Friday, March 27, 2009

The Commies are coming! I mean, don't eat the lutefisk!

The far Right is trying to panic their base over President Obama’s plan to dramatically increase the size of Americorps and four other similar groups. Legislation passed the Senate that will triple the number of people involved and allow older Americans to serve. Despite approval in the Senate by 79 votes the Right is portraying this as a Socialist power grab. Rush is scaring the be-jezus out of his Lim-bots with visions of a 7 million man army rounding up God fearing conservatives. He says the Bill specifies that "they be given uniforms"; yeah those orange vests and plastic hard hats the CCC youth wear while fixing up parks and trails are real scary.

Republicans attempted to amend the Bill to add a labyrinth of restrictions on what nonprofit groups could use the Americorps workers for projects out of fear that ACORN or (GASP!) labor unions might benefit by siphoning off government funds. The Commies are coming, the Commies are coming. OH wait! those are our Chinese business partners. The Socialist Swedes are coming, the Socialist Swedes are coming, don’t eat the Lutefisk! By the way, the real number that will be employed by these programs is only 250,000.

Back to reality: new unemployment claims increased again for the 10th week in a row and set a new record for people continuing on benefits. A new report says that 4th quarter GDP was down even more than previously thought. This is largely from a reduction of inventories as factories and wholesalers wind down operations. The jobless numbers as a percentage of the work force is the worst since the first Reagan Recession but that really doesn’t paint the picture. In 1983 we had many millions more of good paying Union factory jobs that provided a basis for recovery. Our current "fries with that" and "blue light special on Chinese goods in aisle 3" economy doesn’t have any footing for recovery. Obama has to start addressing the real problem soon or his Presidency will be the failure that the Rush-bots are praying for. God help us all.

Post Script
Mike Malloy sent me this

Reponse from prairie2: After reading the SF Examiner editorial; I'll admit it sounds pretty scary except if you leave out the paranoid superlatives and replace Americorps with "Boy Scouts" and that is exactly how they are organized. The rhetoric is all the same and they have the very same infrastructure. Even their uniforms were military in the day.

I don't see the underlying framework for a socialist "Brown Shirt" operation. You have to have a certain type of mental deficiency to be a good candidate for indoctrination. In this country those people are all on the right.

I'll admit I do think the idea of everybody being drafted into the Boy Scouts is creepy and I'm not sure I like this idea even on a small scale. I hope Obama doesn't have this in mind as a substitute for actually fixing the economy.

Thursday, March 26, 2009

Freddie Kruger Inc. will no longer be catering teen slumber parties

Treasury Sec. Geithner went before Congress again today outlining more regulations that the Obama Administration wants to be able to bring the Masters of the Universe under control. They want broad powers to take over and liquidate any of these bloated parasites that threaten to bring down the banking system. Before 1981 commercial lending was almost exclusively the domain of closely
regulated banks as it had been since the last time the Republicans had nearly destroyed this country under Hoover. Now fully two thirds of this big dollar lending is done completely outside the scope of bank regulators.

Obama wants transparency (at least to the SEC) in the activities of large Hedge Funds, Venture Capitalists and Private Equity Firms who have literally been running amok; they need to all fly the Jolly Roger so that they can be distinguished from the merchant vessels. He wants regulation of Credit Default Swaps and Derivatives but not an outright ban. Restricting them to legal behavior would pretty much be a ban of most of them.

Whether or not this broad agenda of regulation makes it through Congress and is successfully implemented will determine if we are going to get off of the log flume toward the buzz saw of Fascism. As far as Geithner just being just another Wall Street insider greasing the skids (another logging reference), it doesn't seem to be so.

The Obama Administration wouldn't need to work this hard to just hand the country over. Bush was able to do it without spending any time on it at all. The fact that they are having real difficulty staffing the top jobs at Treasury suggests they are serious. The Bush Transition in 2001 literally used lobbyists like Jack Abramoff to handle the hiring of Department and Agency administrators. A busload would come over from K Street, were handed axes and told to go at it. Like Freddie Krueger catering teen slumber parties.

Wednesday, March 25, 2009

"1, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0"

Treasury Sec Tim Geinther managed to cause the Dollar to tank on the currency markets by not dismissing out of hand China’s suggestion that the world should be less dependent on the Dollar. He was forced to come out and say that the Dollar will remain the Reserve Currency for now and forever, amen. The Dollar promptly rebounded. I’m not sure which is more stupid, that Dollar went down when Geinther was polite to the Chinese or that it came back up after he was rude to them.

