Daily Digest

Daily Digest 5/30 - More Unemployed To Lose Benefits, SS Disability Insolvent, TSA Fees To Increase

Wednesday, May 30, 2012, 9:47 AM
  • More unemployed Americans to lose jobless benefits
  • Record drop in retail sales adds to Spain's woes
  • NBG: Greeks would lose half income with euro exit
  • Social Security Disability Insolvent Unless Congress Votes
  • Spain hit hard by record debt risk in bank crisis
  • The future of the euro is at stake: Spanish deputy PM
  • Spain Said to Consider Backing Regional Bonds With Taxes
  • Food Shortage in Peloponnesian Prisons Due to State Budget Cuts
  • California colleges cut way back on summer classes
  • TSA security fees to increase
  • Egan-Jones Cuts Spain’s Debt Rating to B From BB- on Outlook
  • Warning lights flash red over Spain
  • Greek Exit Aftershocks Risk Reaching China as Growth Hurt
  • In escape from Japan doomsday, capital takes flight
  • Tuition Will Top $10,000 At Ohio University
  • Universities' summer enrollment drops with Pell grant cuts
  • 6 Out Of 10 Are Long Term Unemployed
  • Insurers forcing patients to pay more for costly specialty drugs
  • Increasing crisis of confidence in the EU
  • Europe’s debtors must pawn their gold for Eurobond Redemption

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Economy

More unemployed Americans to lose jobless benefits

Unemployment checks will soon run out for many people who've been hit the hardest by the recession: the long-term unemployed.

Thousands are expected to lose their jobless benefits this summer, pushing the number who have been cut off this year to nearly half a million. The irony is that cutting people from benefits lowers the official unemployment rate. Only those who are officially seeking work are counted by the government.

Record drop in retail sales adds to Spain's woes

Retail sales dropped 9.8 percent year-on-year in April as the country battled against its second recession in three years and a 24.4 percent jobless rate that is expected to rise. The fall in sales was the 22nd straight monthly decline, and was more than double the 3.8 percent year-on-year fall posted in March, the National Statistics Institute announced.

NBG: Greeks would lose half income with euro exit

The National Bank of Greece study was published Tuesday as Greece heads to new general elections on June 17, amid Europe-wide concern of broader financial turmoil if Greece's place in the single currency is threatened by a victory for an anti-austerity party....The bank report also warned that if Greece did exit the euro, unemployment would rise to 34 percent while inflation would hit 30 percent and then higher. Unemployment in Greece currently stands at around 22 percent while inflation is 2 percent.

Social Security Disability Insolvent Unless Congress Votes

A U.S. government entitlement program is headed for insolvency in four years, and it's not the one members of Congress are talking about most.

The Social Security disability program's trust fund is projected to run out of cash far sooner than the better-known Social Security retirement plan or Medicare. That will trigger a 21 percent cut in benefits to 11 million Americans -- disabled people, their spouses and children -- many of whom rely on the program to stay out of poverty.

Spain hit hard by record debt risk in bank crisis

Spain's sovereign risk premium shot to a fresh euro-era record Tuesday as Madrid announced new bonds to finance debt-struck regions and as banks scrambled to clean up bad loans.The debt premium -- the extra return investors demand to hold Spanish bonds over their safer German counterparts -- leapt to a euro-era record of 5.16 percentage points.

The future of the euro is at stake: Spanish deputy PM

Europe must move quickly with measures to pull Spain back from the brink of a debt crisis, with the future of the euro common currency at stake, Spanish Deputy Prime Minister Soraya Saenz de Santamaria said.

Saenz, a long-time politician in the centre-right People's Party, spoke with Reuters Editor-at-Large Harold Evans during a critical week for Spain as it seeks to fund a 19-billion-euro rescue of one of its biggest banks and the country's autonomous regions face a liquidity crunch. Spain's borrowing cost hovered close to an unsustainable level on Tuesday - the yield on the benchmark 10-year government bond was 6.5 percent - as investors worry costly rescues of the regions and banks will push Spain's finances over the edge.

