Saturday, July 16, 2011

make a nice cream color to better hide the yellow streak

From today's news  "NEW YORK (AP) -- The independent committee charged with monitoring editorial integrity at The Wall Street Journal said Saturday it has found no evidence of wrongdoing at the Journal or Dow Jones & Co., which are owned by News Corp."

This epistle was issued immediately upon the resignation of Les Hinton who was one of Rupert Murdoch's chief hatchet men. Their conclusion was that "they did not believe Les Hinton's resignation as publisher of the Journal and chief executive of Dow Jones & Co. was related to activities at the Journal or Dow Jones". 

It took them a whole ten seconds to look into this matter and rule on it but to be fair he's been there since the oversight committee was put in place as a condition of purchase when Rupert Murdoch  took over the WSJ in 2007 and they don't have anything legitimate to compare to. 

A farmers recipe for White Wash from 1888 -
"Take a clean, water-tight barrel, or other suitable cask, and put into it
a half-bushel of lime. Slake it by pouring water over it boiling hot, and
in sufficient quantity to cover it five inches deep, and stir it briskly
till thoroughly slaked. When the slaking has been thoroughly effected,
dissolve it in water and add two pounds of sulphate of zinc and one of
common salt; these will cause the wash to harden and prevent its cracking,
which gives an unseemly appearance to the work."

Add three pounds of red ochre to make a nice cream color to better hide the yellow streak.

Friday, July 15, 2011

I'm completely relieved, aren't you?

Initial unemployment claims dropped again last week and are getting close to the “new normal” of 400,000/week which will indicate a “robust” level of job creation. With all the hiring concentrated at large corporations in this neo-feudal depression that we are living through, you really can’t tell what’s going on from the unemployment numbers.

Ben Bernanke and the Federal Reserve are blowing hot and cold on the idea of a QE-3 stimulus program, one day it’s on and the next day not so much. QE-1 saw the Fed buy over two trillion in sub-prime assets from the big banks and with QE-2 they bought close to a trillion in Treasury bonds from the Wall Street banks. Not a penny of this went to stimulate the economy. The rich and their corporations have so many trillions in cash that they don’t know what to do with them. The spike in interest rates predicted at the end of QE-2 didn’t happen and 10 year Treasuries continue to sell at the government auctions paying only 3 percent interest.

The USD is quite strong lately against the Euro as things aren’t so good there. The European Central Bank did a stress test on their banks and a number of them were found to be unlikely to survive any sort of downturn. Greece is in the trick bag already and the bond vigilantes are moving in on Italy already, skipping over smaller prey for now. Italy is paying soaring interest rates on bonds because credit rating firms “have concerns” that Italy may not have sufficient growth in the future. (the same firms threaten to downgrade the US) Not that the Italians really have budget problems or even a weak economy, just some vague notion things might not be good enough in the distant future and they are desperate to embrace the new austerity to avoid being another Greece. This isn’t a trivial matter as Italy is the world’s eighth largest economy.

Not that the Wall Street predators have lost track of Portugal and Spain, they keep nibbling at their ankles all the time. Ireland who did all the austerity measures that the IMF demanded of them after they were robbed by the banksters, now Ireland finds that their bonds have been downgraded to junk status.

Wholesale prices in the US are down now that the price of gasoline has subsided, some consumer prices continue to rise as they lag behind but any concern for hyperinflation that was promised by the gold bugs has evaporated. Some people are calling them “gold pigs” and if you think of Glen Beck that works for me. That being said, gold prices have been rising all week and again approaching $1600/ ounce despite a strong USD that should push the USD price of gold down.

The thing to remember about markets is that they are set by who ever feels like buying and selling on a given day. There are a fair number of people who are really spooked by the prospect of the US defaulting and this is where those criminal credit rating agencies come in. Large institutional investors (people who gamble with billions of other people’s money) are required to sell any holdings that don’t maintain a certain credit rating and a downgrade could trigger a market panic.

In all likelihood the various Federal agencies and the Federal Reserve would step in and try to stabilize the markets. Just like when a nuclear plant has an accident and the local fire department responds. The outcome depends if it’s a fire in a trashcan or is a core breach. Speaking of dangerous out of control situations: Sarah Palin tweeted today, “Obama lies and the economy dies”.  Michelle Bachman says “He’s [the President] trying to scare people . . . into thinking that if we don’t raise the debt ceiling by two and a half trillion dollars that we’ll default on our debt. That’s absolutely not true,” Bachmann said in a television appearance. “We have more revenue coming in all the time, and we can simply pay off the interest on our debt. There is no need to default.”  Whew! I’m completely relieved, aren’t you?

Tuesday, July 12, 2011

Americans must choose while they still can

The right wing complains constantly about the Welfare State and there is a kernel of truthiness in what they’re saying. Two dollars of every ten that makes up the average American’s income is some form of government benefit be it unemployment, social security, food stamps or disability payments. The fact is that after 30 years of falling wages and the theft of middle class wealth there are simply a large number of the formally middle class around (also know as poor people).

The percentage of income that comes from government benefits would be far less if incomes reflected real productivity as well there would be a smaller need for benefits if Americans received their due for their work. But as the super rich receive an ever larger portion of the national income they don’t use their money to “create jobs” but rather to buy up assets and take them out of production. Efficiency of scale means less people making good wages and moving into the roles of the working poor. Jobs that are outsourced contribute nothing to our economy and reduce the money available to pay those who do work.

