The stock market was up again today on the news that consumer spending and personal income were both up, however if you deduct transfer payments from the total then personal income was at best flat for the second month in a row. Transfer payments are things like Social Security, pension payments, unemployment and welfare among others, you know what Republicans call wealth transfer or what sane people call money the middle class put away for a rainy day.
This indicates that there was no real recovery last month and this is born out by the continued high weekly unemployment claims. You can also add an extra 250,000 to the rolls of the unemployed this week although they probably won’t be counted as such. With the end of the Transitional Subsidized Employment program (TSE) these jobs have ended. Republicans in Congress succeeded in blocking the extension of funding for the federal stimulus program into the new fiscal year, so a quarter million people will be kicked to the curb.
Under the TSE, a government agency places someone currently on state assistance into a job and then pays that person’s wages for up to a year. This is the kind of program that produces the highest possible return for the stimulus dollar and so the Republicans were dead set against it. These people will be plunged back into poverty and will drastically curtail their spending. This will in turn kill other jobs in the economy besides increasing the demand for welfare and other public services. This ultimately leads to increased crime, imprisonment, urban blight and all the other social ills this sort of idiotic policy creates. “But hey, I don’t want any of my tax dollars going to that wealth transfer, it’s my money, I’d rather pay for more prisons and enjoy that higher crime rate… get mugged, murdered, have my property values go through the floor… it‘s my money damn it!”
Back to the stock market, the SEC and the Commodity Futures Trading Commission say that they have determined that the cause of the so-called "flash crash" that triggered a 1,000 point drop in the DOW in less than a half-hour on May 6. A four billion dollar sell order issued by a trader in Kansas started a self reinforcing cascade of computerized trades that nearly took the entire stock market to zero.
“Self correcting markets” belong on the same list with the tooth fairy, leprechauns and playing the lottery. None of these things will ever get you the American dream or even a can of cat food to put away for your retirement. www.prairie2.com