Thursday, June 30, 2011

The rich are just like them

The Greek Parliament has finalized the end of their country as a sovereign nation and the entire place is now to be sold off lock, stock and barrel and the money will go to the bankers. The public assets will be sold for pennies on the dollar and will end up in the hands of transnational corporations. Wall Street heard the dinner bell ringing (we’re having Greek tonight!) and the market closed up sharply. 

Currency traders have reacted to the good news by driving up the Euro and the USD down and its headed toward record lows. Republicans blame Obama for the weak USD (everybody knows weak it bad, right?), no matter that we would be better off economically with a weak dollar. (it’s similar to having tariffs on imports)  

A weak USD means imports from Europe and the middle east are more expensive but US exports are much more competitive, too bad we don’t have anything to sell. Increasingly exports from the US to Europe are really just products from South American countries that don’t have free trade with the EU and they just make a quick stopover in a southern US port to have the paperwork stamped. 

The Federal Reserve has officially stopped buying US Treasury bonds on the open market and the price of bonds is falling and driving up interest rates. Not that interest is very high, two year bonds sold at Tuesday’s Treasury auction will yield a whopping 0.395% (paying nearly zero interest does keep the cost of borrowing low for the government) Even with the QE2 over, the Fed will continue to spend a billion dollars a day to replace bonds that mature. So the Fed will get money from the Treasury and spend on the bond market. 

The interest we pay is expected to skyrocket after a default on the debt by Republicans in Congress and we will be in a similar position to Greece. That is if we continue to run the country with Wall Street bankers in charge, if we wake up to the fact that this is our country and not theirs it could all be fixed overnight. The bankers can all go live in Greece, for the rest of their short lives.

Initial unemployment claims were down slightly last week and home sales were up sharply in May. In many markets home prices were up significantly but mostly in condos where sellers can control inventory. Home prices are still at the same level they were at ten years ago which represents trillions in lost wealth for the middle class. The rich have gained trillions over the same period. Funny how the economy can crash but the people who own the business sector don’t lose any money but make trillions instead. Maybe the “crash” of the economy isn’t the right word. Maybe the “looting” of the economy would be more descriptive. 

The tea baggers know they’ve lost money on their houses and 401(k) and the pension is gone but they don’t seem to notice where it went. Where do they think the rich got their money? Tea baggers are sure people who don’t have any money took it from them, like poor people and teachers. They are sure the rich are just like them, except for all that money.

Wednesday, June 29, 2011

But the Greeks have some really good bread

In Greece their Parliament needs to pass another bill actually implementing the massive giveaway to the rich by tomorrow in order get the $17 B loan to last until September. Even after the entire $157B is released to them the debt will still need to be restructured as Greece will have given up everything and be in no position to repay the ever ballooning debt. Violence is escalating as the outrage of the Greek people is increasing with the realization of what is being done to them sinks in.

“This is bad, the country will be sold for a piece of bread," said Dimitris Kostopoulos, a 48-year-old insurance salesman who was protesting Wednesday. "There were many other more appropriate alternatives to this. Parliament has once again betrayed us."

The IMF is now involved itself in the US as well. They issued this warning today, “These [repercussions] could take the form of a sudden increase in interest rates and/or a sovereign downgrade if an agreement on consolidation does not materialize or the debt ceiling is not raised soon enough,” the IMF press release said, and it added: “These risks would also have significant global repercussions, given the central role of US Treasury bonds in world financial markets.”

The IMF isn’t really afraid of the US defaulting on its debt, this is what they live for. The only risk they see is that the US is big enough that if we decided to stop being robbed by these parasites that could set a bad precedent for the rest of their victims. If interest rates in the US were to skyrocket as they have in Greece there would be a real clamor to do something about it.

The fact is that we could stop borrowing money overnight by simply raising the tax rates on the rich back up to what they were ten years ago. If the government checks stopped coming then people who have been voting Republican would start paying attention and the IMF (who work for the rich) don’t want that. 

This was why we had the huge drama last Christmas to preserve those tax cuts, we would be running a surplus now and well that just wouldn’t do. You can ask why Obama didn’t just push that through and the answer is that people just aren’t ready to believe it no matter how simple the math. If the checks stop coming then they will ready to believe. 

But, don’t get your hopes up, more likely the Republicans will blink. They will probably accept some sort of face saving budget cuts that don’t really cut anything and acquiesce to some tax breaks being cut. In this case I’m rooting for the Tea Baggers, a real crisis would give Obama, the Democrats and some of the less insane Republicans no choice but to act in our national interest. I’m not holding my breath for such a good outcome, “national interest“ means something very different to these people than to the rest of us.

Tuesday, June 28, 2011

We just need more trust fund babies, that would fix everything

The Greek Parliament is waffling on approving the looting of their country demanded by the IMF in return for a temporary bailout. It’s billed as a once and for all fix to their problems but if they approve it they can kiss their economy goodbye. The average Greek seems to get it as rioting has increased with a general strike underway. The Greeks would lose their electric grid, water works, gas companies, railways, airports, sea ports, post offices, telecom company, defense factories, public land and buildings, stadiums, tourist attractions, important landmarks and the sight of the Olympics. (and Mount Olympus if the bankers can find it)

The EU is saying take it or leave it but Greece would be far better off dumping the Euro and negotiating a pay down of their debt in new Drachmas. Creditors would be happy to get anything and putting their own money in circulation would guarantee a market for Greek products as buying stuff would be the only way creditors could get paid.

