Swine Flu

The CDC has quietly changed its standards for flu testing so that only the most seriously ill patients are tested to confirm H1N1 infection. Unlike "normal" flu viruses this one continues to spread in warm weather and there continues to be deaths. Once school starts it will spread much faster, the question is will it spread through the population without mutating into something really dangerous.

There is a big push to test a vaccine developed in Australia. You should notice that one is yet to be developed here even though we had it months before they did. Years of underfunding have degraded our public health service. The good news is that we have had a few months since the adults have retaken government to equip hospitals with emergency supplies.

An actual 1918 outbreak that would kill 10-20% of the population (mostly under 40) would snowball into a disaster requiring martial law. The problem is that now that this "super bug" flu is in circulation is that no one can predict how it will mutate. We could have a series of new flu viruses that would each require a new vaccine just as we do with "conventional" flu. This assumes that a workable vaccine is possible. The outbreak at a military base during the Ford Adm resulted in the production of a vaccine that killed more people than the flu did.

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We lost another major city in July

I hate to be the wet blanket on the jobs report but the July numbers were not good despite the .1 drop in the unemployment rate. We still lost a quarter million jobs, if they said we depopulated a medium size city, maybe it would be more real. We aren’t talking about fluctuations in the job market. All the slack is already gone out of the system, we are cutting muscle and nothing is being done about it. There is no plan to bring these jobs back from China. Even if the economy "picks up", it just means we import more and this just hastens the day when our credit runs out and the party’s over.

Over the past eight years the Republicans were screaming about mushroom clouds over major cities all the while they were setting up the destruction of America. It hasn't been terrorists destroying homes but bankers. The refugees are living in their cars, in tent camps and relatives basements. Their hopes and dreams gone forever. Bin Laden didn't threaten to blow us up, he said he would destroy our economy. He thought he could drive oil up to $140 a barrel. He couldn't but George Bush did.

Nothing that the Republicans have done over the past forty years has been undone. The stimulus has mitigated the damage they’ve done in the last couple of years from under funding infrastructure. But there is still a backlog of trillions worth of work that should have been done and hasn’t been funded. The Senate compromise that appeased the three Republicans cut the spending in half when it was only fraction of what needed to be done to begin with.

Now is not the time to start thinking that things are going our way. We have to keep pushing for real economic reform. Buy American, buy local, go out and talk to people about rebuilding.

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Rioters in $2000 suits and real people who long for a bigger clunker to live in

Another business day closes and another 4000 American families have filed for Bankruptcy, 60% for medical costs and ¾ or them had insurance. You need to be relatively affluent to file for Bankruptcy, the really poor don’t have the fees needed and must simply dodge their creditors. People living their economy cars could probably use one of the SUV’s traded in as clunkers for one that get a couple of miles better gas mileage but they all get crushed.

New Unemployment claims were down but the number of people on extended benefits increased by twice as that much. This even though the number of people whose benefits have run out gets bigger each week. Jobs continue to disappear and you rarely hear of hiring unless the local news shows the thousands of people standing in line for a handful of jobs.

Are you one of the rare businessmen that could create some jobs, good luck getting a loan. The banks are still frozen after nearly a year. Bush was telling Congressmen that if the banks weren’t unfrozen that Martial Law would be inevitable. Trillions of dollars later the large banks are reporting record profits and executive bonuses and the small banks are going under at an ever increasing rate but new lending is rare.

We had to save the large banks because that’s where people in Bush’s neighborhood put their money and they would have been wiped out. I guess he was afraid the National Guard wouldn’t be able to handle all the rioters in $2000 suits. You can’t blame the little smirking chimp, these are all the people he knows (the servants are invisible), he probably thinks there are a lot of his people. In the real world people would like to upgrade their home by getting their hands on a larger "clunker" to live in.

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high speed trading or how to cheat at cards

Buried deep in its quarterly report to the Securities and Exchange Commission, the too big to fail parasite Goldman Sachs revealed that it "has received inquiries from various governmental agencies". Seems they have some explaining to do about the billions in executive compensation that they were handing out while at the same time holding out the begging bowl to Uncle Sam. They also need to answer some questions about buying and selling trillions in credit derivatives.

The reason these instruments are called derivatives is that they are not tied to anything of real wealth or even paper wealth. The derivative is simply a bet; it resembles the credit default swap but that requires that you hold at least a securitized piece of a mortgage or other debt instrument making it similar to an insurance policy. With a derivative it’s like the town fire bug buying insurance on your house or the "ex" taking out life insurance on you.

Goldman Sachs owned a lot of these "policies" issued by AIG. The same AIG that got a huge government bailout and then the Bushies basically made the check out to Goldman. Goldman is now making 100 million plus per day trading securities. Seems they’ve figured out that if they run their computers "fast" they can get ahead of trades. Really what that means is they look at the huge volume of trades they handle and graph the price swings. Before they've even processed the trades for clients they do their own trading based on that "market trend" information. Sort of like the dealer keeping track of everybody’s hole card and then playing his own hand on the side. We’re all drawing to an inside straight.

