis-based firm's board of directors over the objection of the company.

On CNBC today, Ackman, one of the big shareholders of the firm, suggested he's not going away if he loses the proxy fight.



During the same segment, former Medtronic boss Bill George, a former Target director, disagreed with Ackman's suggestion that the board has become insular, citing the company's decision to get rid of Mervyn's and Dayton's department stores as an example of its good decision-making. George's interview may have been the most spirited defense of Target since Ackman started his fight. Update 2:08 p.m. - Ackman loses the round.

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Half full/Half empty (cont'd)

Posted at 12:01 PM on May 22, 2009 by Bob Collins (2 Comments)
Filed under: Economy

I listened to and read the coverage yesterday of Minnesota's unemployment rate and the math made no sense to me.

Minnesota employers shed 9,500 jobs in April, which is about half as many jobs as the state lost in March, MPR reported. "Minnesota employers shed fewer jobs in April than in the prior month," the Business Journal said. "Fewer Minnesota Jobs Cut," the Fox9 News headline said.

According to the Department of Employment and Economic Development, there are 13,389 more people with jobs in April, than had them in May. The number of officially unemployed dropped by 3,781 people.

True, there's no putting lipstick on this pig. It's the worst job market since 1984.

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Credit card regs

Posted at 4:38 PM on May 20, 2009 by Bob Collins (2 Comments)
Filed under: Economy

Congress has passed the new credit card law that imposes restrictions on rate increases the banks can charge customers. The president will sign it Friday.

Marketplace reports, however, that if you've got good credit, and don't carry a balance, you might get dinged in the deal. We might return to the old days of annual credit card fees of, say, $30 or so. Rewards programs might also disappear.

Perhaps, then, some good might come from the legislation if it convinces people to wean themselves off revolving credit. But somebody must be using those checks the credit cards company send; the ones that come with a big fee for using them, usually to pay off other credit card bills. But the bill isn't aimed at consumer habits; it's aimed at the financial institutions who've done pretty well with an assortment of fees and gimmicks.

The industry argues that the good customer will end up subsidizing the deadbeat. "This industry will start looking more like a one-size-fits-all pricing approach which dominated in the '80s -- 18 percent interest and a $20 annual fees," David Robertson, publisher of the Nilson Report, told the Washington Post.

But Washington Post blogger Ezra Klein says it's wrong to separate credit card customers into good and bad. Some have lost their jobs or lost their bills, he says. The bill "forces the credit card companies to return to treating you like a responsible card holder if you return to acting like a responsible card holder," he says.

Perhaps the best consumer protection for credit card customers is a pair of scissors.

The issue is of great concern in South Dakota, which became the credit card company capital of the world because of favorable banking legislation that made the state an attractive place for financial firms to call home. The governor says up to 5,000 jobs are in jeopardy because of the legislation and South Dakota accounted for 2 of the five votes against the bill in the Senate.

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Half full or half empty?

Posted at 12:22 PM on May 20, 2009 by Bob Collins (1 Comments)
Filed under: Economy

Major financial news sources had two decidedly different ways to headline Minneapolis-based Target Corp's earnings report today.

HALF FULL
Bloomberg: Target First-Quarter Profit Tops Analysts Estimates

HALF EMPTY
New York Times: Revenue Flat, but Target's Profit Falls 13% (the headline was later changed)

MPR (AP): Target posts 13-percent drop in 1st quarter profit

Which is more accurate? You decide. Target made a half-billiion-dollar profit in the first quarter.

Meanwhile, the company is imposing a near news blackout on its annual shareholder meeting next week, when it has a showdown with hedge fund manager William Ackman. The proxy fight for four seats on the board of directors has become one of the nastiest business stories lately.

In an advisory to news reporters, Target officials said it will ban electronic devices at its meeting at an unfinished store near Milwaukee next Thursday. There will be no question-and-answer session with company officials at the meeting, nor will it be Webcast. Reporters will be able to cover it the old-fashioned way -- with a pencil and a notepad. I had asked if live-blogging would be allowed. No.

The restrictions will also apply to shareholders. It will be interesting to see if anyone with an iPhone and a Twitter account slips through.

How do they do things at WalMart? Differently. WalMart Watch was able to live-blog and take pictures at last year's annual meeting, although the biggest controversy appeared to be whether Miley Cyrus would appear . She didn't.

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Why are people so chipper about the economy?

Posted at 11:22 AM on May 19, 2009 by Bob Collins (9 Comments)
Filed under: Economy

According to people who know, consumer confidence has reached a high point for 2009, driven by an improving short-term outlook.

Now the question. Why? Is it because there is genuinely good news about the economy? Or is it because if you tell people something often enough, they'll believe it? In the wake of the collapsing economy, there was pushback against the media for telling "too much bad news." The assertion, not without merit, was that the media was making it worse.

Since then, politicians have done their best to put a happy face on things by viewing a declining economy as good news because it isn't declining as fast as it was. And the media have picked up on the "improving economy" narrative in many of their stories.

But where's the evidence that things are improving?

Today, for example, Medtronic announced it's going to slash 1,500 jobs, 600 of them in the Twin Cities.

Everyone is waiting for the real estate market to bounce back, and while there have been a few stories documenting an increase in home sales, I tend to pay attention to clued-in people like Teresa Boardman, who writes the St. Paul Real Estate blog and yesterday suggested that it's a stretch to say things are brightening.

In the last couple of weeks I have been reading that we have hit bottom and things will get better. I want to believe it but I don't.

Activity has picked up in the housing market but the prices have gone down, there are too many foreclosures and there are two many people who want to sell but can not because they owe more on their homes than they can sell them for.

On Monday, the stock market jumped 3 percent on "brightened" housing news. But today, reports show a steep decline in housing starts for apartments and condos.

The auto industry has just ordered many dealerships in Minnesota to close. And on Midmorning today, legislators reminded us that the tide of job losses in Minnesota aren't expected to ebb until next year... maybe. And in the wake of the mess at the Capitol, hospitals are laying off people already.

Maybe things are getting better for people. How about you? Are you more optimistic? Why or why not?

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Tales from the 'Threshold Generation'

Posted at 3:25 PM on May 14, 2009 by Bob Collins (0 Comments)
Filed under: Economy

From the things you don't have to tell me department: Who's suffered the most in the economic collapse? It's not the kids graduating college. It's not the people living off their retirement savings. It's people like, ummmm, me, according to the Pew Research Center:

... adults ages 50-64 are living through what feels to them like much harder times. Three-quarters of this so-called Threshold Generation say that the nation's current economic problems will make it more difficult for them to afford retirement. Two-thirds of younger adults and 56% of older adults share the same concern.

Far fewer people in other generations report losing money in stocks and retirement funds as this age group.

The report also suggests we can forget about the inheritance:

The survey also finds a sharp inheritance expectations gap between older adults and their adult children. About three-quarters of all adults 65 or older say they plan to leave an inheritance to children or family members. By contrast, less than half (43%) of all adult children with older parents say they expect to receive an inheritance

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Gap-toothed rural Minnesota landscape?

Posted at 2:22 PM on May 14, 2009 by Bob Collins (5 Comments)
Filed under: Economy

Through the miracle of Google street view, let's visit some of the small cities of Minnesota, which seemed to bear the brunt of Chrysler's decisions to close dealerships. Will it leave large, gaping holes in the fabric of rural Minnesota? You decide.

Boe Chrysler in West Concord, Mn.

Salmon Motors in Tracy, MN.

Sonju Two Harbors...

Denny Hecker's Jeep Pine City

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Chrysler's list

Posted at 12:43 PM on May 14, 2009 by Bob Collins (0 Comments)
Filed under: Economy

Here's the list of all the Chrysler dealerships that the company intends to close.

I count 19 Minnesota dealerships and two in the Twin Cities -- in Stillwater and Lake Elmo.

Dealers, start your lawyers!

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The last gasps of Bear Stearns

Posted at 10:42 AM on May 12, 2009 by Bob Collins (1 Comments)
Filed under: Economy

The Los Angeles Times today has an interesting review of 'Street Fighters: The Last 72 Hours of Bear Stearns, the Toughest Firm on Wall Street' by Wall St. Journal reporter Kate Kelly, which purports to show the extent to which federal officials -- mostly then Treasury Secretary Henry Paulson -- orchestrated the first domino in the country's financial collapse.

No paragraph is more compelling than this one:

"Regulators may never know what really happened. But one thing is clear: Once confidence in a company falls away on such a grand scale, it can never recover. Bear started that week with more than $18 billion in capital, its largest cash position ever. Three days later, negative headlines, a stock drop, lender reticence and big withdrawals from client accounts had cut those capital levels in half. Eight hours later, it was nearly dead."

Another YouTube video says Kelly's book reads nothing like the newspaper stories that were coming out at the time of the collapse. You decide. Here's Kelly's lengthy blow-by-blow account in the Journal a year ago.

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Asleep at the wheel?

Posted at 4:23 PM on May 11, 2009 by Bob Collins (2 Comments)
Filed under: Economy

Were business reporters asleep at the switch when it came to covering the financial industry over the last few years? NewsHour posted video late this afternoon of a forum held by the business press a few months ago in Denver.

Larry Ingrassia of The New York Times said maybe the readers were asleep, "but the New York Times definitely wasn't." But most of the people in the video appeared to disagree.

In an assessment of the panel in a Colorado Independent story last month veteran TV journalist Allan Dodds Frank blamed an old reportorial whipping boy: editors.

"Fannie and Freddie were not covered on TV because there's no visual," he said.

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What are you entitled to?

Posted at 9:20 PM on May 7, 2009 by Bob Collins (28 Comments)
Filed under: Economy

A few months ago, when I finished the News Cut on Campus "tour," I wrote this piece: Optimism, pessimissm, and the college graduate.

A writer I very much admire, Lane Wallace of The Atlantic, wrote about that piece today on her online column.

Perhaps Minnesotans are particularly good at accepting life in all its uncertainty and challenge. This is a place, after all, where it's been known to snow in every month of the year, and people have to shovel their roofs as well as their walks. I'm not kidding. I've done it, myself. If you want an easy ride in life, with palm trees and year-round sunshine, you don't settle in Minnesota. But whatever the reason, Collins' advice is a valuable reality check--not only on the current economic situation, but on how all of us, media included, can or should respond to it.

But it was a comment from -- I presume -- a young 'un that got my attention:

Sure the challenges of adulthood are nothing new, but who over 50 graduated college with $50k in student loans and credit card debt? When you're starting out with that kind of burden, never mind the recession, of course there's anxiety. It has nothing to do with the abstract future or achieving your dreams. It's the present, and working for $110 a week or its modern-day equivalent won't cut it. Collins' advice and this post basically ignore that for a lot of recent graduates, there's no time not to be conservative and risk averse. But if you're 50, established and debt-free, well I guess it's fair to look back and wonder if you could have been more care-free, too.

.. and so I responded...

Let's do the math on that. Let's see, I graduated (1976) with $4,000 in debt and a job that paid $5,720 a year. My debt was 69% of my annual salary.

The average student loan debt last year was not, in fact, $50,000, it was $21,899. The average income for graduating seniors in 2007 was $60,000 $46,000, making the total debt 36.5% 47.6% of annual salary.

Are there exceptions? Of course there are. But my point is a simple one to today's kids: You're not the exception you think you are. It's the last thing you will likely learn as part of your college education: Some people do know what they're talking about. The best way to get ahead of the game, is to listen.

But you're right, $110 in today's dollars -- which would be $400 a week -- isn't going to cut it. But here's what you don't understand: It didn't cut it then, either.

That's the point: We weren't entitled then. You're not entitled now.

Go forth, work hard, experience life. Make yourself special.

Graduating seniors: What are you expecting the world owes you starting next month?

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How much is the Web worth?

Posted at 1:52 PM on May 7, 2009 by Bob Collins (11 Comments)
Filed under: Economy, Media

Would you pay for content on the Web?

Rupert Murdoch, the money behind Fox and the Wall St. Journal, expects to start charging you for access to his Web sites within a year.

"We are now in the midst of an epochal debate over the value of content and it is clear to many newspapers that the current model is malfunctioning," he says.

It's the sort of thing newspaper owners dream of during periods of REM sleep. But it's been tried a few times, with fairly mixed results. People will pay for porn; they won't pay for news.

Is there any scenario that you'd pay for news on the Web?

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GM's losses

Posted at 12:07 PM on May 7, 2009 by Bob Collins (0 Comments)
Filed under: Economy

Things didn't get any better for General Motors in the first quarter of the year, according to results released by the company today.

It posted a $6 billion first-quarter loss and spent $10.2 billion more cash than it took in during the first three months of the year.

How much is the $10.2 billion in cash the company burned in the quarter?

It's $472,222 every hour of every day since January 1, 2009.

It's $13,298 for every unsold GM car on dealer lots today (767,000).

It's $60,000 for every car GM sold last month (170,000)

It's $217,021 for every job the company proposed to eliminate (47,000) in the plan rejected by the Obama administration.

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Is it a time to forgive?

Posted at 8:27 PM on May 5, 2009 by Bob Collins (10 Comments)
Filed under: Economy, Politics

Should taxpayers pay for a hockey arena in St. Paul?

That's the question facing Gov. Tim Pawlenty, a professed hockey nut, now that the Legislature has sent him a political grenade -- a bill that forgives $33 million of a no-interest loan the city got from the state to lure professional hockey back to Minnesota by building the Xcel arena.