The Dollar is toast; because the thing is, it’s all on paper; really it’s not even paper. A couple of keystrokes and it’s gone. The same way it was created. In the old days (before Greenspan) money had to have some substance to it. Money issued by the Federal Reserve never really had any reserves behind it but it was at least based on a real economy. Today’s Trillions aren’t based on anything of any value at all. Just keystrokes, "1, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0, 0", there, I just made a Trillion and it’s worth about as much as any of the Trillions that Greenspan created.

The average American doesn’t realize this, but the Chinese do. People are starting to fret that the Wall Street Bankers are getting away with Trillions. All they are getting away with are keystrokes. The factories and such; they already stole all that and sold it to China. Now we’re stuck with Trillions and Trillions of debt. The Bankers expect to keep getting their eight figure salaries because after all; they have to keep track of all the Trillions that we owe.

It’s time we took away their keystrokes and go back to building the American Dream. The Real One, the Middle Class Dream. The Wall Street Bankers should each be given a pad of paper and a pencil and they can sit in their jail cells making Trillions for themselves. "1,0,0,0...."

Tuesday, March 24, 2009

Joe the Flayer

Well, China has come right out and said it; they want to end the US Dollar as a significant currency. Central Bank Governor Zhou Xiaochuan (JOE SHEEOW Chwan) says China wants an international reserve currency based on fixed commodity prices. He cites John Maynard Keynes who advised FDR on economics as the model for this and thinks it unfortunate that Keynes’s advice was not followed in the 1940’s.

I think I like the way Mr. Zhou thinks; except for that "slight" tendency for fascism that his government displays. Mr. Zhou was so feared in his former job; cracking down on corporate corruption; that he was know as Joe the Flayer.

This means bad news for Fat Cat Republicans who have been maintaining the family fortune by shifting paper around. They may have to get real jobs actually doing something useful, of course Republicans would prefer to eliminate the American Middle Class and return to the plantation system.

For the short term; China is in no position to force the change. If Obama fails in his efforts to save the US economy and he can only do this by embracing Keyensian economics; it will be China who steps up with this plan for a new World economy. A currency fixed to commodities appeals to any country who is holding a lot of dollars. Dollars that have been steadily losing their value.

An ounce of gold would buy a good man’s suit 250 years ago, a hundred years ago, 50 years ago and it will now. The world economy is too big to run on gold but could be easily stabilized by tying it to a basket of 30 commodities as Keynes wanted to do. Imagine a World with no inflation, no AIG, no Republicans. I hope we don’t have to learn to speak Chinese to achieve this.

Monday, March 23, 2009

Everybody is afraid to have a sandwich

The Stock Market was up 7% today with the prospect that there will be an end to the banking gridlock by allowing banks to rid themselves of the mortgage based securities they have been holding. These toxic assets were the brain child of Alan Greenspan who claimed they were just an instrument to spread risk. In reality, it was like mixing some jars of bad peanut butter into every case, the risk is spread around but everybody is afraid to have a sandwich.

Obama’s solution is to bring in private investors that will be required to put up enough of their own money so that they have an incentive to do a good job unwinding the mess. They will make big profits but only if they do their job otherwise they lose money. (this isn’t a cost plus, no bid contract from the Bush Crime Family) There are big potential costs for the taxpayer but if it’s done quickly this could be minimized, at least compared with doing nothing. The big potential payoff for the economy is that this will stop the cascade of credit derivative failures and it should fix this particular problem.

The thing is that this is not the cause of the mess we’re in. This was just another of Greenspan’s bubbles designed to inflate the economy in order to hide the collapse. It’s still collapsing and picking up speed. Obama will need to roll out real reforms to fix the economy or the next crisis will be far worse. Massive job losses coupled with a push to depress wages, the out sourcing of labor that only exacerbates the crushing trade deficit; the looming collapse of the Commercial Real-estate Market followed by the certainty of huge Insurance company failures; the collapse of foreign investments made by US companies causing the collapse of the Stock Market, on and on.
The FDR style reforms that are needed to fix these things are what make the veins stand out on the heads of Fat Cat Republicans and they will not go quietly. At least not until they are pursued by a mob with torches and pitch forks. Yes we can.

