Friday, May 13, 2011

A shortcut to Communism

Oil is back up today and so is gasoline but gold is down sharply and the USD is stronger than in months making imports cheaper. Silver has been all over the place after leading the drop in commodities since the major trading houses raised the margin requirement from 10% to 12% (that means instead of buying $10 for just a dollar, you need to put up 1.20, doesn‘t sound like much but hedge funds buy in the billions).

Traders in Shanghai are being blamed for the price swings. In case you didn’t know, Shanghai is in Red China and much of what you buy in Walmart comes from there. Retail sales of silver have been booming in China as the government encourages civilians to own gold, silver and copper as part of their savings and the Chinese save a lot. While Americans save in the low single digits from their income and before the crash the rate dipped below zero in the US, the average Chinese saves upwards of 40%.

Rightwing economists have blamed everything on the Chinese saving rate, the trade deficit, loss of American jobs, inflation, deflation and toe fungus gets blamed on the Chinese worker’s habit of saving money (or gold, silver and copper). China mines more of these metals than anybody else including at one of the world’s biggest copper mines in Afghanistan that we guard for them for free. In this kind of blame the worker economic thinking Wall Street is the “free” market and is never the blame for anything, it‘s always the workers fault like the greedy school teachers and nurses, there always somebody to blame.

Rightwing economists or freshwater economists (as they come primarily from Chicago and not the coasts) are of Milton Friedman persuasion. He was famous for the consulting work he did for the Pinochet Regime in 1973 and this is still heralded by the corporatist right as a resounding success. They sight this as the basis for all the “reforms” they wish to impose upon us. The sort of things they are doing in Wisconsin, Michigan, Indiana and coming soon to a poor ghetto (I mean middle class suburb) near you.

General Pinochet was able to grab power after the complete destruction of the economy from the complete embargo of Chile’s trade and banking imposed by the Nixon administration. This came after the election of a socialist government in Chile while at the same time Nixon and Kissinger lavished their military with USDs and weapons.

Of course from the point of view of everyone in Chile, Friedman's “success” was a complete failure. They privatized everything and it all collapsed leading to nationalization of everything including things the socialists would never have considered. In Chile they refer to Friedman’s economic plan as the shortcut to “communism” as everything ended up being owned by the state.

This week, unemployment claims are down and there are indications that jobs are coming back from China. A more expensive Yuan, increasing wages and a change of attitude from Chinese government toward exports to the US are encouraging smaller US companies to move jobs home. All of this represents efforts by the Obama Administration, you know, things the US Chamber of Commerce calls unfriendly to business if not treason.

Crackdowns on product dumping early in Obama’ first year and pressure on the Chinese to revalue the Yuan and increase domestic consumption in China are being to pay off. These things are not very dramatic but they are ongoing and moving us in the right direction. Will it be enough? Not in the long term but it’s a place to start. Will it mean we won’t have another crash? Not likely, the country has been too hollowed out to expect this all to go smoothly even if the Republicans can be held at bay.

Don’t forget Saturday the 14th  to put canned goods out for the letter carrier.
www.prairie2.com

3 comments:

Robert said...

Obama's weekly address says he's going to open up public lands and offshore sites to the oil companies to promote domestic production.

I thought all oil is sold on the open worldwide market, so how can this help with easing domestic gas prices?

Isn't this just a give away to the oil companies disguised as an effort to bring gasoline prices down?

litlgrey said...

You and your canned goods. Malloy is right... you're a howl.

Robert said...

I don't understand. Why wasn't my comment posted?