The city really doesn't need the money, except that it wants to build another hockey arena across the street for the benefit -- primarily -- of the Minnesota Wild, who need a hockey facility.

A hotel planned for the site has been dropped, according to St. Paul councilman Dave Thune on the the St. Paul Issues Forum. "The ice sheet would provide a base...(surrounded) by a really exciting retail component befitting historic seven corners. The pond would host world class figure skating, public skating, wild hockey practice, curling and youth hockey," he said.

Perhaps. But wasn't one benefit of the Xcel Center to be a boost to business in St. Paul? A few restaurants have benefited, there's more business for parking ramps, but other than that, not much. And while it attracted the Republican National Convention, that week was a disaster, even for businesses a teargas cannister's throw from the arena.

Back when then-mayor Norm Coleman was trying to cut the arena deal, some people in St. Paul objected to the city getting stuck with pricetag for an arena that would attract hockey-loving suburbanites. Perhaps this is one way they can pony up their share.

But what about people in Marshall, for example. Its representative, Marty Seifert, the House Minority Leader is, predictably, no fan of the bill. "Go back to your coffee shop. Go back to your hardware store ... and ask people if you think this is an opportune time for us to be forgiving over $30 million that's owed to the state of Minnesota, from a deal that was struck in the 1990s, when we are $6 billion in the hole," said he said.

What say you?

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Target vs. Ackman

Posted at 4:16 PM on May 5, 2009 by Bob Collins (2 Comments)
Filed under: Economy

A battle is intensifying between Minneapolis-based Target and hedge fund boss William Ackman, who has a history of fighting with the companies in which he becomes an investor.

It will come to a head later this month when stockholders meet to vote on a board of directors. Ackman wants to replace four of them with four of his own.

Target has selected an unfinished store in Waukesha, Wisconsin as the site for the meeting and Ackman is suggesting it's an attempt to make it difficult for his sympathizers to get to the meeting.

"This is another Pershing Square (Ackman's hedge fund) sideshow," a Target
spokesman told Reuters.

But Ackman has some reason to be suspicious. When his hedge fund got into a proxy fund against the railroad CSX, the company held its stockholder meeting in a difficult-to-get-to railroad yard.

Here's Ackman's filing with the SEC in which he complains about the Target location.

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Are tighter lending practices a good or bad thing?

Posted at 1:18 PM on May 4, 2009 by Bob Collins (0 Comments)
Filed under: Economy

Isn't the nation's banking system a chicken-and-egg situation?

The housing crisis which started the economic meltdown was partially due to banks making loans to people who shouldn't have had them to buy things they couldn't afford. When the house of cards collapsed, banks stopped making loans, which led to the U.S. government to throw billions of dollars at them to try to get them to start issuing credit again.

How's that going? Not so well, the quarterly report from the Federal Reserve says today. Its quarterly survey says about 50 percent of U.S. banks tightened their lending standards on prime mortgages, up from about 45 percent in the survey issued in early February. Sixty-five percent of the banks tightened lending standards on "non-traditional" mortgages, such as ARMs.

This comes at a time when demand for mortgages is starting to increase, helped along by lower mortgage rates.

Find the survey here.

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A clean slate for the city

Posted at 11:28 AM on April 22, 2009 by Than Tibbetts (2 Comments)
Filed under: Economy

The New York Times reports on a plan — and from what you'd gather from the article, a surprisingly non-controversial plan — to effectively wipe out entire blocks and neighborhoods in chronically depressed Flint, Mich.

The population would be condensed into a few viable areas. So would stores and services. A city built to manufacture cars would be returned in large measure to the forest primeval.

Michigan's laws afford local governments a lot of leeway when it comes to dealing with tax-delinquent properties.

The numbers, here, tell a powerful tale of boom and bust in the last half century.

Nothing will happen immediately, but Flint has begun updating its master plan, a complicated task last done in 1965. Then it was a prosperous city of 200,000 looking to grow to 350,000. It now has 110,000 people, about a third of whom live in poverty.

The story ends with the reporter meeting a woman, her pristine house about the only thing left on the block, contemplating whether she would abandon her home if the city offered her a spot in a more stable neighborhood.

Would you?

Update: Bob from the comments recommends this Harper's article: "Detroit Arcadia - Exploring the post-American landscape" (pdf).

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History is history

Posted at 3:26 PM on April 16, 2009 by Bob Collins (5 Comments)
Filed under: Economy, Politics

The Minnesota Historical Society is announcing huge proposed budget cuts. According to a news release, more than 90 people would lose their jobs, fewer books would be published and three sites would close.

You know my penchant for aviation, so I'll weep silently for the the Charles A. Lindbergh Historic Site in Little Falls. It, along with Historic Forestville in Preston, and North West Company Fur Post in Pine City would be closed to the public.

Lindbergh, for the record, was good enough for Gov. Pawlenty to invoke in his 2008 State of the State address. "When Charles Lindbergh emerged from the plane, he said just what you might expect a Minnesotan to say, 'Well ... I made it,'" It's easier to fly solo to Paris than it is to keep history alive in Minnesota, however.

Historic Fort Snelling would close for two days each week.

The Oliver H. Kelley Farm in Elk River, Mille Lacs Indian Museum and Trading Post in Onamia, Forest History Center in Grand Rapids, and Jeffers Petroglyphs in Comfrey would only be open weekends.

Maybe nobody cares about these particular cuts, the governor's spokesman suggests.

"If you weren't able to go to the Historical Society Library when you thought you' might be able to, some people might notice that. It doesn't seem like the Historical Society is trying to go overboard. I think their attempt here is one that presents a realistic approach as they seems like they look at the budget situation," said Brian McClung.

But wasn't the "Legacy Amendment" -- that's when you voted for a sales tax increase last fall -- supposed to be a boon to cultural programs in the state?

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Another shoe drops

Posted at 11:58 AM on April 16, 2009 by Bob Collins (0 Comments)
Filed under: Economy

Today marked the biggest real estate bankruptcy filing ever in the United States when General Growth Properties filed Chapter 11. The mall developer is best known, perhaps, for owning Quincy Market (note: some news organizations say the developer owns Faneuil Hall in Boston. Not true. They own the tourist trap next to it.) and South Street Seaport in New York.

There is a local angle here, too. The developer owns Eden Prairie Center. It also owns the Ridgedale Mall as well as the River Hills Mall in Mankato, the Apache Mall in Rochester, and Knollwood Mall in St. Louis Park.

Here's a copy of the bankruptcy filing.

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Long bombs

Posted at 10:48 AM on April 16, 2009 by Bob Collins (0 Comments)
Filed under: Economy

In short, we're not too thrilled about our long-term prospects.

That's the gist of a Rasmussen Reports survey says as of Wednesday, 25% of American adults said the economy was getting better. "That's up from 19% a month earlier and 10% at the beginning of the year. The number who believe the economy is getting worse declined from 67% at the beginning of the year to 57% in mid-March and 48% on April 15."

But the number of Americans who say the economy will be better in five years has fallen to 57%, down from 62% at the beginning of the year.

This, of course, is exactly opposite what we've been told, that there would be short-term pain and long-term gain.

The Minnesota unemployment report today, however, is consistent with the projections that things will get worse before they get better. It got worse in March for 23,200 more Minnesotans, the report said.

Check out the county by county map (based on February data) supplied by The Department of Employment and Economic Development. Move your cursor over the county.


More national, state and substate LAUS data.

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Can anyone here play this game?

Posted at 10:17 AM on April 14, 2009 by Bob Collins (0 Comments)
Filed under: Economy

During the famed 1962 debut of the New York Mets, a frustrated Casey Stengel said, "Can't anyone here play this game?" It was a rhetorical question; the Mets lost 120 of their 162 games that year.

Wall St.is channeling Casey today. It. rises and falls on expectations and so far today a report on retail sales has disappointed the market into another dive.

"Retail sales fell unexpectedly in March, decreasing by 1.1 percent," the Associated Press reported.

Who could possibly have expected anything but a disaster where retail sales are concerned? Analysts. They had expected an increase. They have not learned the law of diminished expectations: expect nothing, and you'll never be disappointed. Maybe it's time for new analysts.

One can almost feel Fed Reserve Chairman Ben Bernanke trying to get a "we're recovering" narrative going. "Recently we have seen tentative signs that the sharp decline in economic activity may be slowing, for example, in data on home sales, homebuilding, and consumer spending, including sales of new motor vehicles," he said in a speech today. "A leveling out of economic activity is the first step toward recovery.

In other words, we're not free-falling, but we're still falling. And that's what passes for good news these days.

President Obama, in a speech today, went with the half-empty strategy, an apparent attempt to diminish expectations. "By no means are we out of the woods just yet," he said, an odd admonishment since nobody with an ounce of common sense is saying we are.

But, he said, there's a glimmer of hope.

If the economy itself could give a speech, it, too, would cite a Stengelism. "If anyone wants me tell them I'm being embalmed."

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Live-blogging Midmorning:

Posted at 9:06 AM on March 23, 2009 by Bob Collins (8 Comments)
Filed under: Economy

I'm in the studio with Kerri Miller of Midmorning this morning to talk about the nature of outrage in the wake of the AIG bonuses. "I won't govern out of anger," President Barack Obama said over the weekend, suggesting he'd likely veto the tax on the bonuses passed by Congress last week.

Writing in the New York Times, Joe Nocera says people have gone a little overboard, what with death threats and all. He also notes that the people who put the screws to AIG are living a good life in retirement and nobody seems much interested in getting their money back.

Our discussion about Wall St. features Daniel Gross, the senior editor and columnist at Newsweek, who also writes the "Moneybox" column for Slate; Kate Jennings, a former Wall St. speechwriter (Wall St. had speechwriters? Let's see you write one for this mess!) and Michele Boldrin, chair of the department of economics at Washington University in St. Louis.

As usual, I'll have a parallel conversation in this parallel universe, and will drop in your comments on the air during the hour, which begins at 9. If you've got some comments now you'd like me to pass along, post them in the comments section below.

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Deficit data

Posted at 12:29 PM on March 20, 2009 by Bob Collins (3 Comments)
Filed under: Economy, Surveys and trivia

What is the main effect the economic meltdown and subsequent bailout efforts have had on America? It makes giant numbers that used to make our jaws drop, now make our shoulders shrug.

Example? Today some congressional economists reportedly whispered that the nation's deficit will hit $1.8 trillion this year. That shatters the previous record of $459 billion, a number which once sounded like something other than the change you pull out of your pocket and throw on the dresser at night.

How much is 1.8 trillion?

>> It would take 57,077 years for you to count that high, assuming you don't sleep. That doesn't include leap days.

>> It's 882,352,941 pounds of $100 bills. That was about the total weight of one tower of the World Trade Center.

>> You could walk around the earth 72,284,656 times, and you'd still be about 20,000 miles short of 1.8 trillion.

>> At its current rate, AIG could give bonuses to 4.4 million employees.

>> It could close the Minnesota budget deficit 331 times.

>> 51,385,994 people could take a backpacking trip around the world. (h/t: Daniel Konold via Twitter)

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The only thing we have to fear is not knowing what to be afraid of

Posted at 11:06 AM on March 20, 2009 by Bob Collins (2 Comments)
Filed under: Economy

You don't have to watch The Daily Show and its occasional snips of CNBC's poor prognostication to marvel at the economists' ability to confound us. You need only look at some of the headlines this week alone.

Let's take deflation and inflation, for example, and the occasional reports of what we should fear. We'll start today and work our way back.

March 20
Fed announcement spurs inflation concern. (Bloomberg)

March 19
So long, deflation (Globe and Mail)

March 18
Deflation: Too late to stop it when we experience it (American Enterprise Institute)

U.S. inflation rises (Reuters)

March 17
Lengthy deflation ahead (American Daily)

Deflation a threat to U.S. economy (Wall St. Journal)

March 16
Paul Krugman: U.S., Europe fear deflation risk (Forbes)

March 11
Pimco predicts inflation (Bloomberg)

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Unemployment by the numbers

Posted at 12:22 PM on March 19, 2009 by Bob Collins (0 Comments)
Filed under: Economy

The Minnesota Department of Employment and Economic Development reported today Minnesota's unemployment rate for February was 8.1 percent -- dead even with the national average.

Earlier this month, however, the department released data on the counties for January that shows the varying degrees of which Minnesotans are struggling. In Clearwater County, for example, the unemployment rate is over 21%. It's over 17% in Kanabec County.

Counties in the far southwestern part of the state, on the other hand, have unemployment rates under 6 percent. April 1983 was the last time the unemployment rate was this high (yes, now it's 1983), although the last time the state had this few people working was around 2000. And the number of unemployed here may now be the highest in the state's history, although the data only goes back on the department's Web site to 1976.

Politics in Minnesota notes that the rate of unemployment increases is among the highest in the nation. State officials predict the number of lost jobs in 2009 should hit 70,000. That figure could be hit by next month since the number of unemployment has increased by 56,000 32,000 this year alone.

Update 1:42 p.m. - Interesting chart at the Minneapolis Fed's Web site on the depth of the recession compared to other recessions.

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The Twitter experience

Posted at 8:25 PM on March 16, 2009 by Bob Collins (0 Comments)
Filed under: Economy, Tech

On Monday, John Moe, doing a great job filling in on MPR's Midmorning, jumped into the mainstream media hot tub with Twitter. There's only been about 100 stories about Facebook and Twitter in the Twin Cities in the last week,so while I enjoyed the show, I declared myself a conscientious objector to any more infatuation with Twitter.

