99er

Aug 18, 2010

dictionary-150[Note: Updated on 2.16.2011]

What is a 99er?

The term ‘99er' refers to those who have been out of work for over 99 weeks. State and federal unemployment benefits run out after that period, so these job seekers are left without a safety net.

dictionary-150[Note: Updated on 2.16.2011]

What is a 99er?

The term ‘99er' refers to those who have been out of work for over 99 weeks. State and federal unemployment benefits run out after that period, so these job seekers are left without a safety net.

What's the significance?

In the current recession, at least 1.3 million people fall into this category, as job opportunities remain scarce. Little help has been given to this group. Although Congressional stalling on an unemployment benefits extension bill was finally ended and it was signed into law on July 22nd, it only covers those who have been unemployed for up to 26 weeks. In recent weeks, however, House and Senate Democrats have put forward legislation that would create a fifth tier of unemployment benefits. This tier would extend the maximum number of weeks of unemployment benefits to 119 in states with unemployment rates above 10 percent.

Who's talking about it?

Annie Lowrey at The Washington Independent has covered the plight of the 99ers extensively...Paul Solomon at PBS NewsHour interviewed 99ers about the difficulties they face... Ed Schultz and Jonathan Alter urged Democrats to do everything they can to help 99ers...House Democrats proposed a new tier of unemployment benefits...99ers went to Washington to remind Congress that they're not just a statistic.

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Benefit Corporations

Jun 16, 2011

dictionary-150What are Benefit Corporations?

A benefit corporation is a public corporation chartered by a state designed to perform some public benefit.

What's the significance?

dictionary-150What are Benefit Corporations?

A benefit corporation is a public corporation chartered by a state designed to perform some public benefit.

What's the significance?

In the wake of the financial crash and a slow recovery, many argue that a new economy requires a new kind of corporation. The idea of benefit corporation has been introduced to address the increasing gulf between the pursuit of private profit and the public good. These corporations are gaining popularity rapidly. Maryland became the first state to pass Benefit Corp legislation in April 2010. Vermont followed in May. Seven other states are interested for 2011. Benefit Corporations are a new class of corporation that is required to create a material positive impact on society and the environment and to meet higher standards of accountability and transparency within the government.

Who's talking about it?

A recently published article in the New York Public Personnel Law describes a case heard by the Supreme Court ruling stating that all Public Benefit Corporations are subject to the Open Meetings Law and the Freedom of Information Law as long as they remain public entities... Dan Cooper and Andrew Delmonte highlight a New York B Corporation reaching the Senate Floor... The Nation discusses the Rise of Benefit Corporations... Susan Adams of Forbes Magazine notes Corporate Responsibility in relation to Benefit Corporations.

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Biflation

Sep 10, 2010

dictionary-150[Note: Updated on 2.16.2011]

What is biflation?

dictionary-150[Note: Updated on 2.16.2011]

What is biflation?

Biflation occurs when there is inflation in one part of the economy, usually on commodities, while at the same time there is deflation in a different part of the economy, such as domestically-produced items and those bought with credit. Economists don't necessarily agree on the causes of biflation. But in a tight economy, demand for essentials has risen and pushed up prices, while demand for more luxury items has fallen and pushed prices down. Commodities also trade in global markets, where there is more buying appetite, while domestically-produced items like cars have to contend with consumers unwilling to make large purchases.

What's the significance?

Biflation means a rise in prices for everyday purchases like food and energy, but a fall in larger items such as cars and houses. Some fear that we are heading to biflation, and signs point in the direction of general deflation but rising commodity prices. With dismal unemployment numbers, that would mean an even heavier burden on much of the population. Stretched budgets would have to stretch even further to buy the necessities.

Who's talking about it?

Nick Summers at Newsweek explains the term and what signs say we're heading there...dillbeans at The Motley Fool thinks the Bush Tax cuts, which put more money into the hands of the rich, have brought us to biflation...Dian L. Chu on Zero Hedge makes the case that we're not just experiencing deflation, but biflation...Al Lewis criticizes Ben Bernanke for dismissing inflation concerns while the cost of education, health care, and other necessities is soaring.

