Monday, October 4, 2010

The really big stimulus that never happened

The stock market was down today, reportedly on a slight fall in factory output but the far more significant news was that the DOJ has started to enforce anti-trust laws for the first time in 30 years. Today’s civil action by the government is against the big three credit card companies for using their stranglehold on their retail merchants to prevent any competition by smaller rivals.

One of the things Obama promised when taking office was that the Anti-trust Division of the DOJ would again take its job seriously. This is possibly one of the first of many actions against the loot and pillage business plan of predatory capitalism, the big corporations have had a free hand for so long that most Americans don’t remember when it wasn’t this way.

State and local officials are planning their budgets and are still struggling with diminished revenue streams and the possibility of Republican control of Congress. Municipalities are going to need to layoff 900,000 people when the Federal stimulus money runs out and this will cripple local government and could start a stampede to Chapter 9 bankruptcy court.

Republicans are just licking their lips with the prospect of busting all the public employee union contracts and driving down wages to a fraction of what municipal workers make now. This will also be hard on municipal bond holders but these are middle class people who foolishly thought government bonds were safe and they‘ll blame Obama, so win-win for the Republicans. But what really has conservatives feeling that warm glow is that the pension plans will all be done away with under Chapter 9. Nothing makes a right-winger’s day like putting grandma out in the street.

This all assumes that Congress doesn’t advance more money and this is why Republicans are pulling out all the stops in November. With control of the House, they could stop dead any spending and deliver the coup de gras to a middle-class based economy. More bankruptcies would also help fuel a deflationary spiral making it possible for the super rich to acquire still more of the nations wealth for pennies on the dollar. Welcome to the new golden age.

Corporations are sitting on almost as much cash as the Red Chinese with over 1.6 trillion in the bank, much of it raised by issuing corporate bonds at near zero interest rates as a result of the Federal Reserves cheap money policy. The Fed said they needed to loan trillions to the big Wall Street banks at zero interest to stimulate the economy. This money has in turn trickled down to corporate bonds but they are getting the money so cheap they feel no need to actually do anything with it.

The corporate wisdom is to wait either for the stock market to crash and buy their own stock for a fraction of what it’s worth or wait until the economy goes south and do some mergers and acquisitions to further consolidate their monopolies. The amount Obama spent on actual stimulus is a tiny fraction of what these bloated corporations are sitting on and this really is taxpayer money. Sure the Federal Reserve created it out of thin air but it has our name on it we will ultimately pay for it. This free money was supposed to make our economy go again, but I forgot, it’s not our economy anymore. It belongs to the top 1/10 of one percent and they’ll do what they want with it.


Athanasor said...

I've decided to diversify my portfolio and start buying canned meat. Do you have any feelings on canned corned beef's shelf life? Earlier this summer I started to add canned veggies that I'm not real fond of ( Lima Beans ) as trade goods.

On a serious note, I actually am envisioning living out my twilight years as a Trading Post "owner".

notoriousqed said...

I know I may be getting ahead of the curve here, but one wonders if-

A) The Senate investigation into the TARP and subsequent (and lesser known about) Fed Bailout will ever see the light of day if the Senate changes hands.

B) Is this the TRUE impetus of the balls-out, hellbent-for-leather attempt to take over the congress by the Rethuglican Party?

I'm SURELY just being my ol paranoid self, right?

Anonymous said...

Right on! You never hear the TV media mentioning the fact that the Fat Cats are CHOOSING not to hire anyone! It angers me to no end that nobody calls them on their bluff. The right-wing talking point about it is, "Well, the poor CEO's are worried about UNCERTAINTY." It's their new buzzword for fucking over the unemployed & sitting on their mounds of cash.

I really enjoy hearing your essays on Mike Malloy. Keep it up :)