Saturday, October 9, 2010

Insurance reform

Some large companies like McDonald's threatened to drop health insurance entirely or double rates in order to avoid the modest increase in life time coverage limits to take effect this year. The cap will increase each year until 2014 when it is eliminated. To avoid an embarrassment right before the election the Obama Administration has granted them a one year wavier.

The waiver affects about a million workers, the rest probably already have limits that are higher than this year's standard. These companies have said they will request a waiver every year through 2014 when the limit is completely lifted. After that it won't do them any good to make threats as there will regulations to provide affordable coverage including requirements that most of the premium must actually be spent on healthcare.
The insurance companies will still be allowed gouge huge profits but it's a start.

Friday, October 8, 2010

Up the limit

The stock market was up today, further proving its complete disconnect from the real world. The jobs report sucked but of course this is good thing for Wall Street, they can depress wages still more. The number of people working part time and in temp jobs continues to  increase and this reflects the high number of layoffs each week as corporations continue to convert full time workers to neo-serfdom.

Gold is on the way up again and the USD touched a 15 year low against the Yen. Grain futures were up the limit on the Chicago Board of Trade as the USDA announced that the grain harvest will be way down. This is a result of really awful weather in the spring but traders were lulled into a false sense of security by pretty good weather since, if it had been a bad summer too, we would really be in trouble. 

Europe, Russia, Brazil and Canada have all either had drought or too much rain. US corn production will hit a 14 year low and this is going to produce a shortage of meat and higher prices as well as playing hell with ethanol production. Fortunately we don't really need ethanol as we actually export a large volume of gasoline. 

Do we all have our canned goods?   

Thursday, October 7, 2010

Obama removes IRON boot from necks of foreclosure victims

Okay the headline overstates it a bit but could you see a Republican (or even Bill Clinton) siding with the little guy over the corrupt banks?

The Interstate Recognition Of Notarization Act or more appropriately the IRON Boot Act that was introduced by Republicans and passed with help from corporate Democrats ended life in a pocket veto by President Obama today. It’s passage had been accomplished in the dead of night as the corporate media conveniently ignored the protests of consumer groups that this was a give away to predatory lenders that could run rough shod over home owners that have been foreclosed upon illegally. It’s likely that this would have spilled over into all manner of corporate predation against anybody they chose to target.

You could say cynically that the Dems passed it just so Obama could veto it and look like a Dudley Do-right and make the bankers look like Snidely Whiplash as if that was hard to do. Well, Little Nell is off the rail road track just the same. No word if Elizabeth Warren played any role in Obama’s decision but it’s exactly the sort of thing she’s know for.

The currency war continues with the USD falling against the Euro and the Yen but gold was down as job numbers seemed to calm the panicked rush to get out of USDs. Treasury bonds were unchanged today as traders are waiting to see if the Fed will really start buying them big time.

The last big buying spree put a lot of cash in the hands of the Wall Street Banks and the big corporations with them now sitting on upwards of 3 trillion dollars and not putting a dime of it into jumpstarting the economy. Do you remember the pundits were predicting high inflation because of all the money the Fed printed?

You see they did inflate the money supply by a 100% but the money didn’t circulate so you didn’t get the price increases that are normally associated with inflation. It wasn't really intended to circulate but prevent deflation, and the economy would return to "normal", at least that was the theory. Some inflation is required to maintain a debt based system or it will automatically slip into deflation if you don't have commodity price controls. (like the gold standard, but you would need to do it with at least 30 commodities to make it work) If they do another round of money supply inflation and it does start to circulate there is a very real risk of things will get out of hand and hyper price inflation will set in.

The Fed claims that they have created a system to take money out of the overnight debt market to keep this from happening but it’s never been tested in the real world and maybe just wishful thinking. Keep your wheelbarrow in good shape to haul your “loaf of bread” money just in case.

Wednesday, October 6, 2010

There's no Champagne in the cheap seats, not even peanuts anymore

A world currency war has broken out as countries scramble to keep their currencies from collapsing. Japan has cut interest rates to zero in an effort to pump out enough Yen to counter its rise against the USD and has been selling Yen for USDs. India is experiencing a high rate of inflation as foreign currency flows in and a long list of countries from Columbia to Israel have been trying to drive down the value of their currency by buying other currency.

