The announcement of Iran’s secret nuclear plant appears fully scripted, even Iran’s part in the drama. Really severe sanctions would not be in the interest of Russia or China and there is really nothing that Obama could offer them to get them to go along. So when Obama, Britain’s PM and France’s President all step up and make that kind of threats against Iran like they did in public, they must know exactly what will happen. Unlike Bush, who only cared about the swagger of the moment and didn’t care how stupid he looked the next day. You can bet that Iran has already agreed to the outcome and Russia and China have blessed the deal.

The right-wing web sites are claiming Obama was caught by surprise but this runs counter to reports that the US has known about this reactor for some time. This would be consistent with rumors of a reactor that Israel intended to attack a year ago. The bombing campaign went out the window with Russia’s invasion of Georgia. The Russian’s behavior seemed a bit odd with their troops wandering about and blowing things up before they left. It seems that what they were taking care to destroy was Israeli Air Force equipment that had be pre-positioned for an extended air campaign against Iran. Tehran is just a quick hop from old Soviet air bases in southern Georgia with a hundred F-15s.

Bush had amassed a four carrier fleet to back up Israel but the Russians wouldn’t go along. Sarah Palin could see the Russian bombers from her porch. It’s not clear just how close Chuckle-nutz brought us to WWIII. The Israelis fell all over themselves to make nice with the Russians immediately afterwards, they seemed to have had some idea they had stepped in it. You shouldn’t mess with the Bear just because some pretend cowboy says he looked into his soul. Bush’s October surprise fizzled and the sun rising didn’t silhouette Dick Cheney’s mushroom cloud after all.

Obama seems to have things under control so far. It’s nice to have a Commander in Chief who isn’t an idiot. Maybe we can.

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Pumping Up the Banking Bubble Still More

Another Friday, another bank failure, the eighth largest this year. This one will cost almost a billion dollars to clean up. Still more of the fallout from the unregulated free market capitalism of the Bush Crime Family. The free market isn’t free.

Paul Volcker, who heads Obama’s economic advisors has criticized the Obama Adm. for re-inflating the banking bubble, but the pumps continue running full speed just the same. Bankers are starting to whine about the prospect of paying into the FDIC the cost guarantying the deposits in the banks that fail. To avoid having the banks pay for it, they are about to launch a scheme to shift the cost directly to taxpayers. The Treasury will bail out small banks that can raise matching investment money. They plan to recycle the 700 billion the large banks are pretending to repay. This will keep many of the 2000 plus banks expected to fail from going under. At least for now.

Even with the bailout that will start in October, the FDIC expects 150 banks to close this year, the worst year since 1992 when the Republican S&L scandal was in full bloom. The head of the FDIC is predicting that bank failures will cost $70 billion over the next four years. I don’t think they are counting the $700 billion in bailout money. (prairie2 said sarcastically)

The real economy is not doing so hot either. Sales of durable goods were down in August, existing home sales were down sharply with new home sales and housing starts slumping badly even with an $8000 government subsidy. The unemployment rolls continue to increase several hundred thousand each week. The government expects 800,000 people to become homeless this year, mostly from home foreclosures.

They are probably underestimating this number and these formally middle class are added to 3.5 million working poor that are homeless at least part of every year in the US. At least with global warming; it’s not so cold to live outdoors. The Republicans have been thinking of us.

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Home Sales Down, even I was surprised

Existing home sales were down sharply in August despite an $8000 government subsidy that has been pushing up sales as the program nears its end. This was an unexpected drop, even I was surprised.

Unemployment claims were down slightly but really only because they are comparing today’s preliminary number against last week’s revised number. We may not have any improvement and in fact the rate of joblessness may be up slightly and of course these numbers mean thousands continue to be put out of work every day. Continuing claims were reported as down but this is only from people dropping off as their eligibility runs out. Congress is expected to pass an extension of benefits that will give about ¾ of claimants a 13 week extension. It depends upon what state you reside in, if your state has less than 8.5% unemployment you can starve.

To cast still more gloom; we are entering the period when firms traditionally layoff regardless of the state of the economy. With retail sales continuing to decline and manufacturing showing only slight seasonal gains, Christmas will not be very cheery for many. Rather than a Black Friday after Thanksgiving where retailers start to make a profit for the year, you may see an exceptional number of bankruptcy clearance sales.
The Fed has just announced that they will keep interest rates at zero but will cut back on securitized mortgage purchases. The big banks have unloaded so many toxic assets that there may not be that much for them to buy. The Fed says they are not concerned about inflation hence the cheap money policy and really there isn’t that much money being lent. The big banks are still using our tax dollars to speculate in oil, keeping it at about double the price it should be and not loaning money to stimulate the economy besides the drag high oil prices are creating.

There is a problem with the Dollar as it continues to decline against the broad index of currencies. The Dollar is nearing its all time low again where it has always been rescued by foreign banks. It could break through that floor and that could trigger hyper-inflation. Some economists and even a few progressives are promoting the idea the some inflation would be a good way to stimulate the economy. It could be a good time to hedge against inflation with a few bars of gold for talk radio hosts or some canned goods for the rest of us. The right-wing nuts are buying up all the ammo but you’ll be able to trade canned goods for that.

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Early in the Obama Adm. they let it be know that they would bypass the corrupt Bush puppet in Kabul and starting funding cooperative local governments. These range from nearly democratic tribal councils to outright warlords. Of course peace with a warlord is still peace. This strategy went out the window with the take over of the Swat valley in Pakistan by religious zealots affiliated with Al-qaeda. This emboldened the Al-qaeda groups who appeared poised to sweep over Pakistan when they attacked and overwhelmed local militias in neighboring provinces. These militias had been newly armed by the Obama Adm. This made it appear that they would not only takeover Pakistan with its nuclear weapons but would then control the supply line to Afghanistan and be able to capture that country as well.

