Monday, August 24, 2015

The ghost of 'Morning in America'

Today is being called Black Monday by Conservative types who are having a fit about the 4% drop in stockmarket. The scary news broadcasts are sure to mention how much the average 401(k) has lost, but they're careful to tell people not get out of the stock market as it always comes back. This is a bald faced lie as it concerns managed 401(k) accounts as they always burn through a big wad of your cash even when you're making money. When the market goes down you really feel it. If you're stuck in one of these traps put your money into an index fund so there are fewer fees and no losses from the fund manager trying to beat the market.

The last Black Monday was October 19, 1987 when the market dropped 22.6%, almost 6 times today's drop. Saint Reagan was in charge then so you don't hear anyone talk about that particular Monday. Reagan was cheerleading the switch to 401(k) but they were new and the amount lost was relatively small. Reagan didn't actually invent the 401(k), but he sure thought they were swell. The tradition of defined benefit pensions was converted to simply dumping your money into Wall Street. This was great for Ronnie's corporate buddies who were getting all manner corporate behavior de-criminalized, and they granted him Sainthood for it as he absolved them of all their sins.

Twitter @BruceEnberg - China is putting a lot of former high level officials in prison for corruption, we should import that instead of crap for Walmart.

Friday, August 14, 2015

"Was it over when the Germans bombed Pearl Harbor?"

China devaluing the yuan against the USD had everyone in a tizzy this week. Taking a 2% markdown in one day alone started a three day decline that ended Friday with China giving their currency a slight bump against the dollar. And China stated flatly that they will maintain this exchange rate. Mostly this devaluing against a strong dollar is a signal to China's own people that they will do what it takes to maintain their economy.

The usual suspects in Republican debates are screaming Currency War and China is about to crash the Dollar! Of course there is no way this is about to happen now, this isn't 2008. All the panic did push the price of gold up slightly or rather pause its decline. At some point the price of gold will get low enough that I'm going to treat myself to a solid gold can opener.

Right Wing trolls have been having a hard time coming up with new Talking Points, so they continue to use the old ones that are way past their 'lie by date'. Workforce Participation Rate is an oldy but a goody, they're now screaming about how it hasn't been this low since the early 70s. The fact is that the percentage of working adults over 16 and not in the military or an institution, began declining at the beginning of the 2000s as Baby Boomers began to retire.

The Right Wing's supplemental Talking Point is that the Workforce Participation shot way up under Reaganomics. Obama's economic numbers are better than Reagan's in any meaningful way and Obama didn't borrow current equivalent of $10t to give away to his cronies either. Of course Reagan could have never have won the Battle of Jutland without those four Iowa Class Battle Battleships and 250 ships he built to support them. (Jutland 1916 was last time battleships fought) And of course Reagan could have never have stopped the Soviet Nazis attack on Pearl Harbor without building the Star Wars missile defense system at the cost of $3t (adj dollars).

Oh yeah, the Job Participation Rate shooting up under Reagan. It was simply millions of women going to work even if they had young children because of Reagan's War on Middle Class wages. For those of you who don't remember the olden days before Reagan, it was common for married women to never work outside the home and with a union job not a difficult thing to do. Now only religious cultists observe that practice.

The current Job Participation rate for Prime Workers 25-55 years old has actually been climbing robustly since Obama put the brakes on the Bush Crash. Of course there have been no real gains in wages but it's up to Congress to reinstate the Hamilton Plan for Manufactures. It was originally enacted in 1792 and largely maintained until 1981 building America to the industrial juggernaut it once was. Now they want to take Hamilton off the money because nobody knows why he's there. China has actually been following his plan since 1981 has gone from building steam locomotives to being the number one world economy, maybe they'll put him on the ten yuan bill.

Twitter @BruceEnberg - where we flip the Right Wingers over and check their 'lie by date'.




Monday, July 13, 2015

The weekly Greek crisis.

