How To Read A Jobs Report

The monthly jobs report from the Bureau of Labor Statistics (BLS) has been out for a few days. Having analyzed these reports for several years, I thought it would be good to talk about what they do and don’t do and how they are put together.

First, the BLS jobs reports are, with a few minor exceptions, focused on paid work. They do not examine whether this work is productive, unproductive, or even destructive of our society. They miss much socially valuable unpaid work such as caregiving, child rearing, mentoring, and yes, blogging, as well as paid work, principally the uniformed military. They do not measure job quality, whether it is meaningful or pays a living wage. Put simply, a job is a job is a job. All are treated the same from the CEO to the no-benefits temp making minimum wage, or effectively less.

Second, one should never take at face value any of the terms used in the BLS reports. All of them have specific definitions that can, and often do, vary widely from their usual, common sense usages, and the numbers themselves often require considerable explanation.

With that, let’s dive in.

The Surveys

As I am sure many of you are aware, the jobs reports are based on two surveys: a household or people’s survey that tracks employment and unemployment and an establishment or business survey that tracks jobs, hours, and wages. Employment and a job, coming from different surveys, do not mean precisely the same thing. In August, there were 156 million employed and 139 million jobs. Some of this discrepancy can be explained by the fact that the jobs (business) survey does not count farm workers or the self-employed (and some “independent” contractors may not be counted as well). On the other hand, the household survey for the purpose of employment counts those holding more than one job only once.

The household survey is much smaller and less accurate. It is based on a sampling of 60,000. The establishment survey is much larger and covers 144,000 businesses, 60% of them with more than 20 employees. The threshold for statistical significance, the confidence that we can say a number or a change in it means something, is 400,000 for the household survey and 100,000 for the jobs survey. The household survey could be improved by increasing its size and bringing in data from other sources, such as unemployment insurance claims, but this would cost some extra money, so end of discussion.

Seasonal Adjustment

The “official” headline numbers of jobs and the unemployment rate are reported in seasonally adjusted terms. The one thing that can be said about seasonally adjusted numbers is that they almost never reflect what is actually going on in any particular month. That is because seasonally adjusted numbers are trendline. Unadjusted numbers are actual. In August, the actual unemployment rate (using the BLS definition for unemployment which we will shortly see has major problems with it) was 6.3%, not the 6.1% reported.

To recap, some of the things I have been talking about so far, let’s look at a couple of graphs. The first, despite the legend, charts jobs from the business survey. The blue line is the trendline, containing the “official” numbers, and the red line is what is happening in any given month. The trendline is fairly smooth, both because the business survey is so large, and also because revisions are updated into it.

 photo 06e3a3ba-90d2-495c-8542-4c6dc2bbf328_zps774a893b.jpg

As we can see, the graph shows the characteristic M-shaped pattern of jobs through the year: the spring rebuild, the fall off with the end of the school year, a second rebuild following the return to classes and approach of the Christmas shopping season, and finally the end of the year dropoff.

Now let’s look at the same graph for employment from the household data:

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The August Jobs Report: The Dog That Didn’t Bark

The Bureau of Labor Statistics numbers, as I have often pointed out, come from two surveys, a large household survey and a smaller poll of employers. It is important to note that these cover different populations (the noninstitutional population over 16 vs total nonfarm jobs) . So while the numbers may be similar, they will not be the same. The BLS takes these results and expands them to the population as a whole. It also passes them through a model based on assumptions about how jobs are created in the economy which adjusts for the seasonality of some jobs. This is meant to smooth the numbers and elicit the underlying or core trends in who works, where, and how much and how long they work. The BLS publishes both its adjusted and unadjusted numbers. In addition, as more information comes into the system, the BLS revises these numbers, or more precisely estimates, over the following two months. Finally, early in the next year the BLS does a complete revision of the previous 12 months revising its model in light of how the economy actually performed. We like to think that a jobs report for a particular month can be taken as a quantitative measure of the economy, but the truth is it is initially more qualitative and only rather gradually becomes more quantitative in nature. . . .

