Friday, January 29, 2010

GDP up, Economy down

The corporate media is trumpeting the sharp upturn in the last quarter of US GDP as the economy having turned the corner but sadly it has not. Nearly 2/3 of the increase is simply US business restocking inventory after the big sell down during the credit freeze, they still don’t have a market. The rest is attributed to the government stimulus programs that have ended or will end in the spring.

The stock market went down again today and did not react to the supposed six percent increase in GDP because the Wall Street Ponzi scheme has nothing to do with the real economy. It is entirely because the USD continues to strengthen which is reflected in the declining price of gold. The Dollar is doing this because the market bubble in the various world markets continues to deflate. This is happening only because the world’s richest banks have frozen credit on orders from their government, that would be the People’s Republic of China, the only remaining super power.

Friday has so far brought us five more bank chains that have failed in the US and they may not be done for the day. The cost will approach two billion USD or more and of course what ever poor saps that had bought the stock of these banks have been wiped out. These events too have no effect on Wall Street since they don’t give a damn what goes on in the real world as long as their 100 million dollar bonus checks clear the bank.

Wall Street banks and trading houses are populated with people so rich that they look down their noses at people with the top of the line American Express card. They live in world of limos traveling from gated estate to private jet to office suite to five star golf resort. All arranged by assistants who make sure the personal chef has the finest gourmet food on the best china, all on the company dime, business travel you know. They don’t bother to carry money, an underling will supply a hundred dollar bill to light the Cuban cigar when required.

Are you short of Cuban cigars or hundred dollar bills? Welcome to the club, wages and benefits rose last year at half the rate of the consumer price index and the CPI doesn’t really reflect the decline in the American standard of living. The really hard times haven’t started yet, better forego the cigars and stock more canned goods.

Thursday, January 28, 2010

Hapless pawns in the final chess game

Tech stocks led the market decline today but Caterpillar and McDonalds were also big losers reflecting the general decline of the economy. The market was plunging even worse early in the day and this was enough to panic the Senate into reconfirming Bernanke to four more years at the Fed.

The Senate also authorized another two trillion in Federal Debt completely along party lines. Republicans are suddenly fiscal conservatives after years of trillion dollar shortfalls under Bush but that was okay since it was done off the books. A crime family always keeps two sets of books.

New unemployment claims dropped back from last week but were still higher than they have been for some weeks. In a normal times claims this high would generate screaming headlines but no real notice is paid anymore even though there has been a jobs creation shortfall for years and numbers are grinding down the middleclass. Bucolic Dubuque Iowa that still has an official unemployment rate that would be considered low even in good times is reporting that the number of homeless school children has doubled since last year.

President Obama mentioned in his State of the Union speech that he reads heartbreaking letters from children who are losing their family home and their parents don’t have jobs anymore. Between his Ivy League college experience and Ivy League law school he worked as a community organizer for Catholic Charities running a program for steel workers who had been out-sourced. Obama should understand what the problem is and realize that nothing he has proposed will fix any of it.

Obama is supposed to be a chess player but the major pieces on the board all belong to the other side and we’re just a bunch hapless pawns and the Supreme Court has just put us in check.

Tuesday, January 26, 2010

The One Percent Solution

The One Percent Solution

The top thirty Wall Street banks have awarded themselves 145 billion in bonuses and that amount comprises one percent of the US GDP. This is not corporate earning but just executive bonuses. The US GDP or Gross Domestic Product counts everything from the money your babysitter makes to the sales of F-16’s to Saudi Arabia. And, GDP is only as big as it is because it multiplies as the money moves through the economy, the baby sitter spends the money and it gets counted again and so on. The money spent on an F-16 for the Saudi Royal Air Force stops circulating when it leaves on the boat for the future site of Armageddon.

The top tier of bankers and traders who got most of that one percent of our entire economy is a group so small that it wouldn’t give you a good crowd in a basketball arena. They could however, afford to buy the NBA outright with what for them would be pocket change and have them play just for their amusement.

President Obama is going to make cuts to the budget in a vain attempt to pander to the three million profoundly un-informed people who watch Fox News. These people make up one percent of the population and Democrats don’t understand why they lose elections when they appeal to them and ignore the other 99%. To be fair to the President he did say all through the campaign that he intended to cut spending to balance the budget. It was the media that hammered the notion into us that he was a tax and spend Liberal. So far he has cut taxes and will now cut spending at a time when the main street economy desperately needs an influx of cash.

Republicans will rightly point out that Obama’s spending cuts amount to less than one percent of the long term deficit and will come right out of the middle class. Who needs National Parks, food safety or air traffic control? Nothing that benefit’s the rich will be affected. Roll back the Reagan tax cuts, not even one percent. Billionaires that were taxed at 74% will continue to be taxed at 15%.

Obama has not and will not do anything about the trade deficit which represents money that stops building the economy the moment that the money leaves for China. The Chinese are able to circulate our money through the rest of the world buying up resources and building a trading network for their exports, notice their growth balloons as we decline. The money doesn’t come back here since we export nothing but raw materials that cost a fraction of what we import. The trade deficit would be even worse but they are strip mining our resources to export. China doesn’t allow the export of essential metals so that foreign companies have no choice but to manufacture high value goods like electronics and green technologies such as high efficiency motors, batteries and solar cells in China.

Putting USD into the world markets allows the bankers to do proprietary trading worldwide but that doesn’t bring any money back here either, that’s what Swiss banks are for. But, it works just fine for the Wall Street bankers who are one percent of one percent of the population and take one percent of the economy for themselves destroying the wealth of the other 99% in the process. The Republicans don’t think the rest of us should even count on eating let alone expect to have any wealth.