Friday, June 10, 2011

The greener pasture is an overgrazed dust bowl

The Dow dropped sharply today to close well below 12,000. Retail investors are losing confidence in the markets withdrawing 2.3 billion this week for a total of seven billion in the last six weeks. Retail investors are people who are betting their own money in the market and of course those are a rare breed in America anymore. Your typical American who thinks he is a capitalist has a house with a mortgage and has a 401(k) that somebody else is betting in the market for his own enrichment and not to advantage the sucker (I mean typical American “capitalist“).

The average American does owe less than before with household debt falling by ½ a trillion dollars in the last three years but 60% of that represented defaults and not a paying down of debt. Student loan debt is increasing and will soon pass the trillion dollar mark passing the declining household debt.

The percentage of their homes that Americans actually “own” is near its lowest point since World War II, the Federal Reserve said Thursday. The average homeowner now has 38 percent equity, down from 61 percent a decade ago. Note that would was before the housing bubble really took off, that “gain” has been wiped out and far more.

A quarter of Americans are underwater on their mortgages, it would be more but the millions of foreclosures are taken off the list. Another 8% of mortgages have less than 5% equity and will slip underwater soon as home prices continue to fall bringing to a full third those people who would be better off if they walked away from their home. Not that I’m advising you do that, rent is going up even as two and three family households are becoming more common. Living in a “compound” with extended family is a third world survival technique and you must be aware of where you live.

The bottom 80% of Americans only hold seven percent of the wealth and this number is declining fast. The top 2% hold close to 50% of the wealth and this number is increasing. Increasingly wealth is held by corporations and while you might assume this means stockholders, but you would be wrong. Stockholders own pieces of paper that are only worth what the market says they are worth and 401(k) owners don’t even have that.

Major corporations largely belong to the senior management who come from a close knit club of elites. I say “belong” in the sense that they are largely the only people who benefit from these corporations which provide them a lifestyle that the “let them eat cake” crowd of 18th century France couldn’t even dream of.

If you think you are going to leave this third world blight for greener pastures in some other country, forget it. Unless you have a spouse or from there, some other claim to citizenship or are under forty with a desirable skill they won’t take you unless you have enough money that you could just stay here.

There’s also the likelihood that the misery here will spread as transnational corporations and the rich who own them know no bounds to their greed and no borders will restrict their destructive tendencies.

Thursday, June 9, 2011

But it's not BP's fault!

Unemployment claims ticked up another thousand last week continuing what the Republicans affectionately call it the “jobless recovery”. If Presidents are in fact responsible for jobs it should be noted that Obama has produced on average about a million jobs a year which is on par with all modern Presidents except one. Geo W. Bush produced exactly zero jobs during his Presidency and oversaw the only decade ever where there was no net growth in the economy.

Oil was up for the second day following the failure of OPEC to agree on a proposal by Saudi Arabia to increase production in order halt speculation driven price hikes. This move was opposed by number of oil rich countries including Iran and Venezuela who already produce as much oil as they can. There is of course no shortage of oil so pumping more in hopes of producing a market glut doesn’t sit well with the smaller producers.

The one thing there is a shortage of is oil tankers as many are parked offshore with full tanks waiting for the price to go up. Crude oil available to US refineries and stocks of gasoline remain high even as demand lessens. Goldman Sachs and other banks that trade heavily in oil continue to predict $150/barrel oil and $5.00 gasoline while selling hundreds of trillions in derivatives to industry customers to hedge against the wild price swings they themselves are predicting. (what’s a word for fraud that rhymes with treason?)

Republicans blame Obama for high gasoline prices based his imposition of drilling regulations after last year’s BP disaster. This week Exxon-Mobil announced the discovery of two new proven fields in the Gulf of Mexico each estimated at 700 million barrels of recoverable oil. After reports by fishermen the Coast Guard confirms a seven mile long oil slick lying a few miles east of last year’s BP well blowout.

Reports distributed to news media claim that government tests show the oil to definitely be from a different source. The news reader I saw said this three times to make sure you understood this wasn’t BP oil. (Great, there is somebody else’s well leaking huge volumes of crude oil too.) BUT IT”S NOT BP! (a major sponsor of this network)

Tuesday, June 7, 2011

Wear your school tie to the meltdown

Chancellor Angela Merkel of Germany dropped in on President Obama today, they had dinner in the Rose Garden and he gave her the Medal of Freedom for her life‘s work. If they talked about their respective views on economics or science they didn’t mention it publicly. Merkel grew up a Communist in East Germany and her school tie was Red. She has a PhD in Physics and speaks fluent Russian. Merkel now leads a united Germany from the center right. Obama who was raised by New Deal liberals from Kansas went to Ivy League schools with a lot of rich kids who now run Wall Street. He became a Constitutional lawyer and governs from the center right despite being an anti-colonial Mau-Mau Muslim commie liberal.