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Dean Baker Gets It Wrong

This began as a comment to Dean Baker’s post today on Social Security but expanded from that.

The problem with Baker’s analysis is that he misses the nature of the con. For nearly 30 years now workers via the FICA have paid into Social Security amounts greater than what Social Security has had to pay out. The government has swapped bonds for this money, which it has then dumped into the general budget and spent like any other money (and in the process made the size of the deficit look smaller than it otherwise would be). Where Baker goes wrong is in advancing the idea that it is just the government that will pay off these bonds. It isn’t just the government but the American taxpayer who will pay them off. The analogous situation would be if you asked your son to hold $1000 for you. He takes it and goes off and spends it. He then comes back to you for another $1000, which he uses to pay off the first $1000, at which point he declares that you and he are quits.

The excess FICA taxes which created the surpluses were, in fact, nothing more than a backdoor tax increase on workers, and a regressive one at that. The future obligations which the surpluses were meant to cover would be there anyway. Under the current arrangement, taxpayers will have to pay for them twice, once as the money the government took out and spent and once to actually cover those obligations. If the surpluses had never existed, then taxpayers would have been on the hook for only covering Social Security’s future obligations (to make up any shortfalls between 2017 and 2040) once. If the government had wished to spend money equal to what it got from the surpluses, then it would have had to justify to voters and taxpayers why it needed to run higher deficits or raise taxes.

The con of the Social Security surpluses is that the government got to spend the money, claim deficits were smaller, avoid defending what it was doing, and stick taxpayers down the road with the bill. The current fight is over reducing as much as possible the size of that bill. Politicians are not doing this out of the goodness of their hearts. Money that goes to paying off the shortfalls that Social Security was expected to begin experiencing in a few years, and is now having due to the bad economy, is money that can not be spent for wars and looting, the priorities of our elites. This is why raising the retirement age is such an attractive option. It both increases revenues to Social Security by having older, higher paid workers contribute longer to the system but also decreases the number of years pay outs have to made to them (the time between retirement and death is not going to change in a positive way for them).

The real game here is that politicians, i.e. our elites, do not want to use general revenues, the discretionary side of the budget, to pay back Social Security Trust funds. In their view, the discretionary budget is theirs. This is also why you do not hear any serious talk of raising the income caps on the FICA. If our elites don’t want to use discretionary funds to this end, they certain don’t want to use their own wealth to that purpose either. Indeed the whole idea behind the surpluses in the first place was to give them "free" money to spend/loot. The object of cutting benefits is to limit or eliminate the need to pay back the Trust Funds and, in so doing, keep control of the discretionary budget in their hands.

The Day the World Changed: August 9, 2007

As I write this, I wonder if any of the media will remember the event that changed our world 3 years ago today, and if they do, what they may say about it. On August 9, 2007, the housing bubble blew up. From 2001-2007, the size of the US home mortgage market grew from $4.5 trillion to $13 trillion, an $8 trillion increase. Housing construction topped out in 2005 and the housing market in 2006. All the while this was going on, Bush was cheerleading the bubble with his talk of the Ownership Society. Upsides of bubbles always look good, but there were flies in the oinment. State attorney generals had been pursuing predatory lending by financial institutions. These were pre-empted in 2003 by Bush’s Comptroller of the Currency. That was not the end of the story. On August 1, 2005, Ameriquest, the largest of the subprime lenders, set aside $325 million to settle similar claims by state attorney generals in 30 states. In May 2006, it closed its own retail mortgage shops and went to a brokerage system outside the predatory lending regulatory framework. By January 2007, the problems in subprime lending were well known. Mortgage writers were going under. In February 2007, the big UK bank HSBC wrote off $10 billion in subprime losses. The cracks in the bubble were really beginning to show. The end phase began in June. A couple of subprime funds Bear Stearns had set up in the Channel Isles were at the point of failure. Bear Stearns loaned them $3.2 billion but by July 16, 2007, they were toast. Then on August 9, 2007, the French bank BNP Paribas froze withdrawals from 3 of its funds with heavy exposures to the subprime market. A panic and credit crisis ensued, assuaged in the following 72 hours by the injection of some $300 billion in short term credit by central banks around the world. The sum seems small now considering subsequent interventions, but at the time, it was huge, something not really seen before. The housing bubble was over.

