Friday, January 28, 2011

Is your tail fat?

Is your tail fat?  “Fat tail” is insider market term that comes originally from mathematical modeling. It refers to an anomalous event that skews the data and produces a funny looking chart. In the market it’s one of those very real possibilities that are completely ignored until they happen. Like the complete break down of multiple governments in places that have oil and such.

Tunisia wasn’t a big deal in the scheme of the world and it’s probably not what is really driving the popular revolt in Egypt and other countries in the Mideast. What all these countries have in common is grinding poverty among more than half the population who live on less than $2 a day. This translates into not being able to afford food when the price doubles or triples.

So called developing countries are scrambling to secure basic food stuffs and are announcing new programs to distribute food and cooking oil in order to avoid being the next domino to fall.

The so called developed world is not exempt from the “fat tail”. The NYSE dropped hard today and commodities were up sharply. Oil in the European markets is already closing in on $100, that’s $12 above West Texas crude today. Gold jumped $25 as investors are anticipate a surge to safe investments.

This will all translate into higher food and fuel prices that were already being pressured by market speculators. And really that’s all that is going on here is speculation and market manipulation by unscrupulous Wall Street parasites. They sucked three trillion out of the pension funds during the last crisis and they’re back for more.

People will die, governments will fall and millions will suffer to transfer more of the world’s wealth to a handful of useless capitalists in the name of “free markets”.  In case you haven’t guessed there is nothing free about the markets, they cost us dearly. If you happen to live on $2 a day in 3rd world country and food costs $3 you could die. If you’re a 99’r in the US and are living on food stamps and nothing else then you’re not much better off here as the price of food surges.

If the Republicans are successful in cutting off all government spending and end food stamps, well you get the idea. But the real danger is that they will manage to cripple the economy to the point where it simply collapses and food stamps aren‘t even available. I’m not kidding about the canned goods.

Thursday, January 27, 2011

What is driving the current Mideast crisis?

Governments across the developing world are scrambling to stockpile food staples in order to calm public fears and to fight inflation, of course this heavy buying on the “free market” just plays into the hands of Wall Street speculators helping to drive prices up. But they have little choice, not acting means you don‘t get anything to eat and several governments fell the last time we went through this Wall Street greed cycle. Countries as diverse economically as Bangladesh and Saudi Arabia are buying huge amounts grain as the panic spreads. And this translates into big profits for big capitalists, even though with derivatives and such, not that much real money is required to cash in. You just need to have the inside track to win the big race.

A spokesman for Cargill Inc said that they expect the market to remain “very volatile”. Cargill is a huge privately held agri-business conglomerate owned by people on the same page politically as the folks at privately owned firms like Comcast, Walmart and the Koch brothers. Walmart is technically a public company but is closely held by people with a shared ideology. A group George W Bush called the “haves and the have mores. Some people call you the elites, I call you my base“.

Cargill has been a huge international grain trader for decades, they have been instrumental in the conversion of the US food supply from family farmers to corporations. These corporations then used the clout obtained from this concentration of supply to do the same worldwide. In the 90s they used NAFTA to dump half price grain into Mexico “freeing up” displaced farmers which in turn became cheap undocumented labor used to bust the unions in its US meat packing plants and in the construction trades. The current manufactured crisis continues this concentration of wealth and power.

You can expect some dictators and puppet governments that do our bidding to go down in the current food crisis but they still don’t have enough food to feed their people thanks to Wall Street and American agri-business corporations. The new governments that replace them will continue to play ball or they will be served up to the next crisis.

The jury isn't going quietly to the gallows

The Financial Crisis Inquiry Commission report is in and a majority of six concluded [this from the report] that this crisis was avoidable—the result of human actions, inactions, and misjudgments.  Warnings were ignored. “The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done. If we accept this notion, it will happen again.”

They listed a litany of bad policies and inaction or wrong and sometimes illegal actions of the Bush Administration, failures or wrong headed policies of the Federal Reserve and Allan Greenspan and Timothy Geithner then of the NY Fed and their successors. Wall Street bankers and credit rating bureaus as well as other bad players, you know all the people you’ve heard me rant about. No real surprises in the report but they do claim to have previously unseen proof that will go to prosecutors for review.  

