Friday, November 20, 2009

Those "interesting times" you've heard of

The economic news this week is much as you would expect it to be, that would be grim news, but something more happened that few people appreciate magnitude of the potential consequences. The usual news is that new unemployment claims remain over half a million for the week, 200,000 jobs were lost last month (really many more than that) and fourteen percent of US homes are deliquent on payments or in foreclosure on top of millions lost already. The really serious news is that the next world war has started to heat up. Peace talks appear to have failed and a clash of empires is under way for world domination. Much of this is not apparent on the surface but the events now set in motion will bring profound changes across the planet.

Japan has declared that its economy is officially in deflation after seven months of declines in consumer price. Demand for services dropped sharply last month and the new liberal government is preparing a new stimulas package. The falling USD has made imports into Japan too cheap and fully a third of their factories stand idle. Price wars are starting to ramp up between retailers, something Japan’s economists see as alarming. While not as apparent as the flood of Dollars in the world, there is an awful lot of yen in circulation and it needs to find a home.
Japan’s central bank has cut the interest rate effectively to zero in an attempt to boost their equities market after disappointing corporate earnings are threatening to crash their stock market. So Japan, who is for now still the second largest economy in the world has gone full in on the monetary war between the US and China. The Chinese Yuan is still pegged to the USD and this is driviing up the Yen and driving down Japan’s economy.

Medium sized economies like Brazil are trying to protect themselves from the tsunamis of Dollars and Yen from washing them away by restricting and taxing foreign capital coming in to their countries. The question is will China blink? Even while Obama was still in China ,they were calling on the rest of the world to do something about the US weak Dollar policy. Does this mean China is being hurt by this or are they just positioning themselves to take over after the worldwide market collapse?

The assumption is that the world will flee back to the Dollar after a market collapse as they did last year and as they always have. Increasingly though it’s China that has the goods, literally. If you want to buy anything you need a currency that China will accept. Oil producers are the key and they would like nothing better than to get off the USD. The US has always had the added benefit of offering military security and shock and awe if you didn’t play ball. But China’s military is far larger and their spending is now second only to the US and you can buy a lot more bang for your buck with a Yuan than with a Dollar.
Russia has the experience and an increasing capability to project military power. The Russians are cozying up to China as a model of modern capitalism after a decade of disasters brought on by the Chicago School of unregulated theft (I mean economics).
China has let it be know that any embargo of Iran will bring Chinese ships to supply Iran. China is already projecting power around Africa and Russian ships have been protecting Venezuella from US aggression.

China Bears and I mean market short sellers and not the fuzzy pandas are telling everyone who will listen that China is near collapse. This is probably not true but China will not fade quietly into the sunset either way. If either empire were to collapse they will only become more dangerous. These are about to be the "interesting times" the Chinese curse refers to.

Thursday, November 19, 2009

How much is that Kidney in the window?

The equities markets were down worldwide today as were most commodities markets except for gold. The Dollar continues its slide and China isn’t happy because it’s cheap Dollars that has been driving the markets up. The markets are already overvalued and this will either cause the mother of all market crashes or spark hyper inflation and then a crash. China has been manipulating its currency for decades and resents the US doing the same thing and more.

Obama's last stop in Asia was in South Korea where he was very warmly received. He returned the warmth by promising to push for a free trade agreement between the US and Korea.

Obama’s Sec. of Treasury appeared before the Joint Economic Committee of Congress today and was not warmly received. Liberal Congressmen want his resignation and the Republicans smelling blood jumped on him too but he didn’t hesitate to point out it was Republicans that were in charge when everything fell apart and that they are wrong about everything.

All true, but Tim Geithner has a lot of explain’n to do just the same, he has been up to his eyeballs in current practice of shoveling money to the Wall Street Banks that are driving the market bubble. Money created out of thin air is flowing through the banks and into markets worldwide. The lone economic super power in the world told Obama how displeased they are about it when he visited them this week with hat in hand.
Congressman Barry Frank’s new legislation will force all foreign exchange currency trading to go through a central clearing house and that has the foreign exchange bankers all up in the air. They are warning that transparency and regulation will bring on the end of the world. The blood sucking leeches prefer to keep the lights turned off.

Obama is apparently trying to fix our problems with a "just print money" monetary policy. China has been eating our lunch with their monetary policy but they also have a trade policy, a policy on manufacturing, an economic growth policy, a health care policy and a bunch of other policies that we just leave to predatory corporations. The kind of criminals are in charge here that end up on the organ market in China.

Wednesday, November 18, 2009

What flavors?

Was Obama’s trip to China a failure? Well, he didn’t give anybody a public back rub or throw up on the prime minister. However, the Chinese President ignored everything Obama said in their joint press conference, where the Chinese refused to take questions. In his half of the press event President Hu lectured Obama on America’s unacceptable weak Dollar policy. He went on to complain about Obama having put huge tariffs of 40% on tires and 99% on pipe that China was dumping into the US market to eliminate US producers.

Obama let the Chinese have things their own way in public and indeed he said many things to build up their stature (face is a very important thing to the Chinese). The question is did he get anything back in private? Obama came out today and warned we could have a double dip recession if government deficits are not brought under control. He knows there is no practical way to balance the budget given the mess the Republicans left behind. The Chinese complain constantly about all our deficit spending, so is he just telling them what they want to hear? Or taking orders from our masters?

Maybe he has made a deal with China to allow us to rebuild without China interfering. What is required is a total restructuring of the economy from the rebuilding of the manufacturing base to a realignment of our currency and the elimination of the debt (not repayment). Throw in a complete breakup of all the monopolistic corporations and a roll back of the Reagan tax cuts and we could become an emerging economy instead of plunging deeper into the third world.

