Economic news

A number of articles have highlighted aspects of the US political economy that are depressing, but essential reading if we're to remain informed about what's going on around us.

• The Wall Street Journal writes about 'How The Other California Lives':  "Some of the most productive farm land in the world is going fallow thanks to a man-made water shortage."  Infuriating reading about how liberal/progressive/environmental politics are destroying an entire rural economy.

• In the same vein, Troy Senik points out that 'The Middle Class is Leaving California Because California Has Left the Middle Class'.  He links to several other articles in the text that are also well worth reading.  His conclusion:

The intrinsic appeal of California never waned for these people — they still think it's beautiful, temperate, and culturally dynamic. What it's not, however, is livable. It's hard to convince people to stay in a place where they can work to the limits of their abilities and endurance and still struggle to eke out a middle-class existence. Like many similarly-situated people still planted on California soil, the question in my mind is less if I will join the diaspora, but when.

• I may have no time at all for George Soros' politics, but his economic savvy is hard to dispute.  He maintains that 'the banking sector is a “parasite” holding back the economic recovery and an “incestuous” relationship with regulators means little has been done to resolve the issues behind the 2008 crisis'.  He offers abundant grounds for his criticism . . . which should give all of us pause for thought.  The 'too big to fail' financial institutions are still far too close to failure for comfort.

• We've already seen how the Christmas shopping season was at best disappointing for retailers.  More evidence of just how bad it was is emerging, particularly the news that Radio Shack is to close more than 20% of its retail stores and J. C. Penney's stock is in trouble.  The article refers to these and other signs as 'the death of retail', which is surely an exaggeration - but equally surely a harbinger of more hardship to come, particularly for those who depend on that sector for jobs and income.

• In a 2012 interactive map titled 'The Geography of Government Benefits', the New York Times illustrates graphically how 'The share of Americans’ income that comes from government benefit programs, like Medicare, Medicaid and Social Security, more than doubled over the last four decades, rising from 8 percent in 1969 to 18 percent in 2009'.  A related article goes into more detail about the implications.  Worthwhile reading, even if it is a couple of years old, as the map illustrates the growth of the problem that's plaguing us more and more severely every day.

Finally, student loans come under the spotlight yet again.

• It appears that student loans are used (often illegally) for many purposes other than study costs and related expenses.
• They're a ruinous drag on the economy, too.
• Student and auto loans amounted to almost all of the loans taken out by US consumers last month.  Revolving credit and other, more normal credit devices were negligible by comparison.

All food for thought . . . albeit more than a little indigestible.

Peter