Saturday, August 1, 2009

A cold and hungry panic

Republicans wasted breathable air on the floor of Congress bloviating about how much that Obama was spending on the Cash for Clunkers program. They were fit to be tied about the one billion spent in the first week but the government spent almost that much Friday taking over failed banks in 5 states. The thing that is dragging down these small to medium sized banks isn’t home foreclosures. It’s loans to commercial real-estate projects and to developers. Not a peep is heard from Republicans about this because these aren’t middle-class home owners, these are good Republican contributors that drank the kool-aid that they were passing out.

Bank seizures happen almost every Friday and will only become more common. A large bank chain in Texas could go down any day. The FDIC is rapidly burning through its reserves and will need to start tapping the 500 billion line of credit they asked Congress to authorize at Treasury. This is of course insignificant compared to the debt run up by the Bush Crime Family which sucks up nearly 2 billion dollars a day in interest. Then there is the trade deficit that sucks another 2 billion a day or more from our pockets. This doesn’t count the 24 Trillion in bank bailouts.

Just keeping a finger in the dike to stop the Republican red ink from drowning us all is approaching the total of all Federal Revenue. We are hurtling toward crisis that has never been seen before and don’t kid yourself that it’s an accident or incompetence or even simple greed. It’s a grab for absolute power. Once and for all with no exception we will all be slaves of the rich elite that control the huge transnational corporations. It won’t be forced on us, in a cold and hungry panic we will ask for it.

Friday, July 31, 2009

The Depression is over!

Happy days are here again! The US GDP was "only" down 1% the last quarter. The factories have all reopened as the massive employment programs of the WPA and CCC put men and boys to work building infrastructure all across American, Government programs have refinanced all the mortgages at affordable rates.... Wait, wrong century. We continue to hemorrhage jobs at an alarming rate and as the quarter ended the extended unemployment benefits for many workers started to run out. Factories continue to be crated up and shipped to China and exports continue to decline. Foreclosures continue unabated, expected to exceed 8 million this year.

So why the "improvement" or rather less decline in the GDP? Who is turning over money? The biggest slice of pie in chart of the GDP is financial services "industry". They’re doing really well, aren’t they? Some 4800 Wall Street executives got bonuses in excess of a million dollars. Big banks got trillions from the Federal Reserve and are showing record profits on paper despite ongoing record losses on loans. Sales of foreclosed homes have also adding to business activity and selling factories and our natural resources to China helps.

Will the next quarter look as rosy? Will cash for clunkers rebuild the economy? Earlier today the FDIC seized four small banks at an estimated cost of 200 million to taxpayers. A few minutes ago they seized a larger bank in Illinois at an estimated cost of 700 million. This number of banks is less than the six taken over last Friday but the day isn’t over yet. The FDIC has "leaked" the information that they have a list of 300 banks they are watching. Banking pundits are putting the number of closing this year at around a thousand. The expanded FDIC consumer bank account insurance expires at the end of the year, Congress will probably extend it, if anybody is still taking US Dollars.

Thursday, July 30, 2009

A Great Passbook Rate if you can get it

Intial jobless claims are up again but continuing claims are down and this is reported as good news. But we are still losing jobs so this means more peoples benifits are running out and nothing is being done about it; so expect a sharp increase in bankruptcies, foreclourses and homelessness that will become more apparent with cold weather. A new trend that is really catching on is for cities to pay the homeless to get out of town. How many buses will Greyhound need to house all the homeless? It’s starting to look like the early thirties when the empty train cars going in both directions would be full of men going to the next town to look for work.

Corporate profits are up but it’s almost entirely from cost cutting. Cost cutting doesn’t make money, cost cutting costs money. When the next quarter numbers come out in early October the picture will be completedly different. The big banks are showing huge profits but not because they are lending more money, it’s still impossible to get a loan. It’s not because defaults from business loans are down, write downs are way up. They’re not making money from foreclosing on more and more families.

They are making money by borrowing trillions from the Federal Reserve (that they printed, backed by thin air) The banks borrow at zero interest and then put it on deposit with the Fed at 6%. (Does your passbook pay 6% or even .6%) The Fed has about a trillion of this money as reserves but they are also buying US Treasury Bonds because nobody else will buy them at the current interest rate. Nobody knows how high interest rates would have to go before anybody would buy them. (this is where the chills run down your spine) Or if anybody would buy them.

The US GDP report comes out tomorrow; don’t expect any good news. Try to think of something funny to say, I can’t.