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Article Artículo

The 2001 Recession Actually Was Really Bad News

I see that I have to disagree with Brad DeLong again. Brad wants to see the 2008 downturn as a uniquely bad event due to the overextension of credit and the ensuing financial collapse. I see it as overwhelmingly a story of a burst housing bubble and the resulting fallout in the real sector.

First off, in this piece Brad seems to want to attribute the worldwide downturn to the collapse of the housing bubble in the U.S. This seems more than a bit bizarre, since countries like Spain and Ireland arguably had bigger bubbles and bigger collapses than the U.S.

The collapse in the U.S. may have happened first and triggered the collapse in other countries, but this would only be in the sense that the U.S. collapse might have alerted lenders to the possibility that house prices can fall. Presumably the bankers would have discovered this basic economic fact at some point regardless of what happened in the United States.

Dean Baker / June 23, 2015

Article Artículo

Haiti

Latin America and the Caribbean

World

USAID Says it Built Houses in Caracol to Earthquake Safety Standards. It Didn’t.

In February, USAID suspended Thor Construction, one of two contractors responsible for designing and building 750 houses in Haiti’s north, in Caracol. In March, the second contractor, CEEPCO, was also suspended. As previous HRRW reporting revealed, the houses were found to be of poor quality, with numerous structural deficiencies including the use of substandard concrete. USAID is currently investigating and putting together a potential legal case against the contractors; however, they continue to downplay the problems and their own role in them.

HRRW has obtained an internal assessment of the Caracol-EKAM housing development, performed by the U.S. Army Corp of Engineers last year. The report directly contradicts USAID’s public comments on the housing development.

On its website, USAID has a “fact sheet” on the project, explaining: “To address natural disaster concerns, the 750 houses are designed to International Building Code earthquake and hurricane safety standards, and constructed with reinforced concrete masonry.” The webpage says it was updated in February 2015, nearly a year after USAID first began investigating. There is no mention of any problems with the houses in the “fact sheet.”

Turning to the Army Corp of Engineers report, it makes clear that from the very beginning, International Building Codes were ignored. The report “found no evidence that a formal internal or external review” of the housing design was conducted and further, that “the project was designed with inconsistent application of code and latest design criteria,” despite the contract mandating compliance with the International Building Code. The lack of any oversight provided at this crucial early stage is a clear indictment of USAID’s own role in the project’s failure.

USACE Summary Caracol EKAM
Summary of Findings from US Army Corp of Engineers Technical Assessment

USAID also maintains that the houses are built with “reinforced concrete masonry” and are built to hurricane and earthquake safety standards. Not so fast, says the Army Corp of Engineers: “The project was constructed with significant variances from the contract plans and specifications. These variances could result in major damage from a hurricane or seismic event and excessive maintenance requirements if left uncorrected.”

Jake Johnston / June 19, 2015

Article Artículo

Globalization and Trade

David Brooks Warns of Economic Collapse and War Without TPP

The Washington chattering class is really upset that the Trans-Pacific Partnership (TPP) looks like it's going down. David Brooks pulls out all the stops today, using his NYT column to yell at "Tea Party" Democrats for not supporting the fast-track authority that would facilitate the passage of the TPP.

Unfortunately, Brooks was largely unarmed with facts when it came to the attack. To start, he tells readers;

"The North American Free Trade Agreement, for example, probably didn’t affect the American economy too much. But the Mexican economy has taken off. With more opportunities, Mexican workers feel less need to sneak into the U.S."

If the Mexican economy has taken off since NAFTA they managed to conceal this fact from the I.M.F. and other keepers of official statistics. Here is the path of per capita GDP in the United States and Mexico post-NAFTA.

Book10 12779 image001

                            Source: International Monetary Fund.

Developing countries like Mexico are supposed to have more rapid growth than rich countries like the United States. Instead the gap has increased by about five percentage points since NAFTA as growth in the U.S. has exceeded growth in Mexico since NAFTA took effect. (The chart shows growth in international dollars, not adjusted for inflation.)

Brooks also seems to be inventive in his assessment of patterns of immigration. According to the Migration Policy Institute the number of Mexican immigrants to the United States rose from 4.3 million in 1990 to 11.7 million by 2010.

Dean Baker / June 16, 2015

Article Artículo

Haiti

Latin America and the Caribbean

World

Haiti Election News Round-Up

The following is cross-posted from the Haiti Elections Blog, which was created to help promote the free access to information and accountability within the electoral process. The blog is co-managed by several non-governmental organizations who work with and within Haiti. 

On Friday, the CEP published the final list of approved presidential candidates for the upcoming election scheduled to take place October 25, 2015. Of an initial 70 candidates, the CEP accepted 58. Among those excluded from the race was former Prime Minister Laurent Lamothe as well as former government ministers Thierry Mayard Paul and Josefina Gauthier. Among the 12 excluded candidates, 9 were excluded for lacking the proper discharge certificate. Radio Kiskeya provides a brief biographical description of each of the 58 candidates, while Le Nouvelliste provides a description of what they describe as the 12 leading candidates. Both Le National and Le Nouvelliste discuss the potential for political alliances in the run-up to elections. Le National points out that the “Lavalas movement is well represented” by a number of candidates but risks splitting the vote if they do not reach some sort of alliance. 

The “Core Group” released a statement on Friday welcoming the CEP’s publication of the list of presidential candidates. The statement reads in part: “The publication of the list of presidential candidates constitutes an important step in the implementation of the electoral process. The ‘Core Group’ reiterates its full support to the work of the Council and the ongoing organization of elections. The Group invites all stakeholders to continue to participate constructively in the 2015 electoral process. The ‘Core Group’ salutes the efforts of the Government of the Republic towards the continued strengthening of democracy in Haiti. The members of the Core Group emphasize the importance of building on the current momentum and supporting the CEP, the Government and people of Haiti, including the political parties, in the conduct of fair, transparent and inclusive elections in a climate of serenity.”

Many political parties are still questioning the electoral schedule provided by the CEP, reports Alterpresse. Legislative elections scheduled for August 9, despite assurances from the CEP that they will be held on time, are being questioned by leaders of Fusion, OPL and MOPOD among others. Secretary General of Fusion, Ramon Pradel, told Alterpresse that, “we do not believe that the elections will take place on that date," due to logistical questions that have yet to be worked out. Fusion and OPL have 97 and 93 candidates in the legislative race respectively, while MOPOD has 23. A key issue has been a significant funding shortfall in the electoral budget, but U.S. Haiti Special Coordinator Tom Adams stated over the weekend that the U.S. would increase their financial contribution. Adams has previously publically expressed his opinion that the August election should be delayed and incorporated into the October 25 presidential election as a way to save money, a position which is supported by many political parties in Haiti.  

Jake Johnston / June 15, 2015