Friday, January 15, 2010

There's a bad moon rising

From banker testimony before the Financial Crisis Inquiry Commission:
[A financial crisis is something that] "happens every five to seven years. We shouldn't be surprised." Another CEO likened such things to a huricane nobody could see coming. Heck of a job Brownie. The stock in these august institutions tanked today when their earnings reports came out. Losses from mortgages and credit cards were worse than expected. Do you hear the wind? There’s a bad moon rising, mind the storm surge.

In her testimony, Chairman of the FDIC Sheila Bair, pointed out that the Federal Reserve was given jurisdiction over these shadow banks that were beyond the reach of the FDIC and the Fed did exactly nothing. Why should the Fed regulate, they covered the losses with trillions in new paper. Profits are at record levels, these institutions are bigger and stronger than ever. Just look at their bonus schedule! Do you hear the voice of rage and rain?

President Obama wants to recover the losses to the TARP by charging these parasites a small fee that will take twenty years to recover a hundred billion. The bankers shot right back with the standard response that they will just pass it along to their customers. Of course they will, the only thing that holds Wall Street bankers back is that they can’t take more than a 100%. It’s estimated that they will give out bonuses of 145 billion for 09 alone. We’re in for nasty weather.

Thursday, January 14, 2010

Does Bill Clinton Feel Guilty?

Initial jobless claims were up more than expected last week. Continuing claims dropped by more than 200,000 because people on extended benefits aren’t counted, they also don’t count people whose extended benefits have run out and move to hardcore poverty. Welfare isn’t available for most of these people thanks to the Welfare to Work Program of Bill Clinton.

At least we don’t live in the Libertarian Paradise of Haiti, a country whose government regulation of corporations is ranked right at the bottom of the list worldwide. Haiti became one of the first countries to be totally globalized thanks to Bill Clinton who got their agreement to this formula for poverty literally at the point of a gun in 1995. He also embargoed their police and emergency services to make them more dependent on the international community which is multiplying the current suffering.

Those sprawling hillside slums you’ve been seeing on TV did not exist before Clinton destroyed the livelihood of Haiti’s rice farmers. Not that there wasn’t a lot of poor people already, Bill Clinton was not the first President to screw with their economy. Haiti was once the world’s biggest sugarcane producer but Reagan needed to create a market for US corn sweetener so they had to go.

Reagan wasn’t the first either, Haiti became the second Republic in the Americas after a slave revolt in 1802 and this never sat well with the slave holding US business interests. Even after the Civil War they didn’t want uppity descendents of slaves getting ahead in the world.

If you think this is tragic but doesn’t really affect us, you need to consider that Clinton’s NAFTA drove more than ten million homeless Mexican farmers north. The farm refugees that didn’t cross the border live in the slums around corporate farming operations in Mexico where the Swine Flu made its jump to humans. We dodged that bullet if you weren’t one of the thousands who died needlessly from Swine Flu.

We have encampments of working poor here in the US. If the conservatives have their way and end all government social programs we will have Haiti style slums here. The UN has put Bill Clinton in charge of bringing sweat shops to Haiti to use all the cheap labor he created. We’re still losing 250,000 jobs a month in the US. It will be our turn for shanty towns and sweat shops soon enough.

Tuesday, January 12, 2010

Trade Deficit Up

The US trade deficit is up sharply despite the weak USD which should be driving exports. But since we don’t make anything we are just selling our natural resources cheaper and this drives the trade deficit up instead of down. Alcoa Aluminum of the US posted a worse than expected quarter due to the continuing disintegration of the American industry while China’s imports of mineral ore and other raw materials are up sharply.

Germany had been the world’s biggest exporter, shipping at twice the rate of China but has slipped to second place. This comes from a weak dollar as well as from the worldwide recession.

China has been cracking down on US banks that have been trying to do the same nonsense there that is considered good business in the US. Rumor is that US banks are being forced to repay huge sums of money gouged from state owned companies that bought derivatives that went bad.

China is trying to avoid a real-estate bubble by increasing capital requirements on their banks and increasing the down payment needed by borrowers. Rated by the value of their assets to their liabilities, China has five of the six healthiest banks in the world, number five is in Brazil.

Being a banker in China is a good job but doesn’t pay what it does in the US. Bankers in China don’t have the same opportunities as Wall Street bankers since corruption in China can carry the death penalty unlike here where it carries a huge bonus.

Monday, January 11, 2010

In the End, Only the Bankers Win

Only one bank failed Friday at a cost of a little over half a billion USD. The FDIC has doubled its operating budget for 2010 and have publicly stated they are anticipating that the pace of failures will pick up. This banking collapse has already cost nearly double what the Reagan/Bush banking collapse did but there is no allowance for toxic assets in either debacle. The government assumed about a trillion dollars worth of bad assets in the early nineties but was able to unload most of it over time and only lost a few hundred billion in the process. This time the treasury and the Fed have eaten some 14 trillion worth of toxic assets and are on the hook for another 10 trillion and no telling how that will settle out in the end.

We are really in a neo-feudal age where the aristocracy is using paper pushing schemes to separate the peasants from their wealth. There is talk in Washington of beginning to tax the top one tenth of one percent who have half the income in the US and pay only 17 percent taxes on average. Needless to say the ruling class says “we are not amused” so don‘t hold your breath. Their plan is to drive the standard of living down to a level befitting our third world station.

The really big problem is that they have stolen our ability to create new wealth and sold it to China. Historically a Great Depression shakes out in about ten years as new businesses establish themselves. Often it can lead to war such as the American Civil War that was precipitated by the bank panic of the 1850’s. More Americans died than in any other war, so far. The only real winner was the bankers.

Having been out-sourced, we lack the ability to do much but make war on behalf of the oil companies and other multinational corporations in order to steal resources. We have become a nation of mercenaries, we‘ve done that work before but now there is nothing else. There is money in war if you aren’t part of the cannon fodder class.