We're approaching a final showdown on the Greek/Euro crisis, of course we have one of those every week. The rhetoric in press is really heating up as their past attempts to force a collapse of the Greek government have so far failed. The Greek people spoke resoundly in their referendum that they don't want to be slaves to bankers, so now the rumor being spread is that their government made no plans about what to do if they actually won the referendum. Supposedly the Greek PM has now accepted worse terms than they were offered before the public voted. I can't count how many times in the past this a similar claim has been made in the media.

A bit of reality. Most of the so-called bailout loans from the europeans have gone to pay europeans holding Greek debt and not to actually keep Greece going. Greece has already accepted far more austerity than they should have to balance their budget, so in reality they're not that dependent on more loans to keep going. As long as Greece doesn't feed the parasitic bankers it can actually do okay.

Greece is not a failed state, it can collect most of the taxes due and it still has an economy. Greece has currency controls in place to keep the bad guys from simply draining all the euros from its banks.

Even if Greece isn't in a position to print drachmas right away it could easily begin issuing IOUs to pay its bills. These would begin trading on the open market for euros to maintain Greece's currency needs at what ever discount rate someone is willing to pay for them. These IOUs would become a defacto currency with a flexible exchange rate. A separate 'currency' for trade would make Greek exports far more competitive and grow its economy. This is the only solution that can work. Simple math requires that austerity measures will always shrink the economy by a greater amount than the austerity 'saves'.

A long term solution depends on whether Germany is really determined to make Greece suffer as a demonstration of the power wielded by the Aryan Master Race, (oops, I meant "the hard working German tax payer"). Greece is really insignificant to the euro, but the bankers have been pulling the same con on several much larger countries that are watching how this plays out.

The Gold Bugs are beside themselves that the Greek Crisis hasn't caused that huge spike in gold prices they've been waiting for ever since the price tanked a couple of years ago. There's even talk that this is the end for gold as a hedge. I've always wondered why I keep hearing the slogan, "Obama has debased the dollar" from Conservatives. The dollar is at its strongest in 20 years and inflation is nonexistent. It took a long time before I found one of them that could actually explain their talking point. They think the dollar is debased because the price of gold went down. Yeah, gold 'buys' fewer dollars so they think Obama is suppressing the price of gold. They of course have no explanation for how Obama is doing this. According to the Gold Bugs you should buy lots of gold because it is above all government influence, that is until the crazy claims they make about gold turn out to not be true, then as with all things, it's Obama's fault.

Twitter @BruceEnberg - oil prices keep falling which will likely bring back $2.00 gasoline by Labor Day, the one thing Conservatives won't blame Obama for.

Friday, June 12, 2015

Bring your own Unicorn

House Democrats lead by Nancy Pelosi have nixed a key provision of Obama's free trade Bill effectively killing it for the time being. In reality it was the failure of Republicans to pass it as they control the House, so it's probably just their way of embarrassing Obama before doing their Corporate Masters bidding next week. Republicans seem to keep forgetting that Obama isn't running for a third term, and this will give Democrats a stick to beat job exporting Republicans with before next year's election.

Job creation was a robust 280,000 for May and the March number was revised upward by 32,000 to 116,000. Hourly wages rose by 8 cents to 24.96 and over the past year wages rose 2.3 percent. Considering that the minimum wage should be $22/hour these positive numbers are rather lackluster and simply reflect the 'success' of Reagan's war on the Middle Class.

Greece appears to be getting close to an actual showdown with its creditors because the sticking point being their refusal eliminate old age pensions. Bankers really don't like keeping people alive who can no longer work.

There's still time for the European Central Bank and the IMF to come to an agreement with Greece. That is unless they are really set on making an example them. Spain is only months from going with a similar populist political party set to sweep into power before year's end. So far there have been no real negotiations, simply a slander campaign in the media with the hopes that the bankers could destabilize the populist Syriza Party government.

The wildcard in all of this are the Chinese who have made moves suggesting they might be inclined to help Greece if they drop out of the euro. These days yuans spend as good as anything and China would just love becoming a major player in the Reserve Currency business by pushing the euro into 3rd place. Once Greece drops out of the euro there would be incentive for a line of debt ridden countries to bail out if China provides a soft landing.

