Friday, April 10, 2009

Potatoes for everybody!

The New Jobless Claims Report dipped slightly this week but the total number of people continuing to receive benefits set another new record. This means that the jobs continue to disappear and not just to out-sourcing; imports are down; the economy is just falling in on itself. A European company just canceled an 80 million dollar windmill plant scheduled for construction in the US this year. This adds to a long list of similar cancellations and this should be no surprise, since we have no way to pay them. We, can’t print our own Euros.

We have an economy that is based on giving each other haircuts and minimum wage jobs selling Chinese goods we can’t pay for. The morning infotainment shows are running segments on people digging up their front yards to plant gardens. While this is good thing, it illustrates the "every man for himself" situation we find ourselves in. We were told that if we got rid of the small family farms we could feed the world. Corporate agribusiness is only capable of producing pesticide-laden corn and meat marinated in antibiotics. Increasingly even this comes from China where they can use drugs that are banned here and more and more Americans can’t even afford that.

We are increasingly becoming like the Irish of the 1840’s who had to try to grow food on the little plot around their huts while the powerful few at the top controlled the land and everything else for their own enrichment. We need to emigrate to America for a better life.... Wait, we’ve got a problem.

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Democrats and Republicans: It may seem that I only go after Republicans but any Democrats that believe in "Free" trade or deregulation will get the same scorn from me as they are every bit as much to blame for the mess we're in.

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Thursday, April 9, 2009

Yo ho ho ho and a bottle of Chteau Lafite Rothschild

The venture capitalist; if you ask a Republican they will tell you that this is a forward thinking individual that provides capital for a risky new venture that holds great promise for society. (a compassionate conservative funding the cure for disease for example) While they sometimes actually do this, most new ventures in the past were things like the dot-com bubble.

What they have been doing the past eight years with current tax laws and total lack of regulation is become nothing less than pirates, plundering and looting across the corporate seas. They take a relatively modest investment and match it with 10 to 1 financing and go out and acquire controlling interest in a business. Then they sell off any marketable assets that the company holds and borrow money against what they can’t sell. Then spin off the remaining shell with the entire debt load (including the original loan that they are now no longer responsible for) and take the entire profit as capital gains which are then taxed at a maximum of 15%. The Republicans keep insisting that the capital gains tax rate be reduced to zero to "stimulate business". In the old days (when we were a prosperous nation) short term capital gains were taxed at 66%.

You might think that a bank wouldn’t want to loan money for this purpose since the debt ends up attached to a company that will almost certainly fail in the long term. The trick to that is the loan gets shredded up and mixed with all sorts of other debt and sold as securities. It’s even considered high grade debt at the time because it’s attached to a long standing corporation with an excellent credit rating; of course now it’s called a toxic asset.

This simple, risk free process has made a lot of rich Republicans into billionaires; in the old days the pirates would have been hunted down by the Navy and hanged from the yardarm. www.prairie2.com

Wednesday, April 8, 2009

Your favorite steak sauce

Insurance companies are in line today jostling to get bank bailout money from the government. Most insurance companies didn’t own a bank and ran out and bought a small bank or savings & loan in order to qualify. If you can afford to buy a bank out of petty cash, do you really need taxpayer money?

Of course these companies are in real trouble since they are part of the New American Century and don’t do anything but push paper around. In the old days (pre-Ronald Reagan) companies that pushed paper around were a small accessory to the real economy. Then the Republicans and conservative Democrats decided that we didn’t need a real economy but could just push paper around. After all pushing paper around "creates" jobs to replace the ones that have gone to China. Jobs that are now being sent to India and the Philippines just as fast as the Insurance companies can do it. It takes money to establish overseas operations so they need a government bailout to pay for it.

Capitalism has stopped meaning "shared risk to establish a useful business". It is really just a legitimization of Ponzi schemes, predatory lending, government corruption and an assortment of deceptive if not outright strong-arm tactics to extract money from a hapless public. Any "useful business" is prey to be brought down by a "capitalist". The "too big to fail" predators are running out of prey and are turning to the government to keep them in fresh meat but this can’t last. Do you feel like you’re swimming in steak sauce?

PS: Moody’s ratings service has put a sort of down-grade on Municipal Bonds - all of them. Look for that to increase the cost that your local government pays for money. You’ll either pay more taxes or just get used to the pot holes and crumbling schools. The steak sauce looks good, let’s go in for a dip. www.prairie2.com

Tuesday, April 7, 2009

Wash your troubles away with some of Granny's lye soap

The number of dry carrier ships that are being mothballed worldwide has increased significantly again last month indicating a continuing downturn in trade. The G-20 pledged 1.2 trillion to the IMF but is questionable whether this is going to do anything to increase trade in time to stave off collapse. Lack of trade will likely impact the quarterly profit and loss (or rather the loss and bigger loss) statements of large American companies in the coming weeks.

The stock market has already been moving briskly downward with information trickling out about how much the big banks are hiding in toxic assets. With the change in Federal accounting standards hiding these assets it is now possible without committing too many felonies and this is spooking investors. The media is fixated on urban gang members being rounded up by the FBI for participating in schemes to arrange fraudulent loans using crooked appraisers and complicit loan officers. They are ignoring the skyscrapers and shopping malls that are now selling for half what they have owed on them. Venture capitalists also engaged in practices that saddled companies with billions in debt that will need to be written down in Chapter 11. These are Billions that good Republicans walked away with and get to keep, but the former gang banger that cleared a hundred grand flipping a house to somebody who never made the payments is what is all over the news.

