Saturday, August 6, 2011

The new right wing lie, same as the old right wing lie

The favorite right wing talking point today is that the current crisis has been brought on by the entire world living beyond its means. Say what?!! REALITY CHECK  You can not consume goods that have not yet been produced. In the same vein, you cannot borrow from the future or from your grandchildren. It must exist in the here and now or you cannot consume it or borrow it. PERIOD, THIS IS REALITY!!!!

The rich and their rightwing/teabag shills want you to believe that you owe them vast sums because somehow you have consumed goods that you produced but they it was okay that they paid you sub-standard wages for doing the work. WAKE-UP SHEEPLE!  They HAD to loan you and the government money because they couldn't get rid of all the un-taxed profits otherwise and their little Ponzi scheme would have collapsed 30 years ago. (As it nearly did several times)

This is why trillions of USD are piling up in bank accounts to the point that banks need to charge for sitting on it. If this money was forced to circulate in the economy by a Progressive tax system and kept from piling up in the hands of Wall Street pirates by meaningful financial regulations we would be far better off than China who is now eating our lunch.

We could be living in a golden age instead of a new gilded age where only the top 0.3% are amassing wealth while the "bottom" 99.7% become poorer. Even you upper middle class right wingers who have some wealth are really getting poorer on a daily basis. Check your bottom line.

What's a couple of trillion here or there

S&P has admitted that they made a 2 Trillion Dollar ERROR in their analysis of the US debt situation but plowed ahead with their baseless opinion anyway. Keep in mind that they make their money (and they make a lot of it) by giving people who lend out money the ratings they want to see. These are the same people who told investors that securities based the worthless sub-prime crap their employers were selling was AAA. At the same time the big banks were betting against these debt instruments with billions in derivatives that ultimately were made good by the Bush Crime Family at your expense.

Now, if S&P is successful in this con, their employers will reap billions in interest windfalls. Currently ten year Treasury bonds are selling at an incredibly low interest rates. The Federal government could lock in interest on long term bonds at less than 2% making the cost of economic stimulus insignificant and the Republicans are determined to stop this from happening.

If you didn't realize that the Republican Party, the Tea Party and conservatives in general were involved in an Ongoing Criminal Conspiracy, you should by now. The old saying still applies: Follow The Money. The right keeps saying that Democrats are unfairly taxing the rich, yet the rich have gone from a time prior to Reagan when have a hundred million in wealth was exceptional to where these people have a thousand times that and have more billions everyday, with Wall Street hedge fund operators having yearly income in the multi-billions. And they pay little if any taxes. It's not the government that's picking your pocket (except for the money the Republicans skim off the government) it's the Republicans on Wall Street that keep 40% of what you spend at the gas pump, lend you money at usury rates, buy up public assets for pennies on the dollar and on and on and on. You are being robbed, follow the money.

Friday, August 5, 2011

Free Fish for the Tea Baggers

The Fed, FDIC, Treasury Dept and other Federal agencies have issued statements disavowing the value of the S&P rating downgrade. The Treasury claims that the numbers that S&P cites have trillions of dollars in errors.

[FROM: Washington (Dow Jones)--Standard & Poor's downgrade of the U.S. government's debt will not affect the risk-based capital requirements for U.S. banks, federal regulators said Friday evening.

The Federal Reserve, Federal Deposit Insurance Corp. and other federal banking regulators said in a statement that the lowering of the U.S. government debt rating from AAA to AA+ "will not change" the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government or government agencies.

"The treatment of Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities under other federal banking agency regulations, including, for example, the Federal Reserve Board's Regulation W, will also be unaffected," the regulators said.]

Even besides the inherit ability of the US to generate wealth not counting its ability to print money that other countries will accept, the assets of the government itself in terms of public lands that hold vast natural resources far outstrips its debts. Privatizing these public assets are of course the ultimate goal of the neo-feudalists driving this totally manufactured crisis. PS for the tea baggers, they see you as property as well, Mr and Mrs Serf.

On creating a Tsunami: When the tea bagger sees the ocean suddenly drain out of the harbor, he thinks "Ah! free fish". Nothing is free.

Even the sheep can't believe it

After hours, Standard & Poors, the debt rating agency, who had no problem rating a variety of sub-prime debt as AAA during the reign of the Bush Crime Family, debt that was in fact and to their knowledge absolutely worthless, has downgraded the sovereign debt of the United States of America by one step to AA+. This puts the US on a par with some Caribbean countries and eastern European principalities that raise sheep.

They say the bites aren't fatal

The Dow blue chip stocks managed to recover from bad numbers in the morning to finish up 60 points but this was one of the few indexes to do so, the S&P and Nasdaq ended down. There was a 400 point swing in the Dow before and after the European Central Bank said it would intervene as necessary in Ireland, Portugal and maybe Spain. Italy has called a meeting of the G-7 countries to resolve the “debt” crisis. Italy’s bond interest rate has gotten really out of hand as Wall Street bond predators circle for the kill.  This mess could kill the Euro for no other reason than the existence of criminal bankers on Wall Street and in London.

