Friday, November 4, 2011

Money can't buy happiness, but it can inflict pain and misery

The stock market was down today on fears the Greek PM would not survive a no confidence vote in Parliament, he did narrowly keep his job late today by pledging to create a new government with a broader base even if he doesn‘t lead it. He had announced that he was going to let the peasants have a vote on their descent into serfdom just before going to the G-20 meeting and he didn’t get a warm reception, in fact they sent him packing. The big money players not only threatened to cut off already promised loans but to isolate Greece from the world. The Greek PM may well have done this on purpose in order to panic the opposition party and grumblers in his own party into endorsing his position so that he isn’t alone in taking the blame when the coming disaster unfolds.

Back in the US, private employers added 104,000 jobs in October but with 24,000 cuts in red state government jobs, this created a net October jobs number of  80,000. The figure for September was revised upward to 158,000 from the initially reported 103,000. If red states hadn’t cut 34,000 public sector jobs the September number would have been 192,000 new jobs. October’s number is also subject to revision and my guess is that it too will be increased. A survey of CEOs is saying that planned layoffs have been cut sharply and the economic numbers in general have been positive.

These job numbers aren’t indicators of real growth as they barely cover the increase in the population. Job creation would be significantly higher if the states weren’t slashing jobs and overall spending as part of the Koch Brothers agenda being pushed by their lobbyists. Even though a significant number of jobs were created during the past two months, weekly jobless claims have stayed above 400,000 until this week when they dipped slightly below the so-called magic 400,000 number everybody in media obsesses over. 

When jobs are being created the weekly initial jobless claims number should be no higher than 275,000 and this is the real magic number, but claims remain high because of the churning of jobs by corporations in order to drive down wages. Median income has dropped sharply in the last three years with 50% of workers earning less than $26,364 last year, down from over $30,000 and this trend is obviously continuing. 

Despite a number of reports from smaller companies that they are moving production back from China, large companies continue to outsource as much as they can and they are also closing plants simply from lack of consumer demand. The one exception is the automobile industry where new US plants are opening, but at half wages. Union factory jobs in the US typically pay $28/hour and the “new” ones are half that or roughly equivalent in today’s dollars to the minimum wage set in 1938 at 25 cents/hour. Auto workers in 1938 made several times the minimum wage. Today in Germany the same factory jobs pay $48/hour with better benefits and everybody in Germany gets those benefits. 

Germany is not in trouble from the Euro crisis, but increasingly Italy is, with bond rates above 6% and climbing. The Wall Street hedge funds are angling to make a killing by taking the smaller Euro currency countries to the cleaners. It may not work out for all them however, ask former NJ Gov Jon Corzine, he has hired a criminal defense attorney as he can’t account for 700 million in customer money. Today it was leaked that this money maybe in Jamie Dimon’s JP Morgan bank. Exactly why we don’t know, but JPMorgan took several banks to the cleaners during the 2008 crash. 

In summary, the US economy is trying to right itself with GDP now above its peak from before the 2008 crash, but the Republicans are busily drilling holes in the bottom of the boat. This isn’t just the crazy ideologue Tea Bagger Congressmen doing this but a cadre of billionaires who can each write a check from the petty cash account that would exceed the total expenditures of the 2008 election. They buy Congressmen like Trick or Treat candy bars and this extends to state and local officials too. Their corporations fund the “news” channels so you only hear what they want you to hear. Word of mouth is the only thing they can’t control, learn the facts, talk about them, take action while you can. Time is running out.  www.prairie2.com

Thursday, November 3, 2011

You are next, right winger

The super rich have been growing in numbers although their numbers have really increased very slowly with less than .1% who truly qualify for that designation. The Census Bureau reports that the ranks of the now dubbed “super poor”, or rather they are the extreme poor who have now swollen ranks to 1 in 15 or 7% of Americans. To qualify for this designation you must have an income of less than half of the official poverty rate and this line is extremely low to begin with.

For a family of four in the bottom half of the poverty income bracket (remember there are many far below this line) this income bracket is slightly more than $11,000 per year. In the greatest nation on the planet we have 21 million people who are in extreme poverty while the top 25 Wall Street hedge fund managers “earned” over a billion each last year on average. That’s billion with a “b” or 100,000 times what millions of American families live on.

