Thursday, July 3, 2014

Anti Corporation Day

The economy added 288,000 jobs in June according to reports from employers. The numbers for April and May were revised upward by 29,000 total, this indicates the five month positive trend is continuing to strengthen. The household survey conducted by the Census Bureau for the Department of labor showed a two tenths drop in the unemployment rate to 6.1%.

Over at Fox News they took this jobs report so hard that you would have thought Reagan's head had fallen from Mount Rushmore. Shhh... they think he's really up there with the Presidents that actually did something. Their business expert Charles Payne went on about how this would be really bad for the stock market, and he's also the same one that says things like, 'It Gets A Little Comfortable To Be In Poverty'. It seems his only qualification to be a business commentator is that he hates all things democratic, any sort of safety net for workers, and he firmly believes in the 'free market' fairy to solve all problems. 

The average hourly wage was up another six cents in June to $24.42, this is an increase of 2% over this time last year and staying ahead of core inflation. But, when you consider that the minimum wage should really about $22/hour you get to the real reason the American Dream is dead, it's because the average wage is only ten percent above what the floor should be.  For many people there isn't enough to live on, and the majority have little or no disposable income. 

Plus we have the people at the very bottom getting subsidized with government money. Each Walmart store sucks up between one and two million dollars in benefits to its employees because they are simply paid too little to live on. The total workers receive is actually equal to Walmart's annual profits. Walmart is not an incredibly efficient competitor in the retail market as it portrays itself, it's simply powerful and ruthless. 

Since it's the eve of July 4th, let's remember that the Revolutionary War was fought simply to break the monopoly of the British East India Company. It wasn't about the Colonists being mad because they had to pay taxes, they weren't tea baggers. It was because British East India Company had recently been exempted from any taxes & had all the taxes it had ever paid refunded. Talk about your Corporate Welfare. 

The Colonists were also fearful of the increasing harsh treatment that the Walmart of the day was encouraging the British government to engage in, all in the name of corporate profits of course. American ships were labeled as smugglers and the manufacture of goods that the Corporation choose to trade in was prohibited in the colonies. And since most of Parliament and the King were shareholders, they had no interest in hearing the grievances of middle class Americans. Sound familiar? They were all Conservatives after all.

Twitter @BruceEnberg - Happy Anti-Corporation Day!  


I had a right wing troll try to get me to publish a link to an anti-science global-warming-is-a-hoax website. He sent me a comment filled with much flattery and intimating that he too was fighting the good fight. He included a link to what at first blush looks like a green website. I guess it didn't occur to him that I'd actually read any of it since Conservatives aren't big on research. Why do these right wing pricks like Ed have to waste my time?

Friday, June 27, 2014

Who's gouging who, get your score card here

The Federal Reserve has announced that they'll 'taper' bond purchases under QE3 by another $10b to $35b/month. Conservatives actually whine about this driving up the stock market as if that were a bad thing. All the people who bought into Reagan's 401(k) instead of a pension BS probably appreciate the market being saved, even if they didn't really get all of their money back with Wall Street capturing a huge chunk for themselves. That is why we have the big swings, there is simply no way to pay off everybody that thinks that they doubled or tripled their money in the market. And these same Conservatives want you to invest your Social Security in the market too. The Fed is also buying mortgage backed bonds and this appears to be having a positive effect with Housing Starts way up over this time last year.

Fed Chair Janet Yellen has said they'll keep interest rates low for some time even after the economy starts to recover. It may be premature to be talking about any sort of recovery however after the latest revision to the First quarter GDP. It apparently declined 2.9% on an annual basis caused by sagging consumer spending and some really bad export numbers. Since the GDP of the 4th quarter showed a 2.6% growth this downturn is probably just the result of the bad weather, so it won't be a problem unless the numbers that come out in July for the 2nd quarter are also negative.

The SEC is finally showing some interest in prosecuting the ratings firms who were instrumental in creating the Bush Crash. They were allowing mortgage companies & banks to sell junk bonds with little or no value by giving them AAA ratings the same as Treasury bonds. There's lots of guessing going on as to why the Feds might prosecute now and didn't have any interest in doing it before. My idle speculation is that the senior Bush people imbedded in the various gov't agencies to gum up the works are retiring and being replaced with people who might actually do their jobs.