Merkel’s response to the world economic meltdown caused by Obama’s school chums down on Wall Street was a full blown New Deal style / Keynesian Economics take over of Germany’s economy by their government. Germany operates on economic principles put in place by Truman and his Marshal Plan and doesn‘t believe in letting the markets decide the fate of Germany.  Obama’s response to the economic meltdown was a half hearted stimulus package largely dependent on tax cuts based on the VooDoo economics of Ronald Reagan without Reagan‘s massive government spending or his tax increases.

Merkel’s response to the multiple reactor meltdowns at Fukushima was to order the immediate shutdown of all of Germany’s GE Mark One reactors. The US has many more of this type reactor and President Obama ordered inspections of safety equipment at the plants.

After review of the GE Mark One design Chancellor Merkel ordered all of them to be decommissioned. The US Nuclear Regulatory Commission reported that much of the safety equipment at the US reactors either didn’t exist, had been diverted to other uses, didn’t work or failed during testing. Obama issued no official statement and took no action.

Last week Angela Merkel (remember she is Physicist) announced the complete end of nuclear power in Germany in ten years sighting the complete “helplessness“ of an advanced country like Japan in the ongoing crisis. The NRC in the US is moving swiftly to pressure local municipal and volunteer fire departments to sign formal agreements that they “will respond” to emergencies at US Nuclear Plants. President Obama is continuing the practice of his predecessors and has no policy on energy or economics. His school chums can take care of it, they have the right tie.

Monday, June 6, 2011

Resting in an un-marked grave

If you make your living with a hammer, (okay with a nail gun) you have a fifty/fifty chance of being unemployed. If you still have a job you probably aren’t working a significant fraction of the hours that you would expect to work this time of year. A lot of mom and pop contractors haven’t paid themselves a salary in three years and most of their workers are long gone.

Housing starts are at the lowest number since WWII when they weren’t building houses except around defense plants. Enough men from WWII to fill three battalions die everyday. Soon they will all be gone and the country that they thought they saved will probably be gone as well. The Greatest Generation who came of age working in CCC camps went straight to war to fight, many died but most came home to a better country then they left.

They in turn spawned the baby boomers who took the New Deal for granted but after a brief flirtation as flower children began to fancy themselves as capitalists. This was because they got a free college education for a good start in life and in their mid thirties acquired a 401(k). While once hippies they became "investors" and it was good, Ronald Reagan told them so.

Gen X’ers in turn grew up on Reagan and the mantra that “Greed is Good” imagining that The Lifestyles of the Rich and Famous was just one shrewd deal away.  Now it’s all come crashing down around them. Oh sure the few at the top are still doing great even as their ranks decline every day even faster than the Greatest Generation.

When we talk about 12 million unemployed and an equal number who don’t make enough to live on we think of some factory line worker who lost an 18 dollar/hour job. In the last ten years we’ve had 50,000 factories close, that’s 50,000 plant managers, untold executives, engineers, accountants, programmers, HR staff, and on and on. Good upper middle class jobs that used to made this country’s economy really hum.

Then there are the bankers, scourge of the earth they may be but a lot of them can’t make their house payments any more. The average new lawyer works at the big box store because all the new corporate lawyers are in India. Remember how the internet was going to make it possible for most white collar employees to work at home. Well they’re at home, when they’re not down at the coffee shop to get free WiFi because they can’t afford a connection for themselves.

The Greatest Generation landed at Normandy on this day in 1944 and they destroyed Fascism in Europe. Unfortunately the people in the US who thought we entered the War on the wrong side didn’t go away. They just bided their time and acquired ever more wealth and power as the lessons of history were forgotten. Now Sarah Palin writes history as she goes along and while she’s an obvious cartoon she is not the only one who does this.

Most people believe that the rich create jobs, that their freedoms come from god, that liberals want to destroy America and they too can be rich someday if government would just get out of the way. History is often represented by rows of white marble markers decorated with tiny flags made in China. History’s real grave will be unmarked.

Sunday, June 5, 2011

Right wing talking points

A sort of old guy like me will tell you that the Republicans are still using the same talking points now that they used to put down the reforms of the 60s. There aren't too many people left from the New Deal but they will tell you they were using the same ones then. Really it's a deviant mindset.

"The poor will pull themselves up by their bootstraps if the government stops feeding them"

"Let them eat cake"

"Stop giving the poor loaves and fishes and they will pull themselves up by their sandal straps"

"We in Sodom do not feed travelers, let's go over to Lot's house and give them what for"

"It's Ogg's mastodon. Ogg no share" -  "but Ogg, village feed you in winter and mastodon starting to smell" -  "Ogg no care, mine, mine, hit you with club"