Most commodities were up at the close and Treasury interest rates reflected a sigh of relief with interest edging up slightly as people aren’t moving as much cash there. Treasury interest rates are still incredibly low and this puts the lie to right wing claims that there is a debt crisis. Ninety day T-bills only pay 0.0076% and 10 year bonds, that are the basis for mortgage interest rates, are only paying 2.4%.

The unemployment rate ticked down one tenth with the creation of 153,000 private sector jobs in July but minus 36,000 government workers slashed in red states gave a net gain of only 117,000. I actually saw a business article that called this the “conservative recovery” since private sector jobs are increasing as government shrinks. I thought this was the “socialist Obama’s economic disaster“? It’s being said that half of the government layoffs were from the Minnesota hostage taking by Republicans and should show up as new jobs next month as the Democratic governor in Minnesota gave in to the needs of the rich and threw the middleclass under the bus

In fact you can’t call this a recovery at all, since we need a quarter million jobs every month just to keep up with the population growth. To be fair to Obama he has had 18 straight months of job growth, however anemic. Bush managed to have 8 years with no net gain in jobs, when he should have added 24 million. That happens to be how many people that are unemployed or underemployed.

Those really bad job numbers for May and June have been revised showing we gained 54,000 more jobs than we thought. The average length of unemployment has however reached 41 weeks, and this is a number never seen before. Even during the post WWII years when there were millions out of work as the economy transitioned to peace we didn‘t see anything like this and they thought things were so bad they elected Republicans to undo the New Deal. In 1947 with Republicans in veto proof control of Congress they attempted to restart the Depression, and even then the time on unemployment was still only a small fraction of what Republicans have achieved this time.

The deliberate attempt to drive down wages by the major corporations is reflected in the high weekly initial unemployment claims still hovering around 400,000. This is considered the “new normal” break even point even though this is half again what was normal in the pre-Bush Crash economy.

Family income was up slightly in June suggesting that wages maybe improving. Unfortunately increased savings more than ate up the extra income which isn’t good for the economy. This is the curse of recessions, the virtue of saving is actually a bad thing. This is why the most effective tool for economic stimulus is to give more money to the people on the bottom rung who can be counted on to spend it. The worst thing you can do is give it to people at the top who not only won’t spend it, they don’t even invest it, but will pay a bank just to keep it for them in cash. Major banks are now charging multi million dollar depositors to hold cash for them. Small depositors still get a token interest payment, it’s like getting a mint on the pillow at the hotel with the bed bugs. www.prairie2.com

Thursday, August 4, 2011

Journey to the Center of the Earth

Yesterday it looked as if the markets had stabilized in the last hour of the trading and the Asian markets followed by moving up sharply early today, but as dawn swept across Europe things began to fall apart with the markets there dropping 3.5%. The specter of the European banks collapsing and dragging down banks in the US spooked already jittery markets here. The Dow dropped over 500 points or 4.25% and the Nasdaq lost 5%. Today the last hour of trading saw the markets drop sharply, it’s probably not going to be a good day in the far east. The talking point is that the markets are worried about jobs and consumer spending and imply it’s Obama’s fault somehow and not the imminent collapse of the Euro and the world’s banking system.

All commodities were down sharply with West Texas Intermediate crude losing 6%, even gold was down significantly. The USD is gaining strength and the old axiom still applies: “cash is king”. Market newsletters are reportedly advising people to sell and stay in cash, on this advice market volume was heavy today. That’s the good news, heavy volume indicates that somebody is still buying. The market really crashes when there is extremely light volume as no one will buy at any price. If people keep selling, the buyers will evaporate at some point, but the bulk of stocks are held by institutions and they have their own rules or the panic would be worse.

There is so much cash on hand that the big banks are taking advantage of the crisis (the free market of course) and they are charging large depositors a fee for holding their cash. Remember when you put money in the bank and they paid you?

The stock market maybe heading for the center of the earth but the companies that the stock represents are doing just fine with last quarter profits way up and trillions in cash on hand. If you are a CEO there is nothing to worry about, if you are in the bottom 99.9% things are getting interesting (in that Chinese curse sort of way). A lot of Republicans who think they have some real money will find they are just they are just the right size fish that the big fish find tasty.

Republicans in the Senate have been forced by the public outcry to go along with Senate Democrats to pass an extension to FAA funding until they come back from break. This will put about 150,000 people back to work and will help keep the job numbers from spiraling out of control. (you wouldn’t know the Republicans were involved from listening to the news)

The union killing rules included in the bill by Republicans in the House have not be waived. In fact these rules intended to kill unions in all areas of transportation were already in effect since the Bush Crime Family was given the government to loot by the five Supreme Court Godfathers. Republicans just want the good old days back again and it was the Obama Administration that changed the rules in favor of unions, democracy, and apple pie.

