Friday, January 8, 2010

Your deposits are safe but nothing else is

Unemployment claims were up slightly and upwards of a million people fell off the backside of the unemployment system and this held the unemployment rate steady. Job losses were put at 85,000 in December despite predictions that government hiring would offset private sector out sourcing but the collapse of local governments produced more layoffs than the Federal stimulus created.

Big corporations are sitting pretty with a lot of cash on their balance sheets but they are not investing in the US. The hiring of Temp workers is up but that’s not good news, normally this would signal growth but it is really just a continued effort to drive down wages and force more worker productivity. The pace of out-sourcing has also picked up as the influx of cheap USD has led to more growth in countries like India. UPS has laid off 1800 managers and administrative staff indicating a sharp drop in business across all sectors is expected.

China surprised everybody by raising interest rates slightly and it’s letting it be known that they will be raising them more. There are several possibilities: China could be afraid of inflation but more likely they are planning to continue to cut exports to the US and need to cool growth. This could be either because they have made a deal with Obama since he imposed steep tariffs on several items that China had been dumping into the US market or they expect the US economy to collapse. The geniuses that run some American hedge funds continue to predict that China will crash instead. China has now passed Germany as the world’s largest exporter of merchandise and car sales in China now exceed the USA by a third.

Last year was the worst year ever for the FDIC by far. The total payout to clean up just the first wave of bank failures outstripped the total for all five years of the Reagan/Bush banking collapse by six billion Dollars in 2009 alone coming in at 35 billion. This doesn’t count the huge failures that occurred in 2008. The head of the FDIC has said publicly that the peak will come in 2010 and they have doubled their budget. The feds are officially watching over 460 banks with the expectation that they could fail, some bank watchers put the real number at around 2000.

The good news is your deposits are safe since the Feds will just print more money. The bad news is your paycheck may not clear if you still have one.

Wednesday, January 6, 2010

A Thousand Years Was a Pretty Good Run

It’s cold here but at least we’re not in Iceland. Not that the weather is that bad, Reykjavik’s highs are in the forties this week. But their President has refused to approve a repayment deal of about six billion USD to savings account holders from the UK and the Netherlands who were swindled by Icelandic banks. The deal was struck by the new democratic socialist government and its failure puts in jeopardy a ten billion Dollar bailout from the IMF.

Their President has thrown the matter to referendum and it’s not popular among the 320,000 citizens who got used to making money from nothing. Either way they are between a volcano and the north Atlantic. To accept an IMF bailout is to put your country into the iron fist of international bankers who want everything down to the rain water privatized and owned by international corporations. (they have actually done that in the past, yes even the rain water)

If the Icelanders don’t play ball they will have a hard go with their traditional economy of fishing since the oceans are dying. They do have natural resources including aluminum and silicon that could be developed and hence the interest from the IMF. Their choice is to give everything away or try to develop their country without any money. The biggest export in the future will probably be people. How do you say “welcome to the flat earth” in Old Norse? Load the women and the sheep in the long boats and leave. A thousand years was a pretty good run.

Monday, January 4, 2010

The Value of Zero

With the turn of the great odometer to 2010, the decade of the zeros is over. The Bush Crime Family who got elected exactly zero times is no more. There have been continued sightings of the person with zero soul, Dick Cheney who was right about anything exactly zero times. Michael Chertoff who as Sec DHS prevented zero terrorist attacks and appropriately responded to natural disasters zero times is out ginning up fear of flying again. That’s because he works for a company that makes x-ray machines with many zeros in the price tag to use for airport screening. Something he found zero money for when he was in government. Critics of the systems say the effectiveness of these machines is zero. The number of middle school students that can remember when we weren’t at war is zero.

The average 401k lost almost ten percent of its original investment in the decade of the zeros and that’s a return of less than zero. Makes those fractional percentage point bank savings rates sound pretty good. This of course allows nothing for inflation. Those year 2000 Dollars that you now only have 91 cents left from your investment won’t buy what they would when you put them into the market. Remember when gas was a Dollar and gold was a fifth of what it is now? Remember when the things on the Dollar menu were 39 cents?

The chances of any of those seven million jobs that were out sourced in the last days of the Bush Adm. coming back are about zero. Total job growth in the past decade was zero, job growth in most decades of the last century was about 20%.

Six million Americans living on food stamps report zero income. That’s nothing, nada, zilch, no unemployment or welfare or pension or social security and thanks to Clinton’s so called welfare reform living on food stamps is slow starvation. These people are kept alive by friends, family, charity or pure luck until that runs out.

The temperature has been below zero for a number of days across much of the country and homeless shelters are turning people away. Nobody really tries to count them, the concern from most of their fellow Americans amounts to zero.

There is some public dispute over whether or not the decade has ended or goes for another year. Roman numerals don’t have a zero but the year one was selected centuries after the fact (or myth) and the formula they used was flawed so the year is off anyway. The real question is if the decade of zeros has really ended or if it will be the century of zeros. It could be that our time as a democracy is running down to zero.