No banks failed this week, huh?

No banks failed on Friday but not because there shouldn't have been any. The FDIC is holding back while the Treasury Dept. tries to see how many they can bail out instead. In theory if the FDIC cleans up one of these free market dog piles then the other banks pay for it. But the banks are already squealing like pigs escaping the sausage factory with the extra premiums they've been charged so far.

In theory the Treasury Dept. gets the money from taxpayers but the Republicans left the government so far in debt and with unfunded infrastructure obligations that is a joke. They just funneled all the money that the government took in to their own pockets. If you voted Republican and you didn't get your share, better complain to the RNC.

So the Treasury Dept. is basically just printing the money. China is not going to lend us any more. They are trying as hard as they can to unload the Dollars they are holding while anybody will still take them.

Surprisingly, printing money to fund the Government isn't always a bad thing. The only trick is convincing people to accept it. If you can do that, it is far better than borrowing money from the fat cats sitting around the pool. Their money isn't "real" either but they expect us to pay them interest on it as if it were.

Even as bad as things are, if Obama's people know what they are doing, they can make this work out. Assuming that he isn't a secret Republican with a fake middle class birth certificate.

Some change we can believe in

Weekly unemployment claims were down slightly for last week but not enough to matter. Canada is touting job growth of 31,000 for last month. We officially lost 256,000 jobs in September but it was really at least half a million.

The Pew Research Center did a study of the news media’s coverage of the Great Recession. They found that the media largely considers it yesterday’s news. Only six percent of coverage about the economy concerns how the average American is suffering from this calamity. They also noted that only four percent of the economic news deals with the mushrooming business crisis that is putting millions out of work.

The bail out has been from the top down and so has been the news coverage.
It’s true the problem came from the top and bulk of the news coverage should be about the indictments, the seizures of assets and the restoration of wealth to the middle class, but it’s not.

A hundred thousand people run out of unemployment benefits each week as the Senate dilly dallies with the details of the benefit extension bill already passed by the House. In the meantime they have passed numerous bills including billions to raise the pay of Congress and its staff.

GM unloaded the Hummer brand today and you could say good riddance except that there is an overseas market for the giant bread box on wheels. That market will go to the Sichuan Tengzhong Heavy Industrial Machinery Company. GM did get a several hundred million Dollars for Hummer but China got rid of a bunch of Dollars that it considers worthless AND they got another factory to crate up and take home.

China is publicly very annoyed with the Obama Administration's actions to raise tariffs on goods that China has been dumping on the US market and Obama’s do nothing attitude toward the falling Dollar. They have not however made any real effort to retaliate and are in fact clamping down on the construction of factories that produce goods for export. Obama has just slapped a 99% tariff on steel pipe made in China. This follows a 39% tariff on cheap tires two weeks ago. It’s not time to start singing Happy Days are Here Again but just maybe this is change we can believe in. Yes we can.

The canned goods rebellion?

Asian central banks bought a lot of Dollars on the currency markets today. The intervention was seen by traders as only being intended to slow the decline of the Dollar and not any line in the sand aimed at stopping its collapse. Basically they are putting more of their own currencies into circulation but they are not going to risk devaluing themselves too far as the Dollar sinks into the morass.

There are so many trillions of Dollars floating around that no single foreign central bank can even consider more than Band-Aid measures. There have been rumors of banks buying Dollars for months but with the Dollar’s slide picking up speed, some banks are being more open about it and hoping to build confidence. (the life boats are very nice and we have plenty of ice) Countries that depend on exports for survival are leading the charge to buy Dollars. Hong Kong who keeps its currency pegged to the USD reportedly bought 5 billion overnight.

Other countries that have NOT been favoring the Dollar are also participating, that’s how bad it is. The Russians who have been converting Dollars to Euros for some time have purchased 1.5 billion Dollars yesterday and on top of 4 billion Dollars in the past week.