One of the most tired clichés of this whole affair is the contention put forward by politicians and financiers that no one could have predicted the bubble. Dean Baker has pointed out repeatedly how absurd this contention is. How could bankers and policymakers not see an $8 trillion bubble? Their denials are a modern example of the Big Lie, a lie so big it shocks critics into silence. In fact, there were those who predicted the bubble, Dean Baker for one who saw it coming back in 2002. But even before him there was Edward M. Gramlich who was the head of the Fed’s Committee on Consumer and Community Affairs —yes, surprising I know they should have one— from 1997 to 2005. He had been warning about problems in the housing sector since the mid 90’s. Tragically, he died on September 5, 2007 of leukemia, just a month after the burst, but in June 2007, even as the housing bubble was fissuring, his book "Subprime Mortgages: America’s Latest Boom and Bust" came out. It wasn’t that Wall Street and Washington were unaware of the housing bubble but rather for reasons of greed and ideology they refused to acknowledge it. The Great Moderation, the 30 year reign of trickle down anti-regulatory Reaganomics did not brook doubts and doubters.

August 9, 2007 may be overlooked, but it was the turning point, the day the economy changed directions. There have been upticks but the overall trajectory of the economy since that day has been down. Those who were in charge at that time, like Henry Paulson, Ben Bernanke, and Timothy Geithner should have lost their jobs then. But even their failure to use the year between the housing bubble and the meltdown to reform the financial industry, their failure to forestall either the recession which the housing bubble burst sparked or the meltdown itself, their dubious dealing in and around the meltdown, the bailouts, the ongoing lack of reform, and their subsequent diddling, especially with jobs, and the housing crisis where this all began, even as we stumble to the next collapse, none of this affected them. Paulson left at the change of Administrations. Bernanke was re-appointed. Timothy Geithner was promoted to Treasury Secretary. In Bernanke and Geithner, and of course Larry Summers, we are looking at the biggest serial screw ups in history. Yet they remain in place 3 years on. Can there be any greater evidence of how corrupt, and doomed, our economy is?

The June Job Numbers: When Smoke and Mirrors Don’t Cut It Anymore

If you saw today’s job numbers you will know that the economy lost 125,000 jobs in June. Most of this was due to a loss of 225,000 temporary jobs for the Census partially offset by small diffuse private sector job gains of 83,000. Now if you will remember, the Census added on more than 400,000 temp jobs. So we can expect to see another 200,000 job losses from the Census winding down in the next month or two.

At the same time, the U-3 measure of unemployment decreased from 9.7% to 9.5%. The broader U-6 unemployment measure decreased from 16.6% to 16.5%. This is where the real story is. This is not good news. What this reflects is not people finding more jobs but rather their exit from the workforce. In June, the workforce decreased by 652,000. In the last two months, it has decreased by 974,000. What we are seeing is our unemployment problem being solved, not by actually creating jobs, but by defining the unemployed out of existence. This is a real failing of the BLS (Bureau of Labor Statistics). It is not geared to analyze major economic downturns and simply doesn’t track the long term unemployed which such downturns produce. The closest it comes is in its ratio of workforce (153.741 million) to what it calls its over 16 noninstitutional population (237.690 million) which was 64.7% in June down .3% from the previous month.

To give you an idea of the discrepancy, if we took this month’s estimate for those employed (139.119 million) and divided it by the size of the workforce for April (154.715 million, the high point so far this year), unemployment would still be at 10.1%. But this in itself doesn’t tell the whole story. The April 2010 size of the workforce is almost identical to the April 2009 number. Normally, we would expect the workforce to increase by 1-1.5 million a year with a really good year closer to 2 million. So what we are seeing is what many of us already knew, a serious underestimating of the unemployed. In this context, even the U-6 does not capture the magnitude of the problem because it is the base, the size of the workforce itself, which is eroding.