The only so-called bright spot is that consumer debt is going down but this reduction is concentrated in revolving credit. Consumers are finding their credit limits cut dramatically even if they haven’t joined the swelling ranks of the jobless. More companies are planning layoffs and cutbacks. Desperate to find some indicator that factory activity is picking up, the analysts are pointing to an upswing in the price of beef tallow used for soap making. Given what has been going on for the last eight years, I don’t think that will wash away our troubles.

Monday, April 6, 2009

If I roll a six, I'm going to attack Kamchatka

The Right Wing talking heads have been going on about how Obama didn’t accomplish anything at the G-20 because he acts like a European and isn’t aggressively promoting US interests. In fact Obama is much more forceful in his language than Bush ever tried to be. The fact that they can understand what he is saying and believe Obama understands what he is saying is more forceful in itself.

The only time Bush was aggressive in Europe was when he got fresh with the German Chancellor. The economic reality is (thanks to the insane trade policies of the Republicans) that what we really have to worry about is the G-2 of the US and China. If China stops making stuff for us for what ever reason we will be dependent on Europe to send us care packages to have any hope of keeping everything here from collapsing.
In a startling admission that the Cold War is actually over, the Pentagon announced a new budget that cuts many absurdly expensive and useless weapons systems. They even want to cut a Carrier Battle Group. That still leaves ten, more than we had when the Russians still had a Navy. They aren’t getting too carried away, we still spend more than Russia, China, our allies and the rest of the world combined.

Remember playing the board game Risk when you were a kid? The latest paranoia from the militaristic Right is that President Obama’s visit to Turkey will bring back the Ottoman Empire. They’ve dug up old articles dated from the end of the Soviet Union and are running them on their "strategic news" web sites as "new". These so called "experts" were sure in the 90’s that with no Soviets to keep them in check that the Turks would sweep across all the Muslim countries controlling everything from the Mediterranean to China. They are sure that Obama is seeking new allies and will now empower Turkey to play out this grand plan for South Asia domination. If I roll a six, I’m going to attack Kamchatka.

Ted Stevens, a glimmer of hope for Justice in America

Disgraced former Senator Ted Stevens of Alaska had his case dismissed with prejudice when the new AG Eric Holter reviewed it and found blatant misconduct by prosecutors. The government lawyers involved could be looking at lengthy prison sentences. Are the rumors true that Stevens was prosecuted because he went off the reservation and the Bush Crime Family wanted to make an example of him? Is there a trail of slime back to Karl Rove and will anybody follow it?

Rove was clearly running the Justice Dept. as his own private fiefdom. High profile cases in Alabama, Mississippi and Wisconsin in which Bush appointed Judges and Rove crony prosecutors railroaded innocent people purely for Rove's political agenda demonstrate that. The fired US attorneys have testified that they were put under pressure to bring similar cases and to keep them from going after corrupt Republicans.

Surely Stevens prosecution required Rove's blessing as it is apparent they didn't have a winnable case to begin with. This looks like it could be a perfect opportunity to put Rove away. The attorneys involved; if not working directly for Rove; doubtless know somebody who does or they wouldn't have their jobs. The question is who are they more afraid of, their new roomy in the Federal lockup or Karl Rove?

Ted Stevens, a glimmer of hope for Justice in America

Disgraced former Senator Ted Stevens of Alaska had his case dismissed with prejudice when the new AG Eric Holter reviewed it and found blatant misconduct by prosecutors. The government lawyers involved could be looking at lengthy prison sentences. Are the rumors true that Stevens was prosecuted because he went off the reservation and the Bush Crime Family wanted to make an example of him? Is there a trail of slime back to Karl Rove and will anybody follow it?

Rove was clearly running the Justice Dept. as his own private fiefdom. High profile cases in Alabama, Mississippi and Wisconsin in which Bush appointed Judges and Rove crony prosecutors railroaded innocent people purely for Rove's political agenda demonstrate that. The fired US attorneys have testified that they were put under pressure to bring similar cases and to keep them from going after corrupt Republicans.

Surely Stevens prosecution required Rove's blessing as it is apparent they didn't have a winnable case to begin with. This looks like it could be a perfect opportunity to put Rove away. The attorneys involved; if not working directly for Rove; doubtless know somebody who does or they wouldn't have their jobs. The question is who are they more afraid of, their new roomy in the Federal lockup or Karl Rove?

Sunday, April 5, 2009

Back to the bad old days, the days of cotton

China’s business community is all abuzz about moving to a "post Dollar" economy. Obama strongly urged everybody at the G-20 to develop their own domestic markets instead of depending on the voracious appetite of the American consumer; he was talking straight to China.

China has been trying to carry fewer dollars in its reserves but they have been stymied in finding an answer to the problem. They don’t want to shift to an American style consumer market, preferring to maintain their 40% savings rate. Americans are only saving 3% and that’s up from a negative number under Bush.

The pre-Reagan savings rate was around 20% coupled with a higher average standard of living and no crushing debt load. Pension plans were common and you could actually live on Social Security. College was cheap or free; medical insurance was affordable; people financed a car for a year or two at most; a house was something you expected to pay off by the time you were fifty instead of never.

China’s middle class thinks we are a bunch of idiots for having thrown away everything we had. This realization frightens them on several levels; they are afraid that perhaps the Capitalism that they have embraced is not really a good idea. They are also afraid we may drag them down with us or that it is some sort of deliberate plot to destroy China. Their government is constantly in fear of an internal panic or outright revolution.

Obama’s meetings with China’s leaders will determine where we go from here. China is talking more and more about disengaging from the US economy. The question then is can we than rebuild from 30 years of Republican destruction. They have really brought us to the point where the South was in 1860 where everything is imported and we export only raw materials. The only reason we still have a middle class anymore is the credit card from China and China is getting out the scissors. If Obama fails and the Republicans and conservative Democrats succeed in coming back to power then the Old South will rise again and the middle class will be gone forever.