But that's before I saw the blog, New Media Chatter, in which a guy stranded at an airport, issues a call for help to the airline that stranded him.

It's a good lesson about what Twitter is and what it isn't where business is concerned. Twitter won't rescue you if you have lousy customer service, so there's no reason to use it just so you can say you're one of the cool kids now. If you have poor customer service without the latest gadget, you'll probably have poor customer service with it.

The guy's airline never helped him, so he issued a call -- via Twitter -- to see if Southwest Airlines could help him. In the end, it couldn't, but it tried; it tried a lot.

The message from all of this? The blogger says:

(Twitter) is not about posting links all the time, cool videos or such. It is about dealing with your customer and creating positive brand awareness at that moment. If you are a company, you see an unhappy customer out there, you need to move quick and communicate! @JetBlue could of said "got your tweet, will follow up soon" something to let me know they were working on it. Something..just let me know you have not forgot about me. Cause if you do not your competition will do this:

My take-away? People are getting hung up on Twitter and missing the more basic picture.

How do we get this deep into a recession and how do some companies still not understand that just showing the customer you care about them doesn't cost you a dime, and probably will keep you in business? You can't lay off people fast enough to offset the lost business from poor customer service.

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Local banker to Citi's board

Posted at 7:53 AM on March 16, 2009 by Bob Collins (0 Comments)
Filed under: Economy

Jerry Grundhofer, the brains behind US Bank, is wading into the CitiGroup mess, it was announced this morning. He's one of four independent candidates for the troubled bank's board of directors.

The four new directors are the trade-off Citi made in exchange for the government taking a a 36% stake in the company.

Grundhofer has made a career of turning around failing banks.

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Do you really want more positive financial news?

Posted at 7:31 PM on March 15, 2009 by Bob Collins (9 Comments)
Filed under: Economy, Media

Clark Hoyt, the editor of the New York Times, is the latest big-name journalist to try to respond to complaints that the news media is overemphasizing bad economic news, depressing consumers confidence and prolonging the recession.

Consumers and their media are in a "you go first" staredown on the subject.

In Hoyt's words:

This is an old argument between a newspaper and its readers: journalists see their job as reflecting the world as their reporting tells them it is, but many readers want reporters to look harder for good news to balance the bad. Ellenson said he wants news organizations to go even further. "Tell consumers not to worry," he said. "Go out and spend as if there is no recession."

Maybe there are more opportunities to emphasize silver linings. The demise of flower shows in the recession was front-page news; Broadway's surprisingly strong box office was not. But The Times is not about to do what Ellenson suggests -- and should not. As David Leonhardt, a business columnist, told me: "The problems we have are not psychological. They are hard, real problems. None of them can be resolved by waking up tomorrow and thinking we're going to be happy about them."

Of course the Times shouldn't do what Ellenson suggests. There's plenty of reason to worry. I know it. You know it. The '27 Yankees know it. And so do many of the consumers who are asking the news media to step back from the brink. So why respond to the extreme?

A few weeks ago, Don Shelby similarly overreached in describing the request:

But, the old story of the ostrich comes to mind. It sticks its head in the sand believing that if it cannot see a threat, the threat cannot see the ostrich. We could just keep the bad news to ourselves, but then, people who would like a little warning of approaching danger, would rightly say, we didn't do our jobs

What are people really saying when they voice their complaint? It's not that they want the news media to ignore reality or pretend something is what it isn't. It's that they want the news media to take just as seriously, the stories about what people are doing to overcome the tough times. To tell the story without the constant numerical equivalent of hand-wringing.

AIG handing out big bonuses? Unemployment at record levels? A state budget deficit widening faster than the politicians ability to close it? Of course that has to be -- and should be -- reported.

So what are people asking for? A little hope. A little inspiration. Perhaps a few stories every now and again like those President Obama told in his address to a joint session of Congress a few weeks ago:

But in my life, I have also learned that hope is found in unlikely places; that inspiration often comes not from those with the most power or celebrity, but from the dreams and aspirations of Americans who are anything but ordinary.

I think about Leonard Abess, the bank president from Miami who reportedly cashed out of his company (note: see a story ABC did on this guy a few days later), took a $60 million bonus, and gave it out to all 399 people who worked for him, plus another 72 who used to work for him. He didn't tell anyone, but when the local newspaper found out, he simply said, ''I knew some of these people since I was 7 years old. I didn't feel right getting the money myself."

I think about Greensburg, Kansas, a town that was completely destroyed by a tornado, but is being rebuilt by its residents as a global example of how clean energy can power an entire community - how it can bring jobs and businesses to a place where piles of bricks and rubble once lay. "The tragedy was terrible," said one of the men who helped them rebuild. "But the folks here know that it also provided an incredible opportunity."

And I think about Ty'Sheoma Bethea, the young girl from that school I visited in Dillon, South Carolina - a place where the ceilings leak, the paint peels off the walls, and they have to stop teaching six times a day because the train barrels by their classroom. She has been told that her school is hopeless, but the other day after class she went to the public library and typed up a letter to the people sitting in this room. She even asked her principal for the money to buy a stamp. The letter asks us for help, and says, "We are just students trying to become lawyers, doctors, congressmen like yourself and one day president, so we can make a change to not just the state of South Carolina but also the world.

We are not quitters.

My colleague, Julia Schrenkler, was following the conversation on Twitter during that portion of the speech last month and noted that it was at that point when the most snarky comments were posted. "See, I think it is interesting that folks snark a bit at these individual stories...but also complain that the news media only reports bad news. Isn't this a version of positive experiences?" she said on the live blog I ran that night.

It was a great observation. Do people really want the "positive" stories they say they want? Is the media convinced they don't? Does "positive" news have to be synonymous with "fantasy?"

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Why are we good?

Posted at 9:34 AM on March 14, 2009 by Bob Collins (3 Comments)
Filed under: Economy, Science

The Boston Globe jumps on the theme we discussed the other night (and was broadcast on Midday on MPR on Friday): the job outlook for graduating college seniors.

It found the same thing I picked up (and wrote about) during the News Cut on Campus tour: that more students are turning toward working for the social good.

Fourteen percent of this year's senior class at Harvard applied to Teach for America, a nonprofit organization that sends graduates to work in low-income urban and rural public schools. The proportion was 9 percent last year.

"There's always that push to make money and be comfortable, but the financial crisis made me think that there's a lot more in life than going to get that corporate job," said Matthew Clair, a Harvard government major who will spend the next two years teaching at an Atlanta primary school. "It gave me a good excuse to take some more time off to do what I'm really passionate about."

But the situation brings up another question: To what extent are graduating seniors heading off in this direction out of a sense of altruism, and to what extent are they heading in that direction because that's where the jobs are?

All of which brings me today to this week's News Cut pick of the week of all the offerings that came out of your radio. It's Thursday morning's Midmorning appearance by Dacher Keltner, the professor of psychology at the University of California at Berkeley, and the author of "Born to be Good." Pay no attention to the misnamed headline on the page ("The science of emotional survival") because the heart of the show (zip ahead about halfway through the audio), was the discussion of altruism, and why we're good (mostly).
It even took on last week's appearance by Richard Dawkins.

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Victims or accomplices?

Posted at 6:43 PM on March 13, 2009 by Bob Collins (4 Comments)
Filed under: Economy

Last month, in the now-famous Chicago Tea Party diatribe, CNBC's Rick Santelli said the people who would be in line for some government help with their mortgages are "losers."

Yesterday,an anchor at the same network suggested Bernie Madoff should be "waterboarded" and pointed out that his victims "did nothing wrong."

Is there a parallel?

Yes, according to Joe Nocera of the New York Times. He writes today that Madoff had accomplices -- his victims:

"These were people with a fair amount of money, and most of them sought no professional advice," said Bruce C. Greenwald, who teaches value investing at the Graduate School of Business at Columbia University. Mr. Hedges said: "It's like trying to do your own dentistry. It is a real lesson that people cannot abdicate personal responsibility when it comes to their personal finances."

And that's the point. People did abdicate responsibility -- and now, rather than face that fact, many of them are blaming the government for not, in effect, saving them from themselves. Indeed, what you discover when you talk to victims is that they harbor an anger toward the S.E.C. that is as deep or deeper than the anger they feel toward Mr. Madoff. There is a powerful sense that because the agency was asleep at the switch, they have been doubly victimized. And they want the government to do something about it.

What happened to the victims of Bernard Madoff is terrible. But every day in this country, people lose money due to financial fraud or negligence. Innocent investors who bought stock in Enron lost millions when that company turned out to be a fraud; nobody made them whole. Half a dozen Ponzi schemes have been discovered since Mr. Madoff was arrested in December. People lose it all because they start a company that turns out to be misguided, or because they do something that is risky, hoping to hit the jackpot. Taxpayers don't bail them out, and they shouldn't start now. Did the S.E.C. foul up? You bet. But that doesn't mean the investors themselves are off the hook. Investors blaming the S.E.C. for their decision to give every last penny to Bernie Madoff is like a child blaming his mother for letting him start a fight while she wasn't looking.

Sound familiar? It's victims as partial contributors of their demise.

Under Nocera's theory, are those of us who've lost our retirement savings victims, too?

(Recommended reading: Tonight's NewsHour on PBS looked at the role of the business press in covering the meltdown, including the assertion that stories were covered, but ignored.)

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Selling the things you love

Posted at 4:59 PM on March 12, 2009 by Bob Collins (1 Comments)
Filed under: Economy

Michael Caputo, who helps run Minnesota Public Radio Public Insight Network, is looking for stories about whether you'd sell the things you'd love to pay the bills.

Here's his story:

---

Okay, money doesn't buy happiness. And accumulating stuff shouldn't make us whole.

But there are some possessions that have value greater than the pricetag. And yet, in a recession, when the times get tough ... you sometimes have no choice but to part with these sentimental items.

Take the case of Jonathan Stimes. More than 20 years ago his father gave him several gold coins. They were a gift of labor, Stimes said, for work that father and son did on a family farm in Illinois.

But Stimes, of Burnsville, has lost his sales job and needs to keep the house paid for. So he decided to part with those gold coins. He tells the story from here.

"My stoic Norwegian Dad would have just shrugged and said, 'well, this is what we put it away for.' But when I handed (the coins) over in exchange for the check, I became rather emotional and had to leave the shop quickly. There are tears in my eyes as I write this now because I still miss him and I know deep down he would have rather that money gone for something more special than a mere two house payments."

Stimes wrote this in response to a question Minnesota Public Radio news posed: Have you considered selling something to boost your income?

What we heard was illuminating -- not only because of the reasons that people sell items, but because of what these items meant to them.

Some have peddled (or contemplate peddling) beer can collections, amphibious ATVs or fluke scopemeters (I had to look that one up). Some sold items to increase cash flow, to get out of debt problems or to stockpile money for the rocky road ahead.

Others, like Chris Carlson of Mound said that initially he sold stuff to pay the bills. But now the business owner says he's peddling possessions as a lifestyle choice.

"I continue to sell my good unwanted items as an alternative to the land fill. Its amazing with the exposure you can get with online listing services there is always someone out there that wants whatever it is. I typicaly list for 1 cent or 99 cents to ensure it gets bought. I now do it for the environment I even keep the packaging peanuts from work that would normaly be discarded and box them up and sell them"

So is anything possessing you to part with your possessions? Are you needing to suppliment your income? Is it a lifestyle choice? Are you parting with something that means a whole lot to you?

What are you willing to part with to make ends meet?

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The Obama Industrial Average?

Posted at 4:48 PM on March 12, 2009 by Bob Collins (3 Comments)
Filed under: Economy, Politics

Last week, some of the partisan commentators were suggesting that the administration of Barack Obama was a failure in its first days, using the Dow closing average as one yardstick. When the Dow closed at its lowest level in 12 years, it had dropped 18% since the day of Obama's inauguration.

Today, the Dow closed at 7170, or 9.7 percent below Inauguration Day. Did Obama become an 8.3 percent better president in one week?

Republican National Committee chair Michael Steele picked a bad time to send out a fundraising letter:

President Obama and Liberal Democrats in Congress don't seem to grasp the fact that since the Democrats took total control in Washington, the stock market has lost over 20% of its value. And over 50 million middle class Americans have lost a huge amount of their life savings.

By the time it arrived, Steele's numbers were already wrong. Can you measure the performance of a president based on the stock market? The Associated Press tried on Monday.

Some investors blame the slow-motion crash on Wall Street's disappointment with the government's $787 billion stimulus plan, its seemingly endless bailouts and the lack of specifics on how to rid banks of toxic assets.

Others say Obama inherited a recession destined to become the worst since World War II. And they note that the market was already in awful shape at the tail end of the Bush administration, down 44 percent from the market's 2007 peak to Inauguration Day.

Here's recent Wall Street performance over the same period for other recent presidents:

George W. Bush - 2nd term	+2.8%
George W. Bush - 1st term	-3.5%
Bill Clinton - 2nd term	+2.8%
Bill Clinton - 1st term	+5.7%
George H.W. Bush	+2.1%
Ronald Reagan - 2nd term	+3.6%
Ronald Reagan - 1st term	+4.3%
Jimmy Carter	-1.2%
Richard Nixon (2nd term)	-5.5%
Richard Nixon (1st term)	-1.5%

Incidentally, with very little fanfare, MPR added some financial tools to its Web site not long ago. You can find some calculators and other things to play with here.