Twitter @BruceEnberg - where we are always holding out hope for a Fascism Free world. Bring your own Unicorn.

Tuesday, May 26, 2015

With Stetson in hand

Weekly unemployment claims continue to hover at levels that predate the Bush Administration, this despite the supposed boom that Bush created by cutting taxes for the rich & after Obama raising them back up again supposedly hurt investment from the Job Creators.

Job creation numbers for April have moved back up to normal levels again now that the West Coast port strike is over and the truck driver labor actions to recover stolen wages have been successful. Trucking companies will no longer be able to pretend their drivers aren't employes and will pay huge amounts in back pay and penalties.

Greece is coming to its monthly crisis about paying its creditors or not. The IMF and private bankers are still demanding grueling austerity and the privatization of public assets. Greece's new government continues to simply say no. At some point the euro bankers are going to give in or Greece will start printing its own money.

The indignados (the outraged) Party has swept local elections across Spain to the chagrin of the ruling party. With General Elections required before the end of the year this anti-austerity party seems poised to take control of Spain less than a year after Syriza took control of Greece running on the same platform. This has to give the euro bankers pause or maybe they just don't care. It's not like their attempts conquer Europe will be met with War Crimes trials this time. There's always the potential for them to acquire more wealth and power next year.

The Texans have momentarily halted their threats of Secession to instead call on the Yankee Carpetbaggers to send them still more disaster relief. How can the Red States complain with a straight face about Federal Government spending when everyone of them get considerably more money back than they pay in? The Texas economy narrowly avoided free fall when the plunge in oil prices gave way to a partial recovery, it seems it wasn't Conservative pro-business policies causing the Texas Boom but simply the high price of oil.  

Twitter @BruceEnberg - where you can learn how Obama is using the cover of Jade Helm to invade Mexico and force them at gunpoint to take Texas back.






Friday, May 1, 2015

I'll bet you a Yuan to a Baklava

First Quarter US GDP came in at 0.2%, which is down from 2.2% in the Fourth Quarter. This isn't really a huge drop in US economic growth as you might think at first blush. When GDP is calculated exports are added and imports are subtracted. The strong USD is making imports 'cheaper' and throttling exports to euro using countries that must pay much higher prices for US goods. 

China of course is right there to sell the exact same things as the US at a more favorable exchange rate as more countries are simply trading in the yuan instead of converting them to USD first. Not that the US is a big exporter anyway, but Europe does use the US as a 'cheap labor' factory floor. Overall the top US exports are gasoline, fuel oil and petrochemicals. Our chief 'manufactured' export to China remains recycled cardboard.

Greece and Germany continue a tit for tat game of threats, insults and kabuki theater. Greece has made clear that they are tired of being taken advantage of while Germany pretends that they're the real victim of a lazy childish bully. Germany wasn't amused that some in Greek government pointed out that Germany still owes reparations for the occupation and looting of Greece during WWII. Today Germany does the looting with bankers and Current Account surpluses instead of Panzers and Messerschmidts.

So far the only ground the Greeks have given to the bankers is that Prime Minister Tsipras has rotated (but not removed) Finance Minister Varoufakis from his position as lead negotiator. The Germans and other European pirates (I mean bankers) really don't like him as he easily cuts through their BS of austerity

Varoufakis is an economics professor from an affluent family with dual Greek/Australian citizenship.  He is handsome, flamboyant & outspoken on issues of social justice worldwide having traveled extensively along the world's major dividing lines in Palestine, Ethiopia-Eritrea, Kosovo, Belfast, Cyprus, Kashmir and the US-Mexico border.  He's basically a combination of Paul Krugman, Alan Grayson and Bono. I'm guessing that the Greeks got some major concessions just for moving him out of the spotlight.     

A German newspaper is reporting that Germany intends to keep Greece in the euro even after default which everyone keeps saying is inevitable, even though each deadline passes with no actual crisis. As I predicted China has shown an interest in helping Greece and Greece is said to be preparing to issue its own parallel currency. This is likely why the European Central Bank has continued to make loans to Greek banks despite early threats to cut them off, they really don't want China getting a foothold among the southern European countries that they've been looting. 