Right wingers will point out that 25 billion dollars divided among 21 million people wouldn’t make them “rich“, but that’s 5000 dollars for a family of four and it would change “their“ lifestyle dramatically while still leaving them in poverty. The thing is, this 25 billion wasn’t just a tax on the peasants. Hedge funds make their money by looting and pillaging, it‘s not carrying off the treasury that does the real damage, it’s burning the villages, slaughtering the livestock, salting the earth and poisoning the wells that makes 21 million people into the “super” poor.

The super rich have closed 55,000 factories in the last ten years and that wasn’t the beginning of their terrorism, having started more than 30 years ago thanks to their Patron Saint Ronald Reagan. They have made millions homeless, ruined the livelihoods of millions of farmers in the US and in Mexico and they are polluting the water table everywhere they can make a buck and that‘s just a few of their crimes. The real damage the one percent has done runs into many trillions every year.

Converting a billion dollar income into the numbers of the Super Poor, each of the palatial estates of the Super Rich could be a city of 100,000. Indeed census figures show that the poor tend to be clustered in their own communities, dare we use the word “ghetto”? This clustering doubles their misery as the local government has no money for services of any kind let alone relief for the poor. No schools worthy of the name, no libraries, no city services the rest of us take for granted, and no jobs at an acceptable wage as most of these people have skills that have been outsourced to China.

States (especially the red ones) don’t provide anything for poor communities anymore, even to support police protection and crime is mushrooming. The Republicans in Congress are determined that no Federal relief will be forthcoming.

The fastest growth in poverty, nearly double anywhere else, is in the suburbs. Formally the symbol of the American dream, they are now a nightmare of isolation and despair, crime ridden, and deteriorating fast, with no jobs to be had, with no government support we are creating a permanent under class. And just so you right wingers know, in these suburbs the people are mostly white like you, worship the same god as you and believe the same rightwing lies as you. You are next. Be like them or fight back.  www.prairie2.com

Wednesday, November 2, 2011

The birds don't flee the stalking horse, the man with the gun walks beside and remains unseen until it's too late

The stock markets recovered some of Monday and Tuesday’s losses today as President Obama made his way to France for a G-20 meeting. All the talk at the meeting will be about Greece. The International Monetary Fund (IMF) that serves as the stalking horse for predatory capitalism is not happy with Greece and is withholding 7 billion in aid over the Greek decision to revert to democracy. The Greek PM is actually going to consult the peasants on whether they will accept the yoke of servitude to the international bankers or (gasp) not. 

The Greeks deny that the vote will be about staying in the EU or on the Euro, but only over the bailout terms which call for practically all of Greece to simply be handed over to corporations for pennies on the euro to raise money to pay creditors. If they do reject servitude, they will have no choice but to drop out of the Euro, and in fact this is the only rational course of action. Once on their own currency they can negotiate for terms, this won’t set well with the disaster capitalists who stood to make a metaphorical killing, so we may see real killing instead.

Back in the States, the Federal Reserve has revised downward its estimate of the strength of the economy over the next two years and is predicting unemployment to stay the same. They did say that the Fed won’t be printing any new money, at least for awhile. Given the vast sums they’ve turned out in the past few years, if it were actually paper money instead of digital accounting entries it would fuel the job recovery by itself. Unfortunately all it does is keep the zombie banks going and does nothing for the economy except for keeping deflation at bay. 

Still that is a good thing, at least until the 99% movement can get enough people engaged so that real reform can become possible without an unreasoning fear and panic gripping the country. As FDR said in his first Inaugural speech “…the only thing we have to fear. . .is fear itself. . . nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.” At the same time, Adolf Hitler who was backed by money from Prescott Bush was consolidating power in Germany. 

The Greeks are going to vote on accepting servitude or not. Here the corporations count the ballots. It will take more than voting. You will become a serf only by choice, doing nothing is a choice. Choose to fight back instead.
www.prairie2.com

Tuesday, November 1, 2011

With loaded dice, why wouldn't you roll them?

The stock markets took a big dive for the second day, dragged down by bank stocks based on their exposure to Euro bonds, or perhaps on the fact that they aren‘t really viable businesses but simply bonus generators for the people who run them. The panic started after the bankruptcy filing of MF Global, an investment bank run by former NJ Gov Jon Corzine. It appears the bank’s problems may have started when the former Goldman Sachs CEO went short in a big way on US Treasuries (betting that the downgrade would drive up interest rates, it did the opposite) He also bet heavily on Euro bonds and lately MF Global couldn’t meet margin requirements as they were leveraged 40 to 1.