China that has upwards of 2.5 trillion in currency reserves with perhaps a trillion or more in dollars has indicated its displeasure with moves by the Federal Reserve that they see as driving the Dollar down. Some Republicans are claiming that Obama is doing this as a secret jobs program as a weaker Dollar in theory improves the sales of exports. Doing this would be extremely dangerous because the Republicans have so wrecked the US economy. Any wild swings in the value of the Dollar would only make things worse and threaten to collapse the Dollar entirely. The Chinese, being no fools have acquired a hundred tons of gold, other Asian countries have bolstered their own gold reserves as well.

After the Revolutionary War in America the shortage of money led to domestic trade being valued in jugs of whiskey. It worked so well that George Washington had to raise an army to end the practice. I’ll give you a can of beans for a haircut, 10 cans for a pod cast subscription.

The Pit

The Right Wing Nutz are all over the collapsing Dollar story. Glen Beck and the other loons are telling the bed wetters that the Federal Government checks will start bouncing and the states are going to go all tenth amendment and start seceding. And the violence, they know there will be violence, "especially in the inner city". They can’t wait.

Of course they don’t believe anything bad will happen in their part of town. After all if there’s a crisis they just go to the, the, the, errr, ( the Federal Government). They are all self made conservatives. In reality, their boot straps have Uncle Sam’s picture on them.

Some of them probably even have gold. It hasn’t occurred to them that if things get so bad that the Federal Government goes away that there won’t be any place to spend their gold. They seem to think that the world will just go on the way it always has for them. In fact they believe it will be the return of the good old days. They can keep their jobs in financial services and drive their suvs from their gated community to the country club. Real Americans will be in charge again and they won’t have any of those liberal laws restricting how they treat the servants. The "whites only" signs can go back up. There will be no taxes and they’ll all be rich. Prayer will be back in the schools and women will know their place again.

They can’t wait and they don’t have a clue about the pit they are going to fall into. It would be funny if we didn’t have to go down with them. prairie2

The view from the bottom of the open grave

Desperate to stop any new stimulus plan from Obama, the corporate media even dusted off Alan Greenspan for the Sunday talk shows. He stated emphatically that we should not have any new stimulus plan to create jobs but we should just extend unemployment benefits instead. His reasoning is that the debt is getting too big. He didn’t say where the money will come from for benefits when no jobs are created. He went on to claim he had always been careful to keep the debt below a level of the GDP that would cause any problems. --- Oh really. What caused the mess we are in exactly? The Fed was loaning money at such a low rate that when adjusted for inflation Greenspan was really paying banks to take the money. Can you say "debt bubble"?

The Republicans who ran up 12 trillion in debt and under funded everything for even more trillions are counting on the Democrats being cowed into not spending any money. It worked with Clinton. So why not just do what Clinton did? Times were great, right? Clinton and Greenspan created a series of bubbles that revolved around massive consumer debt while the manufacturing base was sold to China. That trick simply can’t be repeated. We are at the bottom of an open grave, more digging won't help.

So much money is disappearing from the economy because of the collapse of the debt bubble that without massive government spending we would go into an out of control deflation spiral consuming our entire economy. The Republicans are whining that Obama is spending so much money that 40% of the GDP is now government spending and they complain that state and local governments are cutting back at the same time. The implication is of course that the FEDERAL GOVERNMENT is taking over! But Obama’s spending has been quite modest, most of the "stimulus" went for tax cuts and bank bailouts. Things that the Republicans claim will always fix what ails you.

The reality of course is that the Republicans have effectively destroyed the economy so that the government is the only thing still working. The GDP is shrinking rather than the government growing and if the big box stores weren’t filled with things we get on credit from China, the damage would be much more apparent. When the Walmart is boarded up like the rest of downtown, people will start to catch on.

Greenspan and people he works for did this on purpose. When they started us down this road there were a few heretics that told us exactly how it would turn out. Welcome to the New Plutonomy, the worst is yet to come.