Saturday, June 20, 2009

Everytime a Bell Rings

The big talking point for the American Banking Association about Obama’s proposed regulation of the banks is that the reforms will streamline regulatory agencies and among other things do away the separate charters given to The Thrifts or Savings and Loans. The banking spokesman kept calling them "Thrifts" and invoking the name of George Bailey from Its a Wonderful Life, saying that he is spinning in his grave.

The spokesman pointedly didn’t mention that the Republican Banker was the bad guy in the movie. And did not call them S&Ls as in the S&L scandal of the Reagan years where Republicans were allowed to buy up thrifts and run them like banks without any regulation, ultimately costing a trillion dollars back when a trillion dollars was still a lot of money. After the scandal they changed their names to Savings Banks and were regulated by a redundant agency with the exact same rules as banks.

Eight million more people will lose their homes this year because of these Rat Bastards. Every time a bell rings another Republican gets his horns and pitchfork.

Friday, June 19, 2009

Masking the Problem

The number of people signing up for unemployment last week alone is back up over 600,000. The unemployment rate is up in 48 states, Michigan is now over 14% and Oregon, Rhode Island and South Carolina are over 12%. Many state are past 10% or 11%. The total of continuing claims is down slightly but with the overall rate going up, this means people are using up their eligibility. These people have taken a big and for many an irreversible step toward homelessness.

After 40 years of Presidents screwing with the way the unemployment numbers are calculated these numbers only count about half of those that would be counted if you used the method used in the thirties. If you used that method we would see we are in a Depression. Other tracking indicators of things like trade, manufacturing output and banking activity also track the downward slide at the same rate as 29 and 30.

Two things are masking the situation: social programs that keep the number of people starving in tent camps to a minimum and so far have prevented rioting; the other thing is the massive amounts of goods and oil that we get because of credit from China and just printing money. When this catches up to us, things will change for the worse very quickly and in ways that will shock Americans. I’m serious about those canned goods.

Thursday, June 18, 2009

The Full Faith and Credit of Barbarians

The Federal Reserve pushed down the interest rate on Treasury Bonds by purchasing $6.5 billion worth on Tuesday. The Federal Reserve is buying huge blocks of US Government debt, there has to be a name for this in con-man slang; double shuffle, bait and switch? (any con-men or bunko cops please feel to enlighten us) They are issuing Federal Reserve Notes backed by the full faith and credit of the United States and using them to buy US bonds because nobody (even China) will buy them at an interest rate we can afford to pay. How much "full faith and credit" does the US really have?

Meanwhile Obama wants to give broad new powers to the Federal Reserve to regulate banks and other companies as it sees fit. Secretary Geithner is facing a skeptical Congress. Republicans broke into their usual chant of "no regulation at anytime, anywhere!" Democrats are skeptical about having the Fed regulate anything since they didn’t use any of the powers they did have to prevent the mess we are in now. Mr. Geithner is well aware of this since his former job was Governor of the New York Fed and it was he who personally who handed out 9 trillion dollars last year to keep the entire financial system from collapsing.

The question is, who are Obama and Geithner working for? The rumor is that giving the Fed new powers will result in new powers for the Congressional Committee that oversees the Fed. But the Bush Crime Family proved that oversight committees aren’t worth the powder to blow them to Iraq. In case anybody hasn’t heard the news, the Federal Reserve is a private banking system controlled by Wall Street bankers. Sounds crazy but it’s true.

Compared to Alan Greenspan, Bernie Madoff was stealing lunch money. There should be wholesale prosecutions. The question is why not? Is Obama afraid of panic or does he lack the power to go after these people. The top 1% own 90% of everything but most of it is paper and it would all go away if the Fed was done away with. The rich whine about paying all the taxes but in reality they are taxing us by their ownership of everything. None of it was acquired by hard work or even shrewd investment but rather by controlling the paper shuffle. They are so unconcerned with the creation of real wealth that they have sold that to China and Japan for more paper. It’s no wonder China and Japan consider us barbarians.