There are reports that 100s of millions, perhaps a billion in customer funds are missing, perhaps from trying to cover margin calls. It’s not clear if in fact what they did is a crime in the age of decriminalization for Wall Street hoodlums. Stealing from the poor and giving to the rich has been the law of the land since Reagan made it trendy. Of course they were stealing from the not so poor, so it could go either way. Bernie Madoff has dibs on the top bunk.

MF Global was a small player compared to the big zombie banks. The biggest bank, JP Morgan has exposure to 85 trillion in derivatives and in order for holders of their bonds to insure them they are paying through the nose. Last week they sold one billion in bonds with the spread over Treasuries of 335 basis points or 3.35% over the rather low interest that Treasuries pay. This was a big improvement from a few weeks ago when the spread was 675 bp. This sounds wonkish but it just means that people are catching on to the banking collapse and are trying to make money in the short run.

As it becomes more apparent that all of these banks are really the walking dead, the interest rates they must pay is likely to increase sharply. At some point it becomes impossible for them to do business and it’s bail out time again. As the tide goes out then still more ponzi schemes will be left flopping on the beach.

Italy is being caught in a tight spot even though their economy is really quite strong. They are paying a six percent spread over German bonds and this is not sustainable. The Eurozone has put itself in a self fulfilling death spiral, as more countries become unable reissue debt at a rate they can pay, the disease starts to spread. The problem is that the European Central Bank doesn’t seem to understand basic economics or know anything about the traditional function of central banks.

The ECB is repeating the same mistakes the Federal Reserve made between 1926 and 1933, and you know where that led. It strains credulity however that in either case, then or now, that these big bankers don’t know what they are doing. These banking principles are hundreds of years old and to do the opposite suggests they want the outcome that will certainly follow their failure to act.

The Greek PM wants to hold a public referendum on the bailout/austerity deal in January and this will certainly fail. The uncertainty between now and then is bad news in itself. All of these problems could be fixed by the masters of the universe who caused them but that’s the reason they won‘t be.

It seems incredible that that the bankers would go down this path given the suffering and death toll involved in such a course. For the one percent however, it’s business as usual as they’ve always killed people to get what they want. The only difference is the unprecedented scale, and the pay off is so huge they can’t pass it up. It’s not everyday you get to roll the dice to take over an entire planet, and they have loaded the dice to only roll their number. www.prairie2.com

Monday, October 31, 2011

No standing and keep your arms and legs inside the car

The stock markets took a big dive today, dragged down by bank stocks based on their exposure to Euro bonds. The panic started after the bankruptcy filing of MF Global, an investment bank run by former NJ Gov Jon Corzine. It appears the bank’s problems may have started when the former Goldman Sachs executive went short in a big way on US Treasuries (betting that the downgrade would drive up interest rates, it did the opposite) He also bet the wrong way on Euro bonds and lately they could meet margin requirements. Late today there are reports that 100s of millions in customer funds are missing.

MF Global was a small player compared to the big zombie banks. The biggest bank, JP Morgan has exposure to 85 trillion in derivatives and in order for holders of their bonds to insure them they are paying through the nose. Last week they sold one billion in bonds with the spread over Treasuries of 335 basis points or 3.35% over the rather low interest that Treasuries pay. This was a big improvement from a few weeks ago when the spread was 675 bp.

As it becomes more apparent that all these banks are really the walking dead, the spread is likely to increase again. At some point it becomes impossible for them to do business and it’s bail out time again.

Italy is being caught in a similar situation even though their economy is really quite strong. They are paying a six percent spread over German bonds and this is not sustainable. The Eurozone is caught in a self fulfilling death spiral, as more countries become unable reissue debt at a rate they can pay, the disease starts to spread. The problem is that the European Central Bank doesn’t seem to understand basic economics or know anything about the function of central banks.

The ECB is repeating the same mistakes the Federal Reserve made between 1926 and 1933, and you know where that led. It strains credulity however that in either case that they didn’t know what they were doing. These principles are hundreds of years old and to do the opposite suggests they want the outcome that will certainly follow their failure to act. Hang on tight, it will be a wild ride.  www.prairie2.com