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Tracking the stimulus: Transportation projects

Posted at 4:31 PM on March 12, 2009 by Bob Collins (3 Comments)
Filed under: Economy

The mailbag reveals that the Minnesota Department of Transportation has decided how to spend the economic stimulus money heading this way.

The list of projects for outstate (aka "greater") Minnesota can be found here. They include such things creating "living" snow fences in Monticello (I-94) and Atkinson Bridge to installing traffic lights in Fergus Falls. (See pdf)

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Optimism, pessimism, and the college graduate

Posted at 10:13 PM on March 11, 2009 by Bob Collins (5 Comments)
Filed under: Economy, News Cut on Campus, Schools

On Wednesday night I participated in a roundtable with some soon-to-graduate college students. It was the final chapter of the News Cut on Campus project in which we focused on how the economy is affecting the outlook of students.

The roundtable will be broadcast on MPR's Midday one of these days, but I don't believe it's been scheduled yet. Find the broadcast here.

I was asked to provide some observations about what I learned during the project. Here's a few I tossed in along with a few I didn't.

People must really be in a bad frame of mind if I'm the most optimistic person in the room.

At one point, host Jeff Horwich noted that the people who grew up around the Depression share a lot with these kids because they really had to struggle as they set out in life. True, but as a colleague mentioned to me, "these kids sound like every soon-to-graduate student in history." It's not a new phenomenon that people can't take a direct route to their dreams.

It's supposed to be hard to make the transition from college to the working world. The dream has never been accomplished by taking one giant step, but by taking a series of small steps, some of which can be missteps. That's just the way it works. It's the late '90s that were the exception. Don't make me tell you about my first $110-a-week-six-days-a-week job I got out of college.

Raise your hand if life has gone exactly the way you thought it would. That's part of what students are experiencing -- in many cases for the first time. It's also what old-timers like me are experiencing as we get into the retirement "red zone." It's not going exactly as we thought it would. But why should this phase of life be any different than the other ones? It doesn't go the way you think it will and sometimes -- most often, actually -- that's a good thing.

Jeff asked about advice from parents and several of the students made reference to parents discouraging kids from certain career choices. I met a very nice woman in Ely who gave up her dream of being an artist because her family said she couldn't make any money as an artist. Her comments have stuck with me for the last two months as did the comments of the students on Thursday evening.

Part of the reason for that is I'm giving the same sort of advice to my youngest son, who isn't far away from graduating. I'm not going to advise anyone not to listen to Mom and Dad, but here's the thing: As we get older, we grow more conservative and more risk averse. But you're far too young to be 50.

Your mother was a hippie and wants you to be more concerned about settling down than she was? Fine. Ask her if she'd be a hippie again if she had it to do all over. It's all part of the journey and we parents forget that you should make your own, regardless of what might happen.

You won't be the first generation to have to move back home for a little while. Trust me. I don't like it any better than you do, and neither do your parents. It's part of their journey, too.

The media isn't responsible for the economy the way it is, but we are partly responsible for keeping it the way it is. It's not our job not to tell you how bad things are, but it's not our job to tell you how bad things will be because....

We could be wrong. Anyone who's watched Jon Stewart's dismantling of CNBC over their consistently lousy predictions of a rosy economy, should understand that we all could be equally wrong with predictions that you'll have to learn to live as if it's 1933.

I have no clue how you're going to repay your student loans. Good luck with that.

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Star Tribune may not be #2

Posted at 4:15 PM on March 11, 2009 by Bob Collins (0 Comments)
Filed under: Economy

There was a lot of link love yesterday for a Time Magazine ranking that appeared to suggest the Star Tribune is the second-mostly-likely big city newspaper in America (The Philadelphia Inquirer was first) to go belly up.

Not so fast.

Shocked that the Boston Globe was on the list, media watcher Dan Kennedy (who, by the way, writes a must-read blog), points out the writer was a blogger who might not have the best information in the world:

In fact, the source of this rather startling prediction is Douglas McIntyre, a blogger for 24/7 Wall Street -- not exactly the ghost of Henry Luce. Time just happens to run the feed on its Web site. (Here's a look at the site's syndication service.) I've interviewed McIntyre. He's a smart, knowledgeable guy, but it's fair to say that he likes to be a provocateur.

You will notice, too, that McIntyre repeats that bit about the Globe's being worth only $20 million. In fact, as the Boston Business Journal reported recently, a more logical number is a shade under $200 million -- far short of the $1.1 billion that the New York Times Co. paid for it (in 1993 dollars, no less), but a lot more than $20 million. I know of no one who ever thought the $20 million figure was credible.

Adam Reilly at the Boston Phoenix's Don't Quote Me Blog (another must-read blog), unearths the nugget that the list wasn't in order -- it may not be #2.

None of which matters to the pressmen's union at the paper. Today in New York, the Star Tribune's lawyers told a judge it needs $3.5 million in concessions from the union as part of $20 million more in cuts its seeking from its employees.

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Where's home?

Posted at 1:35 PM on March 11, 2009 by Bob Collins (0 Comments)
Filed under: Economy

Is St. Paul going to lose Travelers?

In Annie Baxter's story about the former St. Paul Companies now listing New York City as its official home, company spokesman Shane Boyd says:

"It's just a designation. It's in the documents. It's just to designate where his primary office is. He still has an office here as he does in Hartford," Boyd said. "It's not like he's in any one location all the time. But of the three executive offices, that's the one he spends more time in."

But it's a word in the last line of her story that jumps out:

Boyd says there are no immediate plans to shift any St. Paul workers out of state.

The affirmation that Travelers is now New York-based confirms a story Baxter aired in 2006 that suggested that the company was operating a "decoy headquarters" in Minnesota.

State officials have been concerned for some time that the state would lose jobs after it lost its St. Paul identity. They may be hoping the company's philanthropy is an indicator, however. In January, the company's charitable foundation dropped $1.4 million on St. Paul schools.

Still, it's hard to look at the St. Paul skyline and wonder what would happen if the company were to head East.

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Should government workers accept a wage freeze?

Posted at 6:35 AM on March 11, 2009 by Bob Collins (29 Comments)
Filed under: Economy

Has your salary been frozen?

MPR's Tim Pugmire has a story today with union reaction to Gov. Tim Pawlenty's call for a wage and benefit freeze on state workers and teachers.

"What's crazy about that kind of a statement, any compensation savings when we're in as much financial trouble as the state of Minnesota is in, will not protect personnel," Jim Monroe, who heads one of the several unions in Minnesota state government said. "Those savings will then be diverted to another area of the budget to plug that hole in the dike."

According to a recent report in unemployment, government work was a comparatively safe place to be during this period of massive job losses. But in January, the unemployment rate among people associated with state government dropped 2.1%.
But the government "industry" is projected to lose only .6% of its jobs in the state (2,642 jobs) in 2009.

But, unlike private industry, the CEOs of state government are proposing a wage freeze that could extend for years. A bill at the Capitol would prohibit and wage increases for any government workers until the middle of 2011.

If this all sounds familiar, Gov. Pawlenty proposed the same wage freeze during the last budget 'crisis' in 2003.

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An image of America

Posted at 8:38 PM on March 10, 2009 by Bob Collins (4 Comments)
Filed under: Economy

A tent city of homeless people is starting to fill up in Sacramento. It got some publicity last week on Oprah, and now several social service agencies are telling people not to "cater" to the homeless, according to MSNBC.

"It's really not a very good thing to do," says Sister Libby Fernandez, the executive director of Loaves & Fishes. "For one thing, you have to have trash pickup. You bring things out there like clothing, suitcases food, water ... it just builds up an accumulation of trash."

As many as 50 people a week are turning up and the authorities estimate that the tent city is now home to more than 1,200 people, the Daily Mail reported.

What are people and cities supposed to do? The city is thinking about providing some services on the site -- portable toilets, for instance -- but a TV station looked into another tent city in Ontario, California and found as soon as the city did that, people from out of the area moved in.

(Photo via Getty Images)

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Have we hit bottom?

Posted at 2:26 PM on March 10, 2009 by Bob Collins (1 Comments)
Filed under: Economy

Is it still possible to make money in this economy? Apparently so.

The price of a share of General Electric has shot up 32 percent in less than a week, and in the process gave some hope to people wondering if we've hit bottom.

"The rundown due to finance exposure has been excessive. It is still a very large, well operated industrial company and I think the pessimism about the finance sector has hurt the value of the stock much beyond reason," Peter Jankovskis, co-chief investment officer at Oakbrook Investments in Lisle, Illinois, told Reuters.

That's his take, financial writer Terry Keenan looks at the same stock and sees this:

"Having lost 48 percent of its value just since Obama took office, GE shares traded at 16-year lows this week and its very survival is being questioned. The stock, once a store of savings for millions of retirees, has lost $380 billion in value in the past 18 months, the greatest wealth destruction by any stock in history."

So which is it? A company on life support or a company coming back? It's a microcosm of every conversation surrounding the economy.

GE is still down 30% from Inauguration Day, but that's still an 18% climb back.

And it's not as if there aren't a few positive news nuggets about the markets:

CitiGroup, the poster child of economic disaster, says it turned a profit in the first two months of the year.

Sun Country Airlines has repaid its debt and is projecting a profit for the first quarter.

Fed Chairman Ben Bernanke gave a speech about the economy and didn't break it in the process.

Granted things are bad; nobody can argue about that. An unemployment will continue to increase even in the initial stages of a recovery. It took months of arguing about whether we were in a recession before we finally determined we were, it'll probably take months of arguing about whether we're in a turnaround before we determine that we are.

At the very least, there's at least a whiff of better times.

Update 3:04 p.m. - Here's where it gets frustrating. Listen to Sen. Arlen Specter claim we're on the verge of a depression. He says our economic problems are "more serious than are publicly disclosed." Perhaps he should disclose them, then.

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The 'mommy track'

Posted at 1:48 PM on March 10, 2009 by Bob Collins (8 Comments)
Filed under: Economy, Life

I'm not sure exactly what to say about this story that crossed the Associated Press a few minutes ago. Plus, it's a minefield. The story? Women being laid off are getting to know their kids better.

Lucas and other laid-off women like her are involuntarily experiencing the life of a stay-at-home mom, and they are getting to know a lot more about the details of their children's daily existence. They are also discovering some of the things they have
been missing.

Couldn't the same be said of men getting laid off?

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Tough times for lawyers, too

Posted at 11:21 AM on March 10, 2009 by Bob Collins (0 Comments)
Filed under: Crime and Justice, Economy

How long could the United States continue to crank out lawyers at the rate it has? About this long, according to a story in the Washington Post.

The recession has taken its toll on the industry that once was -- and still is, really -- synonymous with a way to make a ton of money.

But corporations no longer have a ton of money to spend on lawyers, the big law firm model is failing, and even "globalization" is hitting the business.

"We have 300 people in India. We've added 50 people" in recent months, said Michael J. Dolan, chief executive of the Tusker Group in Austin. Dolan said his lawyers charge $25 an hour, compared with $150 to $300 an hour billed by paralegals and associates doing the same work at law firms. "We're in the process of adding another 30 people."

Across the country, lawyers are being axed from law firms in favor of either lower-priced offshore lawyers, or those graduating from law school who'll work for cheap. "Cheap" in the business, however, is about $130,000 a year.

"Everything you hear is a horror story [but] it's hard to grasp how bad it is," John McBeain, a student at William Mitchell College of Law told Minnesota Lawyer last month.

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Tracking the stimulus

Posted at 3:34 PM on March 9, 2009 by Bob Collins (1 Comments)
Filed under: Crime and Justice, Economy

I wrote early today about the difficulty anyone is going to have keeping track of where all of the stimulus money is going, despite the stated best intentions of many of those involved.

So this afternoon, I've been calling around the state, asking communities how they intend to spend the $29 million coming into the state from the Justice Assistance Grants announced by President Obama last week as part of his stimulus package.

This is "small potato" money in the big scheme of things, but the exercise has revealed how stimulus money gets absorbed into budgets at the lowest levels of government and is probably going to take someone with enough time and resources to call and e-mail every city in the state literally hundreds of times to be able to determine how it's spent.

Some cities and counties know how they'll spend it already. Some don't know how the'll spend it, and some don't even know they've got it. Most are scrambling to figure out what strings -- if any -- are attached. In many cases, the communities just found out today that it's available to them. Only a small handful of the more than 50 communities I contacted responded.

Here's a sample of how some of it is going to be spent in Minnesota.

Dakota County - $11,168
According to Chief Deputy Sheriff Dave Bellows, they're trying to determine if it can be used for equipment. The county has recently been upgrading camera systems in squad cars.

Woodbury - $21,804
"Woodbury is a first-time recipient of this funding. As a result, we need a little time to review the specifics of the program and determine what types of expenditures are eligible," city communications director Julie Lahr said in an e-mail. "Once we do that, the public safety director will make a recommendation to the city administrator regarding what he believes would be the best use of the grant money."

Rosemount - $10,104
The Byrne grants have been used for joint ventures with other government agencies in such things as investigations of gangs and drugs, asscording to Jeff May, the city's finance director. He says he's not sure, however, whether this is "new" money that will allow additional programs or whether it's "old money under a new name."

Apple Valley - $46,001
"Our police chief, Scott Johnson, is currently evaluating a number of different options for these funds. Given the one-time nature of the funding, it is most likely these funds will be used to purchase capital equipment items," Apple Valley's city administrator Tom Lawell said.

Inver Grove Heights - $34,301
"The money you refer to would come to Dakota County and not directly to the City of Inver Grove Heights. In that case, I have not heard from the County on any of their plans for receipt of that funding," responded Joe Lynch, the city administrator.