Just in case you hadn't noticed, a new study shows that the average wealth of Americans is still 43% less than in 2007, even with the stock market recovery. It's also down 36% from 2003, meaning those glorious Bush years were worse than just a bust.

Even up in the top 5% where net worth averages about $1.4 million, they've seen a 16% decline from 2007. Of course when you get up into really big money as you might guess this isn't necessarily so at all, and their share of the national wealth continues to grow. It doesn't matter to a billionaire how many billions he has, it only matters that he has it all and you pesky peasants don't have anything.

It was all over the news today about how gasoline is going to be $5/gal if the Iraq unpleasantness continues, there are huge shortages don't you know. The reality is quite different, analysts had predicted a 2 million barrel decline in US stockpiles but reports to the government showed stockpiles of oil actually rose by 1.7 million barrels last week. Gasoline supplies climbed by 700,000 barrels and distillates like diesel, jet fuel and such rose by an additional 1.2 million barrels.

Fuel exports are still a big part of the US economy at 1.1 million barrels per day, if gasoline goes up at the pump it will be from old fashioned price gouging. And the Obama Commence Dept just eased the ban on the export of crude oil put in place 40 years ago, this is something you probably won't hear Sarah Palin mention while she's telling you how Obama has halted all oil drilling everywhere, all time forever, also too.

Twitter @BruceEnberg - where we tell you who's gouging who.

Friday, June 13, 2014

It's time end the nonsense

Thursday, June 12, 2014

A spike in the price of garlic

New unemployment claims were up last week but are still close to seven year lows. The number of job opening increased about 9% from March to April and were up 17% compared to April 2013. At 4.5 million this is the largest number of jobs that employers reported that they were recruiting for since 2007. Job opening have held at over 4 million for 3 consecutive months suggesting a general upturn in business.

The number of workers voluntarily quitting their jobs was up 11% over last year and people willing to change jobs suggests that the internal mood at companies is more positive. Of course some of these people may be motivated by their ability to always get insurance under ObamaCare reforms and no longer feel locked in at their current employer.

Russia appears to be moving aggressively to do a good deal of its trading in the Chinese Renminbi and some lesser Asian currencies, basically anything but the USD or the euro. China has been actively positioning itself to have a major world currency by persuading Australia, Britain and others to hold large reserves of Yuan. This makes it unnecessary to use the USD as an intermediate currency for trade with any number of smaller countries.  

Euro zone banks have begun to charge interest on cash deposited by large account holders. US banks have been doing this to some degree on dollars for years but it's only recently that the European Central Bank felt the need to do something about cash hoarding. It's always been the hallmark of the boom and bust cycles of capitalism that the rich begin to hang onto money when they smell the blood in the water of a deflationary collapse. The austerity measures that have been imposed on the debtor countries of southern Europe require significant deflation and this brings potential pennies on the euro buying opportunities down the road.

Andrew Mellon who was Sec of Treasury for three Republican Presidents in the 1920s summarized a deflation collapse as "when assets return to their rightful owners". He meant himself of course, it's difficult to estimate Melon's actual wealth as he was dodging the financial disclosure requirements of his job as well as income taxes, but he was perhaps a trillionaire in today's dollars. The Koch family fortune was made by using the boat load of cash Daddy Koch got from Josef Stalin for strategic oil well technology to buy up assets for 10 cents on the dollar.    

The price of oil is up sharply because of the imminent collapse of the oil companies' puppet government in Baghdad. Oil still has a long way to go to get to the $140/barrel price that Bush achieved during his Presidency. Starting with oil at $18/barrel, a price that analysts thought would be unsustainable once Saddam Hussein was out from under sanctions, Bush did pretty well for his cronies. That "Mission Accomplished" banner Bush got into trouble for was simply displayed at the wrong event. It was switched with the one that went to the country club that said "Go Navy".

It's a Full moon tomorrow on Friday the 13th, this rare event won't happen again for 35 years. If you live near Dick Cheney or any other Neo-Cons you'll want to hang extra wreaths of garlic before sunset.

Twitter @BruceEnberg - it's going to be nothing but garlic bread all next week.

Friday, June 6, 2014

Economic news old and new

New unemployment claims were up slightly but are still near the seven year low last seen before the Bush crash really started to pick up speed.

