Friday, February 5, 2010

Will the Devastated Cities Ever be Rebuilt?

The preliminary job loss number for January is “only” 20,000 but the loss for December has been revised from 85,000 up to 150,000. There were also 1.36 million more unemployed in December than previously reported using methods put in place by the Bush Crime Family. On the other hand they reported a sudden drop in the unemployment rate from 10% down to 9.7% but this wasn’t from an upturn in employment (there are those extra 1.36 million unemployed to consider) but instead the Dept. of Labor has changed their estimate of the US population. So that number doesn’t mean much.

The stock market continued its plunge this morning, down 170 points but came back to close ten points up in the final minutes on news that there is more consumer credit available. This raised the spirits of the masters of the universe; there are no jobs, no exports and the Red Chinese who own us are threatening to pull the plug over Taiwan; but consumers can go farther into debt so everything is wonderful.

Only one small bank chain failed today so far, but they sometimes don’t announce them until late in the night. The press pays them little attention anymore but they probably don’t want to take the chance of the evening news picking it up on a slow day. The average tea bagger goes to bed early and they might panic if they found out all the banks had failed. Make no mistake, all the banks have failed, the Bush Crime Family has finished off the economy although they couldn’t have achieved it without 20 years of preparation work done before them.

No country has ever sunk this low without being ravaged by war. Compare any rust belt city in the US to the bombed out cities of Germany. The “capitalist” cheerleaders used to compare the East and West of Germany to make us all afraid of “socialism”. Things like unions, social security and the EPA were equated with East Germany and we needed to get rid of them. The Reagan Democrats went eagerly along, they were all going to be “capitalists” by owning their 401k’s. East Germany has been rebuilt by the “socialist” West Germans. Will we ever rebuild the US? Probably not, China might though.

Thursday, February 4, 2010

The Scott Brown Bounce

The Scott Brown bounce continued today with the DOW up again as his swearing in established the new Republican majority in the Senate and heralded the return of economic prosperity… (oops) back to reality, 29 of 30 DOW components declined today, dragging the market down 2.5% and the broader markets dropped 3% as the economy continues to slip. The market has given up everything it has gained in the past three months and as the USD continues to strengthen, you can expect further declines.

China has frozen the issuance of new stock by companies and that signals that they are very serious about controlling their economy and avoiding bubbles. Greece may default on its debt and other southern European countries that embraced elements of Reaganomics are increasingly in trouble with Portugal and Spain close to default as well. Ireland is included in a group of countries that went in heavily for USD investments, known in Europe as the PIGS (Portugal, Ireland, Greece and Spain) are in deep trouble as the Euro plunges against the Dollar. Ironic since it is the US that is really in trouble but with the trillions that Wall Street banks were able to pump into world markets in the past year, it is the USD that is pulling it all down.

Meanwhile back in the USA, according to the job placement firm Challenger, Gray & Christmas, layoffs scheduled by major corporations have jumped 59% from December to January. The number is still much lower than a year ago but is moving in the wrong direction and picking up speed. Weekly unemployment claims are up again and there is wide spread apprehension about the monthly job report that comes out tomorrow.

There is word from the Obama Adm. that the report will also provide details about how the Bush Crime Family understated job losses in the lead up to the 08 election. It seems that there were a million more people unemployed than reported. Republicans continue brag about how many jobs they created during the Bush reign even though there had been a net loss of jobs even before this revelation.

The Fed has announced that it will stop buying home mortgages (it didn’t buy any last week) and the effect that will have on the economy can only be guessed at. If you guess higher interest rates, plunging home values and a collapsing real estate market you may well be right. It’s always darkest before the dawn, unless you go blind.

Tuesday, February 2, 2010

Juggling Eggs

President Obama has proposed recycling 30 billion TARP dollars from the big banks into small business loans. The Republicans are outraged that the government is putting money into community banks for lending and not applying it to the debt they left behind. The TARP was supposed to unfreeze the credit market and of course it has not. Every Friday more small banks are seized as insolvent. Last week’s batch included six bank chains and will cost about two billion to dispose of.

The FDIC is predicting they will spend at least 100 billion by the end of this year cleaning up the first banking collapse of the New American Century. A brand the Republicans so smugly attached to it when it looked like their empire would never end. Indeed if you are part of the 1/10 of one percent at the top you still doing just fine. Rank and file Republicans that once enjoyed a six figure income and now have none are angry and confused, even more than normal.

Back to that debt the Republicans have left behind; Congress has authorized another two trillion that they hope will last past the election. The debt has already passed 12 trillion on its way to 14 trillion by year’s end and is a ticking bomb in its own right. Not that the amount is unmanageable but that the Bush Crime Family has replaced much of the long term bonds with 90 day notes. Clinton had replaced all the short term notes will ten year bonds with the intention that they would be paid off by the end of President Gore’s second term. That would make sure that social security would not be a problem as the baby boomers began to retire.

Tomorrow’s announcement of Treasury’s bond re-issue auction for next week is expected to drive the stock market either up or down (nobody knows which) The government has been selling its debt so cheap in the last couple of years that they have in effect been making money as people are paying more than face value for short term notes. If this were to change it could easily add another 500 billion to the Federal budget without interest going above the normal rate. Higher rates like we’ve seen in the past could put the amount for interest past a trillion.

It would become necessary to sell more bonds just to keep up with the interest, of course that would quickly put everything into a tailspin. The money simply doesn’t exist. Obama is juggling eggs and the Republicans are throwing them.