Brooklyn Park - $245,693
Our police chief is busy working on figuring out what the eligible expenditures would be for so I can't tell you specifically what we'll use it for," city manager Jamie Verbrugge said.

South St. Paul - $19,411
"We have not made decisions about where it would be used. The Governor's initial 2009 budget proposal would reduce our Local Government aid - an integral part of our revenues - by about $400,000 in 2009 and another $1 million in 2010. If that becomes reality, there will be lots of uses for the $19,411," wrote Stephen King, the city administrator.

My favorite response, however, came from Tammy Omdal, the chief financial officer of Burnsville, which is receiving $75,250. "I have no idea what you're talking about," she said.

Incidentally, Kerri Miller will have the two mayors in the house on Midmorning on Tuesday (9 a.m.) to talk about the stimulus money.

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Morality and the economic crisis

Posted at 11:02 AM on March 9, 2009 by Bob Collins (0 Comments)
Filed under: Economy

John Redwood, a member of Parliament, asks a salient question on his blog today: If it was wrong for banks to lend, why wasn't it wrong for people to borrow?

If lending too much was greedy and wrong, wasn't it also wrong for so many people to borrow so much, especially if they cannot now repay it and are going to walk away from their obligations? Who was more guilty - the lender or the borrower?

If the bankers who did the lending were greedy and wrong, weren't the shareholders in the banks similarly guilty as they were happy to receive the dividends from all that excessive lending? Didn't that include most people in the country? The Church Commissioners who pay the clergy salaries doubtless owned lots of bank shares, as did practically every pension fund in the country. I don't remember them speaking out at Bank shareholder meetings asking for the banks to grow less and pay smaller dividends.

What's interesting is the assertion that the economic crisis, formerly known as a "banking crisis" is an issue of morality. Is it?

Related reading suggestions from MPR: Recovering from a layoff, one step at a time, and The 90 second job interview.

MPR's Midmorning also discussed the fallout from layoffs today, although the subject of morality did not come up.

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Transparency

Posted at 9:35 AM on March 9, 2009 by Bob Collins (2 Comments)
Filed under: Economy, Politics

A year or so ago, I tried to find the number of people employed by the state of Minnesota. It took more than a dozen phone calls to find an agency of state government that knew, and even then the data was more than a year old.

So it's no surprise that Minnesota is one of the 19 states that hasn't set up a Web site to track how federal stimulus money is going to be spent, according to the Web site, ProPublica, which tracks these things.

At the same time, it's also not surprising to read in today's Star Tribune that one of the governor's policy advisors (why can't people who run the state agency's on behalf of the governor be his policy advisors?) is actually paid through the budget of seven state agencies.

What is surprising is that anyone could figure it out. Minnesota is not a candidate for "transparent state of the year."

The Minnesota Office and Management and Budget, formerly the Minnesota Department of Finance, posts -- for example -- salary information on its Web site, with information for eight different unions. As long as you're on the union's bargaining team and understand 11 different "step ranges" (or even know what a step range is) and 16 different "comp codes" (and what they are) you can figure out how much an information technology specialist makes. But you can't find out how many there, what they do, or whether we need so many of them.

A total compensation report is somewhat more illustrative of our budget dollars in the executive branch, but not for mere humans who want to figure out whether (a) money is being well spent and (b) how.

"Transparency" is the new buzz word in government. it's meant to provide all the details of where the money goes. It's mostly a dodge. Transparency isn't just throwing a blizzard of numbers at you for you to sort out, transparency is making it easy to sort out.

President Barack Obama's recovery.gov Web site is a good example. It intends to follow how the economic stimulus money is being spent, but there's no indication that it will. It's "news" section is simply puffed-up press releases to tout components of the plan. A section on "justice grants," for example, tells us about money being thrown at anti-crime programs, but it doesn't tell us that while the president promoted a graduating class of police recruits as evidence the stimulus plan is working, it doesn't mention that subsequent classes for potential recruits have been canceled.

A link on the page sends us to the Justice Department to find out how much each state will get. There, we download a spreadsheet for Minnesota and learn, for example, that $19,000 of the $2 billion is trickling down to South St. Paul. How is it going to be used? Call South St. Paul (Note: I did. I had to leave a message.). Now repeat that for every line item in the stimulus package and you've got your transparency. More likely? People trying to figure out will give up.

Is there a better way to do this? ProPublica thinks so; it points to Missouri's Web site to track how stimulus money will be spent. It lists only $223 million received for Medicare reimbursement, so far. But it provides e-mail alerts and RSS feeds as the money is spent.

It also has an area for people to make suggestions on how the money can be spent but, unfortunately, like the Minnesota Legislature's "submit your idea about the budget," it keeps the suggestions to themselves. Why?

How will we know whether the money is being spent correctly? The Boston Herald reports today that the feds are planning to go undercover to "monitor whether unqualified applicants try to obtain stimulus funds." That must be under the "spies" line-item.

Don't look for it on a Web site, though.

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An escape to fashion

Posted at 2:12 PM on March 6, 2009 by Bob Collins (6 Comments)
Filed under: Economy, Things that are puzzling

There was an interesting segment on APM's Marketplace the other night on how the recession is affecting the way we dress. You'd think that we'd be slobbing it up a bit, but actually -- the story goes -- we're dressing up for the down economy.

"It's time to really make an effort, you can just sink down into, you know, the depths and think about this gloom and doom. And fashion is something that, you know, traditionally is an escape for people, and I think no more so than right now, people will look to it as an escape," said Kate Betts, a fashion editor.

She also said she was shocked -- shocked -- when she was in Milan the other day and heard there were stores that went an entire day without anyone showing up. "And remember Italians are big consumers of fashion and luxury," she said.

Did she say Milan? Milan, where it's fashion week this week?

This is what they're turning out for people to wear in Milan these days:

Of course, it was another cruddy day in the economy. Unemployment numbers for February showed nearly 700,000 lost their jobs, and your retirement plan tanked again.

The good news. Things haven't gotten bad enough to make you want to "escape" to that. Have they?

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Minnesota's mortgage meltdown

Posted at 8:33 PM on March 5, 2009 by Bob Collins (0 Comments)
Filed under: Economy

How bad is the mortgage foreclosure and delinquency problem here? Bad, but not as bad as the rest of the country, according to a report released Thursday by the Mortgage Bankers Association.

In the West North Central area -- Minnesota, Iowa, Kansas, Nebraska, Missouri, and the Dakotas -- 6.7% of all mortgages were past due in the last quarter of 2008, that's the lowest of all the geographical regions. Six percent of mortgages in Minnesota were past due. Just 3 percent of mortgages here were in foreclosure.

Nationally, almost 8 percent of mortgages were past due.

But the situation gets much worse for subprime mortgages -- the mortgages given primarily to people with low credit ratings. Twenty percent of those mortgages in Minnesota were past due in the 4th quarter; 15 percent were in foreclosure.

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Bank pushback and sports stadiums

Posted at 11:59 AM on March 5, 2009 by Bob Collins (3 Comments)
Filed under: Economy, Sports

This week, TCF Bank announced it's giving back the federal bailout money that it didn't want in the first place.

Theirs is not the only "pushback" to the government money and the accompanying nosing around that politicians are doing.

On the Web site, The Biz of Baseball Pete Toms well captures the sentiment that sports marketing is the new "whipping boy" of the recession. The subject? Naming rights for stadiums.

As far as I know, TCF did not get much political grief for its deal with the new University of Minnesota Football stadium naming rights, for which it paid $35 million. But it appears to be one of the few that have escaped.

Two major banks (other than TCF) with homes in Minnesota are in the naming rights business, including those who have accepted bailout money, according to the Sports Business Journal.

Wells Fargo & Co.
$25.0 billion in bailout funds
Wells Fargo Arena in Des Moines, Iowa ($11.5). Wells Fargo Arena at Arizona State University ($5 million). Also has marketing deals with five MLB clubs; five NBA clubs; San Francisco 49ers and Seattle Seahawks; Minnesota Wild; multiple minor league teams; Western Athletic Conference; deals at approximately 15 colleges, including Arizona, Southern California and Texas

U.S. Bancorp
$6.6 billion in bailout money
Naming rights at U.S. Bank Arena in Pittsburgh ($3 million). U.S. Bank Arena in Cincinnati. Also sponsors PGA U.S. Bank Championship Milwaukee; Seattle Mariners; Minnesota Timberwolves; Utah Jazz; Denver Broncos; Minnesota Vikings; Big Ten and Pac-10 conferences; six college athletic programs

The pressure to pull back from sports marketing is affecting the already-questionable math used by proponents of publicly financed sports stadiums.

Less than one year ago, professional sports was anticipating a group of stadium naming rights deals which would command unprecedented dollars. The Mets deal remains in place (at least temporarily) but has generated vast amounts of negative attention for the sponsor. The Yankees deal collapsed. Interest in the naming rights for the Cowboys and Giants/Jets stadiums appears slight. On a smaller scale, the Washington Nationals will soon begin their second season of play in Nationals Park, still with no naming rights sponsor.

BofA sponsorship chief Ray Bednar was quoted in SBJ, "We may have seen a sea change in the acceptable way to develop and nurture and maintain and grow relationships using client B2B entertainment."

Whether or not that change is temporary or permanent will have an enormous impact on professional sports.

It all adds up to increasingly unlikely sell for a new stadium for the Minnesota Vikings, whose lease at the Metrodome expires in 2011, thanks to a lousy economy, the disappearance of naming rights money, and a Legislature that has little interest in asking taxpayers to pony up a dime for a new stadium.

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Surprise!

Posted at 8:00 AM on March 5, 2009 by Bob Collins (11 Comments)
Filed under: Economy

Why are economists so constantly surprised? It's becoming the tag line for just about every economic story lately: "... than economists expected." As in -- mostly -- "worse than economists expected." They're supposed to be the smartest people in the room.

Today's invocation, as cited by the Associated Press:

The number of laid-off workers receiving unemployment benefits has jumped to an all-time high near 5 million while new jobless claims remain well above 600,000. Both figures were worse than expected and new projections from the Federal Reserve show unemployment rising for the rest of this year.

Three days ago the government released the monthly report on consumer spending. Economists got it wrong... again:

The Commerce Department says consumer spending rose 0.6 percent in January, even better than the 0.4 percent gain that economists expected.

This comes on top of last week's bombshell that the economy shrank at the end of 2008 more than...well, you know...

The Commerce Department report released Friday showed the economy sinking much faster than the 3.8 percent annualized drop for the October-December quarter first estimated last month. It also was considerably weaker than the 5.4 percent annualized decline economists expected.

"Analysts" (economists who drive nicer cars, basically) don't get off the hook, either. Take today's earnings report from Target:

Discount retailer Target Corp. says its same-stores sales fell 4.1 percent in February. That was better than analysts had expected.

Wall Street, which hates to be surprised, is reacting to today's surprise in the way to which we've yet to become accustomed. Perhaps the solution is for economists to predict that things will be worse than they expect, then take the bounce when Wall Street is pleasantly surprised.

Granted it's not sound economic theory, but since when has that been a problem?

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The deficit

Posted at 9:59 AM on March 3, 2009 by Bob Collins (2 Comments)
Filed under: Economy

Highlights of the budget forecast, from Tom Stinson, the state economist: Here's the entire budget forecast.

The budget deficit over the next two years will be $4.57 billion. It's lower than anticipated because of the stimulus. It would have been $6.5 billion. There will be a $236 million surplus in the current 2008-09 budget because of the stimulus package.

Another 70,000 jobs are going to be lost in Minnesota. 15,000 in construction, 30,000 in durable manufacturing. 15,000 in professional services. Only in health care will there be growth. "It could be worse," says Stinson. He expects an unemployment rate of about 9.5%. The total number of lost jobs during the recession should be about 120,000.

Why are so many jobs being lost when the state has been approving record bonding bills. "It takes awhile for jobs to materialize under bonding bills," according to Stinson. "We've had an enormous depression in the housing construction industry... it's an enormous turnaround. You just can't overcome that overnight."

The president's stimulus package will not turn the economy around.

This is a consumer-led economy. "We have to see an increase in consumer spending." It's 70 percent of the U.S. economy and "there's no way the U.S. economy is going to grow until the consumer spends. Some of that reduced spending is because people are trying to rebuild their savings and retirement plans.

A sign of a turnaround would be a drop in the number of jobs lost nationwide. If the number of jobs lost nationwide is below 400,000 when they're announced on Friday, that would "perversely be good news," Stinson said.

The economy will start to grow in 2010-2011. There's a 20 percent probability it won't.

The jobs picture will brighten in the first quarter of 2010. It won't be triggered by just one area.

The stimulus dollars may be hiding the long-term problem, but they're helping in the short term.

There are signs that the credit market is improving.

Because of stimulus money, the governor's proposal to cut adults with children from MinnesotaCare is now off the table.

I saw three Minnesota Public Radio reporters at the news conference. Expect a plethora of coverage on tonight's All Things Considered broadcast.

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The budget turnaround

Posted at 5:30 AM on March 3, 2009 by Bob Collins (3 Comments)
Filed under: Economy, Pawlenty

When Gov. Tim Pawlenty took office, he inherited a $4.5 billion two-year budget deficit. Four years later, he claimed some credit "for the biggest financial turnaround in state history." The occasion in November 2006 was a projected $2.2 billion surplus. "We just climbed out of a big hole, and I am going to make sure Minnesota doesn't get thrown back in by overspending," Governor Pawlenty said at the time.