Over 217,000 jobs were created in May maintaining the average that we've seen during this slow climb out of the hole that the GOP has been endeavouring to keep us in. With immigration near zero that is about 150,000 more jobs than the number of new people entering the workforce. The unemployment rate based on household surveys remained unchanged at 6.3%. This is surprisingly the same rate of unemployment seen at this point in the Reagan Presidency.

However Reagan spent upwards of $11 trillion (in today's dollars) on stimulus to jump start the economy. Most of the money was squandered on military spending of course. He doubled the size of the USN to counter an imaginary Soviet buildup. This included four combat groups built around WWII battleships that were obsolete when Reagan was serving in the Army film office in Hollywood. He also funded an entirely new ICBM system that was immediately scrapped thanks to Reagan's nuclear weapons treaty with the Soviets. Reagan reinvigorated fears of nuclear annihilation to push through spending $1t (or the equivalent of $3.5t) on SDI or Star Wars research that produced exactly nothing.

Reagan did fund some highway safety improvements like guardrails and sand barrels at bridge abutments. Not so many bridges though. He did pay for lots of airport runway improvements, these were mostly at small remote airports to make them long enough to handle corporate jets. This was supposed to bring jobs to rural america. Of course at the same time he was signing stacks of exemptions to tariffs that began the de-industrialization of America.  

Speaking of thing no longer made in this country, China has agreed to abide by a WTO ruling that China must end its tariffs on the export of Rare Earth metals. These metals are essential to just about everything that we would consider to be a 21st century product. This does nothing to address 97% monopoly that China has on production of these metals. Eventual monopolization of metals was a policy that China put in place when Reagan began normalizing trade with China. Geo W Bush allowed the sale of all existing US rare earth production equipment to China shortly after 9-11. Building a new rare earth industry in the US is a ten to twenty year project, and there is very little being done about it.

The SEC has announced that they are coming out with new regulations on high speed stock trading that basically takes advantage of stock market swings in the nano-seconds before this knowledge becomes available to the public. The SEC also says they will address the so-called Dark Pools where something like 60% of all stocks are traded with no transparency to the public. We'll see if this new regulation turns out to be anything meaningful.

Twitter @BruceEnberg - on a computer not made in the US, and that even if we tried to build in the US we would need parts that can only be made in China thanks to Reagan and friends. In his mind Reagan was one of the Greatest Generation, but he really should be remembered for what he actually did.

Thursday, May 29, 2014

Don't just sit there with Slime on your head

Now that more data is in, the Bureau of Economic Analysis say that the GDP shrank during the First Quarter by 1% adjusted to an annual rate. If this were to happen again in the second quarter we would officially be in a recession. But, since we had an official growth rate of 2.5% in the GDP in the fourth quarter, I would bet against that happening.

New unemployment claims were back down again for last week and this would bode well for a good job creation number next Friday. This follows a good number for last month and would indicate little chance of an official recession. That doesn't mean that things aren't still crap for the majority of Americans. Things are so bad that several major employers of low wage workers are hinting support for, if not endorsing outright a significant increase in the minimum wage.

Increasing pay for minimum wage slaves would help the economy but doesn't address the falling wages for the traditional 'good paying job' that is simply disappearing. Volkswagen's non-union plant in Tennessee will only pay $27/hour as opposed to GM, Chrysler, Ford, Toyota and Honda that pay $52/hour. German factories (in Germany) pay still higher wages and much better benefits.

But is VW really out of line with these low wages? In US factories it's been the practice for a couple of decades that so-called second tier union jobs pay less than $20/hour with no prospect of ever getting real union wages, and increasingly they are being stripped of all benefits. As older full union scale workers retire, their good paying union jobs that built the American middle class are retiring with them.

With the next economic slump there will be another push to eliminate the pension benefits that these Reagan Democrats have been taking for granted. Their great grandfathers fought for Union scale, but Reagan convinced them that they were really capitalists, and American exceptionalism meant they would face no real competition from Asia for their jobs if tariffs were ended. These newly impoverished retirees that ended union scale for everyone but themselves can expect no sympathy from the second tier wage slaves that replaced them.

The high-tech jobs that were supposed to replace these 'dirty' (but good paying) factory jobs are disappearing even faster. The high-tech jobs that were actually comparable in pay to traditional factory jobs have largely disappeared and even the ones that pay in the mid-teens are being sold to China. People like Mitt Romney loot the cash from a company including its pension plan before crating up the equipment and shipping it to Shanghai getting a premium price for it because it eliminates US competition at the same time. Some might call this treason.