In other signs of weakness, both average hours worked and wages decreased slightly.

The bottomline is that the effects of the Obama stimulus and other one offs are fading. We see that in the bad surface numbers, but much more disturbing, and increasingly harder to hide, is the decline in the workforce and the economic hardship that represents.

McChrystal and Article 88 of the UCMJ, Contempt toward Officials

The question had been raised whether General Stanley McChrystal committed insubordination in his interview with Rolling Stone. Technically, he did not. Insubordination is an offense under the Uniform Code of Military Justice (UCMJ) which occurs within and between enlisted and non-commissioned ranks. (Article 91). When a commissioned officer is involved, it is called "disrespect toward a superior commissioned officer." (Article 89). What McChrystal did is covered under Article 88 and is called "contempt toward officials."

Text.

“Any commissioned officer who uses contemptuous words against the President, the Vice President, Congress, the Secretary of Defense, the Secretary of a military department, the Secretary of Transportation, or the Governor or legislature of any State, Territory, Commonwealth, or possession in which he is on duty or present shall be punished as a court-martial may direct.”

Elements.

(1) That the accused was a commissioned officer of the United States armed forces;

(2) That the accused used certain words against an official or legislature named in the article;

(3) That by an act of the accused these words came to the knowledge of a person other than the accused; and

(4) That the words used were contemptuous, either in themselves or by virtue of the circumstances under which they were used. Note: If the words were against a Governor or legislature, add the following element

(5) That the accused was then present in the State, Territory, Commonwealth, or possession of the Governor or legislature concerned.

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The May Jobs Report: Ouch!

The short story is that the May jobs numbers were a disaster. 431,000 jobs were added to the economy, but 411,000 were temp jobs for the US Census. (These are Establishment (i.e. business) Survey data). What this speaks to is an economy that would be dead in the water if it were not for some one time government spending. If you look at the private sector, from whence we are told real recovery will come, it has added on 479,000 jobs since the beginning of the year, or 96,000 a month. This is below the level needed to cover natural growth in the population, and it is despite the ongoing but soon to be tapering off effects of the Obama stimulus.

In other words, the trajectory is wrong for recovery, or rather there is no trajectory, just a series of zigs and zags in the employment and economic picture. The Washington narrative looks to stocks taking off last year in March 2009 for the beginning of recovery. Employment as we all know lags behind a return to growth as the economy works through its overcapacities. Even so, we should be seeing some nascent trends in terms of jobs. We aren’t. It looks like the best the Obama Administration can do is stabilize unemployment levels at around 15 million and un- and under- employment at about 25 million for a while, as in possibly until after the November elections.

If we switch and look at the Household Survey data, there was actually a small decline (35,000) in the number of those employed and a larger decline in those unemployed (287,000). This indicates a decline in the size of the work force population (i.e. uninstitutionalized, over 16)

In other areas, manufacturing increased by 29,000 but construction decreased by 35,000. Wholesale, retail, transportation, and leisure/hospitality were flat. With the summer vacation season coming on and/or anticipating a recovery, we might expect these to be positive, even strongly positive. Instead they are just more signs of an economy treading water.

The inability to move forward in the real economy demonstrates, as if we really needed confirmation, that the stock market rise is a bubble and that recovery is not only not just around the corner, it isn’t even in the cards. With deficit fever sweeping Washington and the stock and commodity bubbles showing sizable fissures, it looks like we are still on course for a return to recession, and even depression in the next year.

Audit the Fed Was Not a Victory

I am of those, sometimes called cynics, who question whether Bernie Sanders’ audit the Fed amendment was a real victory for us. These are my reasons:

1. It will go from December 1, 2007 to the date of enactment of the bill. This leaves out the run up to the housing bubble burst and the burst itself (which I usually fix at August 9, 2007 when the BNP Paribas funds froze starting the first big panic).

