Turning that smile upside down

The latest economic outlook survey shows a dramatic increase in consumer confidence in the area of durable goods purchases. The number hasn't been this high since before the Bush Crash, and it parallels increased housing starts. What we're seeing is the belief among workers that they'll have a steady income long enough to pay for the new refrigerator that they've been putting off for years.

This doesn't mean that we don't have an ever increasing number of working poor who probably won't be buying anything new. This trend is starting to affect the bottom line of the country's largest private employer. That ubiquitous smiley face at Walmart has been flipped over at corporate headquarters and being used for a dart board. Sales are worse than flat for a company that has existed for growth the same way a cancer cell views its host, and as it turns out with similar results.  

It appears that the practice of Walmart laying waste to the economy of the surrounding communities may have not been a good business model after all. Not only do they pay below subsistence wages, but they relentlessly shut down all their small business competitors, and professionals that served them. Of course they've also been forcing out all the factories that used to make the stuff Walmart imports from China.

Throw in the austerity that Republicans backed by Walmart are imposing on local government and an ever larger slice of their market is simply disappearing. The Dollar stores are doing pretty well, so is the food pantry and the thrift store. The prison is doing pretty good, but it's been privatized and doesn't pay much better than Walmart anymore. Further depressing consumption is the declining birthrate and it would go to zero without the Earned Income Tax Credits that Republicans would love to end.

We need to keep in mind that this wasn't a blunder on their part, for the billionaires it isn't about making money. It's about capturing all of the real wealth, the Walton family alone has more wealth than the bottom 40% of Americans. This isn't anything new, this country was founded on need to get rid of British East India Company, which was truly the Walmart of its day. Until Americans become acquainted with history again there won't be any change. More accurately things will only continue to get worse despite any business cycle upturns like the one we've been seeing. The up's will be smaller, and the downs deeper until there simply is no middle class left.      Twitter @BruceEnberg  Sending me carrier pigeons is okay, but my cat eats the slow ones.

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A new Strain of Rot

New unemployment claims increased sharply last week reversing a multi-week downward trend, but it's still not so high as to cause any real concern, yet. Other economic indicators support the notion that we're not actually losing jobs.

Have you noticed that most Republicans aren't talking about the deficit that much anymore? That's because it's disappearing out from under them like Arctic ice under a Polar bear, and they are forced to cling to any ginned up scandal or half-baked conspiracy theory that comes floating by.

The original Simpson-Bowles plan called for a Federal budget deficit equal to 2.3% of GDP in 2015, largely by starving grandma and achieving magical economic growth rates by cutting taxes on the 'job creators'. Instead Obama chose to keep feeding the 47%, raise taxes on the 'job creators' and maintain most spending as it is. The result of this 'socialist Kenyan' plan is that the deficit is now half of what it was when he took office and is on track to hit 2.1% of GDP by 2015 or two tenths lower than Simpson-Bowles demanded.

Let's not start popping the champagne corks though. We've held the austerians at bay, but the underlying rot is still doing its work on the economy. A new twist on the old Con revolves around the housing market. It's been noticed for several years since the Bush Crash that about 25% of home sales have been for 'cash' meaning investors, and not home owners have been buying them. It turns out that it wasn't small local investors or house flippers buying bargains, but large scale private equity firms that have been squeezing out the little guys. They've buying as many as 40% of houses being sold in some markets.

Remember when Mitt Romney said Obama shouldn't be getting in the way of foreclosures? Let people with money buy up these houses and put them out for rent. Yeah here we come.... Sounds like the evil banker from 'It's A Wonderful Life', doesn't it? Only he was an amateur. What these pirate equity companies are really about is they are bundling these properties together and creating IPOs to sell to investors. Some fund managers that have been approached with these offers are saying that they are making some sketchy claims about the returns on investment.

Sounds exactly like the sort of Ponzi scheme they were running on securitized mortgages that were issued on these same houses before the last crash. And they're pushing hard to move it all before anybody catches on to how bad these investments really are.