Wednesday, June 17, 2009

Nothing smells like a dead horse and beating it doesn't help

Obama has just proposed a long list of banking regulations and the new regulation of companies that have been acting as banks without oversight of any kind. This is all very well and good, a new coat of paint on the buggy and a snazzy fringe around the top. The small problem is that Obama hasn’t dealt with the fact that the horse is dead. Even if he fixes the banking system, there is no economy to support it. In Reagonomics the banking system is the economy. Financial services have gone from 8% of the economy to 40% in thirty years.

The tracking of key indicators such as world industrial output and international trade activity show we are moving toward another Great Depression at the same pace as 1930 and some things are collapsing at an even faster rate. Without real reforms to the insane trade policies the Republicans left behind there can be no recovery.

The rest of the world is getting tired of this arrangement. The countries that still produce the wealth are starting to simply leave the US and its increasingly worthless currency out of the equation. The Europeans tried to keep a lid on things last year by buying back currency from Asian countries using up most of their gold reserves to do it. China now has over a hundred tons of gold on hand, even countries like Vietnam now have large gold reserves.

The Federal Reserve has tried to keep a lid on things by passing out nine trillion dollars with no accounting as to where it went. The money would have been better spent on oats for the horse while it was still swatting flies and not just attracting them.

China isn't the problem

I got more mail than usual yesterday from people who are tired of hearing about how great China is. They are missing the point. China isn’t coming to get us, but they are muscling us out of the way in world trade and in competition for resources. They also hold the lynch pin on the US Dollar. We are getting to the point where China doesn’t have to do anything more destructive than ignore us and we tumble into the abyss.

Can we come back from this? Absolutely, but first we have to admit we have a problem. Republican policies over the last forty years caused this and fixing it will be painful. The big threat is that the Republicans will prevail and instead of fixing the problem we will drift into corporate feudalism. We can’t even assume that the Democrats are on our side in this, many clearly aren’t and most of the rest don’t see the real problem.

Tuesday, June 16, 2009

A BRIC upside the head

Nothing gets your attention like a BRIC upside the head. In this case it's Brazil, Russia, India and China. These are the major non-European industrial powers anchored by the world's only superpower China. The rest of the countries of South America, Africa and Asia are more than willing to align with them as their trade continues to shift away from the US and Europe. At their summit in Russia this week they refused to allow the US to even observe the proceedings.

The major focus of the meeting was how they will proceed with the elimination of the US Dollar as the international reserve currency. In the past six months these countries have moved aggressively toward trade among themselves without the use of Dollars. Now that this has been set in motion there is almost no way to stop it. The only thing holding it back is China's reluctance to change, once they are fully committed either by choice or by cascading events, the avalanche will be unstoppable.

This will make the Dollar worthless for international trade and trigger either hyper-inflation or crushing deflation or alternating waves of both here at home. The assumption is that the standard of living of Americans would drop 20% overnight because that is the percentage of our economy that is made up by trade deficit. Its not likely that it would stop there since we not only consume imports but imports are completely integrated into every aspect of our economy. Everything from car parts to surgical supplies are imported and many things that are lynch pins of our economy are exclusively imported.

The turmoil that this could produce has no large scale precedent. With almost no Americans having any sense of ownership in our society the reaction will be a feeling of hopelessness and an every man for himself mentality. The crazies on the right have been priming themselves for this sort of apocalyptic collapse for forty years and will have no doubt who is to blame. Those that don't know who to blame will get a fair and balanced list on Fox News. Watch your back.

Hitchhiking to the war zone

submitted by Exupery, Another Bush legacy:

During Desert Storm I (in 1990), I was a reservist called up into the active military. During a lull in our operations about October, I attended a Union meeting in which Jeffrey Shane, Under Secretary of Transportation for International Affairs spoke. The first thing he did was brag about flying there on a "on strike" Eastern Airlines flight. Those of us that had given up considerable amounts of money when activated were less than impressed. (I lost more pay at my regular job in that year than I ever made in 22 years of the Reserves total.) For us it was not about the money.

Jeffrey Shane’s plan was to eliminate all rules preventing airlines from incorporating in countries where there are no safety inspections or labor law. We were able to stop him in the Pentagon by pointing out that if he were to pull down aviation laws there would be no civilian aircraft to call into military operations to airlift troops and equipment in a program called CRAF (Civil Reserve Air Fleet). CRAF was responsible for about 60% of all airlift in Desert Storm. Shortly after the war, Bill Clinton won the election, Jeffrey Shane went away, and the urgency to defend aviation laws and CRAF abated.