That being said this would not be without risk for the Greeks, the IMF would be likely to seek retribution after being snubbed. You need to understand that we are in the middle of WWIII and for the most part the modern despot seeking world domination doesn’t wear camouflage but a $3000 suit. Of course if you happen to be sitting on resources they want and they can’t make you bankrupt then you could get a visit from the guys who still use bullets.

So the Greeks can keep their country and pull themselves up by their bootstraps or they can give it away for vague promises of prosperity someday. There are many here that are ready to give our country away just the same way and I’ve been getting their comments on my blog. The right has an entire fantasy world laid out with its own history and system of economics. It’s poor people’s fault that they borrow so much money, the right can’t grasp the fact that the corporate overlords are running a company store right out of The Grapes of Wrath.

Under supply side economics like we’ve had the last 30 years the only way to sell enough goods is to loan money to the under paid workers or the goods simply pile up. Ben Bernanke says he can’t understand why the economy doesn’t recover. Well Ben, it’s not that complicated, consumer credit has been curbed as their equity is largely tapped out and wages are falling. You have to do one thing or the other, pay people enough so they can buy the Model T’s or you need to loan them money so they can shop at the company store.

Loaning money creates a nice big bubble but bubbles always burst, this works great for the rich though who make money on the way up and steal assets on the way down. Paying decent wages so that the productivity gains in an economy are distributed to the people who are productive gives you endless opportunity for growth and prosperity. The rich don’t do so well under a merit system as only the really creative ones do well, the trust fund babies not so much and have to get real jobs.

But an awful lot of Americans think they will be trust fund babies someday if they side with the rich. They don’t have any plan for this (maybe buying lottery tickets) but they are sure it will happen just the same. So they are okay with making other people poor and the poor can starve but this will make them better off (they‘ve read the talking points and can be heard on the radio if they can‘t read). Selling off  public assets is fine with them as they think this will cut taxes. It won’t of course as the government will pay to rent them back for twice the cost and other public resources will simply be lost forever. But don’t worry, we can all be trust fund babies.

Monday, June 27, 2011

But we call it Capitalism

Greece has accepted its fate and will institute draconian austerity measures mandated by the IMF including massive layoffs and pay cuts designed to destroy their economy. The more permanent damage however will be done by a new “independent” agency set up to  liquidate any public assets the transnational corporations find attractive.

This isn’t a new scam, the IMF has been looting and pillaging the third world for more than thirty years but this is its first big haul in Europe. The right wingers are constantly squawking about how we must learn from the failure of Greek socialism and institute austerity here or become just like Greece. “They ran up huge debt you know!” In fact their debt is only 50% of GDP which is lower than most countries in this “modern financial services” dominated world economy. [ people are pointing out that the current "official" percentage of debt is 143% but this includes paying 18% interest that has ballooned the debt and a shrinking GDP that drives up the ratio]

The rude awaking for the right (and really for most Americans) would be to find out that the thing we have in common with Greece is not “socialism” but that we too have a phony debt crisis brought on by the same Wall Street criminals. The goals are the same, the same austerity is already being forced upon us with the goal of crashing the economy and here too public assets are being sold off to transnational corporations.

The most likely scenario is that they will pull back from the brink of total collapse in the US and simply maintain as much pressure on the middle class as will be tolerated but no real recovery will be allowed. Middle class wealth will continue to drain away and the average standard of living will continue to decline until the whole concept of a “middle class“ will go down the memory hole. (the chocolate allotment has always been 2.5 grams)

Even now almost no Americans grasp the concept of wealth. A house (even if you can afford one) is not an asset but really a liability and a 401(k) is a cruel joke. They sold these things as a substitute for the pension plan and all they are is a way for Wall Street to harvest more middle class wealth passing it to the rich and to the “managerial class“ (remember that term).

In the olden days before 1981 the average American aspired to real wealth. To own a business or a farm, to become a professional with their own practice or a tradesman with ongoing business that could be passed on to the next generation. If one chose to work for a big company or the government then a pension could be counted on. Today the entire country is being Walmartized where nobody holds any real wealth and considers themselves lucky to make enough to live on until being cast aside.

This will also be a rude awaking for many of the Republican base who sold the family business after generations in exchange for a large stack of paper. They may be living well now but only until the next flash crash wipes them out. If they are still hanging onto real wealth they might consider what happened to all the car dealers wiped out in the “reorganization” of GM and Chrysler. The Republican plan was that all of them would be wiped out, Obama saved most of them but they still won’t vote for him, he’s a socialist.

The “managerial class” I mentioned earlier are the well paid people who make all this happen. The hedge fund managers, the corporate executive who oversees Mergers & Acquisitions, the media celebrities who get 8 figure salaries to lie to us convincingly that we are all capitalists and the liberals who built this country are “dangerous” and “hate America”. History is rewritten on a daily basis and facts are just opinions to be contradicted with talking points.

 The Soviet Union had a “managerial class”, technically there were no “rich” people in the USSR but the people at the top lived like they were rich while working people got uniform poverty and called it socialism. Here the “managerial class” is well on its way to having everything under the control of the “corporate state” as opposed to the “Soviet State” but the outcome is the same. The working people will have the same uniform poverty but call it “capitalism”.

Sunday, June 26, 2011

Home Depot sells Chinese goods in violation of the law

This is another illustration of the non-enforcement of existing statutes over the past 30 years. The average American doesn't know these things are still law and just accepts the rightwing talking points. 

From AP
[A federal judge in April refused Home Depot Inc.'s bid to toss a whistle blower lawsuit Scott and other attorneys filed against the Atlanta-based company. Now the country's largest home improvement retailer is the latest company accused of running afoul of the Buy American Act, a 1933 law aimed at protecting U.S. jobs. The law requires that all materials used in construction of public projects originate in the United States or "designated countries."]