Friday, April 1, 2011

Jobs are jobs

We actually had more jobs created last month than the population increased, just barely. There is nothing to cheer about unless it was you that found a job. There is no magic trend line, it takes a manufacturing base to have a modern economy and we don't have one.

The USDA is predicting a record corn crop but not any decline in food prices because of it. The USD is continuing to weaken and oil is up again. We have an ever larger surplus of gasoline as demand weakens and we already had record supplies but the price continues to go up.

Supply and Demand only works in a market of equals which never occurs in nature.

Thursday, March 31, 2011

Those lying cows

The FDA is reassuring Americans that there is nothing to fear from the fallout cloud circling the globe courtesy of the Tokyo Electric Power Company and General Electric. Their reasoning is that while trace amounts of radioactive iodine has been found in cows milk on the west coast it’s not in concentrations that are harmful.

The question is, why are they finding any radioactive particles in the milk at all?  The talking heads on the news explain that the cows go out and graze the grass and concentrate the radioactive dust (in the duck and cover days this was called fallout). These particles pass through the cow and into the cow’s milk at reportedly a thousand times concentration.

As the reporter reads in a reassuring voice from the scrip provided by the nuclear power lobby they also show a close-up of a cow enthusiastically eating grass to emphasize the point. But if you know grass, you’ll recognize it as lawn grass. Milk cows don’t go out and graze and haven’t since the early sixties. It’s simply too inefficient, the cows trample more than they eat. Even in Amish country you’ll see farmers driving a team of horses pulling a diesel powered forage harvester. While you might see cows out in a field, that’s not where they get their feed.

So we are being shown a potential problem that doesn’t really exist so that we can be reassured that testing shows us to be no danger. Of course milk cows do more or less live outdoors. They have plenty of shelter for shade and to keep warm and dry, a happy cow does in fact give more milk.

So, if there really is radioactive iodine in the milk, they aren’t getting it from their feed, they‘re getting it from being out of doors. Maybe we should be testing the homeless people instead of the cows, or just we should just duck and cover.

Okay, I want to make it clear that I don’t think we are in any great danger right now. This is about the corporate media lying to us. The corporate motto always is, “Never tell the truth when a lie will do better”.

Amish "Tractor" viewed from the rear where the equipment attaches, the horses draw it from the long tongue at the left, the "fence" holds the reins. The engine drives a variety of tractor towed modern harvesters, hay balers and grain combines. Note the shock absorber at the base of the seat, some are equipped with much more elaborate seats that would make Captain Kirk jealous. An engine that size produces about 60 HP, the equivalent output of a 100 hp conventional farm tractor. (that would be fairly large)

Wednesday, March 30, 2011

Obama is a cat person (the fat kind)

Mergers and acquisitions are up 84% this year, happy days are here again. That is if you are in the top 1%, of course the “happy days” never really left for you. President Obama has been chiding corporate fat cats to start investing the 2 trillion in cash they have been sitting on and he brought on board Jeffery Immelt from GE to make that happen. Immelt, who is the fattest of corporate cats had a really good year with his company making 15 billion dollars in after tax profits. Five billion in the US before tax, 7 billion after tax as they got money back instead of paying in.

Mergers and acquisitions are a favorite of the Wall Street crowd ever since Ronald Reagan de-criminalized the many of the practices they use. Highly profitable and barely taxed (if at all) these M&A operations have been instrumental in the export of jobs and the lowering of wages in the US.

Touted as “increasing efficiency” the real result is higher unemployment, the elimination pensions and benefits. This leads to higher prices for consumers from the stifling of competition. The small investor eventually gets left holding the bag as massive amounts of corporate debt created by the M&A activity ultimately drags companies down into bankruptcy wiping out the unwary stockholder or pension fund. This of course costs still more jobs and eliminates more middle class wealth.

Indeed several trillion in corporate junk bonds will be coming due shortly, probably reaching a peak in 2012 along with several trillion in expiring commercial real estate loans that are underwater and will fail to be renewed.

This sort of widespread debt collapse is just the sort of thing that brings about the kind of deflation that Great Depressions are made of. The Federal Reserve is in the middle of printing an extra trillion USD and using it to buy Treasury Bonds from the secondary market with the intent of heading this off.

The good news is that Wall Street has stopped waiting for the crash to go on a spree of M&A so maybe they don’t see deflation looming right away, or maybe they are just being fooled by the price of gas. Rising prices are not really inflation, not that it doesn‘t hurt the economy, just in a different way. The bad news is that Wall Street making money doesn’t really do the rest of us any good.

Tuesday, March 29, 2011

The Double Dip of Guppies

Housing prices are falling again and the pundits are talking double dip, indeed that’s what the graph looks like. Of course there never really was a recovery in the housing market. Government aid to first time buyers boosted sales for a time but the glut of foreclosed homes will take 9 years to work through and that’s without things getting any worse.

The underlying causes haven’t been fixed and unemployment remains high, this allows the corporations to continue driving down wages while Republicans push for severe public sector wage cuts. There is a whole school of thought on this pushed by conservative economists called “austerity driven growth.” It’s not a new concept but it does require a belief in magic even more than trickle down economics. You probably haven’t heard of it because it left the mainstream after Herbert Hoover drove wages down by 50% in 1929 so that by 1933 the Great Depression was in full swing.

Cutting back and saving money sounds good because they always describe it as if the country worked like a family budget. To make the comparison work you would send half the kids to live outside and go without food so that you’d have more money to give to your rich neighbor.

Conservatives keep chanting that we have a “spending problem” and need to cut back. Tax revenue compared to GDP is at a record low, what we have is a revenue problem. According to the Financial Times, if we had Clinton era tax revenues we would again run a surplus again.  Who do you think buys all the Treasury bonds? No, it’s not China, they stopped buying them years ago, it’s rich people who clearly don’t need to money to “create jobs” because Treasuries pay almost nothing.

We had barely 3% growth in GDP last quarter and it was a “good” quarter, this quarter isn’t likely to be as good. The 2% payroll tax that was supposed to stimulate the economy is going straight into peoples’ gas tanks and from there straight into the pockets of Wall Street speculators.

China had 9.8% growth last year and for them that’s not very good. We had an 8% growth in the number of millionaires while the middle class shrank. The money to create millionaires has to come from somewhere and there isn’t any growth in the economy. The big fish continue to get bigger while the middle class guppies disappear.