The US sees itself as victim of all this currency manipulation especially by China, but the fact remains that the Federal Reserve has been printing trillions of new dollars and lending them to the Wall Street banks at zero interest. This was intended to jump start the US economy but has only pumped up a market bubble as the banks engaged in proprietary trading. This is only allowed because Clinton and the Republicans decriminalized the activity with the repeal of the Glass-Stiegel Act after 65 years of successfully keeping Wall Street under control. (we really needed another Great Depression after so long without one)

China’s premier, Wen Jiabao speaking in Brussels warned that forcing Beijing to revalue its currency would lead to a “disaster for the world”. (not an idle threat) While China has in theory removed controls over its currency it has only appreciated 2% against the USD while the disparity is really 40%. At the same time the Renminbi has fallen against the Euro by 11% and the Europeans are feeling the pinch.

The USD is falling and gold has set yet another new record at 1349 up nine dollars from yesterday. Treasuries are also down and this is increasing pressure for the Federal Reserve to engage in “quantitative easing” or more simply put they want to tinker with supply and demand by buying a couple of trillion in US debt instruments to reduce the supply. None of that free market nonsense when it comes protecting the wealth held by the upper class.

The lower and middle classes can be wiped out in a heart beat and it will be a matter of “personal responsibility”.  But we must protect the wealthy because they, they, they create all the jobs! Millions and millions of jobs, in China and India of course. They’ve used Walmart and the other big box stores to wipe out the entire merchant class in this country. They used the retail monopoly they created from that to force 40,000 factories to move production out of the county or put them out of business entirely.

We are unwilling entrants in the new extreme sport of flat earth economics. There is no predicting the course we will follow in our headlong rush toward the abyss or who will go over the edge first. The upper class will however just be watching the blood and gore from their luxury boxes. The Champagne is chilled and the caviar fresh so let the games begin.

Tuesday, October 5, 2010

Discard after use

The stock market was way up today on the news that Japan’s central bank has lowered their interest rate to zero. This move was intended to weaken the Yen by opening the flood gate but the Yen went up anyway as the USD weakened instead and gold priced in USDs set a new high at 1340, up 33% in the past year. Traders were buying everything but the USD and short term Treasuries fell in the anticipation that the Federal Reserve will now have no choice but to print trillions in new money and start buying US debt. 

Fed Chairman Bernanke is going around telling anyone who will listen that Congress will have to get a handle on the deficit that ran 1.3 trillion the fiscal year just ending but this was less than the previous year at 1.4 trillion which was the last budget year of the Bush Administration. Bush only submitted a half year budget his last year knowing that Obama would have no choice but to extend it to a full year thus making Obama look like the big spender.

The Fed Chairman wants a balanced budget, but not right now, the economy is “too fragile” to cut spending or increase taxes. The fact is the economy is not fragile, it’s dead thanks to his predecessor Alan Greenspan and his free market cronies. Nothing that has been proposed will resurrect it and everybody knows it.

It will take rolling back everything that has been done in the last 30 years of Reaganomics. The question is whether the remnants of the middle-class realize it while there is still time to do anything about it. The super rich are pulling out the stops to try to overwhelm the elections by out spending progressives 7 to 1.

It’s not a question of repaying the huge debts that have been run up but rather taking the money back. The super rich have engineered a massive wealth transfer exceeding even the level they reached in the last Great Depression that they caused. This was reversed under FDR and it can be done again but it will be much harder this time.

This time we can’t just re-open the factories but we must re-build from scratch with must industries completely gone. Rebuilding will be a painful experience but not doing it will ultimately be worse. It’s start over or accept living in a corporate feudal state where you are a human resource, a consumer, a unit of labor to be discarded when not needed.

Monday, October 4, 2010

The really big stimulus that never happened

The stock market was down today, reportedly on a slight fall in factory output but the far more significant news was that the DOJ has started to enforce anti-trust laws for the first time in 30 years. Today’s civil action by the government is against the big three credit card companies for using their stranglehold on their retail merchants to prevent any competition by smaller rivals.