If the projected budget deficit hits $7 billion when it's announced today -- and some legislative leaders say it likely will -- that previous "biggest financial turnaround in state history" will be replaced by a new "biggest financial turnaround in state history." In this case, a U-turn.

When the governor last had a huge budget deficit, it constitutes about 15 percent of the previously passed two-year budget. If the projected budget deficit for the next two-year cycle hits $7 billion, that will climb to 20% of the size of the previous budget.

This time, however, there are few accounting gimmicks and shifts left to use to erase it.

We will, of course, have coverage of the announcement during the day. Be sure to check the archive of Monday's Midday broadcast, during which former Republican Gov. Al Quie and former DFL Sen. Majority Leader Roger Moe offered their ideas of how to clean up the mess.

Though I haven't seen the show's plans for today, yet, I'm presuming they'll tackle the issue once again.

MPR will provide live coverage of the governor's news conference on Midday, followed by analysis with former lawmaker Phil Krinkie and former Capitol reporter -- now head of Growth & Justice Committee -- Dane Smith.

By the way, later today on All Things Considered, Marty Moylan looks at whether people are trying to gamble their way out of this. Are people gambling more?

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Generation Debt

Posted at 4:27 PM on February 27, 2009 by Steve Mullis (0 Comments)
Filed under: Economy

In following up with Bob's News Cut on Campus series and the discussion about the increasing use of credit cards on college campuses, MPR's Molly Bloom sent in this series of responses:

It's no doubt that the job market is tough out there. So we asked students how the changing employment landscape is leading them to change their plans. We expected to hear from students who were shifting majors or changing career paths in hopes of finding a decent job once they graduate.

Instead, we heard from students who are staying in school, signing up for service projects or pursuing special certifications, waiting for the job market to improve.

Ariane Laxo, 22, is double majoring in Interior Design and Music and minoring in Sustainability Studies. She's studying for the LEED AP exam in hopes that it will make her more attractive to employers. Still, she worries about digging herself into an even bigger hole.

"The largest effect the economy is having on students is rising tuition costs. Student loans are still available, but some students have to take out more private loans (with outrageous interest rates) than before. Between my husband and I, we have close to $75,000 in student loan debt and are always scrambling to cover the cost of tuition that isn't covered by grants and loans. Plus, as tuition costs go up and we take out more loans, our loan interest payments go up. If it's difficult to pay interest payments now, what will it be like when we're paying off our loans?"

Like many students we heard from, Ariane and her husband are buried under a mountain of student debt. But with the job market in such dire straits, staying in school - even if it means taking out more loans - is their most attractive option. They say a graduate degree is necessary to set themselves apart, even if it means they'll be that much more in the hole when they do find a job.

Sarah Winikoff, 22, is about to graduate with a degree in freshwater ecology. She wanted to get a job with the Forest Service or Conservation Corps., but now she thinks she needs to go to graduate school to be competitive.

"More of us feel like graduate school is the only way we will be marketable to employers. Most of us have no idea if we will be able to get a job after graduation and there is more anxiety than ever around paying off student loans."

If Samantha Oxborough, 21, can get the loans she needs, she'll be going to law school at the University of Virginia in the fall. While she's taking on more debt, she sees her peers trying to defer that first payment by joining AmeriCorps or other government-funded organizations.

Senah Sampong, 24, a student a Minneapolis Community and Technology College, writes that even with increasing debt and a shaky economy, he and his peers have little choice but to continue their schooling. For his generation, debt is simply a fact of life:

"We expect to be poor. That's really the thing. WE expect to be strapped with heavy debt, and more so once the budget is completed. It is hard to accommodate forces over which one has very limited control. The sense of powerlessness drives the blindness I see at my school, I think. I go to a two-year school. A lot of people have kids to think about, a full-time job to think about. You can't really let something like this stop you from acting in the present. When you're up to your turtle neck in debt, stopping isn't going to help anything. It's like trying to pull back a bet, when the only way to stem your losses is to keep raising."

Share your story with MPR's Public Insight Network.

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Rocky down for the count

Posted at 12:16 PM on February 27, 2009 by Than Tibbetts (6 Comments)
Filed under: Economy, Media

It was shocking to read of the sudden closure of the Rocky Mountain News. The writing, presumably, was on the wall, but to come to work to find out that the institution you work for — and the Rocky was an institution (the paper was shuttered 55 days before its 150th birthday) — will cease to exist tomorrow.

The paper's staff put together a documentary of sorts that seems to be directed more to the paper's owner, The E.W. Scripps Co., than to its Colorado audience.

Twin Cities readers and writers might see the words of Scripps President and CEO Rich Boehne as an omen: "Denver can't support two newspapers any longer."

Update: I left this in a comment but it seems worthy of noting in the entry itself.

Apparently the Rocky folks wanted -- and tried -- to continue on as an online-only 'paper' but the company's joint operating agreement with the Denver Post wouldn't allow it.

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Credit card blues

Posted at 2:31 PM on February 26, 2009 by Bob Collins (4 Comments)
Filed under: Economy

Michael Caputo, one of the icons of Minnesota Public Radio's Public Insight Journalism initiative, and I have been talking in the past week or so about how people are paying -- or not paying -- their bills.

On Wednesday, during the News Cut on Campus listening tour stop in Moorhead, I was set up not far from a group from a bank who were trying to sign students up for credit cards.

Coincidentally, Michael sent me this today on the subject of students trying to balance their credit card debt:

As if paying for college was not rough enough... now that plastic in your pocket is getting into the act.

Philip Novak of Minneapolis thought it made sense to put about $8,000 on his credit card. The rate was good and he needed to buy books and supplies, like a laptop, while pursuing his engineering degree at the University of Minnesota.

Then he heard that Citicard's rate was being doubled to 14 percent. For a returning student, not relying on support of parents, this is a factor that is helping to make his fifth year of school quite costly.

"I've tried to find other cards onto which I can transfer balances, but because I'm a student with a low income, I'm having trouble qualifying for $8,000 in credit," Novak said.

He's one of many college students getting caught up in the recent rate hikes by credit card companies.

You may remember that university's were encouraging students to use credit cards for tuition and books costs.

A Minnesota State Colleges and Universities survey in 2005 on student financing said 25 percent of students use credit cards to pay part of tuition or fees... 37 percent use them for books and supplies. That's only going up, said the MnSCU Student Association advocate Shannah Moore.

The reason: Rising tuition, the cap on federal student loans and the tightening of the private credit market.

In many ways, we saw this coming. In this 2004 story, MPR's Elizabeth Stawicki called attention to the increasing role of credit cards in funding college.

If you're caught up in the credit card interest rate-raising, we'd love to hear from you. Please comment below.

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The help at the end of the phone

Posted at 11:28 AM on February 25, 2009 by Bob Collins (0 Comments)
Filed under: Economy

Pat, whose last name I'm not using to guarantee privacy, is another one of the people who can tell how the economy is doing, even if she closes here eyes. Her ears tell the story.

She's a volunteer crisis counselor for Crisis Connection, which has experienced a noticeable increase in calls since the economy tanked. She's trying to help, one caller at a time.

During a typical four-hour shift each week, she told me yesterday, anywhere between 8 and 20 people will call looking for help. Most are people "at the end of their rope" these days, she says. And most seem to be women. "It's just the culture we're raised in," she says.

People tell their problems to Pat, and she puts them in touch with resources, whether it's a place to get food or shelter. "A lot of them are 15, 16, 17 year old girls who've lost their boyfriend."

She became a crisis counselor two years ago as a grad student in psychology at Bethel University. "It's wonderful," she said. "It's fascinating and frustrating at the same time." Fascinating because of the "things that people get themselves into." Frustrating because many times people don't listen to the solutions she offers. That's when she uses the psychology. She asks the callers what they think they should do. Then they listen up.

Though she says she leaves the job behind when she leaves, she acknowledges that she occasionally thinks about particular callers -- the woman with too many kids at too young an age, for example. She says she's gotten burned out a couple of times, but says she can't walk away. "They're my tribe," she says of her fellow counselors, a few of whom work the phones 8 hours a day 5 days a week.

Occasionally, some people helped by the Crisis Connection volunteers call back to report success, but not too often. "I like to think I've helped someone," she says.

Here's Crisis Connection's profiles of some of the counselors.

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Live-blogging the presidential address

Posted at 7:12 PM on February 24, 2009 by Bob Collins (8 Comments)
Filed under: Economy

We'd like to get your feedback and observations as the president speaks to a joint session of Congress about the economy. Afterwards, react to Gov. Bobby Jindal's response.

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Live-blogging: John Ydstie on Midday

Posted at 10:58 AM on February 24, 2009 by Bob Collins (6 Comments)
Filed under: Economy

NPR's John Ydstie has been NPR's "roving national correspondent," but he covered the economy for a couple of decades. Maybe he can make sense of this mess and also answer some questions about the challenges of covering the economy without contributing to its collapse.

He's on with Gary Eichten on MPR's Midday and I'm live blogging the conversation. By the way, he's a Minneapolis native.

11:09 - The Dow is up 53.21 as Gary and John start their discussion. Let's see if the market is listening to the lads.

11:11 a.m. - John says he's flying back to Washington to cover the president's speech tonight. Obama, by the way, previewed his speech. In a sound bite during the 11 a.m. NPR news, he said he would be honest and convey the enormity of the problem. Ugh. Raise your hand if you don't understand how bad the economy is.

11:12 a.m. Ydstie says he thinks the experts "know what they're doing." As he's speaking, Fed Chair Ben Bernanke is speaking to a Senate committee. He said if the stimulus stabilizes things, the recession could end this year. The market jumped, but now it's lost all of those gains.

QUESTIONS AND ANSWERS

Q: "There's so much negativity from the Republicans," a caller says. Says the country is in "an economic war with each other."

A: What you're witnessing is the Republicans trying to figure out how to come back after November's election. They're going back to "core values." It's fraught with political risk. A new poll shows people back Obama. Meanwhile, consumer confidence is at record low levels.(This would be the part where I bring up the media's role in this. Are people reacting to the economy? Or are they reacting to the media's coverage of the economy? Are the two the same?)

>> It's a pledge break. If you follow me on Twitter, you know how I'd do this. Alas, it was rejected. (Disclaimer: It was a joke.)

11:26 a.m. Back to business.

Q: Should banks be nationalized?

A: "I'm not sure it's a good description. We've nationalized many banks over the years. They clean it up and sell it off back to the private sector." It might take longer to deal with a bank like Citi or Bank of America, but it's not impossible. There's nobody who thinks the government should take over the banks and run them forever. It's a tough political sell.

Aside -- Chicago Tribune: Nationalizing banks poses risk but other options look worse.

"If the banks don't start lending again, the stimulus will go to waste. Whatever it takes, is my view," he said.

Q: What if banks fail the "stress test."

A: Unless the feds find a bank is insolvent, not much will happen. If U.S. stock in Citi is converted to common stock, the government will own 80 percent. If banks fail the stress test, they'll try to convert some of that stock. "We can't afford to have zombie banks that aren't lending that the government is propping up."

Q: We're ignoring people who deal with behavior, that the emotional part of this is bigger than the qualitative part of this. Why aren't we hearing from psychologists?

A: Behavioral economists are gaining status as a result of this crisis. It's easier to quantify numbers than quantify emotions and the tendency is to crunch the numbers.

Q: Given the steady drumbeat of bad news. Is there a point when MPR and other media outlets overcover this?

A: John says he had the same question at a breakfast this morning. It's difficult because as a reporter you report what happens and if the market falls because investors don't have confidence, you have to do that. Maybe we should have a bank holiday and a media holiday.

(Bob aside: Look, this is the problem with answers like this. Nobody is suggesting the media not cover this. But the answer suggests that everything the media covers is in context and it simply isn't. Editors and reporters are not asking the question of what every economic story serves before throwing it on the air. If a company announces it's laying off 25 people, it gets on the air simply because every layoff story gets on the air. But consider the placement a few weeks ago of Traveler's financial results and its investment in schools. Hint: It wasn't on the front page.

So Ydstie answered the question, ignoring why behavioral economists are getting a bigger voice today. The media is dismissing the emotional part of the economy and prefers instead to just crunch the numbers. And he unwittingly, perhaps, answered this caller's question in the previous answer: "It's easier to crunch the numbers." That's true. But that's simply not good enough. I was similarly disappointed that the new Star Tribune columnist also dismissed the validity of the point.)

11:40 a.m. - Pledge break (here, kitty!)

11:44 a.m. - Tangent time: MPR's Tom Weber sends this link to a CNN.com on Minneapolis people handling the economy.

Q: Should the government buy out CEOs and banks and put someone in there who can run things properly?

A; Some people think so. The pool of people to run large financial institutions has gotten quite thin. A lot of people have already been dismissed and finding people -- untainted -- is difficult.

Q: Can Obama marshall elected representatives to work on Social Security and Medicare for real?

A: With 401Ks cut in half, people will depend more on Social Security. He'll try but it'll be like Nixon to China. It'll be easier for a Democrat than a Republican. But SS and Medicare are very different. Cost of health care is rising rapidly and those costs need to be controlled. There is a demographic issue with Social Security but there are multiple ways of solving that problem. The size of the Social Security problem is about 1 percent of GDP. The ability to solve it is much easier than for Medicare.

11:51 a.m. - Pledge break. Back after the top of the hour.

12:07 p.m. - We're back. Down in the comments section, join the "what should the media have known and when should they have known it" thread.

