(1) Basel III Underwhelms. Global banking regulators came out with new rules on Sunday, mostly regarding capital reserves. Here's what the article in yesterday's New York Times had to say:
The centerpiece of the agreement is a measure that requires banks to raise the amount of common equity they hold — considered the least risky form of capital — to 7 percent of assets from 2 percent. Together with other requirements intended to safeguard against risk, it could significantly alter the way banks do business.
Banks have warned that the new regulations could reduce profits, strain weaker institutions and raise the cost of borrowing. But regulators provided a lengthy transition period to give banks time to adjust — the better part of the decade for some of the strictest rules.
The financial press and blogosphere are underwhelmed, because the new requirements are so timid and the process so politicized. See the coverage at FT.com, and comments by Richard Smith at NakedCapitalism ("This Is Basel III??"), Lex at FT.com, and Martin Wolf at FT.com ("Basel: The Mouse That Did Not Roar"). The award for most spot-on summary sentence with the worst grammar goes to Lex: "But the reality is that a Basel III world will not look hugely different to the one from which the last crisis sprang."
(2) D&S Scoops the Times: D&S co-editor Amy Gluckman has an article in our "Economy in Numbers" department called "Hard Work at an Advanced Age," about recent studies showing that if you are an older worker (unless you are white or in the top two income quintiles), you are quite likely to have a job that is "physically demanding" or involves "difficult working conditions." So calls to raise the full retirement age (e.g. from Obama's deficit commission and other people with their eye on Social Security) that point to longer life-expectancy today ignore the fact that lots of older workers do physically demanding work that would be hard to extend for even a few years. "Some 60- and 70-somethings can readily continue working and postpone receiving Social Security benefits; a few have sufficient personal savings and/or private pensions that they will never need to rely on Social Security at all. But for the millions of older custodians, cooks, cashiers, constructions workers, and others who do physically demanding work, having to put in even a few more years on the job before they can receive their full Social Security benefits is a different story."
The article in today's Times, Retiring Later Is Hard Road for Older Laborers, makes the same points, and cites the same CEPR study.
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(3) Mott's Strike Ends: Another piece in our September/October issue was about the strike at the Mott's apple juice factory in upstate New York (by D&S intern Elizabeth Murphy). The union representing the workers there announced the end to that strike yesterday. From the union's the press release:
Among the provisions of the new agreement are restored wage levels and the continuation of the pension plan. Other details of the agreement will not be disclosed.
The Mott’s workers will return to work on Monday, September 20, 2010, on what would have been the 121st day of the strike. The workers went on strike on May 23, 2010.
The striking workers stood up for working people both in their community and nationally. The striking workers obtained support from a wide variety of union leaders and elected officials including AFL-CIO President Rich Trumka, New York State AFL-CIO President Denis Hughes, presidents of numerous International Unions, the entire New York State Democratic Congressional delegation and many NY elected officials, members of the Canadian Parliament, and unions and union federations from around the world.
The strike was the subject of national news coverage from the CBS evening news to PBS Newshour to the NY Times.
"Not a day went by without people stopping by to drop off a financial or food donation for the strike fund. The International, National and local community supported us thoroughly, and the RWDSU and Local 220 members want to share their thanks," said Stuart Appelbaum, president of the RWDSU.
"The RWDSU members at Mott's have a message for working people everywhere: Stand up for what you believe in, and stay united."
Go, Mott's workers and RWDSU!
(4) IMF Worries About Unemployment and Austerity: A couple of stories "IMF warns of the human costs of public spending cuts" (The Guardian), and "IMF fears 'social explosion' from world jobs crisis'" (Daily Telegraph) prompted this great comment by someone named Thomas Williams in the comments section at NakedCapitalism:
Waking up 40 years late is better than not waking up at all.
We’ve been faced with the “perfect storm” on labor for some time. It was just a question of when.
This is really simple, folks. We keep producing babies, that means people who will need jobs. At the same time, everything we consume (food, clothing, shelter, transportation…….) requires fewer and fewer man-hours of labor to produce.
It’s refreshing to see the IMF managed to connect those two dots.
The true tragedy is that nearly all economists have adopted the goal of growth rather than sustainability, thus contributing to the truly hellish scenario in front of the entire human race.
Anyone who is new to this thinking should try “Limits To Growth” and catch up on the fact that actions have consequences. Ole’ Isaac Newton was right after all.
The pieces on the IMF report are worth checking out; they go so far as to fret about the high levels of income inequality:
Historians say the last time that the wealth gap reached such skewed extremes was in 1928-1929. Some argue that wealth concentration may cause investment to outstrip demand, leading to over-capacity. This can trap the world in a slump.
(That's from the Telegraph piece.) As other commentators pointed out at Naked Capitalism, though, what the IMF seems to be worried about is not the human cost but the ruckus people might raise, and the bailouts the IMF will have to oversee. So maybe it is still the same IMF we always knew and loved.
--Chris Sturr