Saturday, November 14, 2009

Every Island

Friday the thirteenth was an unlucky day for three more banks and of course for taxpayers, costing us another billion Dollars. Technically the FDIC operates on premiums from insured banks and not public money but bankers don’t have their pay docked for this, they pass it on to us.

Everything stupid that corporations do gets paid for by us. Libertarians think every man is an island. Unless you live on a real island in a remote part of the world you can’t even begin to be independent. Of course with global warming, you had better have pontoons on your island.

Friday, November 13, 2009

The processing line runs on a chain.

Sholom Rubashkin, the CEO of the notorious Kosher slaughter house in Postville IA has been convicted of 86 of 91 fraud charges with potential sentence of about 1250 years give or take a century. He has been remanded to Federal Prison while awaiting trial in December on 72 immigration charges and the State of Iowa would like to get their hands on him for numerous child labor law violations. A good number of the fraud convictions carry a potential twenty year sentence so he is likely to be in the Federal pen (cow revenge joke) for some time. At trial he blamed his subordinates for the violations despite him being the only one with the authority to take these actions.

They all took plea deals and ratted on him. The jury only took two and a half days to wade through a month worth of testimony and decide guilt on all but five charges.
Contrast this with the show trial given the 300 immigrants rounded up at the Postville Plant by agents of the Bush Crime Family. The so-called trials were conducted in special courtroom set up in a large County Fair barn, prisoners were presented to a Federal Judge shackled in strings of fifteen. Represented by lawyers who had been hand picked by the government and had spent only minutes on each of the dozens of cases each lawyer was given. This all happened within days of the roundup, but the facility having been rented more than a month in advance by the government.

The lawyers had to agree to use a script produced in advance by the government; use only that script and to emphasize, use nothing else, present no evidence, make no motions, just use what the prosecution gave them to read and accept a flat fee for the appearance. It was a modest amount per unit but made lucrative by volume, like any meat processing enterprise. Many of the invited attorneys refused to accept these terms.
The meat processing plant (I mean court room) had several stations, a set up that these workers would certainly recognize from their recent employment. Each group of fifteen was shuffled on a chain from holding pens to station where they were informed that they were going to Federal Prison for ten years unless the workers who spoke no English and few could even read Spanish, unless they pled guilty to a felony carrying a lesser sentence. It is unlikely they understood any of their rights or the ramifications of a plea would have on their future or on their families hiding in churches around Postville.

Processors then moved the chain down the line to a judge who accepted their guilty plea with the lawyer dutifully reading his script. The processed carcasses (I mean convicts) were then moved to another station where they were all given identical USDA Meat Inspection Stamps (I mean duly rendered sentences) and distributed to the freezer (I mean prison). Industrial efficiency; from holding pen to cold storage in a matter of minutes. Attorneys watching the proceedings said that Bush DOJ officials seemed to be practicing, like they were trying to refine a system that could be scaled up. You could easily argue that as their crimes go, this wasn’t even the top ten worst things that the Bushies did. But they were just practicing. Conservatives wouldn’t even have a problem with what they did, as long it isn’t them being loaded into the cattle cars.

So far no lawyers have been disbarred, no judges impeached by Congress, nobody from the DHS or DOJ has been fired. A string of Bush Crime Family members are not being moved on a chain to their appearance before a judge.

Thursday, November 12, 2009

Race to the bottom

Initial jobless claims have declined slightly but still no where near the level where new jobs could be created. States and municipalities continue to pressure workers into pay cuts and bigger workloads as they eliminate jobs. The same tactics are being used on white collar workers and the unions continue to accept pay cuts. The most insidious practice is the two tier system that is relentlessly replacing middle class jobs with the working poor as union workers retire or take buyouts.

No job below the level of the predatory class at the top is exempt from this push down of wages. Service workers like health care are under increasing pressure to accept lower pay as millions leave middle class jobs forever.

The Flat Earthers who make billions and pay right-wing mouth pieces millions to tell us that American workers make too much money. A few years ago they told us that we could give up manufacturing because it would raise our standard of living. Now they are telling us we need to compete with a part of the world that lives on five Dollars a day. Guess what, they tell those people they need to compete with people who live on a Dollar a day.

The really terrifying aspect of this kind of race to the bottom is that at some point you reach the bottom. Then things get really bad.

Wednesday, November 11, 2009

Being Bullish on White Rabbit Futures

Treasury Sec. Geithner is already in Asia ahead of President Obama and he told Japanese reporters today that a strong Dollar is essential. That would be great for Japanese exports, at least in theory. The currency market responded with 15 month lows for the Dollar. Gold and equities are up as well is everything else that can be traded on speculation. The flood of trillions of Dollars into the Wall Street banks to stave off their collapse at the end of the Bush Adm. is hyper inflating all world markets. They were supposed lend the money into the economy, but interest rates are low and trading the markets pays great. Goldman Sachs "earns" a hundred million a day inflating the markets.

When this bubble bursts it could very well plunge us into a global depression or worse. The thing that will burst this bubble will be, you guessed it, a strong Dollar. This ponzi scheme is being financed on margin with credit from the Wall Street banks. When the traders can’t make their margin calls, all that credit will default and start a cascade of failures. Why do you think the bankers want billions in "bonuses" now? If they stop passing out money, a side effect of this would be to drive up interest rates, that brings us to the massive debt.

The Federal Debt has zoomed past 12 trillion Dollars today, this does not include trillions more that are not counted in the general fund. The interest on this amount alone is close to 600 billion putting it in range of passing the official Pentagon expenditures as the single largest budget item. Add in the interest on all the other debt and it would easily be the largest.