Sarah B. left a well written comment that I accidentally deleted, I'm not used to the controls on this program. so here it is:
Prairie 2 For the record, Alan Greenspan did not invent derivatives and collateralized debt obligations and credit default swaps – but Greenspan is responsible for the failure to regulate them. The inventor of derivatives was L. William Siedman (aka Bill Siedman), the impish 87 year-old former director of the F.D.I.C. and later appointed by Poppy Bush to serve as the first chairman of the Resolution Trust Corporation that presided over the S&L bailout. On October 9, 2008, during a lecture at Grand Valley State University in Michigan, Siedman described the way in which he and his group invented derivatives while serving at the RTC:- Clip:"The subprime mortgage market grew in a way that is almost impossible to believe. There were almost million subprime mortgages written in a year and a half. That means somebody had to finance a couple of million homes, almost, of subprime mortgages. So, why did anybody put their money in this? Why would anybody, knowing that these, subprime means that they are not prime? Well, the genesis of that goes back to something called securitization and something called tranche credit-rated securitization. Now, that was invented by one of the people who were operating in the RTC, and mainly it was invented by me and our group."Siedman went to Alan Greenspan to discuss regulation for this new innovation:- Clip:"I remember when we invented this, Alan Greenspan said, "well, this is a great new innovation, because we are spreading the risk all over the world, which, of course, is what we did. And for which at this point the world is, to say the least, blaming the whole financial crisis we're in on us"But Greenspan, ever true to form, wasn’t having any of it and relied instead on his flawed economic philosophy -- the magic of the marketplace driven and regulated by enlightened self-interest:- Clip:"It was proposed that their regulation, or at least disclosure, be required and the industry fought it and the Federal Reserve under Alan Greenspan vehemently opposed. And they made the argument which you hear all the time, and I can remember Alan saying, "look, these are sophisticated contracts between knowledgeable buyers and knowledgeable sellers; no regulator can do as well as they'll do, so what do you need a regulator for? The market will regulate these." And he won the day. So, among the list of our friends along with me and others, Alan was clearly, I'd say, the key person responsible for the fact that we didn't even how many of those contracts there were."There are seven videos on You Tube that fully document Siedman’s lecture at Grand Valley State University on October 9, 2008: (h/t) to Thom Hartmann for alerting and educating his listeners to Bill Siedman and the RTC as the inventors of derivatives, aided and abetted by Alan Greenspan's refusal to regulate them, and the fact that their toxic seeds were sown in the polluted swamp that was the S&L debacle! BTW, thanks for your excellent contributions to The Mike Malloy Show.Best,Sarah B.

Sunday, March 22, 2009

It's only inflation when it helps the little guy

Republicans are in a tizzy because the Fed is creating a trillion dollars out of thin air to jump-start the economy. Republicans didn’t mind that the Fed was creating trillions out of thin air for the last 8 years so that Wall Street banks could create a huge house of cards. Notice what the price of oil did when the banks could no longer afford to buy oil futures.
Republicans didn’t question why the Saudis and the Chinese had surplus dollars to lend Bush so that he could run a trillion dollar a year deficit. This was only possible because the Fed was creating money out of thin air to hide the trade deficit. The insane trade policies of the Republicans wouldn’t have lasted two years without Alan Greenspan creating money OUT OF THIN AIR.
But even with Bush spending money borrowed from China like water, the money was piling up in foreign accounts. The solution was to create bigger and bigger bubbles. Wild speculation in the commodities markets, securitized debt, complex credit default swaps, derivatives based on debt, derivatives based on derivatives and repeat that ten times.
They were heating up the economy faster than Exxon-Mobil is heating up the planet, but not the real economy, just the paper economy. A year ago China pulled the plug and laid off twenty million workers. Then the bubbles started to pop, deflation set in and sucked 45 trillion out of the economy.
Now Republicans are sure that a new trillion aimed at home owners instead of Wall Street banks will cause inflation. Republicans are jumping up and down with fake populist outrage about who knew what about bonuses. Even Liberals are letting the right define their outrage. Haven’t we learned anything. Republicans won’t ever admit the truth. Anything Republicans are outraged about is just a lie to hide their own responsibility.