2. It is a one time only audit. Most here think there will be another crash in the not too distant future although timeframes vary. The lack of ongoing audits encourages moral hazard at the Fed in dealing with it. An audit is a means to accountability, not accountability itself. It is not clear if another audit will ever happen but even if it does, as happened this time around, it will be greatly delayed. As for accountability, we are still waiting for both the housing bubble (2 1/2 years ago) and the meltdown (1 1/2 years ago).

3. The wording of the amendment suggests that while programs will be audited the individual transactions within them may not be. If this is correct, I am not sure how this advances us that much from what we know now.

4. I am also unsure if there will be much of a context in which to place the audit. My impression is that the Open Markets Committee remains out of bounds. So we will not get why the Fed acted as it did.

5. I have seen no indication of what kind of an auditing approach will be used. Will it be mark to market or mark to model? If it is mark to model, then the audit becomes essentially meaningless.

6. The 96-0 vote is not something to applaud. It is deeply suspicious. One view is that Senators were so afraid of voting against this that a unanimous vote was a foregone conclusion. Yet these same Senators were not afraid a few minutes later to defeat the Vitter amendment which contained the original and more substantial Paul-Grayson auditing language. In a hyper-partisan, bitterly divided Senate, the truth is that only something as innocuous as naming a post office branch can get passed with a vote like this. I mean if you want to sell a vote like this one, 20-30 no votes would have given the impression that there was something here to oppose, that there was some substance. Unanimity, on the other hand, especially in an election year, conveys the idea that there was nothing to oppose because there was nothing there.

7. Along the lines of the above, Senators have shown great willingness to kill off every other aspect of meaningful reform. The original Dodd bill is limp beyond belief. The Frank bill is not much better. Amendments to limit bank size or return Glass-Steagall were successfully spiked without great effort or fear on the part of Senators.

So the idea that somehow the audit the Fed amendment was different is fanciful. If Senators had been so afraid, how is it that they found the "courage" to water it down before passing it? The story that this represents some kind of victory either for progressives or a progressive-conservative coalition simply does not hold together.

Now you may disagree on some of the details of the politics and/or the effects of the amendment, but overall the underlying thesis that this was not a victory, or only a cosmetic victory at best, stands.

The April Job Numbers: More Jobs But Unemployment Still Getting Worse

The Bureau of of Labor Statistics has two primary surveys upon which its monthly reports are based. I will look at each in turn for its April report.

According to the Household data report (yes, amassed from a large survey of US households), the size of the overall civilian labor force (the over 16 population) increased by 805,000 in April to 154.715 million. Of these, 550,000 found employment. 255,000 remained unemployed. If you take the number of unemployed (15.26 million) and divide it by civilian labor force number given above, you get 9.86%, rounded to 9.9% for the U-3 unemployment rate. This indicates a significant jump in unemployment from 9.7% in February and March. Also the number of long term unemployed defined as jobless for 27 or more weeks, i.e. 6 months or more increased to 45.9% (6.7 million per the BLS; I am not quite sure how the BLS calculates this number since 45.9% of 15.26 million is 7 million)

In case you were wondering, because the US population continues to grow, this is why you can have both the numbers of employed and unemployed increase at the same time. It is not a zero sum game where if one increases the other must decrease.

The U-6 unemployment rate which combines un- and underemployment increased from 16.9% to 17.1%. Multiplying the civilian labor force number (154.715 million) by this rate indicates that there are 26.46 million Americans in this category.

Turning to the Establishment data report (a smaller survey of businesses), it paints a more positive picture. 290,000 jobs were added in April (projected). Revised figures show 14,000 jobs added in January; 39,000 for February; and 230,000 (projected) for March. Manufacturing added 44,000 jobs. If I had to guess, the auto industry accounted for many of these. Construction increased only 14,000. The biggest increase was in professional and business services (80,000). This includes stuff like temp work, maintenance, but also computer services. Healthcare, an economically distorting element of the US economy, also increased by 20,000. Leisure and hospitality, i.e. motel and fast food places increased by 45,000. And the Census hired another 66,000 temp workers. Wholesale and retail employment changed little. Transportation and warehousing fell 20,000.