Speaking of traitors, median CEO pay has now crossed the ten million dollar mark, or 257 times average worker pay. This is up from 181 times worker pay in 2009. In other industrial countries CEO pay barely gets into double digit multiples of worker pay. Prior to Ronald Reagan, US CEO pay was less than 30 times worker pay, so we're talking a 1000% increase in pay in 30 years. And the ghost of Reagan says, "Well, I told you Trickle Down Economics would work", "What do you mean voodoo? Well there you go again."

Twitter @BruceEnberg - where you can find out who to call when you're covered in the GOP's ectoplasmic slime.

Thursday, May 22, 2014

It takes a sharp wooden stake

The new unemployment claims reported on last week were at a seven year low, the report for this week is up again close to the moving average, but overall it's not bad news for the economy. We will probably see more people leaving the workforce now that they don't need to stay with the company that provides them health insurance, and this should be reflected in a falling unemployment rate. Worker mobility should improve from this 'portability' aspect of ObamaCare, and this could result in fewer people being laid off since workers are able leave a company for another job rather than hanging on until the ax falls.

In theory we should see an upturn in people creating their own business since they don't need to worry about finding health insurance. There is however the problem that if a person is a college graduate they are likely be carrying a large student debt load and this hampers entrepreneurship. Unless you simply take Mitt Romney's advice and borrow the money from your father to get started, it worked great for him.

The more than one trillion dollars in student debt is also overhanging the housing market. It used to be that you could count on college graduates in their twenties to buy houses, but even if you aren't working at Best Buy with your engineering degree you're still screwed. Banks are requiring a mountain of paper work, a large down payment and a cash reserve in the bank. The fact that your student loan would be enough to buy a modest house doesn't really work for you, or for the economy.

Home sales are down 7% compared to last year and are many are 'cash' sales, and these are still on the rise. Cash sales mostly go to Wall Street hedge funds that have already bought up close to 150,000 houses, getting them at fire sale prices from banks that had foreclosed. In theory these houses are to be managed as rental properties providing a tidy return to investors that buy securities based on portfolios made up of these houses.

If this has a familiar sound to it, like the creak of a floorboard in horror movie, it's because these very same houses were once securitized based on their mortgages. The investors then bought so-called 'insurance' or rather derivative contracts based on pure speculation on whether or not these investments were actually worth anything. It was not unusual to have four or five layers of derivatives on every loan with the derivatives repackaged in increasingly complicated formats. This was what caused the collapse, not the relatively few homes purchased by brown people that the Conservatives blamed for the collapse of the World banking system.

No matter how many times you kill the monster, Wall Street bankers just keep coming back. Elizabeth Warren keeps telling us about the danger, but what she really needs is a wooden stake, a few clever puns and some fast paced theme music. Then she could just dust the demon bankers once and for all.

Business lending is up, but it's still really hard for a small business to get a loan. Not to worry, a new type of demon has crawled up out of the Wall Street Hellmouth to fill that niche. Boiler room operations are running full steam calling contractors, truckers and florists to offer them loans regardless of their credit rating at the generous sub-prime rate of only 125%. Since these are business loans they are not covered by consumer protection regulations so they can pretty much do as they like.

This lending is no small potatoes, these demon spawn are doing twice the loan volume of the Small Business Administration and growing fast. A natural disaster such as hurricane will wash these slimy creatures up on the beach where they begin to prey on small businesses in a similar fashion as Pay Day Loan operators do. An initial line of credit will be offered with no collateral requirement but with an exorbitant interest rate and daily payments bled from the victims neck, I mean deducted from their bank account.

Of course any default on the daily payment will dig you in deeper and deeper with no hope of escape. The Sopranos did this to a Sporting Goods store in one episode. Tony could have worked on Wall Street, made more money and not needed to fear the Feds.

And Wall Street is now securitizing this debt as well, investments are being sold with loan tranches ranging from 29% to 134%. Usury laws are being avoided by partnering with banks in Utah were no such moral constraint exists. The scum can get away with this thanks to the Corporate Supreme Court of the United State that legalized the creation of such fictions to avoid local laws. So much for Conservatives belief in State's Rights. In this 'republic' only non-living things have rights.

Twitter @BruceEnberg where the concept of rights for humans is still discussed. Bankers and other Demons will be staked, or at least blocked from tweeting.