One of the things Obama promised when taking office was that the Anti-trust Division of the DOJ would again take its job seriously. This is possibly one of the first of many actions against the loot and pillage business plan of predatory capitalism, the big corporations have had a free hand for so long that most Americans don’t remember when it wasn’t this way.

State and local officials are planning their budgets and are still struggling with diminished revenue streams and the possibility of Republican control of Congress. Municipalities are going to need to layoff 900,000 people when the Federal stimulus money runs out and this will cripple local government and could start a stampede to Chapter 9 bankruptcy court.

Republicans are just licking their lips with the prospect of busting all the public employee union contracts and driving down wages to a fraction of what municipal workers make now. This will also be hard on municipal bond holders but these are middle class people who foolishly thought government bonds were safe and they‘ll blame Obama, so win-win for the Republicans. But what really has conservatives feeling that warm glow is that the pension plans will all be done away with under Chapter 9. Nothing makes a right-winger’s day like putting grandma out in the street.

This all assumes that Congress doesn’t advance more money and this is why Republicans are pulling out all the stops in November. With control of the House, they could stop dead any spending and deliver the coup de gras to a middle-class based economy. More bankruptcies would also help fuel a deflationary spiral making it possible for the super rich to acquire still more of the nations wealth for pennies on the dollar. Welcome to the new golden age.

Corporations are sitting on almost as much cash as the Red Chinese with over 1.6 trillion in the bank, much of it raised by issuing corporate bonds at near zero interest rates as a result of the Federal Reserves cheap money policy. The Fed said they needed to loan trillions to the big Wall Street banks at zero interest to stimulate the economy. This money has in turn trickled down to corporate bonds but they are getting the money so cheap they feel no need to actually do anything with it.

The corporate wisdom is to wait either for the stock market to crash and buy their own stock for a fraction of what it’s worth or wait until the economy goes south and do some mergers and acquisitions to further consolidate their monopolies. The amount Obama spent on actual stimulus is a tiny fraction of what these bloated corporations are sitting on and this really is taxpayer money. Sure the Federal Reserve created it out of thin air but it has our name on it we will ultimately pay for it. This free money was supposed to make our economy go again, but I forgot, it’s not our economy anymore. It belongs to the top 1/10 of one percent and they’ll do what they want with it.

Sunday, October 3, 2010

Scape goats unite!

Did you wonder why all of a sudden the media is accusing Obama and Biden of trying to scape goat progressives for the Nov 2 blood bath? They were aware of the new polling data that was just coming out showing that the Republicans won't win big in November. This reflects a steady shift in the polls since August as voters start to take seriously the election. In Iowa the absentee ballot requests are running 3 to 1 in favor of Democrats and Chuck Grassley is running TV ads that paint him as more liberal than most Democrats would dare to run.

The truth is that Democrats are the majority in the US by a wide margin but all politics are local and Republicans have always been able to exploit that. One of the worst right-wing Republican Senators has been able get re-elected over and over in the same state that re-elects Tom Harkin over and over again. This and of course the touch screen voting machines give them a huge edge in Republican districts.

Tom Harkin is by the way making progress in creating a new model for the filibuster rules that would strictly limit the Republicans ability to stop everything. The Republicans in the Senate are holding up over 500 of Obama's appointments and this translates into tens of thousands of lesser officials and staffers these people should be hiring to run the government. Instead we have Bush/Cheney political appointees that were converted to civil service in the last months of their crime spree to continue the looting and pillaging.

The huge budget overrun is not just from unnecessary wars, corporate tax dodging and destruction of the middle class. The diversion of god knows how much of the Federal money to crony contractors and worthless projects consumes a large chunk of the budget. It was revealed just before 9-11 that the Pentagon could not account for the whereabouts of 2 trillion dollars. That story got buried in the glare color coded terror alerts.

Pete Rouse the new WH chief of staff survived the second big terror attack on Bush's watch when Tom Dashle's office was targeted with weapons grade anthrax. That never solved attack forced through the legislation authorizing the ├╝ber  bureaucracy of Homeland Security and effectively ended the US Constitution. Did you know that you have no Constitutional Rights if you enter the "protection zone" within 200 miles of the border or within 200 miles any navigational waterway? That's pretty much everywhere that anybody lives. Welcome to Amerika, have your papers ready.