Saturday, November 12, 2011

My new Hero, Mario Batali

Friday, November 11, 2011

The odds favor sunrise in the morning, or maybe not

The weekly survey of economists shows that they now believe we are significantly less likely to see a double-dip recession next year with the majority shifting from 1 in 3 odds down to 1 in 4 odds. The only problem with this bit of cheery news (we are living in time where only 1 in 4 odds that civilization will end is now “good news”), the big problem with this news is that this is the same bunch of guys that always get it wrong. I wouldn’t bet on the sun coming up based on the majority thinking of these corporate agenda driven nit-wits.

The trend line on jobless claims continues to move in the right direction with “only” 390,000 workers filing initial claims last week. But, here again the numbers are so distorted by corporations churning the workforce to drive down wages that the numbers don’t mean much.

The stock markets closed the week up significantly based on the capture of both Greece and Italy by the Forces of Darkness. So-called Techno-crats will lead both countries with “everybody” (that’s what the corporate media says) “everybody” buying into it on the assumption that this will take the politics out of political decision making, it also takes out the democracy. Here again you have a couple guys who have been profoundly wrong about economics for decades, and they have not changed their tune by one single note. Now they will now run these two countries on the basis of what is good for the one percent. The rumor is that Portugal is poised to fall next week as the dark conquest marches across Europe.

The rational for throwing the smaller Euro countries to the wolves is that it will lighten the sleigh and the rest of us will survive, or more specifically the banks won’t crash. But the harsh level of austerity they are imposing will suck the life out of these economies so collapse remains inevitable. One can surmise that the plan is to keep repeating the cycle over and over again with a crash or close to it, and follow this with another bailout for the banks. Then the wholesale transfer of assets to pay the interest to the creditors. Basically, ever more printed money will finance the acquisition of the planet for the one percent.

With every cycle more and more real tangible wealth is transferred to the one percent based on the fact that they hold our massive debt. Debt that was only run up in the first place because the one percent weren’t paying their taxes, nor paying high enough wages to the middleclass so that workers and the government had to borrow money. Money that never should have been in the hands of the one percent to begin with.

Herman Cain is right about one thing, it is our own damn fault. We could have stopped this from happening. We could stop it now but too few realize we have the power. The 99% bought into 40 years worth of corporate lies because too few of us read anything but the sports scores and even if you do the lies are everywhere. There’s no real shame in being hoodwinked until you know better and then don’t fight back.

Thursday, November 10, 2011

The new feudalism isn't new and is really the norm

Greece fell to the control of the bankers today as on of their own, former European Central Bank VP Lucas Papademos has become the new “unity” PM replacing the former PM that had suggested letting the people vote on the austerity measures. “We’ll have none of that” sniffed the bankers, the ECB bankers make ours look like a bunch of saints. Iceland gave them the bums rush after bankers destroyed their economy and so far Iceland is doing just fine. The bankers can’t let that contagion spread.

Italy is next in line for take over as they are expected to appoint an economist to replace PM Berlusconi. Mario Monti is known as a technocrat who favors tough austerity measures and that would of course play directly into the hands of the banksters. As austerity is applied, the economy shrinks, making it more and more difficult to repay the massive debt. This causes deflation which makes the debt impossible to repay.

It doesn’t seem to occur to anybody that debt is just paper. For governments the debt represents borrowing money from rich people who haven’t been paying taxes. Government shouldn’t need to borrow money, that’s what taxes are for. For the middleclass, debt represents a replacement for substandard wages (also so the middle class can pay the cost of services that should be free such as education). The middleclass shouldn’t need to borrow from rich people either, they should be paid on the basis of how productive the economy is. Rich people shouldn’t have enough money to do that kind of lending and in fact they don’t really, they’ve simply been stealing the money and loaning it out at a steep vig in order to steal more.

Under Reaganomics the economy would collapse if consumers weren’t given money to spend through debt as their wages don’t create sufficient demand in the economy for the supply being produced. Sure spending by the rich is making up an ever growing share of the retail sector, but it just isn’t enough. But if you think that will be the undoing of the rich, you are wrong, feudalism isn’t just a medieval concept. The days of the Antebellum South were great times for the one percent even as the majority of the population were slaves, and most everybody else was dirt poor.

In short the one percent know what they are doing as they begin setting up their feudal states. We can’t sit back hoping the “natural order” will work in our favor. A significant middleclass has never been the natural order of things throughout history. A fabulously wealthy one percent (or less) has been the norm with everybody else in poverty. The rich see this as their birthright and the way things “should be” as god ordained it. Fight back now, we won’t get a second chance at this.

Wednesday, November 9, 2011

The Pale Horse makes money as the market goes up and as the market goes down, you get Death

The Dow fell almost 400 points today and the European markets faired worse as bond rates in Italy shot past 7% and into death spiral territory. The high interest rates trigger margin calls among bond traders forcing sales regardless of the losses. This could also start the derivative avalanche where somewhere in excess of a quadrillion dollars in contracts that were designed as bets on future events start unwinding.

