Saturday, June 18, 2011

The world is ending! (they did what?) Never mind.

Germany has agreed to compromise on the treatment of the holders of Greek bonds by not forcing them to take low interest long term bonds instead of the get rich quick ones they have now. This wasn't really a good thing but  it ends the crisis in the corporate media which is the only place it actually exists.

To be clear there is no real crisis, we are not broke. We just have an ongoing criminal conspiracy robbing us blind and they are destroying our economy. That's not to say things couldn't get really bad for the bottom 98%, but we can still fix this.

GOP retirement plan: work until death

If you still had any question whether the AARP was an advocate for seniors or just a corporate insurance company front, that should have been resolved today when their CEO (for policy) came out with a new position for seniors. (bend over and spread 'em) They are willing to consider changes to Social Security for future retirees.

Any further increase in retirement age for people who do physical work for a living means either they work until they die or they live without social security for years hoping to survive long enough to collect on the "entitlement" that they have paid for. That 3 trillion dollars (that will grow to 4.3 trillion by the time all us boomers retire) in the Social Security Trust Fund belongs to Wall Street and not to retirees and don't you forget it.

A reduction in benefits is also simply theft of the Trust Fund. There are two reasons that the Trust Fund will eventually run out of money. The cut off for contributions is set too low and most of the income of the rich now comes in capital gains and the like that aren't taxed at all. The second reason is the corporate fascists have suppressed wages, one estimate I've seen is that without Reagan and his disciples the average middle class income would be 20,000 a year higher.

Reagan built a steady decline into the benefits based on a rigged CPI so that current retirement benefits are 40% lower than in 1980. To be fair, the Republicans have said for the last thirty years that you couldn't expect to retire on Social Security so they created the 401(k) and did away with those pesky pension plans as well. If you've checked your statement lately you will find your 401(k) is now a 301(k) and after the next crash it will be a 000(k).

Thursday, June 16, 2011

From Scientific American

Ever wonder why it's hard to carry on a meaningful conversation with somebody who has be "born again"?
Sort of like talking to a Alzheimer's patient or somebody with a head injury.



http://whowhatwhy.com/2011/06/09/born-again-and-brain-damage/

Wednesday, June 15, 2011

From Doonesbury's page


SAY WHAT?
"The threshold question: It's not usually asked, but it's in everyone's mind in a presidential election. 'Should we give this person nuclear weapons?' ...Answers itself."
— George Will on Sarah Palin

The gallows are being built

Intense rioting has broken out in Greece as the IMF imposition of serfdom is meeting with stiff resistance. The corporate media is beating the drum that this “contagion” of debt defaults (which hasn’t happened yet) will spread to the other PIGS countries then other European countries and this will bring down the German banks closely followed the US banks and we will all be in the soup, or soup lines.

The fact is that the only real problem that Greece has, is that it must pay 18% interest to recycle its bond debt. If the US had to pay 18%, which it did briefly under Reagan we would be paying 2.5 trillion in interest which is roughly the current Federal revenue. It’s all a phony, ginned up crisis to further the transition to corporate fascism. Except for Greece who hasn’t recovered from its recent transition from a military dictatorship the rest of Europe is not in bad shape. I mean really, they were a smoking ruin 60 years ago, this isn’t that big of a deal, it‘s just Wall Street paper.

Half of Americans believe a Great Depression could happen within a year, of course the reason this belief is so widespread is that we have been in one for years. The Obama stimulus package was a block in front of the wheel to keep us from going over the cliff but this will give way soon with the Republicans pushing from behind. The fascists are tasting success in Greece and are licking their chops.

The number of Americans who have taken out loans against their 401(k) accounts has jumped from 20% to 30% in the past year. Core inflation (excluding fuel and food) jumped unexpectedly in May and the word “stagflation” is being bandied about. (that’s massive inflation with no recovery) There is no risk of runaway inflation as wages are flat or falling. Falling gas prices will reverse the inflation trend in next month’s report and deflation will again be the boogie man, well okay this monster is real and should be feared like a train wreck.

The desertion of Austin Goolsbe from Obama’s economic team is a milestone in that there are no economists left in the White House, all of the senior people now advising the President on the economy are Wall Street lawyers. In reality he doesn’t need economists since his hands are tied by Congress and he can’t do anything but threaten to veto the stupid things they might pass.

This band of “economic” advisors from Wall Street don’t have any actual power. There is one lawyer advising the President that does matter and she is Elizabeth Warren currently creating the Consumer Financial Protection Bureau. The word is that she is attracting good people to run this new agency and Republicans are desperate to shut it down, but its budget is paid directly from the Federal Reserve and the Tea Baggers can’t touch it.

When the next collapse comes the Wall Street banks won’t need to be bailed out as the CFPB has the authority to step in. They will take these behemoth banks apart, the investors will be wiped out and the cronies in charge will all fired (as required by law), then a new Progressive Age can begin. Okay that’s the theory, the cynical among us can say Obama won’t really do that but the gallows are being built over at the CFPB just the same.  www.prairie2.com

Tuesday, June 14, 2011

Finish the job for the Gipper

Consumer spending was off in May but not as badly as economists had predicted (but they are always wrong). If you exclude new car sales then spending was up substantially. Auto sales were off from a lack of supply after the Japan earthquake made parts unavailable and this allowed the price of the average new car to jump nearly a thousand dollars to nearly $30,000. Used cars are also up with some models up even more per unit than new cars. Early in the year used cars had been falling in value hinting at a general deflation of middle class assets.