Is this enough to collapse the economy again? No, probably not. The problem is this is just one of many crooked schemes Wall Street is running. The Commodity Futures Trading Commission has just backed off from a relatively strict rule on Derivatives that would have required five banks to compete on any derivative being marketed or it couldn't be sold. None of these things should be sold, they used to be illegal for good reason. So we still have 600 trillion dollars (ten times world GDP) of these things in circulation just waiting for the next big screw up to create another banking collapse. And those 'too big to fail' banks from the last crash? They're much bigger and are steadily gobbling up the small banks every day.

Something will trigger a complete collapse in the next couple of years unless something is done. Republicans are successfully blocking the implementation of the modest reforms of Dodd-Frank so we are really worse off than we were before. It all hinges on next year's election, the only good news is the Republicans are being seen as less competent by the voters, the bad news is they still have all the money in world to simply buy elections.  www.prairie2.com  Twitter @BruceEnberg  Facebook Prairie2 News   'Dead Drop' under the third bench in the park.








sun spots

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A Final Number, and a non-starter

One thousand, one hundred, twenty seven people is the final toll in Bangladesh making this the sixth worst such 'accident' since the dawn of the industrial age. Of course it wasn't really an accident, it was industrial scale murder, and it's not going to be the last. It was not so much the fault of the local 'owners' that are in police custody, but fault of the people who remain faceless behind corporations that make it clear that this is the way things will be done.

Those faceless people aren't in prison, they won't miss a single seven course meal served on the finest china, and they will sleep comfortably in palaces that princes of old could not dream of. And 1127 is just the 'official' number, we'll never know the real number, perhaps as many as 400 people are still missing, still faceless, and will remain unknown to all but those they left behind. When multi-ton slabs of concrete pancake together... you see the counting isn't precise, although authorities have promised DNA testing, the time available to take samples is limited by the intense heat and limited money. You can only ask so much of the people on the ground who must do the actual work.

The sheer size of this particular tragedy has spurred possible labor reform in Bangladesh. Only 30% of the worker's signatures are required to unionize a factory in Bangladesh, but the roll has always been made available to employers. You can guess what they do with that list. Supposedly the government will no longer make those names public.

Additionally, some higher end retailers and major European companies have signed union agreements backing safety reforms. Big Box US companies have not, and don't hold your breath for that to happen. The truth is that no union can stand against unregulated corporate America. If Bangladesh reforms their textile industry, look for the Big Box companies to simply move to some other god forsaken place that they can exploit.

The $5b it would take to reform the safety practices in Bangladesh would cost ten cents per garment spread over just five years. Paying the workers a living wage would be still more billions. The thing is, spending of this nature isn't money that disappears, your spending is my wages, and back again. It would be good for the economy, but that's not what the billionaires want. They want it all, and a good economy makes it impossible for them to achieve that goal. They would have to share, and that's a non-starter. www.prairie2.com   Twitter @BruceEnberg   Facebook Prairie2 News

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Not getting enough P2?

I haven't been writing as many blogs lately as I've been obsessing over my twitter feed. If you want to follow the collapse of civilization in real time, pick up my feed. I follow a lot of other feeds and will provide links to interesting articles as well as my own blow by blow reports. I will be writing more blogs once I get settled into the new tech. I kind of like twitter, it's like telegrams. I just need to get a paper tape strip printer and have the lines pasted onto quarter sheets of paper....

I do also try to provide Mike with material on a nightly basis, not that he's always in the mood to hear it, but you should tune in just the same. What else are you going to do, watch reality tv?  - P2  Twitter @BruceEnberg   FaceBook Prairie2 News

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Bits, pieces, and body parts

New unemployment claims fell again last week setting another new record since the Bush economic collapse. The Federal Budget deficit continues to fall, not so much from spending cuts but from increased revenue as the economy continues to improve despite the efforts of Republicans.