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guns, seeds and chicks

Personal income was down again in June, this was the biggest single month drop in four and a half years. Wage income is down 5% from a year ago, falling monthly and accelerating in its decline.
Pending home sales are up again as bargain hunters attempt to buy foreclosed property at bargain basement prices. There are plenty of foreclosed properties and more every day; only 9% of eligible homeowners have received any help to avoid foreclosure. Why has Obama done nothing to help these people? Perhaps he doesn’t want to stand in front of an avalanche. Perhaps there is no point in trying to save people’s homes with runaway unemployment and no likelihood that they will ever have a middle-class job again.

According to the Wall Street Journal, Treasury Sec. Geithner in a closed door meeting with the heads of Federal regulatory agencies unleashed a profanity laced tirade aimed at them. The only quote they printed was "enough is enough". Regulators (appointed by Obama) have misgivings about turning control of everything over to the Federal Reserve, a private company. The Obama Adm.'s rational is that the Fed knows where the bodies are buried. The problem is, they buried them. I have a real hard time coming up with any scenario where Obama doing this makes sense.

GM is getting ready for another round of layoffs as not enough workers would take early retirement. The only growth areas in the economy are sales of guns, garden seeds and baby chickens. Survival tactics for the New American Century. I hope Obama has a plan, raising your own food is a lot harder than people think it is.

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Off the Cliff and into the Dark Ages

Our out of control tumbling downhill may have slowed but we are still headed for the cliff. When we start thinking of our current economy as improving we are really kidding ourselves. One problem is that anybody under 40 can’t even remember "good" times. Even if we went back to the five years ago we would still be in trouble. Oh sure, many individuals have experienced high incomes and have accumulated some wealth, but if it’s in a 401k, good luck with that.

Do you have your "wealth" in your home? It could easily become more valuable to copper thieves than to anyone else. Own a small business? My condolences. Family farmer? Rest in Peace. Union job? New hires are getting half wages and reduced benefits (if any). When is the last time you heard of an increase of pay let alone a strike?

Much has been made of people maintaining their lifestyle with credit cards and home equity loans. The group with some of the highest card balances are the elderly, blamed mostly on health care costs, it’s a question of maintaining life. Boomers as a group have no savings or even home equity left and are often shocked to find their parents don’t have enough to support themselves let alone leave anything to the kids.

Recent college graduates are benefiting from the increase in the minimum wage since this is where many of them are employed. Teenagers who want to get an service job (read that as low pay and no advancement) to help support the family can find themselves in the same hiring line with their fathers as Dad is being told his middle-class job is gone forever.

We are losing 500,000 jobs a month with no plan or even any intention of bringing these jobs back. Each unemployed person is producing nothing and the rest of the economy must support them one way or another. We’ve been masking this lack of productivity with cheap imports purchased on credit from China. When our credit runs out the full magnitude of this folly will become apparent. Comparisons to the Great Depression are inadequate. Comparisons to the Dark Ages would be more appropriate.

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handouts

It finally made it into mainstream media that people’s extended unemployment benefits are running out. Estimates are 500,000 will run out by the end of September and 1.5 million by the end of the year. In about half the states you can receive benefits averaging $300 per week for as much as 79 weeks. This is the longest since the Depression and if real numbers were used the rate of unemployed would be Depression level as well. Democrats are planning to extend benefits this fall by another 13 weeks but thousands whose benefits have expired will become homeless by then.
The Republican talking point on this is that people don’t look for work until 3 weeks before their free handouts run out. They ignore the hundreds that stand in line for every minimum wage opening and a real job will bring 10,000 applications. College grads are not finding work and are moving back home with no idea how to make their student loan and credit card payments.

These conditions are even worse in states without extended benefits because they are losing service jobs at an accelerated rate since even more people have no money to spend. Ross Perot said "you can’t have an economy by giving each other haircuts"; he was right of course and now the barbers are being laid off too.

The closest Obama has come to doing anything about this is to ask China to expand their domestic market and to export less. China does have a 15% domestic growth rate but the only thing slowing exports to the US is that factories in China are no longer giving big box stores in the US easy credit and some won’t accept payment in Dollars.

Inventories are nearing record lows, if China were to cut us off, we would very quickly have empty store shelves. Germany is still the largest exporter of manufactured goods and has kept their factories going through this down turn. We could go to them hat in hand and ask for foreign aid. Most Germans don’t remember the bombing and some might remember the Marshal plan, of course we would still have to ration for years while we rebuilt our factories. This assumes we don’t drag them down with us. What’s the German word for handout?

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