Washington Watch

The Obama administration is bracing itself for the moment when unemployment hits 10 per cent. This blow to the country’s animal spirits is likely to come before Christmas rather than after. But among some economists, the sobering question is whether true unemployment is going to reach the peak of 24 per cent that was last recorded in 1933, during the Depression.

It’s all a matter of measurement. The official unemployment figures—known to the Bureau of Labor Statistics as the U-3—count only those receiving unemployment benefit who have actively looked for work in the last four weeks. But there are other measures, such as the U-6 figures, which used to be the official rate until the Clinton administration began using U-3 instead. U-6 includes workers who have stopped looking for jobs and those who can only find part-time work. It thus comes closer to the way unemployment was measured in the 1930s, but still tends to exclude seasonal and many domestic workers.



Both Paul Craig Roberts, a former assistant secretary of the treasury, and economist John Williams at Shadowstats.com, have tried to replicate the measurement system used in the 1930s. In July, the U-3 unemployment rate was 9.4 per cent. Williams calculates that the equivalent figure using the 1930s system would be 20.6 per cent. He expects it to reach 23 per cent by the end of this year. This was borne out by a New York Times survey in July that applied the broadest measure of unemployment and recorded rates above 20 per cent for California and four other states.

Dems and climate change

Europeans still love Barack Obama. The latest Transatlantic Trends survey, which polls more than 13,000 people in the US and 12 European countries, found 92 per cent of Germans, 91 per cent of Italians, 88 per cent of the French and 82 per cent of the British have “a positive view” of his handling of foreign affairs. Overall, European approval ratings of US foreign policy jumped from 19 per cent last year under George W Bush to 77 per cent this year.

But the Obama effect may not survive the looming disappointment of December’s climate-change summit in Copenhagen. Anyone depressed by the president’s problems in achieving healthcare reform is going to feel a lot worse as the senate dithers, blocks and slowly eviscerates the weak Clean Energy and Security Act that passed in the House of Representatives.

If Copenhagen results in a formal treaty, there is zero chance of it being ratified by the required two-thirds majority in the senate. John Kerry, who chairs the foreign relations committee, knows this and has been planning to get a simple bill passed which would parallel the emissions cuts required in any treaty. Even this bill, which would only require a 51-vote majority, may have to include mandatory tariffs on exports from countries (read China) that do not match US targets.

But Kerry may not be able to get 51 votes. The problem lies with the centrist Democrats. Already five of them have said that while they may vote for the cap-and-trade provision in the House bill, they cannot swallow the requirement of 15 per cent of US energy coming from renewables by 2020. And a further six Democratic senators all ducked or voted against last year’s climate security bill. That’s a baker’s dozen of dodgy Dems even before the coal and oil lobbies gear up for their campaigns.

Ron Paul’s dream comes true

Texan congressman Ron Paul, who ran a brave race as the libertarian candidate for last year’s Republican nomination, looks set to achieve his long-time goal of auditing the secretive Federal Reserve. With 285 fellow members of the house signed up as co-sponsors so far, his bill will be hard to stop. Financial services committee chairman Barney Frank is working out the wider powers the government accountability office (GAO) would need to do the job.

At present, the GAO can examine only those areas outside of monetary policy, which in effect means bank supervision, consumer issues and payment systems. It can’t review loans to financial institutions, nor the Fed’s transactions with foreign central banks or governments and other international organisations. This has become a hot issue since the Fed exploded its balance sheet from around $870bn a year ago to over $2 trillion now by lending huge sums to the stricken banks.

Paul wants the audit to report who the Fed lends to, how much it lends and what agreements it has made with foreign central banks. Fed hopes of blocking this rest with the Senate, where the independent Bernie Sanders of Vermont (who is really a socialist) has a parallel “Federal Reserve Sunshine” bill, though with only 23 co-sponsors. It’s ironic that it takes a socialist and a libertarian to get the Fed worried.

The american Jamie Oliver

Having already harvested 90 pounds of fruits and vegetables from her organic garden, Michelle Obama is backing a White House farmers’ market. Sam Kass, the Chicago chef the Obamas brought to Washington, has persuaded the neighbourhood commission to give its approval. FreshFarm Markets has applied to run the market on Thursdays on a block of Vermont Avenue opposite the White House.

Kass, who was the Obamas’ personal chef in Chicago, founded Inevitable Table, a cooking and delivery service that uses ingredients from local farms. He also launched Re-thinking Soup, a weekly public event in Chicago. Kass made soup every Tuesday, calling it “a communal event where we will eat delicious, healthy soup and have fresh, organic conversation about many of the urgent social, cultural, economic and environmental food issues that we should be addressing.” Clearly bidding to be the US Jamie Oliver, he is an outspoken critic of the school meals programme, which still labours under president Reagan’s ruling that ketchup is a vegetable.