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Bond Vigilante

Aug 25, 2010

dictionary-150[Note: Updated on 2.16.2011]

What is a bond vigilante?

dictionary-150[Note: Updated on 2.16.2011]

What is a bond vigilante?

A bond vigilante is a bond market investor who protests a country's fiscal policies by selling off its bonds and refusing to buy them. This happens when the bond investors perceive the policy to be inflationary, and can act as a check on a government that is over-spending. The proof of vigilante action is high interest rates, as yields rise when investors perceive risk; this makes a government's cost of borrowing rise.

What's the significance?

Conservatives who worry about government spending have threatened that bond vigilantes will appear unless we cut the deficit. However, interest rates are low and demand for US bonds is high. Rather than heading toward inflation, many economists think deflation is a more likely threat. Bond vigilantes so far have yet to materialize, undermining some of the credibility behind calls for fiscal austerity.

Who's talking about it?

Paul Krugman calls out conservatives who demand deficit cuts to appease the invisible bond vigilantes...Brian Millner at The Globe and Mail wonders where all the supposed bond vigilantes are...Stan Collender at Roll Call says that today's bond vigilantes are supporting deficits and borrowing...Nouriel Roubini predicts disaster if the U.S. doesn't get its budget under control...John Cassidy thinks President Obama's 2012 budget is a plea for bond vigilantes to be patient.

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Boondoggle

Jun 5, 2009

dictionary

[Note: updated on 8.6.2010]

What is a boondoggle?

dictionary

[Note: updated on 8.6.2010]

What is a boondoggle?

Originally, the word meant a hand-made household or otherwise practical item, such as a key chain.  But during the New Deal, the meaning of the word changed: When a teacher with the Federal Emergency Relief Administration (a predecessor to the WPA) testified that he taught people how to make boondoggles, the media pounced on the word, and the meaning changed to what we know today: a project, often of government, that wastes time and resources.

What’s the significance?

Since the New Deal, boondoggle has been a populist criticism leveled by conservatives at everything from wasteful spending to blatant errors, usually by the local, state or national government.  The online mega-dictionary Wordnik statistical analyses word usage; it found that boondoggle was popular in the 1930s and 1940s, faded out completely, and has only recently made a  comeback.

Who’s Talking About It?

Rush Limbaugh has decided that Chevy's new all-electric vehicle, the Volt, is boondoogle...Ed Lasky at American Thinker thinks the GOP was bribed to support "Dem boondoggle" that prevents teacher layoffs...Phil Levy of the American Enterprise Institute, writing in his Foreign Policy blog, refers to "the GM boondoggle" when raising concerns about the Obama administration's plans for the auto sector....Indiana Tribune Star columnist Arthur Foulkes says government can't create wealth and workers should beware "the 'green jobs' boondoggle"....Pacific Press's Tom Burghardt denounces the administration's cyber security plan as "a corporatist boondoggle"....And, over at Golf Digest, "the myth of the elitist boondoggle has been exposed as exactly that."  Which myth?  The one about golf being too elitist for the President to be associated with it.  (For those keeping score, that means Obama can be honorary chair of the PGA President's Cup in October.  Phew.)

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BRIC

Jun 3, 2011

dictionary-150What does BRIC refer to?

dictionary-150What does BRIC refer to?

BRIC is an acronym for Brazil, Russia, India, and China, all of which are countries whose economies are thought to be emerging as important players in the global markets. A 2003 Goldman Sachs report predicted that their economies would be wealthier than the current major powers by 2050. The theory posits that China will be the dominant supplier of manufactured goods, India will be the dominant suppliers of services, while Brazil and Russia will supply raw materials.

What's the significance?