Q: What has to happen before people see a light at the end of the tunnel?

A: Getting the banking system stabilized. Ydstie says he thinks the Obama administration will come up with a plan soon because then the markets will grow as businesses think they can make some profit again (Tangent: Target's profit dropped a lot, but it made a ton of money.) Says if 401k's started to come back, that would help.

Q: Do you see a moratorium on the use of IRA funds without a penalty?

A: No.There is some help for college students in the economic stimulus package (Bob notes: You might want to read how that's getting neutered here.)

Q: What if the stimulus doesn't work?

A: They'll do another one. Until consumers and businesses start spending.

12:19 p.m. - Pledge break. Hearing that Gary Eichten was Ydstie's first editor when he worked at KCCM in Moorhead. Kate Smith is noting the number of people who've come through MPR's doors, "and then gone on to great broadcasting careers" somewhere else. Hmmmmm....

In another thread, Tom Sweeney writes:

1. People are drowning in econ crisis coverage but little (none?) of the information is actionable. What would John have me do in reaction to the reports? I was laid off last March 4 and am still looking.

2. Is the crisis likely to boost US productivity and global competitiveness by enabling companies to pay people way less and by causing employees to work way harder for the good fortune of having a paycheck? I'm a certifiable workaholic with sweet references and 25 years in publishing but have yet to land after declining a transfer to NYC.

>> I don't know if Gary will take either one of those questions. But #1 sounds familiar.

Q: People are framing "economic recovery" in the context of where we are a couple of years ago. That's the problem. We got away from real values, to speculative values.

A: "You make an interesting point. Scott Simon interviewed a demographer on Saturday and compared the situation to the Great Depression. When he looked at them, they were a 'reset' to the economy. We were living in a fantasy world. He suggested that instead of thinking of them as recessions/depressions, they are resets. The problem is unless you get the economy moving along again, you're going to have people losing their jobs and losing their homes. We can have a theoretical discussion about what the economy and values ought to be, but if you're about to lose your job or your home, you need something fast. You need a program that tries to keep you employed. The poison that got us into this is the medicine that will get us off our backs, and then we need to have a conversation about consuming less or saving more. The problem is that everyone is saving now."

Q: Why don't you correlate market action to government action? The market knows wasteful spending.

A: It's more about the banking system.

Q: Were banks forced to make bad loans?

A: No. We all think home ownership -- along with motherhood and apple pie -- is a good thing. But it's not a good thing if you can't afford the payment.

12:38 p.m. - Pledge break. None of the people joining/renewing appear to be listing News Cut as a reason. What's the matter with you people? There's a guy trying to eat here!

Q: Any relief for large student loans?

A: You're unlucky because your parents made more money and you had to take out the loan. If you had a home and had an "exotic loan," you may be able to get help under the housing plan. But for people who are "highly leveraged," you probably just want to take the $10 a week tax cut and put it toward debt retirement.

12:51 p.m. They're close to wrapping it up. the Dow is up 164.15. What does this mean? It means the Dow went up 110 points while Ydstie and Eichten were talking, and went down 30 when Federal Reserve Chairman Ben Bernanke was speaking earlier today. Perhaps we've unwittingly identified our way out of this mess.

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The housing market basket case: It's us

Posted at 8:27 AM on February 24, 2009 by Bob Collins (17 Comments)
Filed under: Economy

The resale price of homes is dropping faster in Minneapolis than in almost any other U.S. city.

The Case-Schiller housing price index has just been released for December and it shows a massive drop in the resale price of homes here -- 4.6 percent -- in one month. It is the largest single-month decline since Minneapolis was added to the index in 1989, and puts the region right up there with Phoenix on the list of basket-case cities.

The price of a home is now at spring 2002 levels.

It's hard to say what this means because at the same time, the sales of homes is increasing -- albeit slightly -- according to MPR's Jess Mador.

"I think we need at this point is a certain amount of patience," David Blitzer, the chairman of Standard & Poor's Index Committee told CNBC this morning. "Right away there's a lag in any numbers that come out a month, a month and a half... there's a lag in people getting going. Mortgage rates have come down. It's very difficult for people to qualify for loans. The banking system, now that the horse is out of the barn, has locked the barn up very tight. This is also the slow period. You gotta hang on 'til late in the second quarter in the summer before all the stars are aligned."

Only Phoenix (-5.1%) and Las Vegas (-4.8%) dropped more than Minneapolis in the month.

For the year, Minneapolis housing prices dropped 21.1% 18.4%, about the same as the entire country. The pace of the price drop is not changing much increasing slightly, however. In the last six months of the year, Minneapolis prices dropped a little more than 10%.

At 11, NPR's John Ydstie, will join Gary Eichten on Midday to answer questions about the economy. I'll live-blog it here.

Update 9:31 a.m. - In response to a question from a reader asking for a comparison between the current rapid drop in home prices compared to the rapid increase in home prices during the "boom years," I played with the spreadsheet and found these factoids:

The largest month-to-month increase in home prices was July 1997, when prices jumped 2.1% from June 1997.

Most month-to-month increases during the boom years were far less than 1 percent.

House prices have dropped my more than 1 percent in 12 of the last 15 months.

The highest one-year jump in housing prices here since the Case-Schiller index started was 12.2% (2001). There were only three years in which housing prices jumped by double digits (1999, 2000, and 2001).

The rate of increases in home prices started dropping in 2002.

Home prices have dropped for three straight years. Home prices increased for 17 straight years.

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Sun spots

Posted at 7:37 AM on February 24, 2009 by Bob Collins (0 Comments)
Filed under: Economy

It was a gorgeous sunrise across the frozen tundra of flyover country this morning. Against the backdrop of a collapsing economy, we caught ourselves singing "the sun will come up tomorrow," before we recalled another famous sun-phrase: "Red sky in morning, sailor take warning."

Tonight, Barack Obama gives his speech to a joint session of Congress and we'll figure out which he's going with. I'll live blog it here at 8 p.m.

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Body language

Posted at 6:17 PM on February 23, 2009 by Bob Collins (3 Comments)
Filed under: Economy, Politics

It was another horrible day in the equity markets. The last time the market was this low -- 1997 -- Brad Radke was winning 20 games as a 24-year old for the Minnesota Twins. Yeah, that long ago.

Usually, stories about rough days on Wall Street are accompanied by the cliche picture of a stock exchange trader.

Today, however, let's look at the body language of the nation's governors and the president and vice president as they met in Washington.

Where have I seen this expression before?

(Photos via Getty Images)

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The prison economy

Posted at 11:28 AM on February 23, 2009 by Bob Collins (2 Comments)
Filed under: Crime and Justice, Economy

At least one business made money and doesn't foresee any layoffs. MINNCOR Industries, the "company" that uses prison labor. The company was created by the state during the economic slowdown of the early '90s, to encourage prison industries to operate in a more business-like fashion.

According to a report from the Legislative Auditor, that presents some challenges because most businesses don't have to take a headcount in the middle of the day to make sure nobody has escaped, and some inmates not only don't have skills for the job, but often aren't all that interested in showing up to work on time or putting in a full day of work. (Fill in joke about your workplace here.)

But the economy is putting a squeeze on MINNCOR in its own way, according to today's report. The number of inmates is increasing so rapidly, it's getting difficult to find jobs for them.

The company also has a turnover problem. The majority of "employees" have less than a year remaining on their sentence, the report said.

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Reversal of fortune

Posted at 9:10 AM on February 23, 2009 by Bob Collins (2 Comments)
Filed under: Economy

It's a small step; a very, very small step. But US Airways announced today they're bringing back free drinks. US Airways was one of the few airlines to charge $1 for coffee and $2 for soft drinks and water, but there was always the danger other airlines would follow suit.

Now, about those checked baggage fees...

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Where are the economists?

Posted at 7:00 AM on February 23, 2009 by Bob Collins (9 Comments)
Filed under: Economy, Media

Conservative and liberal groups don't agree on much, but they agree on this: TV did a very questionable job covering the economic stimulus bill signed by President Obama last week.

The liberal Media Matters for America said of the 681 people who appeared as guests on cable news and Sunday TV talk shows, only 6 percent, were economists, said the Associated Press.

While Media Matters didn't survey the network evening news shows, the conservative Media Research Center did, and found that only 13 percent of those interviewed were economists.

The rest were the usual suspects -- reporters, political "experts" and talking heads.

The producer of ABC's This Week said the guest selections mirror the need for news shows to have verbal battles between contrasting viewpoints.

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Waiting for instructions

Posted at 8:47 AM on February 22, 2009 by Bob Collins (6 Comments)
Filed under: Economy, Politics

"I don't want to pretend that today marks the end of our economic problems. But today does mark the beginning of the end," President Barack Obama said on Tuesday when he signed the economic stimulus bill. It was a rare message of hope from a president who campaigned his way to the White House on the theme.

Has the president, who has got a big speech to give on Tuesday, become too much of a downer? Are we in such denial that we need to be told how bad things are... again?

Writing in the New York Times this weekend, Frank Rich chronicles Americans' ability to deny bad news and accept the enormity of the economic crisis. What is a president to do?

Pity our new president. As he rolls out one recovery package after another, he can't know for sure what will work. If he tells the whole story of what might be around the corner, he risks instilling fear itself among Americans who are already panicked. (Half the country, according to a new Associated Press poll, now fears unemployment.) But if the president airbrushes the picture too much, the country could be as angry about ensuing calamities as it was when the Bush administration's repeated assertion of "success" in Iraq proved a sham. Managing America's future shock is a task that will call for every last ounce of Obama's brains, temperament and oratorical gifts.

More than half of America now fears unemployment, one in 10 homes are in foreclosure, retirements are now unattainable. Minnesota courts are about to let scofflaws run amok, and the nation is running out of rich people. The economic recession was felt out here in the working world long before it reached the cubicles of the New York Times or, most certainly, the Oval office.

We get it. The economy is bad. Really bad.

While Rich wonders whether Americans will "get it," his op-ed page colleague, Maureen Dowd, wonders whether it's Washington that fails to grasp the reality of the situation.

President Obama disdains sound bites, and he does not have Bill Clinton's talent for reducing the abstruse to aperçus. We wanted someone smart to gather a bunch of smart people around him to get us out of this fix. But Mr. Obama's egghead manner has failed to soothe a nation with the jits. Maybe he has been so intent on avoiding the stereotype of the Angry Black Man, as he wrote in his memoir, that it's hard for him to connect with and articulate public anger about our diminishment.

Though he demonstrated in the campaign that he has a rare gift for inspiring the country with new belief in itself, Mr. Obama has not yet captured either the grit the moment requires or the fury it provokes. He has not explained in a compelling way why Americans who followed the rules need to sacrifice more to help those who flouted the rules.

Part of the problem, perhaps, is that politicians use speeches to us, not to talk to us, but to send messages to each other. When the president tells us how bad things are, he's talking to Republicans who don't support his proposed his solution. Here in Minnesota, the DFL, for example, is engaged in "listening sessions" around the state to come up with ideas for closing the state's budget gap. When they heard the first one the other night in St. Cloud, that was one more than the DFL has presented, since it's yet to propose an alternative to the governor's budget. Lawmakers, no doubt, have their own ideas how to do it, but the "inner cynic" can be forgiven for thinking they want the political cover of full meeting rooms in small towns across Minnesota first.

Meanwhile, Minnesotans -- and most Americans -- wait for instructions on what we are supposed to do now about the situation, the extent of which we know only too well.

What is the one message you want to hear from the politicians and pundits now?

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Timewasters: Ma and Pa Kettle explain the economic stimulus plan

Posted at 12:31 PM on February 20, 2009 by Bob Collins (0 Comments)
Filed under: Economy

Or maybe not.

(h/t: Bill Hibbler)

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Is there enough time for a comeback?

Posted at 10:26 AM on February 20, 2009 by Bob Collins (2 Comments)
Filed under: Economy

Perhaps you've seen this New York Times tool by now. It helps you calculate what would have to happen for your retirement fund to get back to where it was at its zenith.

According to the various scenarios I entered, in my case I would have to get a 5.2% annual return -- starting today -- to get back to my 2006 state by the time I retire. To get to the point where I'd calculated the resources I'd need to retire, I would need roughly a 10 percent return.

If I were much younger, this isn't a problem. But it's here where the usual financial advice isn't making sense and doesn't apply to a significant number of Americans -- essentially those who are within 10-15 years of retirement. Sure, historically the market comes back given the right amount of time. But there isn't enough time left for these people. They are looking at a significantly reduced standard of living, and there's virtually nothing they can do about it.

It's that reality that few economic experts are addressing or acknowledging. Might it soon be time to warn them that they need to accept a lower standard of living? Is that politically wise for them? Should younger people plan on having mom and dad move in?

(h/t: Marty Moylan)

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Who should get help?

Posted at 8:26 AM on February 20, 2009 by Bob Collins (2 Comments)
Filed under: Economy

Gold passed the $1,000 an ounce mark a few minutes ago, which is the economy's version of a hurricane flag.

Today, apparently, is going to be another horrible day in the equity markets. Fear of bank nationalization is being blamed for pre-market jitters. And the rhetoric surrounding Wednesday's unveiling of a housing assistance plan by President Obama is starting to sink in, and not just among the talk-radio crowd.

"The government is supporting bad behavior," said CNBC's Chicago Board of Exchange analyst Rick Santelli as he organized a "revolt" on the floor of the exchange on Thursday morning. "You can go down to -2% on a mortgage and they still can't afford the house."