Senator Elizabeth Warren has introduced a bill that would require Federally backed student loans to be issued at the same rate that the Federal Reserve lends money to billionaire owned banks. Good luck with that.

The average wage for a two year community college grad is now higher than that of four year college diploma or higher. Not unexpected since fully half of all 'real college' grads either have no job or are working at Best Buy. Most new jobs that should be done by US college grads like engineering, medical research and even corporate law are now done in China or India. Youth unemployment in the US is now higher than in austerity ridden Europe.

Darrel Issa admitted to reporters that he discovered nothing new in his Benghazi hearing. Paul Ryan complains that Obama never calls him 'to chat'. Obama can read the daily talking points on Drudge, so why talk to the gym rat? House Republicans got enough votes to mandate by law that China gets paid ahead of Americans' Medicare if there is a cash flow problem with the Federal budget.

Pat Roberson cautioned today to beware of 'false prophets', in November God told him that Mitt Romney would win, would serve two terms, and the economy would boom. Well the economy is picking up. Batting .334 in the Major Leagues will make you a rich man, apparently a rich prophet as well.

Baby Boomers and the middle aged that have just now realized that they should not have voted for Ronald Reagan have for the first time ever pushed the suicide rate above the death toll from car crashes. The suicide rate among older Americans had been relatively low, but no more.

Senator Tom Colburn asserted on Fox that since Obama signed the law permitting people to carry guns in Federal Parks that violent crime there has declined 85%. Actual numbers are that violent crime of all types declined by 12%, but murder is up by 133% in the parks. Slightly less chance of being robbed, if you don't mind being dead.

The $5 billion it would take to upgrade all Bangladesh factories up to modern safety standards would cost ten cents per garment when spread over just five years.

Photos are available online showing scattered in the debris the labels of the stores that the sweatshop workers died for. The most 'touching', yet disturbing photo to surface shows the bodies of a man and women embracing in their final moments pinned in the fallen concrete. However since there are no obvious injuries to their bodies above their pinned legs, they may have been this way for some time before succumbing to their injuries.

The death toll at the sight of the Big Box Store sweatshops has now passed 1000, and after a sweep of the basement area the army will bring in large bulldozers to 'shift' heavy debris in an attempt to recover the remaining corpses that are now little more than skeletons.

A fire at a Bangladesh garment factory yesterday killed 'only' eight workers.  www.prairie2.com   Twittter @BruceEnberg   Facebook Prairie2 News

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Ye Olde Ayn Rand & other Tory talking points

We must find that we cannot levy taxes upon the bowed heads of the noble 'job creators'! If the Crown were cease exempting the British East India Company from the Tea Tax Act and other encumbrance that the rest of us must bear, then they would in good time leave our humble Colonies. And we would all to fall into starving & ruination! Ye verily!

Besides bringing unto us these miseries, what earthly goode did it do to allow militia to turn their ships away from the harbors of New York and Philadelphia? They will simply sail un-impeded unto port of Boston for their many benefits. We must not fail to compete rapaciously for the import trade from China and the Orient at our own peril. Let us giveth the job creators land freely, many cheaper labourers; be they indentured or the slave, favourable law for their goode practice of commerce, & that what so ever they should in their God Enlightened Wisdom desire from our humble selves. So it is said by the Blessed Word of the Lord itself.

Those that speak of the so-called 'Liberal' Enlightenment that all men are created equal, know not of God's Will & speak with the forked tongues of blasphemers! These cowardly liberals have filled the head of the Commoner with utter nonsenses. For he knows not what is goode for his person being little more cognoscente of his surrounding then the lowly woman or the naked savage. It could be said that the black slave possess more inherit wisdom as he clings to his servitude willingly, grateful for the blessings bestowed upon him by his master. The goode servant never seeks to break his sacred bond, and we would do well to emulate him in all such things, as our masters were all chosen by God in His wisdom to make us free to serve.

