Saturday, May 28, 2011

Stupid in the Land of Dixie

In the long running debate in the nature vs nurture in determining how smart somebody is you have a major study that does address one factor in the problem of the lack of gray matter in the Deep South. Lifestyle matters when it comes to having a functioning brain. This is what makes a Teabagger.

Link thanks to regular commenter Joe M.

From Hell to Eternity

Sarah Palin is trying to re-invent herself by releasing a feature length movie beginning in Iowa. Using witchcraft she attempted to have the movie produced by Joseph Goebbels and directed by D.W. Griffith but even they have standards and would rather stay in Hell.

Here are some title suggestions from John Cole readers, read more at the link.

From Here to Inanity
Citizen Vain
Red Yawn
The Aleutianist
The Scum Also Rises
Lost in Translation II

Friday, May 27, 2011

Don't you wish it was 1963 again?

Consumer spending is up, as an excellent indicator of economic health this would normally be great news, but all of the increased spending went for food and fuel. So the rosy cheeks are really from strep.

There are still a lot of foreclosures and the right wingers will tell you what a great thing it is to re-adjust the market. Lot’s of buying opportunities you know, all those people who couldn‘t afford a house can buy one now. It’s not happening of course, the National Association of Realtors index of home contracts pending is down 11% in April and down 26% from last year. Contracts typically take 60 days to complete so this is a leading indicator, expect things to get worse in coming months.

Home sales are currently half of what they were in 1963 despite a 130 million increase in population. It’s even worse than that of course because families are smaller now, the number of households has gone from 53 million to 115 million. Home sales should be brisk, the so-called housing bubble didn’t really exceed the need for housing. It was the deliberate depressing of wages over the past 30 years that caused the collapse. People were buying houses they couldn’t afford, but they should have been able to afford them and wages continue to plummet.

Commodities are up as the USD goes down, the people who churn the market are doing very well thank you. When you go to the gas station or buy food remember how much they appreciate you, you make their 10 digit incomes possible. They also thank you for not begrudging their 15% income tax rate that you and the Republicans provide for them, remember they are the job creators and you make it all possible.

There are some jobs coming back to non union America, wages of $7.25/hour with no benefits make factory output cheaper here than anywhere in the industrialized world. Even compared to China, the higher productivity in the US offsets the wage advantages as Chinese workers can make as much as $2/hour and climbing. China is also starting to crack down on the worst polluters and if Republicans have their way there won’t be any pesky EPA controls here.

China also taxes business at a much higher effective rate than in the US. The Republican talking point is that the US has the highest corporate tax rate in the world but 2/3 of corporations operating in the US pay zero taxes and you can’t get much lower than that. Of course the other talking point is that business doesn’t pay taxes, consumers do! This is absurd to anybody who can do 5th grade math, corporate taxes are paid on profits. If they increase prices to pass along taxes then they would make more profits and pay still more taxes.

Now they can just increase prices, cut wages and pay no taxes. Good luck having the consumer pay all the taxes as their wages fall. This is of course why government can’t pay its bills, because corporations and the rich don’t pay any. The number of other people who can pay taxes declines daily. The Republicans have a solution for that however. It’s called the Flat Tax, you get to pay tax whether you have any money or not. The tea baggers say it’s that way now, but they haven’t seen anything yet.

Thursday, May 26, 2011

Remember the American Dream? Shhh, they might be listening.

Initial unemployment claims jumped unexpectedly last week when economists had predicted claims to continue to subside. The economists they poll for these opinions seem to always get these things wrong. It’s like the kid you remember from high school that could consistently score less than 50% on a true/false quiz, a knowledge black hole where the only things they know are wrong.

Economists that do have a reputation for getting these things right are predicting that the GDP numbers are going to continue shrinking quarter to quarter. Paul Krugman is still predicting the third Depression, the first was the Long Depression from 1873 to 1896 and then the second was Great Depression in the 1930s. He’s predicting this one to be another Long Depression where misery is widespread but not as severe as the Great Depression.

My take on this is the continued high unemployment numbers even as new jobs are being created is indicative of the falling wages you would expect to see during a Depression. Upswings in economic activity are common in these circumstances but each backslide is worse than the one before and we could easily see another big backslide anytime.

Falling wages are sucking more wealth from the middle class all the time so any economic shock becomes harder for the average family to weather. Red states are cutting unemployment coverage down to 20 weeks and making food aid harder to get. This isn’t just mean spirited, it’s really much worse. You can find the answer in Econ 101, if the people who still have money are afraid to spend it, the economy simply goes into a death spiral. The lack of spending causes layoffs, businesses to fail, mortgages go unpaid, tax collections plummet and it all repeats again and again.