It was such a display of economic petulance, that this morning, the Today Show brought Santelli in for a repeat.

A few people have moved past the "why should I help someone who bought too much house?" stage and are concentrating on some interesting questions. For example, if someone gets help with their mortgage, and the economy rebounds and home values go up again, does that person who got help give something back?

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Retirement is not an option

Posted at 3:50 PM on February 19, 2009 by Bob Collins (7 Comments)
Filed under: Economy

If you're over the age of 50, you can probably relate to my colleague, who took a look at the closing Dow average today and proclaimed,"someone wants me to die here at my desk."

To paraphrase: "Retirement is not an option."

The Dow closed at its lowest level in the last six years.

What's our next benchmark? If the Dow drops another 180 points, it'll be at the lowest level since October 28, 1997, the day the "Asian flu" halted trading on the New York Stock Exchange for the first time... ever.

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Picture of the year

Posted at 12:44 PM on February 17, 2009 by Bob Collins (0 Comments)
Filed under: Economy, Media

I'm prohibited by copyright law from showing you the winner of the contest for the best news photograph of the year as chosen by the World Press Photo. Lots of online sites appear to be ripping the photographer off, but I'm not going to be one of them. You'll have to look for yourself here.

It is a chilling image of a Cleveland police officer, gun drawn, making sure the people who lived in a foreclosed-upon home are out of it.

It's a sign of the times in the journalism industry, too, that the world's best news photo ran only online, and that the photographer who took it is having trouble finding work.

Another online site -- The Raw File -- won first place in the "stories" category for its photographs accompanying a profile of Troy, New York.

I couldn't find the photographs on the Web site, but did find this photographic story about Troy which further documents the declining economy.

Upstate Girls - What Became of Collar City from The Raw File on Vimeo.

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The search for the recession-proof job

Posted at 9:20 AM on February 16, 2009 by Bob Collins (3 Comments)
Filed under: Economy

In December, I wrote about jobs that may be recession proof. It came on a day when hospitals announced large cutbacks, exploding the notion that health care was recession-proof. It's not.

"Mortician," a reader volunteered, a suggestion that seemed perfect for the times.

But MPR's Tom Robertson pokes that bubble with a needle today, too. It's not that people aren't dying, Tom points out in his story today, it's that when they go, they're going more cheaply. The big caskets aren't selling.

So let's scratch "mortician" off the list, too. What's left?

A TV station in Oklahoma went searching for some last week. "Health care" was #1 on their list. It was an odd conclusion, all things considered, but if you look at the job listings for area medical centers in Minnesota, there are jobs posted despite the announced layoffs.

The Boston Globe today profiles a young couple, victims of the economy who have been looking for work and identifies "career management counselor" as a recession-proof job. How does one break into that business?

Lawyers once were considered recession proof. Those days are gone.

On the other side of the coin, however, heating and air conditioning repair, barbers and hair stylists. And the biggest growth industry is government.

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What is Sylvia going to do?

Posted at 5:47 PM on February 13, 2009 by Bob Collins (8 Comments)
Filed under: Economy

I drove up -- and back -- to Moorhead today, which gave me plenty of time to listen to Minnesota Public Radio along the way. In between, I heard details of an estimated 14-percent budget cut at the University of Minnesota Morris. It's amazing, really, how every moment of my day these days is somehow consumed with the economy. I find it difficult to end the day with the same hope with which I start it. How about you?

Some excerpts from MPR's broadcast day are worth considering:

KEEP HOPE ALIVE

The first is the Midday rebroadcast of the Commonwealth Club speech by journalist and former Clinton administration adviser Matt Miller. He discussed his new book "The Tyranny of Dead Ideas: Letting Go of the Old Ways of Thinking to Unleash a New Prosperity."

What got me yelling back at the radio was his claim that we have overemphasized -- or at least overvalued -- the power of the individual to change his or her life; that the "you can grow up to be whatever you want to be if you work hard enough" mantra is dead or dying.

I come from New England with an overdose of the Protestant work ethic so it's virtually impossible for me -- DNA wise -- to accept the premise, although I find it an intriguing one worthy of discussion.

But it requires the dissolution of hope and I, personally, can't let that be an early casualty of this economy. I'm not talking about the black, former drug-using, kid who grows up to be president, I'm talking about the people I've met on the News Cut on Campus tour. To accept Miller's premise is to say the very heart of those kids' endeavors -- and there's a lot of heart involved -- is a charade.

WHAT HOPE?

And that idea lasted me from Pelican Rapids to Maple Grove, and then I heard the story of Silvia Martinez on All Things Considered. I tried to get at the emotional toll of the economy earlier this week in this post. And Brandt Williams gave it a similar go.

But nothing that's been said about the economy for the last year anywhere put a human face on the desperation like her story did. She loved her job. She was the sole provider for her family, and she got laid off. She was too ashamed to tell her children. She not only feels unemployed; she feels worthless.

"I would start thinking about it and my heart would start racing and I would start sweating and [having] chest pains," she says. "And, of course, at that point I would try to hide, because I didn't want my children to know what was going on with me. So I would go to the bathroom and just stay in there. Just go through it in the bathroom."

In the three months since she was let go, this sense of panic and fear has not improved.

"I apply for jobs and apply for jobs and no one calls. Nobody. I've even gone as far as applying at fast-food places; I've applied at Wal-Mart, at Kmart, at Target," she says.

Be sure you listen to the audio.

I thought to myself, "someone with a job will hear this story and offer her a job," but I quickly realized those days are probably gone, too.

During the drive out, I listened to two state senators talk about transportation and the best way to jumpstart the economy. They disagreed on most things. Lots of talk about numbers and each uttered the usual talking points of their party, but they never really talked about what it's like for people who don't have a guaranteed job through at least November 2010.

On the drive back, I heard the House approved a stimulus bill and heard our local delegation arguing about whether it was too much.

But there's something I didn't hear from any of the politicians: What is Sylvia -- and no doubt, the tens of thousands just like her -- going to do? Where is she going to live? How is she going to take care of her children? Now that her kids can't go to community college, how are they better off?

I don't have an answer, either. But after listening to her story "just work harder" seems insulting.

What would you do?

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Worthington redux

Posted at 6:01 PM on February 12, 2009 by Bob Collins (0 Comments)
Filed under: Economy, News Cut on Campus

Each week, after the Wednesday News Cut on Campus stop, either All Things Considered or Morning Edition graciously invites me to stop in and share what I've learned from the most recent stop. And each week I'm more and more impressed with the producers' ability to edit my rambling dissertation into a less-rambling one. MPR is an iceberg. You see (hear) the very tip of an active organization that is primarily underwater. Well, perhaps that wasn't the best analogy in these economic times.

Here's this week's version, based on my stop on Wednesday at Minnesota West Community and Technical College's Worthington campus (hat tip for the picture to MWCTC).

Here's the whole list of profiles of students I've met over the last month. Perhaps you have learned something from them, too.

Next week I'll be at Lake Superior College in Duluth. On Friday, I'm driving up to Moorhead to visit with the people who are helping me set up at Minnesota State Moorhead in two weeks, so posting (at least from me) will be light.

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Hospitals in a squeeze

Posted at 5:03 PM on February 12, 2009 by Bob Collins (2 Comments)
Filed under: Economy, Health

It's no secret that hospitals in the area are hurting. During the economic downturn, people are putting off elective surgery. The state has cut $73 million in funding for health care and human services. And with people losing their jobs and health care coverage, they're showing up in emergency rooms for free care, which the hospitals have to absorb.

Even people with health insurance are costing the hospitals money, however. I was checking out a rumor that North Memorial had eliminated more nursing positions (they hadn't) today, when Robert Prevost, a spokesman for the hospital, told me about the rapidly rising rate of delinquent accounts by people with health insurance.

In 2007, he said, the hospital had over $1 million in unpaid bills by people who had health insurance coverage. In 2008, that number has risen to $8 million.

No interest is added to medical bills, Prevost said, so people who have insurance but may be having financial difficulty, are putting medical bills last in line to be paid. And quite often they're not paid at all.

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Economic Armageddon?

Posted at 6:19 PM on February 10, 2009 by Bob Collins (13 Comments)
Filed under: Economy

If you've listened closely to top economic officials in the last few months, perhaps you -- like me -- got the impression that there was something -- something serious -- they weren't telling us. Why else would so many politicians be so quick to pass legislation they hadn't really read, giving so much unchecked power to the treasury secretary?

True, they were hinting at it, but they wouldn't come right out and say it.

In the last few days, a video has raced around the Internet (which was actually made in January) at a fever pitch which appears to reveal what that something is: A run on the nation's banks that allegedly brought the nation within hours of collapse.

The details came in a C-SPAN interview with Rep. Paul Kanjorski, D-PA.

Here's the facts and we don't even talk about these things: On Thursday (September 18) at about 11 o'clock in the morning, the Federal Reserve noticed a tremendous drawdown of moneymarket accounts in the United States, to the tune of $550 billion. It was being drawn out in the matter of an hour or two. The Treasury opened up its window to help. They pumped a $105 billion into the system, and quickly realized that they could not stem the tide. We were having an electronic run on the banks. They decided to close the operation, close down the money accounts and announce a guarantee of $250,000 per account, so there wouldn't be any further panic out there and that's what actually happened.

If they had not done that, their estimation was that by 2 o'clock that afternoon, $5.5 trillion would've been drawn out of the money market system of the United States, would've collapsed the entire economy of the United States, and in 24 hours, the world economy would've collapsed.

We talked at that time about what would happen if that happened. It would've been the end of our economic system and our political system as we know it. That's why, when they made the point, 'we've got to act and do things quickly,' we did.

Here's what we don't know: We don't know if any of that is true. Kanjorski hasn't elaborated on it since, and today he had only this to say during a hearing with Federal Reserve Chair Ben Bernanke (as quoted by a New York Times live blog).

Paul Kanjorski, a Democrat from Pennsylvania, says he thinks "All of you," including the chairman and the current and previous presidents and Treasury secretaries, "have failed for all of us, particularly the general public, to enunciate what the problem is." He wants to know what "we can do to facilitate" the explanation of the problem to the American public.

So on the one hand he says he describes what the problem was and on the other hand he complains that nobody is saying what the problem was (and, apparently, still is.)

Rep. Brad Sherman, D-CA., took to the House floor a week or so later and, without citing too many specifics other than the prospect of martial law, suggested it was all a con to get the bailout passed.

Still, Motley Fool adds it up by comparing it to a confirmed run on the banks in London, and concluded that, yes, we were within 3 hours of economic disaster.

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The emotional toll of a bleak economy

Posted at 7:03 AM on February 10, 2009 by Bob Collins (3 Comments)
Filed under: Economy

There's been a significant jump in the number of people calling crisis hotlines in Minnesota.

"We've had a 27 percent increase from the first quarter of 2008 to the last quarter of the year," according to Linda Schmid, clinical director of Crisis Connection, which operates the Twin Cities crisis line, the Suicide Prevention Lifeline in Minnesota, Men's Line Twin Cities and Minnesota Link Vet. " We're seeing a higher proportion of men calling. I can only speculate anecdotally that these calls are about employment and financial issues and men are particularly distressed."

Calls to the Minnesota suicide hotline are up 35 percent, she said.

Overall calls doubled in October, when the stock market crashed and the first large waves of layoffs were made.

"I can't say that there's a typical caller. Some people call for a referral (for help). Most want to talk; sometimes they just know they're distressed and want to talk," Schmid said.

The organization recorded 9,300 calls in the first quarter of 2008, and 11,500 in the last three months of the year. About 90 percent of the calls come from the Twin Cities, according to Schmid.

The experience of the Minnesota crisis organization is mirrored throughout the country. In Pennsylvania, calls to a crisis hotline have doubled, Oregon officials say more victims of domestic abuse are calling, a hotline in Tennessee reports they're getting more suicide calls in a week than they used to get in a month, and Illinois has seen a significant increase in calls from people who are losing their homes.

(MPR file photo: Tim Boyle/Getty Images)

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The 'man' factor

Posted at 7:44 AM on February 9, 2009 by Bob Collins (16 Comments)
Filed under: Economy

Until I heard American Public Media's Marketplace on Friday evening, I had no idea that the economic downturn and the resulting unemployment is falling disproportionately on men.

Men make up 82 percent of the total number of people eliminated from the country's workforce and for the first time, women are poised to pass men in the majority, according to the New York Times.

"Given how stark and concentrated the job losses are among men, and that women represented a high proportion of the labor force in the beginning of this recession, women are now bearing the burden -- or the opportunity, one could say -- of being breadwinners," says Heather Boushey, a senior economist at the Center for American Progress, told the newspaper.

It is a huge societal shift with changing roles.

"Oh yeah, of course. For a while there we were calling him the man maid, because he was doing all the house work while I worked," Michelle Tully, whose husband, Stephen, is laid-off.

As recently as 2005, the unemployment rates for men and women were about equal, according to the Bureau of Labor Statistics. Only in the early '80s have they varied much.

Still, women are likely to make less money, work fewer hours, and have no benefits in their soon-to-be workplace majority.

The situation, meanwhile, is setting up an interesting political debate as Congress considers President Obama's stimulus package. If men are bearing the brunt of unemployment, should the economic stimulus favor men?

"Absent efforts to increase worker diversity in infrastructure-related jobs -- this could lead to a shift of hundreds of billions of dollars of wealth from women to men," Rep. Jared Polis, D-CO. said in a letter to President Obama last month.