The emerging power of these countries' economies is seen as a symbol of the shift in economic power away from the G7 countries toward the developing world. These countries aren't likely to form a political alliance or a formal trading association, but they could form a powerful economic bloc. Because of their lower labor and production costs, they're also seen as an opportunity for foreign expansion.

Who's talking about it?

Forbes notes that 108 of the 214 new names added to its World's Billionaires list are from BRIC countries... There have been some indications that Russia wants to turn the group into a political alliance... Joe Costello points out that without dealing with our trade deficit, stimulus money may simply employ people in BRIC countries... David Woolner reminds us that FDR was the one who first thought of China as a great power... Marshall Auerback explained the consequences of failing to address our industrial base at home and trade imbalances with China... And Mike Konczal adds that it will be really hard to compensate workers at home for free trade agreements with countries like China.

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Broken Windows Theory

Jan 7, 2011

dictionary-150What is the broken windows theory?

dictionary-150What is the broken windows theory?

The broken windows theory refers to an idea set forth by James Q. Wilson and George L. Kelling in a 1982 Atlantic Monthly article that keeping urban environments orderly and fixing small discretions will prevent further vandalism and escalation into more serious crimes. The theory advises the police force to fix problems when they are minor and claims that further low-level offenses will be avoided and major crime will therefore be prevented.

What's the significance?

The theory has led to many reforms in criminal policy and been implemented in a some cities, including New York City. But critics say that it confuses correlation with causality. Some social scientists have revisited the studies that support the theory and found that there is a low relationship between disorder and serious crime. Some fear that giving police broad discretion in low-level intervention would be harmful in minority communities and people could be arrested simply for being undesirable. It also turns minor offenses into harmful acts and leads some to think that serious crime is always preceded by small offenses. This leads to the idea that by policing the minor acts, a city can prevent the more serious ones. The theory also relies on separating people into "law abiders" and "disorderly people" and delineating "order" and "disorder", but these distinctions may not be easy to make or have an intrinsic reality.

Who's talking about it?

Mike Konczal points out that the theory is behind an increase in the US prison population...Bernard E. Harcourt has written about the theory's false promise and challenges the data behind it...The high number of vacant houses due to the foreclosure crisis has led to a resurgence of the theory for a Milwaukee lawmaker and other officials in other cities...Conservative Daniel Henninger says, "Earmarks, pork, corporate carve-outs and all that are Congress's broken windows."

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Buy American Act

Jul 8, 2009

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[Note: updated on 8.6.2010]

What is the Buy American Act?

thumbs-up-thumbs-down-200

[Note: updated on 8.6.2010]

What is the Buy American Act?

The Buy American Act was passed under President Hoover in 1933. Its intent was to help American-owned companies by requiring the US government to buy products made in the USA.

The Buy American Act was tailored more specifically to purchases associated with transit-related projects costing over US$100,000. Projects authorized by the Federal Transit Administration (FTA) and the Federal Highway Administration (FHWA) are constrained by strict regulations detailing from where it is acceptable to purchase materials.

What’s the significance?

The Buy American Act puts foreign countries with competitive markets or lower prices at a disadvantage. The Act does mitigate this effect in circumstances where the FTA or FHWA deems it appropriate to buy products made outside the US (usually in cases of large price discrepancy or unavailability within the US).

As the Obama administration debates whether to strengthen or lessen the provisions in the Buy American Act, more foreign and domestic players are sharing their opinions. Canada, the US’s main trading partner, is staunchly opposed to these regulations and wishes to be exempt from its rules. Many European countries are also watching closely to see what becomes of the Act. Both have warned of possible “do not Buy American” provisions emerging from their governments should the act go through. Simultaneously, unions and lobbyists for the steel industry are putting pressure on leaders to heighten regulations. It remains unclear what the outcome will be, but forming bilateral trade agreements with Canada and each European country seems exceedingly complex and unlikely.

Who’s talking about it?

