Friday, October 2, 2009

Disappearing people

Three tenths of one percent of the US adult population is the amount of people have stopped participating in the official work force and are not counted in the unemployment numbers. Just in September that’s 571,000 people. This number is from the Labor Department and who knows if it really is big enough. Nearly a million more people applied for Social Security benefits in the past year than was expected.
263,000 jobs were officially lost in September but that doesn’t really tell the story. For every job that comes available there are officially six people who want it.

The media keeps repeating the chant that this will some how turn around next year as if by magic. It’s just a cycle you know. No mention of the millions of jobs sent out of the country and how thousands more leave every week. Fewer and fewer people are working to provide support for the rest of the economy. Less and less is produced here and our credit card with China keeps getting closer and closer to where Beijing will not accept it anymore.

The unpleasant truth is that even if enough stimulus money was pumped into the system to inflate the "service economy" it would only make the trade deficit worse and hasten total collapse of the Dollar.

We will have a new way of doing things in America. The question is; who will decide what that will look like. Will it be the Masters of the Universe that are currently running the plutonomy? (economy for the plutocracy) They represent one percent of the population and they own more than the bottom 90%. They have half of the income and life is good. We have seen this before, it was called the Roaring Twenties. Meanwhile here in 1933, three more banks failed today.

Thursday, October 1, 2009

Getting sheared

The Stock Market headed down today as the real world intruded into the fairyland of Wall Street. The number Jobless claims took a upturn again last week. Manufacturing was down and GM and Chrysler sales were off more than 40%. Wall Street’s numbers would have been off considerably more but were buoyed by Health Insurance stocks because they have the belief that not only will no meaningful reforms be instituted but that they will indeed be able to gorge themselves at the public trough.

Speaking of feeding the pigs on Wall Street; the subprime losses in 2007 were 150 Billion and the total aid from the government as of June this year has been 13.2 Trillion. That doesn’t include another 11 Trillion in guarantees, this according to the Inspector General for the TARP program.

These are really just meaningless numbers created with smoke and mirrors to obscure the rotting corpse of the American economy. It’s just new ledger entries to balance the red ink from 40 years of Republican policies but the damage from the lack of any real economy only continues to accumulate.

The top ten percent are now half of the economy and their share is growing, we live in a world of plutonomy. The economy now only exists to service the wealthy. What we little people think, do and say matters no more than the muttering of a flock of sheep. If seeing that bothers you, Fox will be happy to pull the wool down over your eyes.

Wednesday, September 30, 2009

The Chicago Purchasing Managers Index dropped unexpectedly when it was predicted to rise. This is an early indicator of manufacturing reports that will come out shortly and don’t expect them to be good. As I said a few weeks ago, the reports last month indicating growth were being misread and the down turn is likely to worsen.

China is restricting industrial expansion because of over capacity. No longer able to dump excess production into US market and thus assuring growth by destroying US manufactures that are still holding on. China continues to threaten to cut off imports of chicken from the US in response to Obama cracking down on their dumping tires in the US market. Of the $700 million in chicken that they import, half is chicken feet. Worth only 2 cents a pound in the US, they bring 40 cents in China as a delicacy. If exports from the US are blocked, look for more toe nails in the hot dogs.

CIT the eighth largest bank is again teetering on the edge of Bankruptcy and has the potential to cause a cascade of business failures since it primarily lends to small and medium businesses and these depend on bank lines of credit to operate.

Ken Lewis, chairman of BOA surprised his board by resigning. Is he expecting an indictment or just jumping ship while he can still can cash his golden parachute check? With the IMF saying that US banks have only revealed half of their toxic assets, another round of banking crisis’s bringing the economy to the edge is inevitable.

You can eat the rich with a nice broth made from surplus chicken feet.

Tuesday, September 29, 2009

Save some cans of Fava Beans

The Consumer Confidence Index came down unexpectedly in September. Everything is getting better, right? Why wouldn’t consumers see it that way? Maybe because for every four people who have a job there is one who hasn’t been able to find work for months or years. Maybe because nearly a million people retired early in the past year for lack of work or health insurance. Anybody looking for work has the odds increasingly stacked against them with six times as many people now looking for jobs as there are jobs available, a new high.