Then there are people like Mitt Romney that simply crate up factories and ship them to China. In fact the few large-scale steel construction projects that are being built in the US are being fabricated in China and shipped here to be installed by Chinese workers on American soil. The American officials authorizing these projects don’t have much choice as even if they could get away with politically or legally having a “buy American” policy there simply are no large American steel companies that they can buy from.

The next big emerging problem is that with no real economic recovery we have no choice but to keep providing money to the large segment of newly poor Americans or face the economic consequences. Funding for extended unemployment will stop December 31 and a couple of million people will fall from being merely poor to desperately poor. Throw in the cuts Republicans want to make to other programs as well as to the government payroll and this will cause the economy to go right off the cliff in 2012.

Obama appears to be beating the Republicans over the debt ceiling but he can’t defy gravity and the Republicans have already pushed the country off the cliff. We’re just standing in mid-air like a cartoon coyote and at the end of the year we will have no choice but to look down. Already people who could spend money aren’t because of uncertainty. I don’t mean corporate uncertainty, they are certain about what they are doing, except for retailers corporate profits are at all time highs and their bank accounts are incredibly fat. I mean the real creators of jobs, people who buy things. Everybody from the welfare recipient who simply doesn’t have money to spend to the middle aged person who heard Obama say he might agree to raise the age of Medicare still higher and simply stops spending money out of fear he won‘t be able to pay the doctor.

But is Obama the Coyote or the Road Runner? The day of reckoning is now pegged at August 2nd and Obama said today that the benefit checks like Social Security and for payments for Veterans that are due the very next day WILL NOT  be forth coming without an agreement. The hard math is that 44% of the current budget authorized by Congress comes from borrowed money. The popular lie in the corporate media is that money comes from China but I’ve yet to see a Government check payable in Yuans, the borrowed money really comes from rich Americans and their corporations who pay no taxes.

Obama must, according to the 14th Amendment pay the debts of the United States “without question” so that means 50% of the spending of the non-debt obligations authorized by Congress cannot be met without further borrowing. Obama could take the 14th Amendment that to mean he must “spend” the money authorized by Congress and ignore the debt ceiling but he seems to take the meaning to be he must now choose what debt obligations to meet and what people to leave destitute.

If Obama were to meet the debt payments and the entitlement obligations of Social Security, Medicare, Medicaid and the alike, then the rest of the Government would cease to function. Soldiers, FBI agents, Border Patrol, CDC doctors, VA personnel and the like will go without pay for awhile but at some point reality must hit home. Mitch McConnell says no deal is possible with the current President of the United States. He must seriously believe that the government will simply live off the land like Sherman’s Army for the next 18 months? Will they loot and pillage towns selected by zip code in a lottery? I personally prefer singling out red states for utter devastation.

In fact Republican Senate Minority Leader McConnell has a uniquely political solution that tops anything Republicans have come up with so far. He would support a resolution that authorizes Obama to raise the debt ceiling unilaterally so that Congress plays no role in it and technically condemns it. Obama will uphold the Constitution, carry out the will of Congress, save The Republic and the world economy but Republicans will condemn him for it in the very authorization do the deed. Only in a madhouse, or in America, or are the two that the same thing? Americans must choose while they still can.

Sunday, July 10, 2011

Obama's poker face

After Republicans walked out of the Biden talks because the President was demanding the closure of a few tax loopholes for the rich in exchange for 2 Trillion in budget cuts over ten years, Obama went all in with 4 Trillion in cuts. Rumors of cuts to Social Security are being denied (Obama would be stupid to do that) and Medicare would be reformed not cut (there is still a lot of corporate fat to rendered from Medicare).

Boner panicked and now wants the Biden plan back or even less of a deal if he can get it. Republicans don't want budget cuts except for the poor and the Feds don't spend that much on poor people. The Federal Government is largely an insurance company for elderly white people that has an army. Nearly 90% of the Federal income tax revenue goes to the Pentagon with a huge amount buried in the budgets of other agencies. Start making serious cuts to those other agencies and either the military industrial complex takes a hit or you stop doing any non-military functions like Border Patrol, CDC, food inspection, bridges, damns and right down the list.

Then there is the 200 billion or so the Treasury pays in interest on long term debt left over from Reagan and Bush I and to a minor extent, Clinton. You see once Clinton balanced the budget and he had boom period established he refinanced all of the remaining debt as long term bonds at what was at the time low interest rates.

When Bush II started running over a trillion dollar annual deficit he was of course selling short term Treasuries like his daddy did. This was the only way to keep interest rates down because the rich and their corporations are awash in cash since they pay almost no taxes they will buy short term paper at low rates but not so much the long term bonds. In fact at the height of the Bush bank panic investors were buying bonds at the Treasury auctions at such high prices that the government made money, effectively getting a negative interest rate.

The problem is if the Republicans force a default in August when large amounts of this debt start coming due and needs to be rolled over, interest rates could spike and we'll all be speaking Greek or in tongues or whatever happens during an Apocalypse.

Keep in mind none of this has to happen. Like the security theater at the airport it's all a show invented by the Republicans and the corporate fat cats to make them richer and you into a serf. We can have our country back anytime enough of us realize its our country and not theirs. The government borrows money from rich people because the rich have surplus money. They have this surplus money because they bribe enough Congressman to go along with this Kabuki theater and cut their taxes and raise yours because it's good for the economy. Their economy, not yours. It's up to you to change that.