When Gore won the election but Bush Jr. was installed, he brought back Jeffrey Shane. While Shane made noise he wasn't able to do any damage until 9/11. Between grounding the airlines, launching the wars in Afghanistan and Iraq, and the oil industry’s spike in oil prices; stress in the airline business went on exacerbated by policy. (The only airlines which didn't go bankrupt were based in Texas. Did you think that was a coincidence?) This gave Shane the cover he needed. Bush never activated CRAF, because it mandated cost plus contracts. By contracting using the lowest bidder and not launching CRAF, he bankrupted the airlines which bid below cost contracts as well as those carriers not based in Texas. Why would management do that? Because they stuffed their pockets with the contract cash and left their airlines bankrupt at the end of the contract.

By maintaining the predatory industrial policy Bush has guaranteed that foreign carriers will inherit the world aviation market. My job was outsourced to a foreign country and I'm lucky to have a job, but this company merely tolerates us because they need us. We have no union protections and there is a small group of ultra nationalists, their version of our KKK, which is always looking for the opportunity to ruin us.

So a foreign carrier will fly a large percentage of troops to Afghanistan in the current build up. What made this a fait accompli, was the ultra nationalists here, front office graft, corruption here, and Jeffrey Shane. We have met the enemy, and yes, it’s us.

submitted by Exupery

Monday, June 15, 2009

wholesale theft or business acumen?

The stock market took a big turn down today as did commodity prices except gasoline which continues to be driven up by "investors". In any other society these people would be called "criminals" and be dealt with, here they are lauded for their business acumen and we just continue to pay.

The realization that things aren’t really getting better is starting to sink in as credit card default rates continue to climb and predictions on the number of foreclosures continue to worsen. Even Walmart’s stock price has taken a hit as analysts predict declining sales and there are warnings that Bank of America is taking huge loan losses.

Bond prices continue to drive up mortgage interest rates and interest rates in general would probably soar except for the Federal Reserve continuing to print money like there is no tomorrow and maybe they’re right. If you have some gold bars squirreled away among your canned goods, they are continuing to go up in price.
So far the Obama Adm. has only proposed modest reforms like rules on debt securitization. The banning of the practice would be real reform. The complete dismantling of the financial services "industry" would be the only real solution but this would make paupers out of most of the rich and powerful in this country. They have long ago abandoned any pretense of investing in anything that actually produces real wealth.

There are exceptions to this rule on the extreme right that have vast private equity holdings in the few remaining American industries. These are the same people who fund the right-wing think tanks and also invest in things like the company of killers formally know as Blackwater. This subset of fascists also fund the Christian extremist groups. Watch your back.

Sunday, June 14, 2009

The Autopsy was conclusive

The Sunday news shows were all nattering on about Obama’s attempts at health care reform. The Republicans were right there with their same tired talking points: do you want some bureaucrat deciding your health care?

If you have ever dealt with an insurance company (unless you have one of the Cadillac plans (we probably need a new name for that)) you quickly realize that is exactly who is running your health care. And it’s not a government bureaucrat but a functionary in India whose only goal is to keep you from getting any health care what so ever and they are really good at it.

If you do manage to get past them and get taken care of; they won’t pay for it. Even if they do "authorize" treatment, the For Profit insurance company will use every underhanded trick possible to make you pay the bill and not them. Sixty-two percent of US bankruptcies are from people with overwhelming medical bills and 75% of those had health insurance. It is also a given that you will lose coverage and not be able to get any even if you can afford the $1400 a month premium and $10,000 deductible.

Fifty million Americans have no insurance and probably another 150 million only think they are covered but will find themselves in bankruptcy if they ever need it. There is also a pretty good chance that the insurance company will have killed you in the processes and your family will be left bankrupt after you’re gone.

The right-wingers will defend this all as "free market" or "freedom of choice". It’s freedom to die a painful and unnecessary death leaving your family destitute to repeat the cycle and having lost the family wealth their situation will be all the worse. There should be a check box on the coroners’ report: the cause of death was the insurance company.