Spain Said to Consider Backing Regional Bonds With Taxes

Spain is weighing how to help regions regain access to markets as the rate on its 10-year debt approaches the 7 percent level that led Greece, Ireland and Portugal to seek aid from the European Union and the International Monetary Fund. The government is trying to avoid allowing the regions, which owe a combined 140 billion euros ($175 billion), to add that burden as its liabilities swell following the bailout of Bankia group, owner of Spain's third-biggest lender.

Food Shortage in Peloponnesian Prisons Due to State Budget Cuts

Amidst the deepening financial crisis, the state budget for many prisons has decreased to a minimum for some months now resulting in hundreds of detainees being malnourished and literally surviving on the charity of local communities, a Proto Thema article reveals.

The latest example is the prison in Corinth where there’s a supply stoppage from the nearby military camp, and prisoners are about to starve reports prison staff, since not even one grain of rice has been left in their warehouses. The prison staff reports they haven’t received any state funds for the last three months.

California colleges cut way back on summer classes

In an informal survey of about half of the state's 112 community colleges, conducted by the chancellor's office, more than a third reported reduced offerings this summer and eight campuses planned no summer sessions at all. Overall, enrollment and course offerings have plummeted and are at their lowest level in 15 years. From 2008 to 2011, the number of students served fell nearly 43 percent.

Santa Monica College found in a recent study that 15 Los Angeles-area community colleges this summer are offering only a third of the courses they offered in 2008, equivalent to a loss of 6,000 teaching assignments and 168,000 classroom seats.

TSA security fees to increase (Video)

There's yet another fee to fly in the works, but this time it's transportation security officials who want fliers to pay more.

The agency backed by Democrats in the senate wants to increase the security fee you pay with a ticket from $2.50 a flight, to $5 per one-way ticket and $10 for a round trip. TSA's budget, like many in Washington, is set to be cut and the agency says boosting this fee would help cover the increasing price of security like costly scanners.

Egan-Jones Cuts Spain’s Debt Rating to B From BB- on Outlook

Spain’s sovereign credit rating was cut by Egan-Jones Ratings Co. to B from BB- on the country’s deteriorating economic outlook. The nation’s 9.6 percent budget deficit, 24 percent jobless rate and bank losses of as much as 260 billion euros ($324 billion) weigh on the economy, the ratings company said in an e- mailed statement today.

Warning lights flash red over Spain

Athens, Dublin and Lisbon lasted just 12, 24 and 34 days after the premium they pay to borrow over Germany reached 500 basis points before seeking international help. Spain hit 500bp on Monday.

Greek Exit Aftershocks Risk Reaching China as Growth Hurt

A Greek departure from the currency would inflict "collateral damage," says Pacific Investment Management Co.'s Richard Clarida, a view echoed by economists from Bank of America Merrill Lynch and JPMorgan Chase & Co. At worst, it could spur sovereign defaults in Europe as well as bank runs, credit crunches and recessions that may spark more euro exits.

Global trade and financial ties mean the pain wouldn't be confined to the euro area.

In escape from Japan doomsday, capital takes flight

"If Japan's finances collapse, social order would collapse as well. That would be a tough environment to raise children." The Japanese have been buying real estate overseas in the past, but what has changed since last year's earthquake and the Fukushima nuclear crisis is that it is no longer the province of the rich and the retired. Increasingly, the middle class and younger people are opening bank accounts in Malaysia, New Zealand and Singapore to buy condominiums and homes that they plan to rent out for a few years before they eventually move in themselves.

Tuition Will Top $10,000 At Ohio University

Ohio University students and their parents will have to open their wallets and purses even wider for the next school year. For the first time, tuition and fees at OU will be more than $10,000 a year.

Universities' summer enrollment drops with Pell grant cuts

Cuts in the federal Pell grant program means fewer students are registering for summer school, including at two universities in Utah County.