It appears that Greece's creditors have just been running a Fox News style campaign hoping to undermine the Greek government to no avail. They've even gotten US Treasury Sec Jacob Lew to issue dire warnings about the suffering Greek citizens will endure if their government defaults to its creditors and drops out of the euro. But Greek citizens are suffering so much already and the demands of the bankers for even more draconian measures has those 'warnings' falling on deaf ears. 

Even though the media has labeled the ruling party as leftist and extremists, in reality they're competent, no nonsense centrists along the lines of FDR and the New Deal. Too bad we don't have that here. 
Twitter @BruceEnberg - I'll bet you a yuan to a baklava that Greece is going to win this game.

Friday, March 27, 2015

Things are up and that has Conservatives saying that they're down

A lot of contradictory statements are appearing in the business news about the debt crisis in Greece. The usual suspects blame the Greek people for being lazy tax evading leeches living off the welfare state. In fact per capita economic output is higher in Greece than in several US Red States, at least it was before austerity. Greece does have a problem with tax evasion, basically the rich feel entitled to not pay them, just like in the US. The new so called 'far left' government vows to do something about tax collection and since they aren't in the pockets of the rich they probably will. In the US the rich don't so much evade taxes illegally, they just have tax evasion decriminalized so that they accomplish the same goal.

The Greek government has made it clear that they have no intention of paying their creditors without a deal that reduces their debt payment burden to a manageable level. To some this seems outrageous but Greece didn't have a debt problem until they were set upon by Wall Street banks that drove up the interest rates that they had to pay. The subsequent austerity demands from German banks wrecked their economy making debt management impossible. The so called bailout requires that the entire country of Greece be privatized from ports, railroads, and other infrasture to all public lands including Greek antiquities. During the Bush administration there was a concerted effort to do that in the US and that scam has never really gone away, it's just concentrated in the Red States.

With Germany's outrageous trade surplus the euro is really the deutschmark. The Germans are stuck between two factions. Those that want to make an example of Greece and throw them out of the euro and those who see the rest of Europe following the Greeks out the door making the euro worthless. So far the Germans have been giving ground despite claims in the Conservative media suggesting that Greece is on the ropes.

In more news that contradicts the Conservative media: 'strategists' (what ever that means) that work for the Bank of America Merrill Lynch are saying that this October the International Monetary Fund will add the Chinese yuan to the basket of currencies that make up the "Special Drawing Rights" fund that the IMF uses for its transactions.

Currently there are only four currencies used for this purpose, the USD, euro, British pound and the Japanese yen. This would make the yuan officially one of the world's major currencies. In fact the yuan is already held as a reserve currency by many foreign countries. A reserve currency is used to settle international trade transactions. Most countries used to exchange yuans for USD on each side of the trade, but not so much anymore. The US doesn't have much to sell anymore, so it simply makes sense to do the trade in the currency of the world's dominate economic power.

The ascendency of renminbi (the People's currency) to world domination contradicts the constant drone from the right that China is on the verge of collapse any day now, they've been saying that for 35 years. The other name for China's currency is actually slang, yuan translates as 'round' like coins. The Right likes to say China has moved from Communism to capitalism. The Right used to say that would make China democratic, they don't say that anymore because they don't even pretend to want democracy here, just capitalism.

At least the USD is currently pretty strong and since the typical American consumes a lot of imports that's a good thing. A strong dollar is bad for exports, but we don't make anything anymore, so it's not really a problem. So when a Conservative tells you that Obama is debasing the currency you could point this out. It's not going to make a dent in the Conservatives though, they think the dollar has been debased because an ounce of gold won't buy as many dollars as it did at the height of the Bush Crash. This is of course the opposite of the USD being debased, but Obama is still Black and that's what they really care about.

Twitter @BruceEnberg - where up is still up, and down is still down, no matter what Conservatives say.




Tuesday, March 10, 2015

50 years since Selma

To be Conservative is to oppose change. That definition is too kind, to be Conservative is to embrace evil.