The minority of the FCIC (four Republicans) concluded the majority report was simplistic and ignored the global aspects of the crisis and they blamed it on the housing bubble (code for brown people). In fact, the report didn’t ignore the global aspects of the crisis rather it rightfully blamed the Bush Adm, the Fed, Wall Street. Also the ratings agencies that told foreign investors that the securitized crap Wall Street was selling were AAA rated investments. (you know, just like Treasury Bonds or gold)

The media is gearing up to call this report a hung jury. Say what? The facts are in the report, it doesn’t matter if four of the ten “jurors” are made men in the crime family that’s on trial.

Today’s weekly jobless claims report jumped to 453,000 for last week, the corporate media has blamed this on the bad weather even though economists had predicted only 400,000 new claims. I guess economists don’t watch the Weather Channel, they don’t seem to actually watch the economy either.

Tuesday, January 25, 2011

The earth has been flat for a long time

On the occasion of his State of the Union speech, Obama used his description of the internet to write the “flat earth” doctrine into stone. He said “In this new era, a company can set up anywhere in the world that there is an internet connection”. In 1773 it was the view of the British East India Company that they could do business anywhere in the world that they could reach by sailing ship. The principle is exactly the same. It’s not technology, it is unregulated predatory capitalism.

They drive down wages below the cost of keeping slaves, keep all profits for the corporation, everybody else can starve. They overwhelm resistance with concentrated capital provided by taxation on the people without representation and no taxes on corporations. Failing that, there was the military option, the military industrial complex isn’t new.

This all changed with the Alexander Hamilton policies on manufacturing and trade adopted by Congress in 1793. They turned a primitive frontier into an industrial giant and it ended in 1980 with the election of Reagan.

To be fair to Obama, if he had mentioned any of these principles in his speech he would have been impeached and convicted by acclamation before he could leave the House chamber.

Obama said “We must make the hard choices to rein in deficits”. You would need to eliminate the all civilian and military activities of the Federal government to balance the budget. Social Security, Medicare, Medicaid, interest on the debt and other mandatory spending consume the entire revenue of the Federal Government at current tax levels. Tax levels that favor the rich and an economy completely destroyed over the past thirty years.

Obama just participated in a grand performance of Kabuki theater with a supporting cast of 535. Hollywood announced the Oscars this morning as if they are at the top of their trade. They are just rank amateurs.

Monday, January 24, 2011

In the hole

Wall Street markets were up today and everybody is feeling bullish. The Federal Reserve printing a fresh trillion has gotten things going. Commodities are up and the sky is the limit so money is pouring in from your pension and 401k managers. Wave goodbye to it, you‘ll never see it again.

Nothing about this market bubble is building the real economy of course but they will take credit for the natural up tick that you can expect after a recession has run this long. The improvements we are seeing will quickly evaporate as commodity prices rise. There is a pretty good chance we’ll see $4.00 gas soon and if the economy can handle it, you’ll see $5.00 gas.

And no, it’s not peak oil, that is not going to happen overnight. There is still plenty of oil and the market should reflect that, this is Wall Street manipulation. Keep in mind that the big oil companies don’t pay “market” price for oil anyway, they have plenty of their own that they got cheap. If you think the high price of gas is good for the planet, guess again. Tanking the economy only makes it harder to get off fossil fuels.

Expect food prices to far exceed the last bubble when millions died as food became priced out of reach. There will be massive rioting in countries where people pay half their income for food already. The further out of reach food becomes the more the price goes up in a bubble economy as money making opportunities abound. This also drives down supply as it becomes difficult for third world farmers to afford to put in a crop. Less local supply of course drives the price up even higher and this means there is even more money to make.

You can expect this bubble to grow fast and end quickly, almost certainly by September 2012. A 1500 point Dow should guarantee a Republican sweep when combined with unlimited corporate spending thanks to the five Republicans on the Supreme Court. There is talk of impeachment as several of Justices haven’t been reporting millions of income from rightwing sources on their disclosure forms over the years. But Obama likes to move forward and such crimes are by definition in the past so don’t expect anything to happen.

The buzzword for Obama is now economic “competitiveness“, this has long been rightwing code for union busting, maybe he is just using it as slogan and thinks he can ride the bubble through the election. There is simply no way to “compete” with India, China, Brazil, Vietnam and on down the list. The idea of protecting our domestic economy like all the successful countries do is not even spoken of, except to wrongly blame the Great Depression and even the current one on such “protectionism”. The history from 1790 to 1980 seems to not exist anymore, it’s all gone down the memory hole. The American Dream is going down right behind it.