Senator Fritz Hollings thinks a trade war is more necessary than a war in Afghanistan and that "Enforcing the 'Buy American' Act would create more jobs"...Paul Krugman, writing in his blog for the New York Times, reminds us that while there is a strong “case against protectionism…these are not normal conditions” and Buy American may be better for the short-run....Kevin Drum’s take is that while it makes sense to spend stimulus money on American goods, using the Buy American slogan will only generate hostility towards the US…In a Room for Debate posting, union VP and machinist Roger Simmermaker says it’s all about returning to the American ideals of “self-sufficiency, self-reliance and independence”…Sherrod Brown, Democratic Senator from Ohio, couldn’t agree more. He insists that Buy America is flexible, not in violation of WTO agreements or trade laws, and is a choice – “Do we want to use billions in tax dollars to create jobs in Ohio or in China?”….Well I think we know the answer to that question, but so far it doesn’t seem to be that simple.

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CARD Act

Feb 16, 2011

dictionary-150What is the CARD Act?

dictionary-150What is the CARD Act?

The Credit Card Accountability and Responsibility and Disclosure Act of 2009 (or the Credit CARD Act) was passed by Congress and signed into law by President Obama on May 22, 2009.

Its provisions include:

  • Protections against unfair interest rate increases, including a ban on retroactive increases done at any time for any reason, protection against hikes in the first year of an account, and the requirement of 45 days notice before any increases are put into place.
  • Banning fee traps by giving cardholders at least 21 days to pay their bills, forcing companies to apply excess payments to the highest interest balance first, and requiring that consumers opt in to over-limit fees.
  • Putting contracts and statements into plain language that consumers can understand and disclosure of the consequences of their account decisions.
  • Increased accountability from card issues in complying with regulations and from regulators enforcing them.

What's the significance?

Over the last 30 years, credit card companies have been very loosely regulated and they developed abusive and predatory practices, which this bill attempts to curb. It also aims to empower consumers to make informed choices about credit products by bringing transparency to contracts and practices. However, it may not have gone far enough, as banks are already finding ways around it. Upfront interest rates are soaring, for example, as companies anticipate lost revenue from no longer being able to jack them up at will.

Who's talking about it?

Bryce Covert notes all the loopholes banks were already finding in the Act by the time the last phase was implemented, including interest rates that are getting as high as 59%...Banks could lose up to $25 billion in revenue a year due to the new regulations...Thirty-seven percent of consumers surveyed by Business Insider reported seeing negative changes in their credit card accounts since it passed...But James B. Kelleher reports that the new rules haven't restricted consumers' access to credit.

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Carried Interest

May 26, 2010

dictionary-150[Note: Updated on 2.16.2011]

What is carried interest?

Carried interest is a manager's share of the profits of a hedge fund or private equity fund. It is meant as incentive to the manager and also often serves as his or her primary source of income.

dictionary-150[Note: Updated on 2.16.2011]

What is carried interest?

Carried interest is a manager's share of the profits of a hedge fund or private equity fund. It is meant as incentive to the manager and also often serves as his or her primary source of income.

What’s the significance?

Under the Bush tax laws, carried interest is taxed as return on investment, rather than as income. This is a big difference -- the percentage goes from 35% taken from regular income (like our paychecks) down to about 15% taken from return on investment. It is often seen as a huge loophole for wealthy fund managers, who are effectively receiving a salary without paying normal income taxes like the rest of us.

Who's talking about it?

Digby at Salon is sick of millionaires defending these loopholes while asking the rest of us to tighten our belts...Peter Peterson, the deficit hawk with a large role to play in Obama's deficit commission, is reaping the benefits of the tax law while he advises that we must cut entitlement programs...Linda Beale at Angry Bear muses on how hard it is for Congress to get rid of the loophole...James Kwak at The Baseline Scenario discusses the relevance for venture capital fund managers...Rep. Paul Ryan's budget roadmap would allow financiers to shelter even more...President Obama's 2012 budget includes a proposal to tax carried interest as income.

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