Almost all of this debt was run up by Republican Presidents over the past 40 years. Most of it by Reagan and the two Bushes. Reagan holds the record by quadrupling the debt to four trillion by himself. Geo W. ran up the debt by the largest amount in dollars but a trillion won’t buy what it did in 1980. What Bush did is a bigger deal though since our net worth as a nation is approaching zero.

The big problem that Bush built into the debt crisis is that he borrowed almost all the money on 90 and 180 day notes. The debt needs to be resold constantly as it expires and more and more of it every day as the terms of older bonds ends. Reagan had done the same thing but Clinton had refinanced all of the debt with ten year bonds that are now all expiring. Clinton’s budget called for all the debt to be repaid by the end of President Gore’s second term.

The Fed has been holding down the interest for the past two years by buying bonds on the Treasury auctions but say they plan to stop doing this. Where does the Fed get all the money to buy bonds? The Treasury first sells special bonds and then gives the proceeds to the Fed who then "creates" more "money" on a ten to one margin. They really shouldn’t have followed that White Rabbit after eating those mushrooms.

Tuesday, November 10, 2009

The Birdseed Milkshake Economy

Today’s economic news is brought to you by the number forty.

Sesame Street turned forty today and they still tell truth to children and sometimes they don’t. In 1968, Big Bird could buy a bird seed milkshake at Mr. Hoopers store for 20 cents and today the posted price is 2.99. If they wanted to be totally honest, Mr. Hooper’s store and all the others would be gone and Big Bird would be working at Walmart.

According to the conservatives, Sesame Street was supposed to make all the kids into socialists and destroy capitalism. Instead, forty years of conservatives dominating economic policy has dragged us down to where we look increasing like the Soviet Union of 1968, except for the universal health care they enjoyed. Of course in 1968, Mr. Hooper’s store sold American goods. Today he would be selling goods exclusively from Communist China, not because he wanted to, but because that is conservative policy.

Still there have been positive changes that Sesame Street can take some of the credit for. The first year they were on the air, the show with the integrated cast was banned in Mississippi. Today Sesame Street had First Lady of the United States Michelle Obama showing kids how to plant vegetables. A skill they will need in the conservative future and Big Bird will need to watch his back and his drumsticks.

I’m stocking my garbage can with extra canned goods.

Monday, November 9, 2009

The "carry trade" and your 001k

Gold hit a new high today as the Dollar continued to decline. Long term oil futures are hovering around $100 and inflation protected instruments are big sellers. The stock market is up as well as the glut of cheap Dollars is driving everything up. Boom times for Goldman Sachs but the danger is building in an obscure class of investors called the "carry trade".

The "carry trade" is where investors will borrow currency in a country that has a cheap money policy and move it to country that has risky but profitable investments. This can be done with any currency and the difference doesn’t need to be that great since little "real money" is involved. It’s all done on margin, you know like 1929.

For the past couple of decades the Japanese Yen has been the favored currency for this purpose. This was what caused the collapse of the company Long-Term Capital Management in 1998 and exposed the folly of deregulation. The big Wall Street banks chipped in to take this problem off of Clinton’s hands and in return the last of the New Deal regulation of banks was done away with entirely. Since banks could take care of the financial services industry themselves, why should millions of taxpayer money be spent on regulation. (In the past year something like 24 trillion has been committed to the bank bailout as a direct result of this policy)

Cheap yen has been replaced by the cheap dollar, so now everything priced in dollars has been inflating the bubble. Dollars are flowing like water into all markets worldwide and it’s going to be a problem. Countries like Brazil fearing the inevitable collapse are restricting capital inflow and others like India and China are buying gold. As the Dollar continues to weaken from this illicit activity, it creates its own pressure for a reversal. Since there is no real restrictions on debt being used for leveraged investment the reversal creates a stampede to sell in order to cover margins calls since the market bubble is being financed with debt on margin. The ensuing panic drives people into Dollars making the non-Dollar investments worth even less triggering more margin calls and creating a spiral of credit defaults.

Nobody knows how much "carry trade" there really is, but it is a huge bubble and it really can’t be reversed once started, it will grow until it bursts. Since it is based on trillions in debt, it will drag everything down with it. This risk is spread across all types of investment and will destroy an unprecedented amount of paper wealth and will surge across the real economy as well. This is of course bad news for your 401k, 301k, 201k, 101k, until finally 001k. Unfortunately the past thirty years of Reaganomics has embedded the financial services industry into all aspects of the economy. Last year’s credit freeze is just a taste of what likely to happen. We will get change, whether we believe in it or not.

Sunday, November 8, 2009

Mass murder, some numbers

Joe Leiberman went on Fox Sunday and implied that he might have information through his office as Chairman of the Senate Homeland Security Committee confirming that last week’s Fort Hood mass killer was an Islamic terrorist. This from the Senator representing the health insurance terrorists who mass murder a 1000 people a week by denying care and corporatized hospitals who according to the AMA murder another 2000 people a week. Largely from under staffing and poor management in order to maximize profits. This is only a partial list of corporate created deaths supported by Leiberman.

The Conservatives see this one suicidal mad man as justification to kick all the Muslims out of the military and that as the first step toward a general roundup. They ignore the fact that right-wing Christians have in total killed more people in the past year and if they had not been stopped quickly, each of their murder sprees would have been much larger.

And of course it is a Christian who holds the record for domestic terrorism deaths. The Oklahoma City bomber driven by so-called Christian values had no problem planting his truck bomb in front of a daycare nursery in order to kill Federal workers on the floors above. Remember that Timothy McVeigh was not clinically insane or suicidal and did not act alone.

You would expect Joe Leiberman would think twice about going on Fox and inciting the very people who would commit mass murder at a Synagogue just as quick as they would at Mosque or a liberal Christian church.