Is Obama preparing the ground for a New Deal reform program and maybe a trade war with China? Or is he preparing us for the final transfer of power to the corporate elite? Obama is warning about a double dip Recession if we spend more money on the recovery. We’re still going down the first dip. Either way things are going to get bad, but will they get better again? Asking, what flavors on your double dip?

Tuesday, November 17, 2009

The Grim Reaper

According to a Harvard Study, an American with no insurance who goes to the ER is twice as likely to die of traumatic injury if they have no insurance. The first thing that comes to mind is that these people have underlying health conditions. This would be expected because if you are sick you don’t get to have insurance and so you could be expected to succumb to your untreated illness but those in this study were all trauma cases. The majority of the uninsured are young healthy adults who also tend to have a much higher incidence of trauma injuries so being sick should not be that big of a factor.

You could say that these people routinely waited too long to go to the ER, but this study only looked at people with injuries from things like car crashes, falls and gunshot wounds where waiting isn’t really a choice for most people. They didn’t count people who were DOA or were treated and released. Certainly waiting too long could be a contributing factor in some deaths, since if you’ve ever been to an ER without insurance you will find the first call you will receive when to get home will be from the collection agency. Your bill will be four times what the insurance company would have had to pay and this is why collection companies that prey upon the uninsured sick are the darlings of Wall Street.

There is a long list of ways in which the system is stacked against the uninsured. Many live in areas where the hospitals are not well equipped and lack adequate staff. If you seek emergency treatment at a private for profit hospital which used to be required to be nonprofit but has been taken over as a stacked system eliminates the public hospitals, if you go to one of these bastions of Free Enterprise without an insurance card, they will only give you as little treatment as they can get away with to stabilize you so that you can be shipped out to a public hospital no matter how far away that may be. They would let you die on the doorstep if this was allowed by law.

Republicans insist that all uninsured Americans get excellent health care by going to the ER in the ever shrinking pool of public hospitals. In fact all of the people at focal point of this study got ER care... and died. They got care in public hospitals with ever diminishing resources as the Republicans do what ever they can to cut funding.

Republican crony Insurance companies make it ever more difficult for these hospitals to provide services by using every under handed billing trick they can to push payment onto the policy holder who is sick and simply cannot pay.

Since the US spends twice as much per person as the next most expensive country and gets worse outcomes, it isn’t a matter of spending the money. It’s a matter of making the rich richer and the middle class health plan simply is, die quickly. poking the eye of the Grim Reaper and Republicans (I repeat myself)

Monday, November 16, 2009

Obama in a Mao jacket

Obama arrived in China Sunday and gave a speech saying that the US will not try to contain China. Indeed he spoke of a Pacific free trade zone. He did however stop short saying that the US would join in such folly as was the policy of the Bush Adm. The U.S. trade deficit, which ballooned by more than 18 percent to $36.5 billion in September alone must give Obama pause about continuing the full speed dash toward the abyss.

Our President is popular in China, especially among the young, of course with the decades old one child policy the young are a small minority in China. But you need to remember the scale that they operate on, with a population between 1.3 and 1.5 billion (nobody in the west knows for sure), that’s still a lot of young people. There are more fluent English speakers in China than in the US even if you count Republican voters as fluent English speakers.

Obama is not as popular as Bush was. Many Chinese are wary and think of him as more of a cult figure, you can buy T-shirts in Beijing with Obama wearing a Mao jacket. Indeed Bush should be more popular since he gave China many trillions of Dollars and a big leg up toward world domination. Many are afraid that Obama wants the money back, he talks about a strong Dollar but his real policy apparently is a weak Dollar. Obama’s speech only made the evening news on the main network in China after 27 minutes in and after a story about a rural policeman who seems to spend most of his time helping old women husk their corn crop.

Indeed China has been very concerned about Obama’s policies. Liu Mingkang, China’s chief banking regulator, said that the combination of a weak dollar and low interest rates had encouraged a "huge carry trade" (by using one countries cheap currency and low interest to buy another countries market assets, in this case using USD to buy everything) and that this "carry trade" was having a "massive impact on global asset prices".
Since the Chinese currency is unofficially pegged to the USD there is rising international criticism that China’s currency is undervalued. Mr Liu’s unusually blunt remarks underscore how China – the largest US creditor because of its massive holdings of Treasury bonds plus another trillion give or take in increaingly worthless cash – China has become a forceful critic of US fiscal and monetary policies to say the least.

The Federal Reserve has a policy of cheap money and plenty of it (if you are Wall Street bank) and to quote Mr Liu, [This] "is boosting speculative investment in stock and property markets and will pose new, real and insurmountable risks to the global recovery and particularly to the recovery in emerging markets,"
However, Mr Liu’s criticism of the Fed comes as China’s own monetary policy is attracting growing scrutiny at home. Critics say the massive expansion in bank loans this year could cause asset price bubbles and inflation. China was forced to launch a stimulus plan equal to the US to avoid a panic at home since prior to the crash in the US, 40% of China’s economy was exports.

China has warned the US repeatedly not to try to inflate its way out of its debts. In reality the US has no choice but to inflate the Dollar unless it defaults and prints new currency. Even if we had an economy again, it would never be possible to produce enough goods to repay the debt the Republicans have run up at any thing close to the Dollar’s current value. Oh by the way, on Friday we spent another billion Dollars cleaning up three more Republican bank failures, but that’s chicken feed, the interest on the debt the Republicans left behind is moving toward two billion everyday. - where we party like it’s 2011