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Sunday, October 7, 2012

Economic Stories of Relevance in Today's World -- October 7, 2012

Workers in China strike over iPhone 5 labor demands - USA Today - Yamiche Alcindor - October 6. 2012 - Thousands of factory workers at a plant in China went on strike Friday to protest their working conditions on the iPhone 5's production lines, CNN reports.                        Employees at Foxconn's plant in Zhengzhou, China, made the decision after management enacted "overly strict demands" for production of Apple's new iPhone 5.              The strike began at 1 p.m. local time on Friday with the majority of its participants from the on-site quality control line for the iPhone.The work stoppage has "paralyzed the production lines," CNN reports.               Neither Foxconn nor Apple responded to requests for comment by the news agency.              "Employees could not even turn out iPhones that met the standard" because of "design defects," according to China Labor Watch, a New York-based advocacy group that works closely with sources in China.              Foxconn's demands, coupled with the fact that workers were not allowed to take vacation time during a recent week-long holiday, created a high-pressure situation, CNN reports..... Foxconn denies worker unrest slowed iPhone assembly - USA Today - October 6, 2012

16 Critical Economic Issues That Obama And Romney Avoided During The Debate
- The Economic Collapse Blog - Did you watch the presidential debate on Wednesday night? It is absolutely amazing how they can have an hour and a half debate about the economy and say so little. It seemed like both candidates were falling all over each other wanting to talk about how much they value education, but will more education really solve our problems? After all, 53 percent of all Americans with a bachelor's degree under the age of 25 were either unemployed or underemployed in 2011. So perhaps they should just both agree that education is a good thing and start talking about how to create more jobs for all of us. If you want to grade the debate from a technical standpoint, clearly Romney was the winner of the debate. Romney was full of energy and was generally sharp with his answers. Obama looked like he had just popped a couple of antidepressants and was ready for nap time. As a result, this might have been the worst blowout in the history of presidential debates. A CNN/ORC International poll that was taken right after the debate found that 67 percent of all Americans that had watched the debate thought that Romney was the winner. Never before had any presidential candidate crossed the 60 percent mark in the history of their post-debate polling. So Romney definitely had a big night. But the reality is that both candidates were telling the American people what they want to hear. If either Obama or Romney told the truth about what we are facing they would lose votes, and in a race this tight both of them really want to avoid doing that. Obama and Romney both desperately want to win this election, and the words that are coming out of their mouths have been carefully crafted to appeal to the "undecided voters" in the swing states. If you actually believe that they can deliver on everything that they are promising, then you must not have been paying much attention to U.S. politics over the past several decades.               Perhaps the biggest failure on Wednesday night was debate moderator Jim Lehrer of PBS. His questions were about as far from "hard hitting" as you could get.                The hour and a half debate was almost entirely about the economy, and yet almost all of the critical economic issues were ignored.                     Yes, Obama and Romney have slight differences when it comes to tax rates and regulations, but those small differences are not going to do much to change the direction of this country one way or another.                Meanwhile, there were some really huge issues about the economy that were not addressed at all last night....

Gasoline Prices Set to Rise Through Election Day - CNBC - Sharon Epperson - October 5, 2012 - Retail gasoline prices, already at the highest levels on average since July 2008, are likely to continue to climb this month as refinery and pipeline problems overshadow weakness in U.S. consumer demand.                 On Wednesday night, a fire broke out at Exxon's (XOM) Baytown, Texas refinery, a 584,000 barrel per day facility that is the largest operating refinery in the U.S.                Exxon said there may be "some impacts to production" from the fire, but the plant will resume normal operations. A partial shutdown of the Colonial Pipeline, the nation's largest oil product pipeline, also contributed to supplies fears, as it impacted the portion of the line carrying gasoline from Atlanta to Nashville.               "It will only take another refinery issue and a bit more of geopolitical noise to have the first U.S. election at a US average gasoline price of $4 a gallon," says energy analyst Olivier Jakob of Petromatrix.                The national average for regular unleaded is now at $3.79 a gallon, basically on par with where pump prices were last Friday.                 Yet that masks the volatility in the gasoline futures (New York Mercantile Exchange: RBCV1), and especially some wholesale markets. Gasoline futures prices dropped 30 cents after the expiration of the previous month's contract, reflecting the seasonal shift among many refiners from summer-grade gasoline to a cheaper winter-blend.                       On Wednesday morning, the EIA reported a sharp drop in gasoline demand versus a year ago - leading futures to fall to the low of the week. But prices quickly recovered after the fire at the Exxon Baytown refinery.

U.S. restaurants look to overcome weak traffic - Wall Street Journal Market Watch - Debbie Cal - October 5, 2012 - TAKING THE PULSE: Efforts to manage commodity costs by raising menu prices without deterring customer traffic could pay off in the third quarter for U.S. restaurant companies. They are expected to record a combined same-store sales increase of 2.8%. Starbucks Corp. SBUX -0.73% , McDonald's Corp. MCD -0.03% and Yum Brands Inc. YUM -0.71% are continuing investments in their overseas businesses to maintain profit margins amid concerns around sluggish domestic growth, while Brinker International Inc. EAT -1.13% is relying on menu and in-store improvements to boost sales.                 Street projections show both profit and revenue growth for Yum Brands, Starbucks, Brinker and Chipotle Mexican Grill Inc. CMG -4.45% , while profit is likely to be flat for fast-food leader McDonald's.                   Wall Street Expectations: Analysts surveyed by Thomson Reuters predict an adjusted profit of 97 cents a share on revenue of $3.64 billion. A year ago, Yum posted income of 80 cents, or 83 cents excluding some items, on revenue of $3.27 billion.               Key Issues: The parent company of Taco Bell, KFC and Pizza Hut expects its China and Yum Restaurants International businesses to drive its profit growth in the second half as its Pizza Hut and KFC chains are booming in urban areas. However, China generated just 37% of Yum's total operating profit in the second quarter as rising food costs and wage inflation squeezed Yum's profit margins in the country. China typically contributes half of Yum's total profits.