What does all this mean? Offhand it looks like summer and vacation time are coming. The auto industry is showing some signs of life. Temp hiring continues and healthcare is still soaking up the nation’s resources. Store and wholesale hiring is flat indicating that a consumer led recovery isn’t in the offing.

Hours increased slightly 0.1 hour and wages almost not at all 1 penny.

The take away from all of this is that the economy showed some improvements in April, but the overall situation got worse.

A List of Real, not Potemkin, Financial Reforms

I mentioned earlier today that I had written up a list of financial reforms first in December 2008 and then with some modifications again in October 2009. It was suggested that I repost it, and the following is essentially the October list with a few additions. The key ideas are that financial and political reform go together. We will not have one without the other. The second is that the current system needs to be completely restructured to make it simpler, more transparent, and safer. Banking needs to be made dull again.

Bank Bankruptcy Force banks, bankholding companies and financial holding companies to prove they aren’t bankrupt and can survive without government backstops. If they can’t, put them into bankruptcy and restructure them

1. Re-initiate normal lending, i.e. local community based lending practices
2. Evaluate toxic assets and solvency
3. Remove discredited executive leadership
4. Recapitalize and re-privatize or set up as a public utility for vanilla banking activities
5. Reduce fees
6. Initiate forensic audits of financial institutions, investigate and prosecute fraud at all levels (both fraud in lending and control fraud)
7. Enforce Prompt Corrective Action to place financial institutions into bankruptcy or receivership regardless of size
8. Require bondholders to share in losses in any re-organizations

Audit the shadow banking system, especially Money Markets
Bring Money Markets under greater scrutiny: reporting requirements, compensation, risk portfolio, reserve requirements

Nationalize the Fed (it is currently working for the benefit of banks and not the wider economy)
1. Eliminate conflicts of interest: take the Fed away from its control by banks and
2. Remove the Fed’s de facto use by the Executive as its own funding instrument and return the power of the purse to Congress
3. Bring the Fed into line with the Constitution
4. Yearly audit and publication of the Fed’s activities; increase monthly and quarterly reporting requirements
5. Require that the Fed can only take on to its balance sheet assets that are marked to market

Eliminate the ratings agencies and consolidate their function into a single independent entity
1. Eliminate conflicts of interest (they are currently paid by those they provide ratings to)
2. Make explicit that ratings do not mitigate fiduciary responsibility of investment and financial institutions

Homeowners and the housing market
1. Offer a re-issue option on mortgages (all types on first residences) with a cramdown based on pre-bubble values (approx. 40-50% discount on face value, varies by market) at long term fixed rates.
2. Foreclosure moratorium
3. Allow conversion to renting
4. Future mortgages must follow truth in lending requirements, verify applicants creditworthiness and information, and disclose all fees and costs in advance
5. Establish a warrant system for mortgage writers with proof of insurance and/or reserves

Derivatives
1. Must be registered with the CFTC to be legally enforceable and must trade on a federally regulated US exchange
2. Reserve requirements and limitations on leveraging
3. Limitations, not on net positions, but on overall nominal ones

Collateral Debt Obligations (CDOs)
1. Simplify contents to a single asset class
2. Define ownership of the underlying assets
3. Ban re-rating sub-tranches upward and spinning them off into new CDOs
4. Ban movement of individual “mortgages” within a CDO
5. Ban CDO squared

Credit Default Swaps (CDSs)
1. Nullify naked swaps and synthetic CDOs
2. Amortize risk on equity backed types
3. Phase out and convert to regular insurance

Futures
1. Increase margin requirements
2. Ban non-commercial traders
3. Monitor for excessive speculation: High volume trade notifications and total exposure reporting by traders

Special Investment Vehicles (SIV)
1. Must be kept on balance sheet. (This effectively eliminates them.)
2. Must be marked to market

Private Equity
Purchased assets must be held a minimum of 5 years to penalize gutting and asset stripping