The Republican response is austerity across the board, cut wages, cut jobs, don’t spend anything, cut benefits, no “welfare” for anybody. (except the rich)  To balance the budget they sell off public assets for pennies on the dollar and then lease them back at the equivalent of double digit interest. This government fire sale is charging ahead like never before and as deflation and shrinking economic activity continue, these leased assets consume an ever bigger portion of declining tax revenue.

Eventually there is nothing left to sell and nothing left to cut and nothing left to privatize. Then you will be living in a libertarian paradise, if successful it will resemble something like the old Soviet Union where everything is organized in giant corporate structures that are run by a handful of elites. It may even have a veneer of socialism to keep the proletariat in line or maybe they’ll go with an absolute security state instead.

Of course it could turn out like that other libertarian paradise of Somalia but where ever we end up it won’t include the American Dream that we used to take for granted.

Wednesday, May 25, 2011

Just a force of nature

The Commodities Futures Trading Commission is charging two traders and the Swiss company they work for with rigging the oil futures market by controlling 85% of the available delivery contracts for the month of April 2008. They apparently did this not just from buying actual oil contracts but by manipulating derivatives based on the oil market. This pushed oil over $147/barrel three years ago all the while they were short selling the market to cash in when they dumped their holdings. Derivatives can be had for mere tenths of a penny on the dollar and if you are willing to bet enough money all on one side you can shift the entire market. This was why the CFTC opposed allowing the creation of derivatives in the first place.

In the end these two traders “only” made 50 million off their scheme and the government wants 150 million in penalties. The real damage of course ran into the many billions but the really big players get to keep that money because what they did doesn’t count as a crime (they are smart enough to make their crimes legal or at least make sure the law isn’t enforced).

If you would expect a criminal charge with a 150 million dollar fine attached, based on a crime that helped tank the entire world economy would make the evening news, your expectations are to be dashed. Only the business pages covered it and were weighted heavily with the denials of wrongdoing.

Obama’s recent pledge to go after illegal oil trading was met with derisive remarks from the right and the left as nothing but empty political rhetoric so of course there will be no reporting of this. After all if the peasants hear about it they might expect to see more. The aristocracy knows that once the blade is lifted on the guillotine there is no turning back.

The right has successfully indoctrinated most of America with the notion that what markets do is a force of nature that you can no more resist than an F5 tornado. You can’t do anything about the weather, that’s why Republicans want to halve the funding for weather warnings. The Republicans introduced a bill today provide a billion in emergency storm relief but the bill requires a 1.5 billion cut in green energy.

Global warming is a myth you know, rigged markets are a myth too and as long as we cut taxes on the rich the weather will be fine. If you lose your house to Wall Street bank or to a global warming driven storm it was all just nature and you should just pull yourself up by your bootstraps. You couldn’t afford that house anyway on what your job pays now, if you have a job.

Tuesday, May 24, 2011

Not even a free breakfast

Oil was up today on projections issued by Goldman Sachs that oil will hit $130/barrel by this time next year. The other big banks chimed in with similar forecasts making it a virtual fate accompli since these banks own more oil than all the oil companies, at least on paper. Record supplies and a stagnant economy seem to not deter their optimism, or pessimism depending on whether you are the guppy or the shark in this pond.

The CEO of Exxon testified before Congress recently that 40% of what you’ve been paying at the pump goes to Wall Street. You might assume that he was just shifting the blame to anyone but himself, he didn’t mention that oil companies are willing participants in the Wall Street shenanigans and profit from it greatly. Most oil costs less than $20/barrel to produce so you can see how it would serve everybody involved to keep the market price above a $100.

In reality most oil doesn’t sell for anywhere near the “market” price but this inflated number is required in order that the rich elites can take a large skim off the top of almost all economic activity. It’s sort of like when the mob ran Las Vegas, but without the pretty showgirls to distract us. Those mob guys were amateurs compared to Wall Street. The occasional gambler might lose his house in Vegas, the housing bubble took millions of houses and the suckers didn’t even know they were placing a bet.

The Government has been making money this week with sale of 7 B of AIG stock at a modest profit. Chrysler also paid back 7.6 B to the US and Canada bringing it in line to repay 100% of its emergency loans as it posts record profits. The misery of Toyota of course boosts US manufacturers despite chronic parts shortages from the destruction of critical manufacturing plants in Japan.

Japan is moving to require all new construction to incorporate solar electricity production and its prior plans to produce 50% of its electricity from Nuclear are being scrapped. Germany who has replaced the equivalent of 12 nuclear plants with solar over the past ten years and had suspended their solar program because of a surplus of electricity but is likely to shut down even more of its older nuclear plants.
The US continues to have no real energy policy along with no trade policy or manufacturing policy. We are getting some new manufacturing jobs this year but they pay a third of what the same jobs paid three years ago. Okay we do have policies for trade, manufacturing and energy but they are set on Wall Street and only serve Wall Street. But then the House always makes the rules to make money for itself and not for us marks and they don’t even comp our breakfast.