Utah Valley University has seen record enrollment in fall and winter. But now that Pell grants, which support low-income students, have been cut from three semesters to two, many students are cutting out the summer term.

UVU expects 600 fewer students in the first seven-week session of summer classes than it had last summer, when 11,600 students attended summer school.

6 Out Of 10 Are Long Term Unemployed (Georgia)

Nearly six out of every 10 unemployed workers in Georgia have been out of work for more than six months. That is believed to be the highest rate of long-term joblessness since the Great Depression.

Insurers forcing patients to pay more for costly specialty drugs

Thousands of patients in California and across the nation who take expensive prescription drugs every month for cancer, rheumatoid arthritis and other ailments are facing sticker shock at the pharmacy.

Until recently, most of these patients typically paid modest co-pays for the advanced drugs. But increasingly, Anthem Blue Cross, Aetna and other insurers are shifting more prescriptions to a new category requiring patients to shoulder a larger share of the drug's cost.

Increasing crisis of confidence in the EU

Majorities in most countries now blame EU integration for damaging their economies, but the figures hit 70pc in Greece, 63pc in France and 61pc in Italy, all countries once regarded as staunchly pro-European.

Just one third of people – 34pc – believe that economic integration, a central plank of the EU's raison d'etre, is a benefit.

Europe’s debtors must pawn their gold for Eurobond Redemption

Germany would have a lockhold over the fund, able to enforce discipline. Each state would have to pledge 20pc of their debt as collateral. "The assets could be taken from the country’s currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations," said the proposal.

This demand could enflame opinion in Italy and Portugal. Both states have kept their bullion, resisting the rush to sell by Britain and others. Italy has 2,451 tonnes of gold, valued at €98bn in March.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

16 Comments

saxplayer00o1's picture
saxplayer00o1
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gegreene's picture
gegreene
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Denny Johnson
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Thanks gegreene

Thanks gegreene.................. a pleasurable read.

saxplayer00o1's picture
saxplayer00o1
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Italian and Spanish bond yields

 

IT 2Y Govt Bond Benchmark (Currently at 4.79%, but look at the change for the day)
 

 

IT 10Y Govt Bond Benchmark (Currently at 6.11%)
 

 

ES 10Y Govt Bond Benchmark (Currently at 6.63%)
 

Quercus bicolor's picture
Quercus bicolor
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Re: More unemployed Americans to lose jobless benefits

The irony is that cutting people from benefits lowers the official unemployment rate. Only those who are officially seeking work are counted by the government.

That can't be right.  If your benefits run out and you're still looking for work, you must count as unemployed.

Ken C's picture
Ken C
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unemployment calculation
steveyoung wrote:

The irony is that cutting people from benefits lowers the official unemployment rate. Only those who are officially seeking work are counted by the government.

That can't be right.  If your benefits run out and you're still looking for work, you must count as unemployed.

Well no you don't count as unemployed. Amazing how we can decrease the unemployment at the same time as the number of employed goes down.

So the logical conclusion is that we should eliminate all unemployment compensation and then our unemployment rate would go down to zero.

/sarc

VeganDB12's picture
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FAQ from the BLS-maybe it will clarify

http://www.bls.gov/cps/faq.htm (BOLD print my edit for clarity)

snip

 

Who is not in the labor force?

Persons not in the labor force are those who are not classified as employed or unemployed during the survey reference week.

Labor force measures are based on the civilian noninstitutional population 16 years old and over. (Excluded are persons under 16 years of age, all persons confined to institutions such as nursing homes and prisons, and persons on active duty in the Armed Forces.) The labor force is made up of the employed and the unemployed. The remainder—those who have no job and are not looking for one—are counted as "not in the labor force." Many who are not in the labor force are going to school or are retired. Family responsibilities keep others out of the labor force.

snip

 

 

  note:        It is interesting to look at the entire FAQ though I think it contains lots of double talk.  Some people who are working for free are counted as  "employed" (such as those working without pay in family businesses).