The success of the zealots and videos of their barbaric treatment civilians especially young women was sufficient to galvanize public opinion in the rest of Pakistan. While willing to let the tribal areas keep to themselves, the threats they made to take over the entire country didn’t set well with the majority that doesn’t want to return to the twelfth century. The Pakistani Army then had the public support to sweep in, giving them control of large areas, probably for the first time ever.

This makes the original plan in Afghanistan viable again. Obama’s people are letting it be know that they will probably cut the number of troops and pull back from McChrystal’s plan to occupy the entire country and instead concentrate on Al-qaeda and not pursuing the Taliban.

In reality the majority of Taliban forces are just local militias pressed to support Alqaeda. This was made possible by Bush’s handling of Afghanistan because he wanted an endless war there. He provided financial support for elements of Al-qaeda who were supposedly attacking Iran. Bush also hired contractors to convoy supplies through the Khaiber Pass and that allowed more weapons and material to go to Al-Qaeda in Pakistan than made it to Kabul. No better way to have endless war than to supply both sides.

When the Obama people say they will concentrate on Al-Qaeda what they really mean that they will support militarily local leaders that are cooperative and let them get rid of Al-Qaeda. The locals don’t want the foreign Al-Qaeda zealots or the mayor of Kabul running things. Obama has also cut off the supply of weapons by securing a supply line through Russia. Done properly this is a plan that can work. "Done properly" is the problem, this means getting rid of people like Gen. McKrazy. There are rumors that is was the White House that leaked the story about Mckrazy threatening to resign if he didn’t get more cannon fodder as a way to get rid of him.

This plan doesn’t require the US to occupy Afghanistan or assimilate its people and it could produce an adequate level of peace long enough for Obama to simply declare victory and leave.

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Comsumer spending is down, the kids are down in the basement and America is down the drain

Consumer spending has been for decades 70% of the economy but new numbers put that at something closer to 60%. The obvious answer is that the difference is now being made up by government spending but that doesn’t reveal the real problem.

Consumers have dropped out of the middle class by the tens of millions and simply don’t have much more to spend than for subsistence needs. This has been masked over the last 30 years by ever increasing debt where instead of paying workers a living wage, American corporations have created a giant company store where the worker becomes more indebted the longer that they work. Then selling the debt to China to mask the fact that they aren’t really making enough profit to pay themselves the obscene executive salaries they continue to claim they are entitled to.

Now with real unemployment approaching Depression Era numbers of twenty percent and unions having been beaten and subdued; there is no longer any need to even pretend to pay workers enough to live on. Government spending is keeping the economy going but nothing has been done about out-sourcing so the standard of living will continue to decline as even more jobs are exported. Businesses that depend on the middle class will continue to decline, laying off more people and driving consumer spending ever lower and around and down.

Americans have come to accept the idea that roughly 300,000 people should own everything. Incredibly they still see themselves as being able to enter that ownership class. If not by hard work then there is always the lottery or god’s intervention. No real hope that the kids will have a better life then them or even as good. The kids having finished college with crushing debt they are lucky to find a minimum wage job and are one more bad month from living in the folks basement.

After thirty years of Reagan propaganda many people are fully accepting of this decline or are willing to blame everybody but the people they voted for. The kids living in the basement don’t buy it, but aren’t quite sure what to do about it. Having had schools deprive them of any critical thinking skills or any history they can use; having had a steady diet of misinformation and out right lies from the TV their whole lives; they are close to becoming peasants and serfs. They will have to find the truth themselves or perish.

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A House of Cards Needs a Good Foundation

Yet another risk analyst has come out with a list of bad banks. Their list has almost 2300 banks in the "F" category. These banks that are considered likely to fail hold four and a half trillion in assets. So far the FDIC has had pay an average of 25% to cover deposits so you are looking at a bit over a trillion dollars for this estimate assuming things don’t get any worse. Congress has given the FDIC a half trillion line of credit and of course Congress can print as much as they want. How this gets paid back is another matter.

On the too big to fail list are four US companies — Bank of America, JPMorgan Chase, Citigroup and Wells Fargo & Co. now have 46 % of the assets of all FDIC-insured banks, up from 38 % a year ago. Nine more banks control another 40 % of bank assets and would also likely to be on the too big to fail list.
The Financial Crisis Inquiry Commission held its first meeting last week, four months after being created by Congress. They did little at the first meeting but give speeches about their own importance but gave little of substance. Don’t hold your breath for anything to come of this committee unlike the Pecora hearing of the 1930’s that produced the reforms that would have prevented the current crisis had they remained in place.

Besides the slow and inauspicious start, under rules supplied by Congress, the minority Republicans on the committee appointed by the Republican leadership must approve all subpoenas. That will guarantee that no stone will remain unturned. The stones will be turned in a mixer with Portland cement and carefully guarded until all the facts are encased in hardened concrete, forever covering up who was to blame and what their real motives were. This will provide a solid base upon which a tissue of lies will be used to construct a new house of cards obscuring the continuing decline of our civilization until it’s too late.

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Where have all the flowers gone?

Two people of words died last week. Mary Travers was know for singing her words. Words of peace, justice and equality.

Irving Krystal wrote his words of Neo-Conservatism. Words designed to end peace, deny justice and make equality something only for the very, very rich.

When will they ever learn?

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