Monday, May 23, 2011

The god equation

Warm humid air climbs the western slope of the Himalayas building up heat until it chimneys up over the 30,000 foot peaks and then chilled by the thin but intensely cold air above it plunges partway down the slope at incredible speed until it levels off heading east, and so the jet stream is born. It’s called that because it was the age of jet airliners made it known to the general public. Flying in the jet stream could give you a hundred mph tail wind which was boon to high altitude travel. It really should be called the B-29 stream as the bombers flying to Japan in 1944 were the first airplanes to encounter it. The Japanese had already figured it out but weren’t telling anybody, just launching fire balloons toward the United States.

All of this energy can be plotted as a very complicated equation and indeed this is a big factor in long range weather forecasting. Its path across the US determines what sort of weather we have from day to day. Running further north than usual means heavy rains in the upper Midwest and summer flooding. It can produce heavy winter snow pact in places that don’t normally get much snow. It snowed so much this winter that it ended a long time drought in California but that also changed the equation.

The extra cold air coming off this snow is now pushing the jet stream further south than normal and setting up a conflict with historically warm moist air coming up from the south. The equalizer of this clash is the thunderstorm where warm air rises and being cooled discharges millions of tons of water which creates devastating winds and lightning. When the up flow of air becomes unusually vigorous it can create a vortex we call a tornado. The energy can’t dissipate fast enough and the wind just blows in a tight circle, of course a “tight“ circle can be a mile across.

This jet stream equation involves the topography of mountains and plains, cold high pressure air masses from the north and hot wet air from the south. Over the decades these numbers have many times produced tornadoes in and around Joplin MO. This time the numbers were particularly bad producing an F4 tornado with winds just short of 200 mph that cut a ¾ mile wide path through the center of town leveling everything and wiping away 25% of the structures along a six mile corridor.

The seven story Medical Center that had served well in past storms took a direct hit this time and became a five story wreck surrounded by leveled and littered landscape with only the trunks of the largest trees protruding above ground. Ambulances arriving at the ER after the storm found that that wing of the hospital was simply gone. The death toll from this single storm exceeds anything in 65 years and is still climbing.

The misery for Joplin is not over, the one thing that made this storm so bad is that the weather front is not moving and more storms could continue for up to three days. Tomorrow is already forecasted to have the potential to repeat the same storm again.

Damage from storms and flooding in the US have already set a new record running five times a typical year and the hurricane season has yet to begin. It’s a good thing global warming is just a conspiracy among the scientific community and not really affecting the weather or we’d be in real trouble. Those equations with the extra heat and moisture don’t really mean anything. Just factor in some extra god and we’ll be alright.

Sunday, May 22, 2011

Conspiracy Theory

The definition of conspiracy is to agree in secret to do something, usually illegal. The corporate media loves to label as "conspiracy theory" things that are going on that aren't really secret, the Koch Brothers plan for world domination by the wealthy elite for example, not really a secret, this is called public policy.

In order to have a successful conspiracy you need to make it as simple as possible. This makes it unlikely that DSK is being framed, way too many civilians involved. It's not like building some fake moon rocks out plaster and chicken wire on a sound stage to film the moon landings. Of course if everybody involved starts turning up dead like the people with knowledge of the JFK assassination I'll take it back. Then there is the possibility that the CIA has a drug that simulates syphilitic dementia but I think it more likely this guy is just a pig and finally went too far in a country that doesn't know he's above the law.

The theory that DSK was taken out because he wanted to supplant the USD with a new world currency doesn't hold up to scrutiny. His "currency" would have included the USD as the major component, the BRICS countries are pushing ahead with not using the USD or even Euros at all. The IMF "currency" would have held this move off and probably stabilized the USD. (unless the big "THEY" wants a completely unstable USD)

There is talk that Saddam and now Muammar were taken out for similarly shunning the USD and we do know that the sanctions against Iran have been primarily aimed at their banks. I doubt that Bush invaded Iraq for that reason, there are too many other reasons that it was a tempting target for a mob hit from the Bush Crime Family. Libya is simply not that big of a player and it's not like the other dictators that are using the USD are being spared so any noise he was making about switching from the USD isn't likely the cause.

The truth is that the rich and powerful "conspire" all the time but the really bad stuff isn't a secret, it's issued as a Policy Statement by some fancy think tank and signed by "very serious people". Allan Greenspan and Henry Kissinger have been in that business their whole lives.