Friday, December 11, 2009

Rice in the Christmas stockings

Three more bank chains were seized today bringing the total to 133 for the year. The head of the FDIC says the peak for bank failures will come next year. Indeed the commercial loans made five years ago will be coming due. Those loans will be to the many of the more overextended developments built at the peak of the bubble years.

The Treasury Dept. has instituted a program to bail out as many of the small banks as it can to keep the failure numbers from getting too big right before the 2010 elections.
The headline today was that retail sales for November were up more than 1% but contrast this will state sales tax receipts that are down 10 to 20 percent depending on how deep your state is into the Depression. States are gearing up to slash next years budgets and this will not be good for the economy.

The House has passed a bill regulating the financial services industry. It’s not nearly enough but Republicans are screaming that it’s the end of freedom for Americans so there most be a couple of good things in it. Funny how they don’t care about any of the freedoms we’ve lost so far but regulate parasitic bankers and it’s the end of the world.

The rest of the world is paying close attention to whether or not the US is serious
about reining in these overgrown corporations that threaten the world economy. This is a no brainier for the rest of the world after last year’s banking collapse. The runaway food commodity markets fueled by speculators and the specter of famine was a wake up call for most. There is some hint that this could be starting up again as the rice market is heating up. It’s possible to store grain for a number of years if you go about it right or you can just go with canned goods in the Christmas stockings this year. www.prairie2.com

Rice in the Christmas stockings

Three more bank chains were seized today bringing the total to 133 for the year. The head of the FDIC says the peak for bank failures will come next year. Indeed the commercial loans made five years ago will be coming due. Those loans will be to the many of the more overextended developments built at the peak of the bubble years.

The Treasury Dept. has instituted a program to bail out as many of the small banks as it can to keep the failure numbers from getting too big right before the 2010 elections.
The headline today was that retail sales for November were up more than 1% but contrast this will state sales tax receipts that are down 10 to 20 percent depending on how deep your state is into the Depression. States are gearing up to slash next years budgets and this will not be good for the economy.

The House has passed a bill regulating the financial services industry. It’s not nearly enough but Republicans are screaming that it’s the end of freedom for Americans so there most be a couple of good things in it. Funny how they don’t care about any of the freedoms we’ve lost so far but regulate parasitic bankers and it’s the end of the world.

The rest of the world is paying close attention to whether or not the US is serious
about reining in these overgrown corporations that threaten the world economy. This is a no brainier for the rest of the world after last year’s banking collapse. The runaway food commodity markets fueled by speculators and the specter of famine was a wake up call for most. There is some hint that this could be starting up again as the rice market is heating up. It’s possible to store grain for a number of years if you go about it right or you can just go with canned goods in the Christmas stockings this year. www.prairie2.com

Thursday, December 10, 2009

With a Twinke In Their Eye

Initial unemployment claims were up 17,000 last week dampening hopes that we had really turned that corner on jobs. The news readers then reported with a twinkle in their eye that the number of people receiving extended benefits dropped sharply. They were in fact down 303,000 in just one week. This is not good news, it reflects how many people that exhausted their benefits.

They were estimating that one million people would fall off the rolls by the end of January but I would say that was not an accurate guess. The millions that lost their jobs in the final months of the Bush reign of terror came from out sourced industries. Their jobs are gone for good and with all the other occupations laying off workers their chances of finding a job in a new field are not good.

Great Britain has had enough with its criminal class and has slapped a 50% tax on big bonuses. In the rest of Europe this is about what the normal tax rate is for that income level. Before Reagan there was a 72% top rate in the US. Today these parasites only pay an average of 17%.

Home foreclosures were down slightly again last month but the number of people on track toward eventual foreclosure continues to climb. You can probably add many of the 303,000 who lost unemployment benefits to that list. This year will set another new record for foreclosures.

Bankruptcies continue to climb as well but nearly 2/3 of those cases are people with medical bills who still have a good paying job. The jobless and the working poor either don’t need bankruptcy anymore or can’t afford to file and then jump through all the hoops put in place by the Republicans. The new law doesn’t keep that many people from filing, its real intent was to make securitized debt instruments based on unsecured debt seem more attractive.

This added to the quadrillion Dollar credit derivative market. In fact the added risk made the sale of credit default swaps even more profitable and in turn pumped up the need for derivatives based on the CDS and on and on. One dollar of credit issued could produce hundreds of dollars in market activity. You know, "innovative products" from your financial services industry. Making American capitalism the envy of the world. Better learn to speak Chinese. www.prairie2.com

Wednesday, December 9, 2009

Reanimating the corpse

The markets rallied late today on a weakening USD. With the Dollar down 1.2% measured against gold that would mean for each trillion the big banks have invested against the USD in foreign markets they made $12,000,000,000 (12 billion) today. That’s assuming they can cash out before everybody else, but since they are the "market makers" they do have the inside track on that.