Regulation
1. Re-imposition of Glass-Steagall
2. Limits on size of banking and insurance institutions: Any institution which is too big to fail is too big. Increase anti-trust investigations and actions
3. Re-institution of the uptick rule to prevent predatory shorting of a company’s stock
4. Ban naked shorts; and CDS used to undermine a company (another reason to get rid of them)
5. Sliding scale of fees on trades that increases with volume to decrease volatility and tamp down on speculative plays by hedge funds (and investment banks trading on their own account)
6. Limitations on direct executive compensation, limit bonuses, limit stock options and draw out any payouts
7. Require independent boards of directors
8. Make both CEOs and board members criminally liable for criminal activities of the company and civilly liable for losses unless reported immediately to regulators and with relinguishment of control
9. Redefine and limit the meaning of corporations as legal individuals. Limit corporate lobbying and campaign contributions
10. Ban investment banks from trading on their own account
11. Outlaw frontrunning done with fast computers
12. Reinstitute mark to market in accounting; disallow mark to model
13. Disallow and/or limit write downs of debt in accounting
14. Disallow booking the projected profit of a contract at its beginning but phase it in over the life of the contract
15. Registration and reporting for hedge funds and private equity firms
16. Close the revolving door between government and the financial community; a 3 year rule either way
17. Completely revamp and restructure the SEC to emphasize professionalism and independence in investigation and monitoring; codify minimum funding levels
18. OTC (over the counter) exchanges must be independent or set up by another independent exchange; no OTC exchange can be owned or controlled by a market participant
19. Forbid insurance companies from re-insuring internally or through shells
20. Repeal McCarran-Ferguson’s anti-trust exemption for insurance companies
21. Ban dark pools, private exchanges where the buyers, sellers, and the price they agree upon in large block trades are not communicated to public exchanges (and so have an impact on price) until after the deal is done, presenting markets with faits accomplis.
22. Transparency, transparency, transparency

Consumer Credit
1. Re-imposition of anti-usury laws
2. Easing of personal bankruptcy laws
3. Limitation on credit card offerings
4. Debt repudiation without bankruptcy

A Consumer Financial Protection Agency with real power to require plain vanilla instruments and ban or limit abusive practices

Pension funds
1. Require adequate funding and more realistic projections for future payouts
2. Require pension funds to pursue low risk investments
3. Restrict or eliminate investments through high risk hedge funds

Tax policy (essentially dismantle the paper economy which acquires excess capital and uses it to fuel destructive bubbles)
1. Rescind Bush tax cuts for the wealthy and re-institute high marginal tax rates
2. Take income caps off FICA (Social Security)
3. Treat capital gains as regular income for tax purposes
4. After current downturn is over, increase corporate taxation
5. Redirect tax cuts to lower and middle class Americans
6. Reward companies with tax breaks if they increase workers’ wages and living conditions, and if they become greener
7. Rescind tax subsidies for outsourcing

International
1. Reconsideration of “free” trade agreements which allow for free flow of goods, jobs and capital but do not take into account environmental pollution, poor quality control, and lack of workers’ rights and safety in target countries
2. Harmonization of standards for banking, insurance, and exchanges
3. A new Bretton Woods to reconsider currency relationships: the Chinese peg to the dollar, the troubled Euro, reliance on the US dollar as the world’s reserve currency

Other
1. Single payer universal healthcare
2. Large multi-year stimulus with a view to sustainable re-industrialization: nationwide broadband, levees for New Orleans, rebuilding highways and water systems, building wind and solar power, update the power grid, conservation, mass transit, better community planning, carbon reduction projects, basic research; aid for state deficits; education grants; food stamps; unemployment benefits; and green technologies (of which an auto bailout and requirement to move to smaller more fuel efficient cars would be a part)
3. Savings in defense spending: Withdraw from Iraq and Afghanistan, cut unneeded, goldplated weapons programs, reduce the number of overseas bases
4. Change the filibuster rule in the Senate to prevent gridlock
5. Mandatory public campaign financing

These are my ideas for reform and those I have gleaned from others. If you have other suggestions, please feel free to make them in the comments.