God Save the King & bring all His blessings upon His Corporations. Parchment available at www.prairie2.com  Twitter @BruceEnberg  Facebook Praire2 News [parchment delivery guaranteed by Spring next with favorable seas]

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Knocking down the talking points, one by one

The 'talking point' to justify not enacting gun background check legislation that 92% of Americans support is that, "if we allow this to be passed it's just the camel's nose under the tent. The liberals will just want more when it doesn't work..."

The problem with this 'thinking' is that if reasonable legislation can be stopped by democracy, wouldn't it be really easy to stop future legislation when this failed to preform? Isn't obvious that what they really fear is that it would work, and that gun sales would plummet as the 'irrational fear' that they've created subsides?

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Two very different reasons to print money

New jobless claims fell to 324,000 last week and these numbers are starting to look like pre-Bush crash statistics. Job creation while steady has not been particularly robust, averaging 225,000 per month. The bright spot was February and that number has been revised upward to 325,000 new jobs for the month. April coming in today at 150,000 was better than the March number revised upward to 135,000 new jobs.

These statistics are from employer establishment surveys and may not reflect accurately what is really happening. A sharp increase in pickup truck sales indicate a resurgence in small business activity that   could mushroom into more jobs across the economy. Ford has announced the hiring of 2000 truck assembly plant workers, this alone will had additional jobs in parts manufacturing, and in other areas where these workers will spend money.

Drudge didn't run their monthly screaming headline about the decrease in the labor participation rate, since it has turned sharply in the opposite direction. This indicates that more people are in fact finding work compared to the number that aren't working. These non-participators include those who are jobless as well as young people and immigrants newly entering the workforce. The total number of people that are available to work includes all non-military, non-institutionalized adults no matter how elderly. The participation rate has been drifting lower ever since the Baby Boomers have started to retire and only became a concern for the Right Wing media after Obama took office. The percentage number is based on the Bureau of Labor Statistics Household Survey which also produces the unemployment rate that moved down in April.

The 'austerity at all costs' crowd can take comfort in the continuing decline in the number government and postal workers. This is putting a drag on the economy as does the continuing out sourcing of good paying manufacturing jobs by companies like Bain Capital. While there was a four cents an hour increase in the average hourly wage to $23.87, that really reflects a modest increase in pay at the low end of the pay scale that makes up the bulk of American jobs. This is barely off-setting the better paying jobs that are disappearing. Since the real minimum wage should $22/hour, this illustrates perfectly why the economy is still in the dumper, nobody has any money to spend. No spending means no demand, and no demand means no jobs.

Really the only thing that is keeping the whole thing from collapsing is that the Federal Reserve is printing 85 billion/month in new money to buy various bond instruments, with the Fed now holding over $3 trillion. This 'quantitative easing, version 3' spending works out to a little over a trillion USDs on an annual basis, or equivalent to over a quarter of the Federal budget, or a 16th of the GDP. This so-called QE-3 has no planned end date and they are even discussing increasing it. While it poses no threat of run away hyper-inflation as the far right keeps insisting, it does indicate just how deep of a ditch that we are in. And no, this is not a good way to handle it. But, not doing QE-3 along with Congress not doing anything would result in total collapse.

The People's Republic of China continues to increase its dominance of world trade with the amount international business actually being done in the Chinese Yuan increasing by 17% last year. This sounds like a lot, but they still are way behind Norway's currency. Not that this won't change, increasingly China's trading partners are holding Yuan cash reserves rather than using the USD or the Euro as an intermediate currency. Some folks are suggesting that the Yuan could be comparable in volume to other major currencies in as little a three years.

This is really amazing for a currency that nobody outside China would accept just ten years ago. Just 30 years ago China was building steam locomotives and now they dominate the world in bullet trains. The US of course, has none of that sort of thing. China prints money for trade, we print money to keep the billionaire's banks from collapsing. This illustrates the difference between having a government that has as its purpose the development of the country, and that of having a government whose purpose it is to transfer wealth to super rich.  www.prairie2.com  twitter @BruceEnberg  and Facebook Prairie2 News

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