The stock markets were flat today with some indexes up slightly and some down on very light trading. Nobody can quite decide if the Euro zone deal will really work. At best it’s only a framework to start from and could fall on its face if investors aren’t willing to put hundreds of billions into a stabilization pot. A senior EU official went to Beijing with hat in hand seeking help and China’s response was positive. Indeed what does China have to lose? They have an awful lot of Euros and they really don’t want to see them trading on par with currency from the Confederate States of America.
Nor does China really want to see the USD become the only major currency in the world. They hope to see that role being filled by the Renminbi (or People‘s Currency), but they aren’t quite ready for that. Maybe in five years when their economy has eclipsed that of the United States. Given the likelihood of the US collapsing into complete chaos in the next couple of years, the Chinese are probably being too cautious.
The US economy is showing some growth, consumer spending is up and businesses are buying new equipment. The problem is that consumers are spending savings and using what little credit they have left to buy things they have been putting off. This sort of spending will peter out quickly if nothing is done. Business believes this to be true because the only equipment that they are buying is to replace worn out machines and they aren’t hiring or expanding.
Whirlpool, which is the world’s largest appliance manufacturer and also a big player in union busting, along with outsourcing to Mexico, announced today a 5000 person cut in its workforce, and the closing of a major plant in Arkansas. The Arkansas plant was only built to break unions in the northern states, but with that accomplished it is now surplus production. You see with no middle class, the building of shiny new appliances isn’t really needed so much.
This doesn’t really matter to the one percent, all that matters is that they completely control 100% of everything. We are very close to the tipping point with core inflation approaching the zero line, below that lies deflation and economic collapse. Having the Federal Reserve print more money for a QE3 cash infussion isn’t going to stop it this time. Massive government spending is the only thing that can put the brakes on as this would create actual jobs and demand for goods and services.
You’ll never guess which party is suddenly in favor of massive government spending to preserve jobs. No, it’s the Republicans. With reports that the super committee is not getting anywhere on balancing the long term budget, the prospect is looming for massive cuts to the Pentagon budget to be triggered if they don’t act in the next few weeks. There would also be cuts to Medicare, but they don’t care about that.
Republicans are predicting the loss of a million jobs and total chaos as the military and more importantly the Military-Industrial Complex types won’t be able to budget for 2013 given all the “uncertainty“, and when they say budget, they mean arranging kickbacks for Republicans. Who says the one percent don’t suffer in an economic downturn? Well they don’t, but sometimes their lackeys do. www.prairie2.com