Some people are doing all right though, US banks are expected to show higher third quarter earnings this week. They are doing this by revaluing about a trillion dollars in toxic assets they are holding. This move is based on market trading in these instruments that they claim has driven up the value more than 30%. The problem is that the trading in these worthless bundles of paper has been described as "thin". In other words there is no real market for this crap but as long as they can pretend that there is, it’s money in the bank.

It will be difficult to even tell which banks are doing this or how much, since the accounting procedures that they use rely on the Gordian Knot principle. With this tangled mess, you can’t really tell what’s going on until the checks start to bounce. A good rule of thumb is: the bigger the bank and bigger the profits then the bigger the lies. By modern corporate thinking, the only thing Enron did wrong was that they couldn’t convince the right people that they were too big to fail.

Meanwhile, the US money supply is shrinking and bank credit is contracting at a pace not seen since the worst days of the last Great Depression. This has been going on for about three months and appears to be tied to the Federal Reserve not buying as many bonds as it had been planning to. It’s believed that the Fed gave into pressure from China that has fears that the US is trying to devalue the Dollar and make worthless the trillions of dollars that China holds by increasing the money supply.

The risk from this rapid debt reduction is that this could plunge an already shaky US economy, if not the entire world economy into a full blown deflation collapse. The so called Experts that work for rich people are predicting that by next year the Fed will have to start the outright monetizing of government debt. This a fancy way of printing money in which the "new" money is put into the hands of people who are already rich by issuing Treasury bonds and then have the Fed buy them back at a premium for cash (instant profits for the privileged class). But of course, you wouldn’t want to put the money in the hands of the lower classes, that would be so Keynesian. What do you think this is? The New Deal? ----- Submit your recipes for eating the rich at

Monday, September 28, 2009

We don't do socialism anymore, Comrade

The latest trick from corporate America is to force out workers that are 62 plus so that they don’t count as unemployed rather they are "retired". This is creating a surge in social security claims that will put the system in the red for the first time since the Reagan recession. Reagan then doubled the tax, the biggest tax increase ever. A tax that was levied on the poor and middle class; the rich don’t pay anything on the "rich" part of their income (no flat tax for them).

Current revenue is also down as wages are being depressed and also from having 30 million people out of work. Claims filed for retirement or disability under Social Security rose 900,000 over the previous year for the fiscal year ending this month. This trend will only accelerate as more people exhaust their unemployment benefits in the so called jobless recovery. Extensions to benefits passed by Congress only apply in about half of the states. Another big advantage to retirement is that you can get single payer health insurance from the government (shhh, don’t tell the kids).

There are in fact trillions of dollars in the Social Security reserve fund, but Reagan, Bush and Bush stole that money, so more money will have to be borrowed to replace the empty fund. Bush called the special Treasury Bonds issued for this purpose worthless paper. It’s the truth if you accept the premise that the Republicans have destroyed our economy and government. He would know, since he was instrumental in making that so.

The right-wingers are throwing a self righteous fit, "we told you that Social Security would go broke and should be put in the stock market, wait, wait, we mean we told you it should be put in real estate, wait, we mean it should be in Treasury Bonds (it already is in Treasury Bonds)... well, err, aaa, we told you so!" The Social Security Adm. says it will even out again in about two years as corporations run out of people to push into retirement, of course they are assuming the economy won’t get worse.

Just the same the same the corporate media is pushing the notion that Congress needs to "fix" Social Security by slashing benefits, raising the retirement age and increasing taxes even though the only problem is the looted treasury. Repealing the Reagan tax cuts would fix all our problems but since the top 1% now own more than the bottom 90%, don’t hold your breath. We’re approaching the distribution of wealth ratio they had in the old Soviet Union where the party elite effectively "owned" almost everything. At least there everybody got health care and a pension. I guess we can’t expect that, Comrade.