This all was of course simply a grand conspiracy between Obama, the House Republicans and the Senate Democrats to create a crisis based on the pretense of the Democrats of being pro-union. This crisis nearly crashed the economy and may still do that in September once the Democrats have convinced their dull witted base that they aren’t all really working for the same people who control the Republican puppets.  (this last paragraph is intended as sarcasm aimed at the cynical left) www.prairie2.com

Wednesday, August 3, 2011

You can tell a civilization existed here by the abandoned roads

You can tell a civilization existed here by the abandoned roads

The stock markets appear to stabilizing after the longest continuous slide since 1976, a cool trillion in wealth was lost, mostly held by institutional investors; your 401(k), state pension plans and the like; people who could, got out months ago.

Precious metals were the only commodities that were up today with gold gaining another $22 while oil continues to slide. The USD was weaker today after several days of strengthening but is still in the range its been trading in for the past year. The continuing train wreck of the EU banking system should keep the USD relatively strong against most currencies, except the Chinese Yuan which is manipulated for the advantage of China. (why can’t we do that? Oh, that‘s right they shoot corrupt officials and we reward them)

The shutdown of the FAA is an extortion attempt by Republicans demanding the elimination of unions throughout the FAA and the airlines. This has caused an immediate halt to 200 airport construction projects idling 36,000 workers. This is estimated to kill another 100,000 jobs as the damage ripples through suppliers, service companies and on and on. Even if the shutdown ends when Congress comes back from their break it will cost the government a billion in lost airline ticket tax revenue that is going into airline coffers instead. The people laid off won’t be paying taxes and will be drawing unemployment checks paid by the Federal Government as the states are too broke to cover their accounts.

Grover Norquist who is known for the pledge to “never raise taxes on rich” that all Republicans must sign in baby’s blood, and is also known as an un-indicted co-conspirator and beneficiary of Jack Abramoff, the convicted lobbyist/felon, (those two words are interchangeable), Grover Norquist has set his sights on the Federal Gasoline Tax due to expire September 30. If he is successful in holding that hostage, it will stop work on most highway projects nationwide unless the states want to pickup the tab. This will cause the layoff of hundreds of thousands of well paid workers and this too will ripple through the economy destroying even more hundreds of thousands of jobs.

Given that most of the states are barely avoiding bankruptcy already after slashing taxes on the rich and their corporations, this will mean most highways simply fall to ruin or become privatized toll roads at twice the cost. There will be more taxes and fees on the poor and middle class and still more cut backs to try to close the gap with all of this damaging the economy further and cutting state revenue still more. States could raise their own gas tax but Grover has his blue furry paws in every level of government so good luck. There will also be a need for more state safety net spending and for police to control the increasingly desperate population but no money to pay for it and once the economy is really circling the drain it becomes nearly impossible to fix by anything like normal means.

When I was a boy my grandfather told me how when he was a boy the Indians who would stop at our farm to water their horses. In our woods was a part of the trail that ran between two river crossings. It had probably been in use for thousands of years. The Native Americans were long gone by then but their road was still plainly visible where it cut deep through the earth. The trail and the woods are gone, it’s a corn field now.

There are lots of places on this planet where you can see old roads left by peoples long gone. Our civilization is poised to leave a lot of deserted roads.
www.prairie2.com

Tuesday, August 2, 2011

Obama 1, Tea Party 0, Dow -266

Obama 1, Tea Party 0, Dow -266

Obama took advantage of the naiveté of Tea Party Radicals to force the cockroaches out into the kitchen with the lights on. According to polls even the average Republican voter now favors taxing the rich and Obama can run as the adult in the room who wanted to do just that. Republicans really didn’t want to cut government spending, they never do that when they are in charge. The Republican base always wants cuts until they realize the Tea Party Congressmen want to get their Government hands on people’s Medicare.

The Federal budget isn’t distributed the way the Right Wing talking points describe it, 50% welfare and 50% foreign aid. Any real cuts will affect Republican voters and since it will be the Republicans will be making the cuts without Obama getting his hands dirty then they will have to answer for the cuts. Billionaire funded think tank talking heads are out in force singing the praises of cutting spending even while the stock analysts are pointing out that cutting spending means cutting demand and no demand means no business, and that means no stock market. If Democrats can’t get elected now in any Congressional district with indoor plumbing, something is wrong. (yes there are things wrong, Citizen‘s United to be specific)

The markets gave up all the gains made this year in just the past week. Last month’s consumer spending report took the first downturn in the past two years despite a slight up-tick in family income. The Manufacturing Index is down to where negative growth is a hair’s breath away. Any cut in demand will tip us over the edge into free fall and the markets are seeing it exactly that way.