Meanwhile back in the "real" world; US home owners lost 500 billion of their personal wealth this year. Still we did better than last year when we collectively lost $3.6 trillion. Of course that $4.1 trillion wasn’t real money since it was just a market bubble created by the big banks to create a basis for their 1000 trillion dollar credit derivative trade.

If your house is worth less than you paid for it, you might not think of it as "pretend" money. When the Wall Street bankers use that money to buy another yacht or a personal jet it is real money, but not for you, just keep making the payments. By the way they say you are paid to much and will have to take another pay cut.
Some good news for a change, maybe. The lowering of the Medicare age could be a real boon for the economy if it isn’t sabotaged somehow. The 55 to 65 group that this affects are the people at the top of the food chain. These are the people who could make real change if they are no longer shackled to their corporate masters by their company health care plan.

This could produce a real resurgence of small business that has been suppressed since Reagan made health care a for profit business in the eighties. Coincidentally President Obama has just come out with a long list of incentives, loans and tax breaks for small business.

To make this work Obama will need to order AG Holder to open the crypt and reanimate the corpse of the DOJ antitrust division. Is there a new lightning rod on the roof of the RFK building? No new laws would be needed to get started. Everything from the Sherman Antitrust law to Packers and Stockyards Act to an assortment of laws against leveraged buy outs and other corporate predators have been ignored by every President since 1980. Millions of jobs would be created and this is why the Republicans are loathe to allow health care reform besides the bribes from the insurance companies.

Once set in motion the Republicans will be hard pressed to oppose this but they will anyway. Already only 22 percent of voters will identify themselves as Republicans, openly opposing people who want to start a small business since their 401k is gone to hell could put Republicans in single digits. We can hope, yes we can. www.prairie2.com

Tuesday, December 8, 2009

Chump change we can believe in

World markets were down sharply today on the news that Greece has had its credit rating downgraded and the word is that the Dubai crisis won’t be resolved anytime soon despite a sell off of Dubai World’s overseas holdings. Gold continued going down as the Dollar continued to strengthen against other currencies. Oil was down again reflecting the continued decline of the economy.

A survey of US companies found that at least half of them will continue to layoff into the new year and the rest won’t be hiring that much. President Obama unveiled an array of new ideas he would like to use to encourage more hiring. He didn’t say how much he intends to spend on this. He has a so-called windfall from the TARP program of 200 billion that is coming back from the big banks who want to pretend they are making money to justify their obscene bonuses.

In reality the banks consider this money chump change compared to the trillions they got from the Fed. They’ve been able to use the Fed money to churn the markets worldwide and are just wallowing in profits. The reality is of course is that they aren’t creating any new wealth, they are just harvesting it from pension plans and other such investments made by the unwary. It looks like everybody is making money but when the markets plunge to about a third of what they are now the accounting will take place. The rich will be richer and the middle-class will disappear for good. The really rich don’t play the stock market.
If the Dollar continues to strengthen this accounting will come sooner rather than later. Greece won’t be the only country that can’t pay its bills. The US can ride the strong Dollar for a time but a strong USD means more out sourcing and more unemployment. Two hundred Billion won’t make a dent in that and there will be more calls for working people to accept lower and lower wages.

Fed Chairman Bernanke wasn’t kidding about cutting Social Security either. The conservative wet-dream about the government being too broke to pay entitlements is getting closer everyday. Even if the talk about taxing the rich were to come to something it probably wouldn’t be enough anymore. The economy needs to be totally rebuilt from the ground up or it will just continue to deteriorate. Any boost from stimulus will just be a bubble if the same parasites are left in place. www.prairie2.com

Monday, December 7, 2009

Not much thinking going on

Fed Chairman Bernanke testified to Congress not to expect too much from the recovery and the jobless rate will not be coming down. This is bad news for the 1,000,000 people who had their unemployment benefits extended by the stimulus act earlier this year. Their checks will stop coming in the next few weeks and Congress has yet to do anything. They had also been receiving a 65% subsidy on their health insurance with their average family premium of $1100 but this has already run out while Congress is bogged down on health care reform that won’t kick in for years if ever.

The CBO estimates extending these benefits for another year will cost a hundred billion Dollars and this doesn’t allow for more people becoming unemployed. FDR refused to just hand out money during the last Republican Great Depression believing that jobs were the key to rebuilding an economy. But Roosevelt didn’t have today’s problems. The factories were still there and hadn’t been sold off to China.

Even if Obama creates jobs the money will drain off to multinational corporations that will not do anything to rebuild America. Obama’s economic advisors have him playing a monetary game of chicken with China that is putting the entire world economy at risk. In the meantime its making the people who run Goldman Sachs (where most of his advisors come from), it’s making them very rich. .

Meanwhile we have millions of people on "temporary" assistance instead of working and more are joining them every day. The rest of us continue to slide toward this same cliff edge since nothing has been done fix the underlying problems and no more than a handful of Congressmen are even thinking about it. The rest don’t do much thinking at all. www.prairie2.com