Friday, March 5, 2010

“It’s Morning in America Again”

“It’s Morning in America Again” (Reagan 1984) but it’s coming with a Red Dawn

There were 33 rounds of applause as Chinese Premier Wen Jiabao waded through the 36 page "State of the Union" style report. He said that his government aims to create more than 9 million jobs this year and keep unemployment down to 4.6 percent. It’s not surprising his audience applauds with an eleven percent growth rate for the last quarter while the rest of the world langishs. They believe his predictions aren‘t just “switch grass“ predictions, in his country they shoot traitors.

Wen’s speech opened the annual parliamentary session and he said that, in spite of its impressive economic recovery, China continues to face a "complicated situation" as the government now pushes to rein in lending and boost domestic consumption. He also focused on China's need to become a fairer society and of the government's commitment to improve education and healthcare while narrowing the income gap. There will be economic restructuring he said, because they are too dependent on foreign exports, and that the gap between the rich and the poor has to be reduced by better redistributing the benefits of the economy.

China has been hinting at the possibility of revaluing their currency because of the wild swings of the US dollar but Wen made it clear that wasn’t happening any time soon. He also did not indicate there would be any roll-back of the fiscal stimulus that has been spurring their rebound.

Meanwhile some Hollywood executives who are nostalgic for the Reagan cold war years are remaking the movie Red Dawn, but since Reagan’s evil empire of the Soviets is gone they are turning to the remaining toltalitarian Communist state. Unlike the Russians who were so weak by the 1980’s that a bunch of high school kids could have defeated them, China is poised to eat our lunch.

MGM is spending $75 million, that’s 513 million Yuan to make this new epic in Detroit where the battle cry of “Wolverines” will ring out one last time before the city closes for good. Thanks to collaborators like Mitt Romney who sold it for pennies to China, it isn’t hard to find cities in Michigan that look like they’ve been bombed and have been living under a brutal occupation. The movie people will need to spruce up the houses for the opening scenes that take place before the attack. China doesn’t really need to invade if they want US territory, they can just have the Sheriff serve the papers.

MGM is also doing big budget remake of Robo Cop which had a dark vision of Detroit in grinding poverty under the heel of a huge corporation. Except for the cyborg cop it’s even closer to reality.

Thursday, March 4, 2010

time to buy the garden seeds or is the green thumb just gangrene

Initial unemployment claims were down 29,000 last week from a recent high of 498,000 the week before but this will turn out to be from the last snow storm and not because of hiring. 350,000 is considered the neutral point where job creation would occur. The elimination of jobs to out sourcing and the ripple of unemployment this sends through the economy continues to exceed jobs created by the stimulus and Census Bureau hiring.

Currently there are 5.8 million on extended benefits as well as 5.5 million on traditional state unemployment programs. But the number of former middle class receiving no help at all is accelerating with 134,000 losing benefits last week alone as their federal extended weeks ran out. This number will grow to more than five million by the end of April if no extension is granted by Congress. This does not include almost a million workers who took Social Security earlier than they wanted to according to the Social Security Adm. in the last Federal budget year. On the other end a growing number say that they can’t afford to retire even though they would like to with 70% of workers over 60 who say they aren‘t retiring giving that as the reason.

The index that measures home sales contracts dropped nearly 10 percent to the lowest level since last April. This came despite a hefty government incentive to buy that will expire next month. It’s now estimated that 20% of homeowners could be justified in walking away from their underwater mortgages. Since they have almost no chance of ever recovering the equity they have already lost and they are wasting their money paying interest on that lost home value. This estimate is based on the assumption that prices stay flat, they could rise but there is better chance that prices will decline still further.

Retail sales were up last month by 3.7% but this does not Wal-Mart who no longer reports sales figures. The increase is attributed largely to spring clothing sales and may not be sustained growth. Even as bad as the employment numbers are, most people still have jobs and money to spend. They don’t have as much to spend however, as labor costs have dropped by six percent in the fourth quarter alone. Average productivity rose by seven percent in the past quarter. Productivity is difficult to measure accurately with almost everything being out sourced so you can’t tell what percentage is being done where. The decline in pay is not hard to measure however and is being reflected throughout the economy. Time to buy the seeds for the garden if you want to eat next winter.

Tuesday, March 2, 2010

Sing along! "spam spam spam spam...."

Senator Bunning who made his career as a major league ball player by throwing the “brush back” pitch continues to throw at the heads of the long term unemployed. While the number affected is not as bad as first feared, this is only because most of the states stepped up and covered the checks with the anticipation that Congress will come through with funds by the end of the week.

Senator Olympia Snow took to the floor today and called for an override of the hold but rest of the millionaire Republicans refused to join in and the matter drags out while tens of thousands suffer. If the money is not appropriated by the weekend then the number affected will begin to skyrocket. At least one million will stop getting funds next week and potentially five million could lose benefits by the end of April if the number weeks of eligibility is not increased again soon.

Republican Rep. Dean Heller of Nevada said in public what all conservatives believe but most don’t voice in that they believe no unemployment should be paid, period. He is positing that we are creating a new class of “hobos” who don’t want a job. Indeed we have created a new class of chronically unemployed but the seven million welders, machinists, lathe operators, engineers, draftsman and other middle class workers who used to build things in America want to work. Unemployment is only a fraction of what they used to make so this two year “vacation” is getting old and it’s not like there are any “fries with that?” jobs to be had. Nevada where the growth is service jobs was centered has a 13% unemployment rate and whole subdivisions reverting to desert, so Rep. Heller probably would rather only employed voters heard his remarks.

Reports are that the worst affected areas in Chile immediately experienced wide spread “looting” (that’s what the corporate media calls scrounging for food). Being a long time neo-con paradise the people of Chile are on average quite poor and don’t expect any relief from their government.

Even in Hawaii the population bided their time while the tsunami wave crossed the Pacific by lining up for gasoline and creating a run on the super markets. The stores controlled purchases of some things, most notably they restricted how many cans of Spam people could buy. Long a traditional favorite because it will keep between ship arrivals to the islands, it is served everywhere, even at fast food restaurants and on sushi. How is your stock of canned goods?