Gasoline expenditures were up sharply of course even with reduced consumption. Building materials were more heavily purchased than the past year driven up mostly by natural disasters (see, global warming is good). Spending for clothing was up but entirely on higher prices. High oil prices are driving up costs for clothing manufacturers. Even natural fibers are going up with cotton breaking the record price set 150 years ago when Yankees were burning the cotton bales. Egyptian and Indian cotton was only starting to become available in 1861 and would keep prices low until rayon was invented and then prices went even lower.

Sales of durable goods and electronics were off sharply as stagnate and falling wages are making these purchases out of reach. Anecdotal reports of 10% pay cuts are becoming common and will start affecting wage numbers soon. Since consumer spending is 70% of GDP, wage cuts and the chronically under employed and the jobless feed the downward spiral. Nearly half of Baby Boomers report that they have at least one adult child living with them and many are taking care of an elderly parent as well.

American industry claims to need one million engineers, mathematicians and scientists but we only graduate 200,000 per year. Their solution is to outsource these jobs of course and even as they claim a shortage of workers wages of recent college graduates average only 30,000 per year and is falling. College tuition on the other hand has doubled in the past ten years ago. Thirty years ago a student could work fulltime at minimum wage during summer break and pay for 48% of college. Today a minimum wage job, if one can be found, will only cover 17% of a year of state college.

Republican candidates are becoming desperate to come up with a plan to fix the economy that Obama completely wrecked in only two years. Pawlenty of the falling bridges wants to slash corporate taxes to 15% and the top rate of income tax to 25% and eliminate all taxes on the super rich by doing away with inheritance, capital gains, dividends and interest income taxes. His plan to pay for this is to guarantee that this extreme trickle down scheme will produce 5% steady growth for ten years uninterrupted. The only time this ever happened was during the New Deal and WWII (which was the New Deal on steroids). At that time the top rate on income taxes was 93%. FDR wanted 100% for the top rate on incomes over 3 million in today’s dollars but compromised.

Michelle Bachman who is not to be out crazy’ed will cut the top corporate rate to 8%, but she has a plan to pay for it. She has noticed that 47% of Americans don’t make enough money to pay any income taxes and that has to end. Those deadbeats must start paying big time to make up for the free ride they have been getting on the backs of the rich. No mention that the poor and middle class already pay a far higher percentage of their income in taxes. In fact Ronald Reagan doubled their taxes and started the massive transfer of wealth to the top 2% and this generation of Republicans are determined to finish the job.  www.prairie2.com

Monday, June 13, 2011

It's not the speed of the fall, it's the sudden stop that sucks

According to Chinese banking sources talking to the Financial Times of London the big Wall Street banks have let it be know that they won’t be depending as much on US Treasury bonds. Normally these bonds to used as collateral to back financial transactions as they have the highest possible rating and aren’t discounted for risk, and are treated as if they were cash. (plus they pay interest unlike cash) Wall Street will be using a variety of debt instruments and cash to back their transactions instead.

The conclusion you might jump to is that Wall Street has decided that the Republicans are indeed bat crap crazy and will default on the debt. The 14th Amendment forbids the US Government defaulting on its debt, “Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”

The phrase “shall not be questioned” has be interpreted to mean public officials would be in violation of their oath to “uphold and defend the Constitution” to even suggest a failure to pay the debt. Some scholars believe the Debt Ceiling Law to be in violation of this Amendment. In this light the President could assert he has the authority to continue borrowing to pay for spending authorized by Congress regardless of any limit imposed by an unconstitutional debt limit.

But what is Wall Street really up to? The Fed has just finished buying 600 billion in Treasuries and paying 900 billion on the open market to buy them, and guess who made the profit? That’s right, Wall Street. They now have lots of cash and not so many bonds and the price is up. As the price of bonds goes up the interest rate goes down and this was the Federal Reserve’s stated purpose to cut interest and thus stimulate the economy.

So if the Wall Street banks can “talk down” the value of bonds the price will fall and then they can buy them cheap while planning that there will again be a huge demand for bonds with the next panic. In 2008 the demand for Treasuries was so great that the Government was able to sell them bearing negative interest. In other words the Treasury made money by borrowing money instead of paying to borrow.

So trillions and trillions of dollars that exist only on paper get shuffled back and forth making the rich richer while the other 98% of us pay for it. How will we pay? Driving down bond prices will drive interest rates up and tank that economic recovery we were all counting on. Asset prices will begin to fall and the corporations that are sitting on trillions they got for free can buy cheap. If they have their way it will be for pennies on the dollar.

Your home’s value will fall through the floor, your employer will pressure you to take a huge pay cut if you still have a job and that 401(k) will become a 101(k). Gold is not a refuge from this sort of calamity, some people you might think of as shrewd have been selling gold. Unfortunately there can be many twists and turns to this sort of thing so an exact prediction is impossible, but where ever we are going, we seem to be picking up speed.    www.prairie2.com