Friday, March 19, 2010

The Mayan accountants had it right

The bank seizing business picked up today after languishing for the last couple of weeks where we saw only smaller bank seizures totaling a few hundred billion in losses. Today’s haul was seven different chains of banks costing the FDIC at least a billion USD but the final amount is unknown with the largest of the banks being un-saleable. The FDIC will mail checks to depositors in that bank who aren’t over the insured limit and at least 250 million USD will go uncompensated.

The current pace of bank failures is already two and a half times what it was last year and there are press reports today that the seizures are about to really pick up speed. These bank failures are driven by the losses from commercial loans and not mortgage defaults. The problem is that we are no where near the peak of commercial loan defaults that will come sometime in the next two or three years. Also to come in 2012 is the beginning of the collapse of the junk bond bubble estimated to be at least a trillion dollars. Junk bonds are corporate bonds issued to pay for the leveraged buyouts of companies that made people like Mitt Romney very, very rich.

An LBO is where you buy a company using some of your money but mostly debt arranged by a Wall Street bank who gets a large fee, you liquidate the assets of the acquired company and send the jobs to China. Then you take your money back plus the entire net worth of the company as profit for yourself and say “so long suckers!” Often the amount taken is based on an inflated value of assets so there would be no chance of the company surviving even if the economy wasn’t tanking. Much of corporate America has been hollowed out in this manner.

These rich parasites have drained America until there is no life in the economy. That is why they really want to pull off the final takeover before the average American figures out what they have done. The economy is coasting along on credit from China and if that stops before they have complete control it will be awkward for them. The Mayan accountants were right about 2012. By the way, the Mayans balanced their books with human sacrifice.
www.prairie2.com

Thursday, March 18, 2010

A Galley slave rowing toward the edge of the Earth

Consumer prices were down slightly last month which sounds like something that would always be a good thing but in the world we live in, it is not. But on the Flat Earth business model, US consumer goods are almost entirely made in China and they have been manipulating their currency to keep prices down. The decline in US consumer prices simply tracks the further decline of American manufacturing. The flat earthers would say this a good thing since everything is cheaper. Okay, if you still have a job and your pay hasn’t been cut, except for your taxes going up to pay the share for all of the people whose jobs went to China and can’t pay taxes anymore. It’s still okay they say, except that the collapsing economy is driving down the value of your house and your 401k or if you own a small business it’s eating that up too.

Initial jobless claims were down slightly last week but still a hundred thousand a week above the number that signals job creation. But wait you say, that would mean we are losing 400,000 jobs a month and the government says the number of jobs lost is less than a 100,000 each month. Don’t short out your tin foil hat, the government isn’t cooking the books. They just aren’t looking for the problem. Business is rehiring almost as many workers as they fire but not as hourly employees. They are loading up with low paid temps and converting the better jobs to contract labor. They wouldn’t do this if they could just buy cheap slaves but driving down wages and eliminating benefits will have to do.

These “non” employees are also easy to get rid of if business activity turns down, slaves would need to fed and hard to sell in a weak economy. “Flexibility” in labor is a basic tenet of the Flat Earth business model. When the double dip comes there will be millions of new “unemployed” who will have no eligibility for benefits and will need to be supported by the tax payer or left to die in the street. Either option works fine for the Flat Earth business model. Two thirds of corporations in the US pay no taxes now and lobby their Congress very hard make law another tenet of the Flat Earth business model; no taxes for corporations or for the people who own them.
The end game for the Flat Earth business model is to end government as we know it. “… drown it in the bathtub.” is the oft repeated quote from Grover Norquist. Cutting taxes and increasing spending until government simply can’t pay its bills is the strategy. We are getting close to where they think they can make this happen. It’s a Flat Earth and we’re heading for the edge. www.prairie2.com

Tuesday, March 16, 2010

Living without Tickle Me Elmo

One hundred and twenty members of Congress delivered a letter to the Obama Administration requesting that the President formally declare the Peoples Republic of China to be a currency manipulator and apply the appropriate tariffs to imports from China. It had caused a minor stir when Treasury Sec Guithner stated unequivocally in Congressional testimony early last year that China was in fact doing that. It had been China’s practice for more than ten years but nobody from the Clinton or Bush Adm. would say it out loud.

Speculation had heated up that Obama might do something about trade with China after he imposed a 99% tariff on steel pipe in response to their dumping of the product into the US market. This was something Bush had many opportunities to do but never did even once as industry after industry was wiped out. China now has a stranglehold on a most of the vital segments of the US economy as a result of this process. It completely escapes the people who hold up signs accusing Obama of being some sort of foreign infiltrator bent on destroying America is that the destruction has already been done.

The letter from Congress was delivered on the eve of Obama’s second Asia trip. He has only two scheduled stops, one in Australia to address Parliament and a longer one in Indonesia but no stops in Japan, China or India. The accusation that they are manipulating their currency doesn’t make China very happy. They have complained to the multi-national corporations that govern the United States about the insult and they expect corrective action to be taken.

Candidate Obama said repeatedly that our trade deals needed to be revisited but President Obama’s people have been saying “protectionism” was “dangerous” idea. Indeed with many of Obama’s appointees still not confirmed by the Senate after over a year, any crisis needs to be avoided. With most consumer goods coming from China and 80% of pharmaceuticals coming from India and China it would be a disruption most Americans are not equipped to deal with. Indeed what industry the US still has would come to a grinding halt as parts and vital materials ran out. The USD as legal tender would also be problem with any trading partners we had left would be concerned about being paid.

Across the board rationing of consumer goods ended for the last time in the US 65 years ago. Gas shortages in in the seventies resulted in fist fights and shootings. A rush for Tickle Me Elmo dolls can produce a riot. How dangerous will cold, hungry and unmediated Americans be? Especially when most of them think a Kenyan born Nazi/Communist Muslim Liberal is to blame. I guess we will find out. www.prairie2.com