Unemployment claims for last week took a sharp turn up and the news said the analysts were expecting the numbers to go down. The analysts always seem to be wrong about these binary choices, they need to get a better coin to flip and then maybe they would be right half of the time. The new number wiped out all the modest gains over the last four months and claims are back up above January numbers.
On the subject of analysts, stock analysts are almost universally picking BP as a “buy” stock. They are using the heads I win and tails the suckers lose coin to pick that stock. BP’s assets are at most worth a couple of hundred billion and it has a good trillion in liabilities without things getting any worse. Of course the analysts are issued their coins by companies that have BP stock to unload.
The consumer price index fell last month in a period when we should see inflation. Inventory levels are getting quite high again and nothing is being done to boost demand. With layoffs picking up again demand will begin another downward spiral and deflation will likely follow once companies start to run short of cash and start cutting prices to make CEO payroll. At the moment everybody is flush with cash but commercial credit has started to tighten again.
The housing market is starting to deteriorate already and the last of the sales where the buyer received government incentives haven’t even been processed yet. New construction is sagging of course with more and more foreclosed homes coming on the market. The only bright note everybody is pointing to is a sharp up tick in pickup truck sales but this is probably just pent up demand from people who have been putting off replacing worn out equipment rather than any real growth.
The finance reform bill is in Conference Committee to reconcile the House and Senate bills but it remains unclear if any real reform will survive. Eight House Members (mostly Republicans) are the subject of a ethics investigation for shaking down Wall Street banks just before voting on the legislation in early December. The fact that some withdrew amendments that would have cracked down the banks after getting huge bundles of campaign contributions to their personal Political Action Committees is largely shrugged off as business as usual.
These PAC slush funds allow Congressmen to wield influence beyond their everyday corrupt practices by bailing out colleagues who would be voted out of office if their constituents weren’t bombarded with TV ads. Thanks to the Supreme Court, corporations can now campaign directly in elections with unlimited funds so these PACs are likely to fade away. Fund raising will become much simpler for a Congressman as corporations will simply express their jumping needs and the Congressman will only ask how high?
In Italy during the twenties the legislature finally stopped meeting entirely as the council of corporations made all the decisions. Of course today we have TV cameras so the Congressmen will continue to perform as if it were some sort of reality show. But on this show the tribe doesn’t really get to vote anybody off, that is decided by the corporate suits behind the cameras. www.prairie2.com