Wendy S. Delmater's picture
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lies, damned lies and statistics

Steve, those who cannot find a job are called "discouraged workers" and they are indeed not counted in the "official" unemployment stats. Remember, you cannot spell Bureau of Labor Staistics (BLS) without BS.

Let's take a trip over to Shadowstats for more accutrate information.

Alternate Unemployment Charts

The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994. That estimate is added to the BLS estimate of U-6 unemployment, which includes short-term discouraged workers.

The U-3 unemployment rate is the monthly headline number. The U-6 unemployment rate is the Bureau of Labor Statistics’ (BLS) broadest unemployment measure, including short-term discouraged and other marginally-attached workers as well as those forced to work part-time because they cannot find full-time employment.
 
 

Trust your government (to make themselves look good, and the truth be damned).

Arthur Robey's picture
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Australian Banks in trouble.

It is official. Australian Banks are in trouble. I heard some politician denying it this morning.

Doug's picture
Doug
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unemployed, not in labor force

 I believe that those who are unemployed and not looking for work means in officialese that they are not reporting to their local gov't runned employment office.  They could still be out pounding on doors looking for work but are not officially reported as doing so.  It may be a fine distinction, but there is some number of people who fit in this uncounted category.

Doug

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VeganDB12
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Doug That is my

Doug

That is my interpretation too.  I think we are all on the same page here. This is a graph from an article on Zero Hedge showing the rise in "not in labor force" numbers showing a steady and substantial increase. 

http://www.zerohedge.com/news/people-not-labor-force-soar-522000-labor-f...

 

Labor force participation Rate:

People not in labor force:

Wendy S. Delmater's picture
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Eurozone set-up unsustainable

BBC news: Eurozone set-up unsustainable

European Central Bank (ECB) president Mario Draghi says that eurozone leaders must decide what they want the bloc to look like in the future, because the current set-up is "unsustainable".

He said that the ECB could not "fill the vacuum" left by governments on creating growth or structural reforms.

Quercus bicolor's picture
Quercus bicolor
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counting the unemployed.

From the FAQs, the BLS clearly counts people who are looking for work even if they do not qualify for unemployment insurance:

Who is counted as unemployed?

Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work.

Workers expecting to be recalled from layoff are counted as unemployed, whether or not they have engaged in a specific jobseeking activity. In all other cases, the individual must have been engaged in at least one active job search activity in the 4 weeks preceding the interview and be available for work (except for temporary illness).

What do the unemployment insurance (UI) figures measure?

The UI figures are not produced by the Bureau of Labor Statistics. Statistics on insured unemployment in the United States are collected as a by-product of UI programs. Workers who lose their jobs and are covered by these programs typically file claims ("initial claims") that serve as notice that they are beginning a period of unemployment. Claimants who qualify for benefits are counted in the insured unemployment figures (as "continued claims"). Data on UI claims are maintained by the Employment and Training Administration, an agency of the U.S. Department of Labor, and are available on the Internet at: http://workforcesecurity.doleta.gov/unemploy/claims.asp.

These data are not used to measure total unemployment because they exclude several important groups. To begin with, not all workers are covered by UI programs. For example, self-employed workers, unpaid family workers, workers in certain not-for-profit organizations, and several other small (primarily seasonal) worker categories are not covered. In addition, the insured unemployed exclude the following:

  • Unemployed workers who have exhausted their benefits
  • Unemployed workers who have not yet earned benefit rights (such as new entrants or reentrants to the labor force)
  • Disqualified workers whose unemployment is considered to have resulted from their own actions rather than from economic conditions; for example, a worker discharged for misconduct on the job
  • Otherwise eligible unemployed persons who do not file for benefits

Note that the BLS unemployment statistics are computed independently from the unemployment insurance statistics - which are computed by the Employment and Training Administration.  The first bullet point specifically indicates that one of the reasons is so that the BLS can count unemployed workers who have exhausted their benefits in their statistics.  While the labor participation issue is a big one and does distort the unemployment statistics, our government is not (yet) that Orwellian that they don't count workers who have exhausted their benefits and are still looking for work.

