Wholesale prices fell last month for no good reason and that brings on that chill of deflation. Once that starts to be seen as inevitable it pushes all business decisions in one direction. Unload inventory, cut expenses, layoff everybody but the executive suite and hoard cash so as to make the big killing on the other side, that is if there is an other side this time.
The corporate media is talking up the “failure” of the Obama stimulus package, they are careful to not interview any legitimate economists as they would point out this is not true. The problem is that a third of the stimulus went for tax cuts. The best that will do is 1.10 return when it goes to low income people who will spend most of it.
But a large portion went to the upper middle class to offset the Alternative Minimum Tax created when LBJ cut the top marginal tax rate from 92% to 71%. The AMT was intended to make sure millionaires paid a decent amount of tax but has never been adjusted for inflation and today’s rich scoff at a 100,000 dollar income and a measly million in assets is nothing. You need to be a centi-millionaire to even get into the second tier country clubs. Never fixing the AMT allowed Republicans to claim every year that they were fighting for tax cuts. So most of the tax cut part of the “stimulus” only returned 60 cents on the dollar. Tax cuts to billionaires that the Republicans say will stimulate the economy only return 20 cents the dollar.
Another third went to save state and municipal jobs since local governments revenue collapsed and they are mostly unwilling to tax the rich or corporations for fear they leave and take the jobs with them. This was another of Reagan’s “reforms” that made job migration not only possible but a basic tenet of “competition” also known as the race to the bottom. The rest of the stimulus worked just fine, the numbers are out, imports from China are up 44% year to year.
Goldman Sachs dodged the bullet paying only 550 million for defrauding its own customers of a cool billion or more on a package of mortgage slices they knew would fail. Only 200 million will go to investors which doesn’t mean Goldman gets to make money on the deal. This is actually triple damages for Goldman‘s profit on the deal plus the fine to the government . The investor who made a billion on the fraud gets to keep the money since he was up front about what he was doing, it was Goldman who lied to its own investors but nobody goes to prison so it’s really is just a slap on the wrist.
Skyline of Shanghai, Peoples Republic of China today, not where Captain Kirk lives. This area was mud flats before free trade.
1 comments:
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