Insurers seek 17 percent increase in NC homeowner policy rates - - October 3, 2012 - The North Carolina Rate Bureau, which represents insurance companies that provide coverage in the state, has asked the state Department of Insurance for an average 17.7 percent increase in homeowner policies, officials said Wednesday.              The Rate Bureau would like the increase to take effect next June.                The filing is the first request for higher homeowner insurance rates since the Rate Bureau sought a 19.5 percent increase in 2008. The DOI allowed a 4.05 percent statewide average increase to go into effect in May 2009.              The public can comment on the proposed increase during a public hearing on Oct. 17 in the Jim Long Hearing Room of the Dobbs Building, 430 N. Salisbury St. in Raleigh.             Written public comments can be mailed to NCDOI, Attn: Bob Mack, Property & Casualty Division, 1201 Mail Service Center, Raleigh, NC 27699-1201, or emailed to The deadline for submitting written comments is Oct. 19.             The DOI will then review the request to determine what, if any, rate adjustments are warranted. If the two sides cannot agree on rate changes, another public hearing will be held for both parties to present their cases for any rate adjustments.

Reason For Today's Unemployment Rate Plunge: Part-Time Jobs For Economic Reasons Surge Most Since QE1 Announcement - Zero Hedge - Tyler Durden - October 5, 2012 - We already noted the absolutely stunning surge in reported Household Survey jobs which "added" 873,000 jobs, or the most since 2003 and the second most in the past decade, which was just a little bit off the Household Survey used in the monthly NFP jobs changes, which came at 114,000, or about 8 times less. But what was the reason for this epic jump in Household survey jobs? Simple, and those who have read our series on America's transition to a part-time worker society know the answer. The reason is that the number of part-time people employed for economic reasons soared by 582,000 to 8,613,000, the most since October 2011, and the largest one month jump since February 2009, when "restoring" confidence in the economy was all the rage... and just before the Fed announced the full blown QE1 in March of 2009. Odd symmetry.                   So putting it all together, what does this mean for the true state of the US economy? Recall back in September one of our Charts of the Day was the number of Unemployed and Underemployed for the month of August, which was 25.8 million. Readers may be surprised to learn that when putting it all together, in September this number increased to 26.2 million.

Why the unemployment rate won't keep dropping - CNN Money - Stephen Gandel - October 5, 2012 - In September, the politically charged rate fell because of a huge jump in a survey that few economists trust.                 FORTUNE -- It was either an average month for job growth, or one of the best months in nearly three decades. In the September jobs numbers, there was evidence for both.                Last month, employers said they added 114,000 workers to their payrolls. Not fast by any means, but not bad.              The unemployment rate, however, was a blockbuster. In September, the unemployment rate fell to 7.8%, down from 8.1%. That's the lowest it has been since Obama took office....

A Jobs Report Conspiracy? - The Economic Collapse Blog

Another Phony Employment Report - Paul Craig Roberts - October 5, 2012 - October 5. Today’s employment report from the Bureau of Labor Statistics shows 114,000 new jobs in September and a drop in the rate of unemployment from 8.1% to 7.8%. As 114,000 new jobs are not sufficient to stay even with population growth, the drop in the unemployment rate is the result of not counting discouraged workers who are defined away as “not in the labor force.”                 According to the BLS, “In September, 2.5 million persons were marginally attached to the labor force.” These individuals “wanted and were available for work,” but “they were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.”                       In other words, 2.5 million unemployed Americans were not counted as unemployed.                    The stock market rose on the phony good news. Bloomberg’s headline: “U.S. Stocks Rise as Unemployment Rate Unexpectedly Drops,” .                        A truer picture of the dire employment situation is provided by the 600,000 rise over the previous month in involuntary part-time workers. According to the BLS, “These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.”                   Turning to the 114,000 new jobs, once again the jobs are concentrated in lowly paid domestic service jobs that cannot be offshored. Manufacturing jobs declined by 16,000.                  As has been the case for a decade, two categories--health care and social assistance (primarily ambulatory health care services) and waitresses and bartenders account for 53% of the new jobs. The BLS never ceases to find ever growing employment of people in restaurants and bars despite the rising dependence of the US population on food stamps. The elderly are rising as a percentage of the American population, but I sometimes wonder if employment in ambulatory health care services is rising faster than the elderly population. Whether these reported jobs are real, I do not know.                    The rest of the new jobs were accounted for by retail trade, transportation and warehousing, financial activities (primarily credit intermediation), professional and business services (primarily administrative and waste services), and state government education, where the 13,600 reported new jobs seem odd in light of the teacher layoffs and rise in classroom size.                 The high-tech jobs that economists promised would be our reward for offshoring American manufacturing jobs and tradeable professional services, such as software engineering and IT, have never materialized. “The New Economy” was just another hoax, like “Iraqi weapons of mass destruction” and “Iranian nukes.”

Paul Craig Roberts : The Unemployment Numbers are Phony

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