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Discouraged workers - high percent of those loosing benefits?
steveyoung wrote:

From the FAQs, the BLS clearly counts people who are looking for work even if they do not qualify for unemployment insurance:

I think we need to dig a bit more, also from the FAQ:

Not in the labor force

Persons who are neither employed nor unemployed are not in the labor force. This category includes retired persons, students, those taking care of children or other family members, and others who are neither working nor seeking work. Information is collected on their desire for and availability for work, job search activity in the prior year, and reasons for not currently searching. See also Labor force and Discouraged workers.

then if you look at the link for discourage workers:

Discouraged workers

Discouraged workers are a subset of persons marginally attached to the labor force. The marginally attached are those persons not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months, but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Among the marginally attached, discouraged workers were not currently looking for work specifically because they believed no jobs were available for them or there were none for which they would qualify. See also: Not in the labor force and Alternative measures of labor underutilization.

So the question how many of those 5 million people that have been on unemployment for 99 weeks are discouraged?  The quote in this article makes me think quite a few:

Unemployed individuals looked much longer for work in 2011, compared with 2007, before giving up and leaving the labor force, 21.4 weeks versus 8.7 weeks, respectively

Unemployment benefits last 99 weeks, but the average time before someone is no longer counted in the labor force is 21.4 weeks.   So while it's true, they say they count them, they quickly get moved to the discouraged worker category where they are not counted - which explains the charts others have posted above.

 

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Steve
Quote:

From the FAQs, the BLS clearly counts people who are looking for work even if they do not qualify for unemployment insurance:

The problem with this statement is that there has to be some way of counting those people.  No matter how many jobs they may have searched and/or applied for, that information has to somehow be conveyed to BLS.  A long time ago I was on unemployment insurance for a while.  In order to get my checks, I had to report to the employment office on a regular basis where I documented my job search efforts.  If it were not for that check, I would not go to the office because I found that the local library was a much better source of employment information.  In fact, I found my next job through the library.

With the advent of computer technology, of course, all that has probably changed.  But, my guess is that it still requires some affirmative act by the unemployed individual to be counted for BLS purposes.  Without that check for incentive, my guess is there are still some number of active job searchers who won't bother because being counted by the BLS is not high on their lists of priorities.

Doug

Quercus bicolor's picture
Quercus bicolor
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Doug wrote: Quote: From the
Doug wrote:
Quote:

From the FAQs, the BLS clearly counts people who are looking for work even if they do not qualify for unemployment insurance:

The problem with this statement is that there has to be some way of counting those people.  No matter how many jobs they may have searched and/or applied for, that information has to somehow be conveyed to BLS.  A long time ago I was on unemployment insurance for a while.  In order to get my checks, I had to report to the employment office on a regular basis where I documented my job search efforts.  If it were not for that check, I would not go to the office because I found that the local library was a much better source of employment information.  In fact, I found my next job through the library.

With the advent of computer technology, of course, all that has probably changed.  But, my guess is that it still requires some affirmative act by the unemployed individual to be counted for BLS purposes.  Without that check for incentive, my guess is there are still some number of active job searchers who won't bother because being counted by the BLS is not high on their lists of priorities.

Doug

The BLS conducts a household survey that is entirely independent of the unenmployment insurance system.  The reported unemployment rate comes from this survey, not unemployment insurance data. Rhare's point that by the time most people's benefits expire, they have stopped looking and are counted as discouraged workers is well taken, though.  Even so, the original article I took issue with claims that simply having your benefits expire results in you not being counted among the unemployed by the BLS.  This is not true.  It is the week-after-week unsuccessful search for work that leads to people giving up searching that removes them from among the unemployed according to the BLS.

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