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As GM and Ford reported dismal December sales, Toyota reported another great month. Even though the company had reached its quota of 60,000 hybrid sales that qualify for the federal tax credit, and even though gas prices have moderated, Toyota's hybrid sales continued at a strong pace. For the month, it sold 17,883 hybrid cars--more than it did in November, and more than the average monthly pace for the year. For all of 2006, Toyota sold 191,742 hybrids.
Posted by dan at 08:59 AM
George Will's sneering attack on the minimum wage is typically awful. The first paragraph contains so much blinkered willful misreading of history that it deserves a prize. Here it is:
A federal minimum wage is an idea whose time came in 1938, when public confidence in markets was at a nadir and the federal government's confidence in itself was at an apogee. This, in spite of the fact that with 19 percent unemployment and the economy contracting by 6.2 percent in 1938, the New Deal's frenetic attempts had failed to end, and perhaps had prolonged, the Depression.
Lets review a bit. Will seems to think that "public confidence in markets was at a nadir" in 1938. Um, no. Public confidence in markets reached a nadir in 1933, when half the banks in the country had closed, when Wall Street was essentially out of business, when the Dow stood at its appalling lows, when employment was about 25 percent. In 1933 -- before the New Deal -- there was no securities industry, no banking industry, no mortgage industry, no capital formation or lending of any kind. That year, an estimated 40 percent of home mortgages were in default.
It was only with the passage of New Deal efforts--the SEC, the FDIC, the FSLIC--that the mechanisms of private capital began to kick back into gear. Don't take it from me. Take it from Federal Reserve Chairman Ben Bernanke, who wrote the following in Essays on the Great Depression: “Only with the New Deal’s rehabilitation of the financial system in 1933-35 did the economy begin its slow emergence from the Great Depression."
The economy did contract in 1938, as Will notes. The business cycle was still alive back then. As the National Bureau of Economic Research notes, there was a 13-month recession in 1937-1938, which was a fairly typical length for a recession in the 20th century. But it came after more than four years of expansion, which started in. . . March 1933. (Coincidence?) The 13-month recession of 1937-1938, in which the economy contracted 6.2 percent, didn't leave confidence in markets at their nadir, as Will argues. The 43-month Depression between 1929 and 1933, in which Gross Domestic Product fell 45 percent, left confidence in markets at their nadir.
The argument that the New Deal's efforts "perhaps had prolonged, the Depression," is likewise a canard. One would be very hard-pressed to find a serious professional historian--I mean a serious historian, not a think-tank wanker, not an economist, not a journalist--who believes that the New Deal prolonged the Depression.
Sure, I'm talking my own book here. My latest, due out in May, contains a chapter that argues that the financial infrastructure laid down by the government in the New Deal helped pave the way for the immense growth seen in America's capital markets, banking system, credit industry, and housing markets over the past 70 years.
My confidence in George Will is at a nadir.
Posted by dan at 07:59 AM
If ADP's employment report is to believed, the economy lost 40,000 jobs in December. Gulp!
Posted by dan at 09:32 AM
My latest in Slate, on outdated restrictions on foreigners' ability to invest in U.S. airlines.
Posted by dan at 09:28 AM
Great article in the New York Times by Michael Barbaro on Wal-Mart's embrace of compact flourescent bulbs. The best nugget is that General Electric, which produces compact flourescents, isn't particularly eager to ramp up production massively because it would take a bite out of its old-fashioned incandescent bulb business.
Posted by dan at 09:51 AM
Need more evidence of investor optimism? Margin debt is near a record. Gaston Ceron reports in the Wall Street Journal:
A rising stock market encouraged investors to go into debt to trade stocks, leading to an increase in the level of so-called margin debt in 2006. . .As tracked by the New York Stock Exchange, margin debt rose to $270.52 billion in November from $221.66 billion at the end of 2005, the first time in more than six years that margin debt has topped $270 billion. December numbers will be available later this month.
That 22% increase left margin debt not far from the record of $278.53 billion, reached in March 2000 as the Nasdaq Composite Index was setting a record high.
Noted without comment.
Posted by dan at 08:21 AM
Swamps class-action lawyers. The Wall Street Journal reports (a) that class-action securities lawsuits have fallen sharply in recent years; and (b) they would have fallen even more if directors and CEOs hadn't played games with options. Hmm. I wonder if Sarbanes-Oxley has anything to do with it. Nathan Koppel reports:
The number of securities-related class-actions dropped sharply in 2006, according to two studies to be released today.Investors filed 110 class-action lawsuits involving securities issues last year, a 38% decline from the 178 filings in 2005, according to a report issued jointly by Stanford Law School and Cornerstone Research, an economic and financial-consulting firm. The 2006 filing rate, according to the report, was the lowest since Congress passed securities class-action reform legislation in 1995.
Separately, NERA Economic Consulting reported a 36% drop in securities class-actions. (Both the Stanford and NERA studies tracked filings through mid-December.)
The decline would have been more severe but for the recent options-backdating scandal, involving companies that allegedly violated securities rules by backdating stock options. There were 20 class-actions filed last year relating to options-backdating claims, according to the Stanford/Cornerstone report.
Posted by dan at 08:12 AM
Rank speculation by your humble scribe, in the New York Times "Week in Review."
Posted by dan at 08:24 PM