Gold is up $40 but the USD is stronger and Treasuries continue to go up and interest down. You see the rating agencies are just whoring for the big bankers and hedge funds who will clean up in a crash. The debt crisis was completely phony but the uncertainty it has created is weighing on the economy. Even though the first trillion in cuts won’t take effect for years, the fear is that the Death Panel Jury of Twelve will do something really stupid.

In reality the Super Congressional Committee is only a Gang of Seven since a majority vote is all that’s needed to lay down cuts that can’t be debated or amended but only voted up or down. Our future could be decided by six Republicans and one blue dog Democrat and their list of cuts must be approved or the axe falls heavily on the Pentagon. Of course anything they do can be reversed by normal legislation if the President will sign it or Congress overrides his veto.

So in reality Congress is just kicking the can down the road to see who wins in 2012. Obama thinks he’s positioned himself well and if he doesn’t get blamed for the crash he might be right. Did you notice that even with the Tea Party in the forefront of the news that there were no rallies?  www.prairie2.com

Monday, August 1, 2011

It's not this budget deal that's killing us, not anytime soon. Dead just the same.

CBO has scored the bill passed by the House, under the debt deal, discretionary spending, which excludes Social Security, Medicare and Medicaid, would be cut $21 billion in 2012 and $42 billion in 2013, The spending cuts would increase to $75 billion in 2015 and $156 billion in 2021,

No real cuts will be brought to bear before 2014. It's been my suspicion all along that the Republicans didn't want any real cuts, you can't steal from a government that doesn't spend any money.

This doesn't mean the economy won't go in the tank, it was doing that already and nothing about this helps.

Kitty is always hungry, so very hungry

The only thing good to be said about the budget deal is that it could have been worse. We don’t know yet when these austerity cuts start taking effect and most of the damage to the economy won’t happen until the bleeding actually starts.

There is one upside to austerity: despite all the Sturm und Drang from the bond rating agencies the interest rates on Treasury bonds continues to fall. In fact except for a brief panic a couple weeks ago the downward trend has been steady ever since the specter of default was raised last spring. And, this does continue to drive down mortgage rates which are based on the Ten Year Treasury Note. Not that anybody can qualify for a home mortgage anymore.

We could go through all of this again at Thanksgiving depending on how rigid the rules are for the Super Slash and Burn Committee that is supposed to come up with the majority of the austerity measures. There is even the possibility that if Barrack has been a good little boy they might bring him some taxes levied on the rich for his Christmas stocking. (he’s more likely to find a pony in it or rather pony byproducts)

It seems more and more likely that Obama really does buy into the “growth through austerity” nonsense and that the “real” economy is created by the Federal Reserve and that he should keep his hands off of it. Obama is a smart guy but he’s a lawyer and so has no real education. He capable of following along with the reports put out by the even smarter guys that work for the Fed and the Wall Street banks and they probably make sense to him. That comes from not knowing any history and not realizing that economists get paid by how well they can lie. The really well paid ones are complete stone cold sociopaths. I’ve seen Allen Greenspan’s wife on the news a lot lately and she’s capable of telling some real doozies herself.

The pundits had promised us a big rally on Wall Street this morning since a deal was imminent and since it had lost 500 points last week that should have been easy. Indeed on the opening bell the market shot right up. Then the Manufacturing Index came out and the market fell though the floor, it did pull near to even late in the day but on light trading which doesn‘t mean much.

Since austerity is the new watch word, the traders all expect the economy to slide so they are starting to build in the idea of a QE3 from the Fed and so the USD is weakening as they expect more to be dumped into the markets. The question is how much will they print and who will they give it to (the best guess is rich people and Wall Street banks).

You’ll hear people screaming “hyper-inflation, buy gold, panic, panic” but we are in a Depression. The real risk in a Depression is deflation, no matter how much money they print. Since wages are declining, government spending is declining, job numbers are declining and demand for goods is declining (and there are more things declining, well just about everything is declining). This all presses down hard for deflation and not inflation. Not that buying stuff you really need will be a bargain, deflation only works for you if you are rich and even then it’s a dangerous tiger to keep as a pet.  (kitty is always hungry)
www.prairie2.com

Junk mail from China

Is anybody else getting the propaganda emails from China? Each one sounds like a first person story from Reader's Digest talking up how wonderful, kind and generous the Chinese people are. One engaged in a really racist bashing of the Tibetan people who abused the writer until he was rescued by some wonderful Chinese businessmen dressed like westerners in 3 pieces suits and riding in an American car. The writer poses as either an American or Canadian traveler with a persona that they assume would appeal to someone on the left. The phrasing gives away that the writer doesn't speak English as a first language even if you thought they might be Canadian. :)   They also don't seem to get the concept of BCC so I have a lot of peoples's email addresses.