There was the usual economic news today, the Euro went to new lows against the USD and this pushed down all the commodities priced in dollars except gold which is close to a new high. Attacks against the debt of Portugal have picked up with another downgrade of their credit rating and there are indications from the rating agencies that there will be more downgrades. These downgrades have nothing to do with the real situation on the ground but rather an anticipation that Portugal will have a hard time issuing new debt in the bond market to replace expiring debt… largely because their credit rating has been downgraded which cuts the number of investment funds that can buy bonds. Supply and demand sets the price in the “free” market; of course capitalists long ago caught on to controlling the supply and the demand to their advantage.
Hungry is close to slipping into the same debt abyss and the feeling that this contagion is spreading is driving down paper of all sorts and boosting gold.
Even US Treasuries fell sharply as they are being seen as not immune with the last bond auction not being well attended and more large sales are scheduled for this week. Japan is also issuing a record amount of debt for the new year that began in April and this only adds to the rumor mill that we are all drowning in debt.
We are drowning, but not from debt, debt is just the flotsam and jetsam left from the sinking of the US economy. Thirty years of selling off America instead of manufacturing things to sell has long ago gotten to the point where all they have to sell is debt. Securitized debt of all kinds from sub-prime mortgages and credit card debt to junk bonds was created and used to build up a quadrillion dollars of derivatives. If the rest of the world didn’t feel dependent on using USD as reserve currency then we would all be in the dumpster already. This attack by Wall Street on the Euro is all that is keeping things going since USD are still considered spend able for now, but the rich are all filling their personal vaults with gold.
The FDIC spent 300 million closing banks on Friday as they do almost every Friday. Most weeks these are banks in the heartland where the real-estate bubble is not a factor. It’s failed commercial loans that are dragging these banks under, most of it can be traced back to the Wal-Mart plague. When they come into a town they will take out 200 small businesses in a forty mile radius and drive down wages. They drive down property values and erode the tax base and often get tax exemptions from the town they land in. They use competition between towns to get what they want since everybody knows all the other towns are really screwed. Every store they open gives them more leverage to force factory production to move China and the small factories in these towns close too. At some point the Wal-Mart’s will close as well and the Waltons will continue to live comfortably on their feudal estates.
There’s a new class of people, the “99 weekers”, their unemployment is gone and Congress is not going to pass an extension for more weeks, they haven‘t even funded the extensions for less than 99 weeks. To add insult to injury, the rat bastard corporations all have policies against hiring somebody from this class as they see them as somehow as “damaged”. We need to see these corporations as “damaged” and recreate an economy that works for all of us and not just the 1/10 of one percent at the top and no one else. www.prairie2.com