All of this didn’t happen from chance or nature or even incompetence, it was planned to happen all along. You see the talking point stressed in the corporate media today is that Italy has been living the “good life” with much wine and little work, and they tick off all the benefits that Italians enjoy, from maternity leave, to healthcare, to early retirement (in Republican terms that means retiring “before” you die). How absurd that the peasants should expect the things reserved for the 1%.

In reality Italy is not Greece, their economy has been healthy, profits up, and the budget has been in surplus for years. They do have a lot of bonds out but they aren’t in debt the way that many countries are that are still considered healthy. Their crime is that the total amount of their bonds being traded is small enough to be captured by Wall Street bond traders, and this is simply as irresistible as Death on a Pale Horse.

A big part of this problem is that much of the debt is held in long term bonds, and while this should be a sign of stability this does ironically make Italy more vulnerable to capture by the bond traders, who can take advantage of the relative small number of bonds that need to be reissued. Five billion dollars to be sold this week and ten billion next week could end Italian democracy once and for all.

Interest rates are climbing fast to levels where it simply becomes impossible to refinance debt. Bonds are sold by auction at a price that reflects the interest rate as if it is paid up front. If the interest rate accrued over a number of years gets high enough, then the sale price of the bond produces too little money to cover the needs of government. In fact the issue of bonds simply creates more debt and little else.

In case you haven’t guessed, the big US banks are making out like bandits from all of this. Or should I say the bankers are, the banks themselves will ultimately fail or be bailed out from the pockets of the middle class even if there is no appropriation from Congress. After all we are talking about the people who “create” the money and determine its value, and I’m not talking about Congress as called for in the Constitution. As warned against by the founding fathers, the creation of money is firmly in the hands of bankers and corporations.

Today’s drop in the stock market cost the average 401(k) holder a bit over $4000. Before Reagan, people had pensions for retirement but people bought into the “capitalism” of the 401(k) instead. You put the money in and Wall Street bleeds it out. It happens everyday as the market goes up and down and the “wisdom” reported in the news today was the we can expect to see these wild swings on a daily basis. Everyday thousands drain from your retirement account and from the reserve accounts invested by local governments.

You see the real truth, the one they won’t tell you ever on the news, is that when the market goes back up after one of the regular falls is that you aren’t making back any money. The Wall Street banks and hedge funds make money going up or down, but you have nothing until you sell, and you will always get less than you put in, if you get any thing at all.

Monday, November 7, 2011

Everybody all at once scream, BOO!

The current Depression has been going so long that the majority of the unemployed are no longer receiving benefits. Eighteen months ago, 75% were still getting benefits and now only 48% remain eligible. This doesn’t include people who weren’t eligible for benefits to begin with, like people who hadn‘t worked enough since depleting their benefits after their last job was outsourced , those people simply aren’t counted. Teenagers entering the workforce or recent college grads, and those looking for work after re-training at for the 2nd, 3rd or 4th time following the outsourcing of their middle class job don’t count either.

In the olden days, before Clinton ended “Welfare as we know it” in 1996 these people would get welfare, not today as this would lessen the pressure to drive down wages if people weren’t willing to work for food (and not enough of that).

Nearly five million Americans have been out of work for more than a year, and again that’s just the ones that are being counted. Besides people who have simply fallen through the non-existent safety net, there are millions that took early retirement or disability payments that would still work if they could. Still more millions have gone back to school to live on student loans with little chance finding a job when they enter the job market. Fully half of recent college grads either have no job or work at a job they didn’t need a college degree for. The majority of new corporate lawyers each year are in India, medical researchers, accountants, engineers, architects and on and on are all being out sourced.

By the end of the year Congress must extend the 99 weeks program or another million people will have their benefits end suddenly and this number will grow steadily. By February it will 2.2 million cut off from benefits, but 45 billion dollars for the extension is a lot of money for Tea Baggers to agree to. No admission from them that they are the ones who caused this mess.  They bought into the magic of Reaganomics and free trade, tax cuts for the rich that didn’t trickle down, wars that would pay for themselves, free trade would make everything more affordable and create high tech, high finance and high wage jobs that never happened.  The Tea Baggers made these mistakes despite our warnings, but they won’t pay for them. The children, the old, the helpless will pay with their lives.

Even if Congress does the right thing, this one small “right thing” and renews the unemployment benefit program, this won’t help the “99ers” who have already fallen off the rolls.  The Census Bureau says unemployment benefits kept 3.2 million people from stepping over the edge into the abyss of poverty last year. The threshold for poverty is far too low of course, defined as annual income below $22,314 for a family of four.

The cost of raising child in America with a middle class lifestyle until age 18 is estimated to half a million dollars (and with no frills like piano lessons or cell phones) . For a family of four with two kids this would be $55,000/year which is more than the median family income in the United States. You can make do on a fraction of this by giving up luxuries like good nutrition or healthcare, and the numbers make it clear that the majority of American families are giving up a lot of things to get by.

The reality is that millions of American families in the most powerful, most wealthy nation on the planet aren’t getting by. The leader of the most powerful institution in the world, the Speaker of the House in the Congress of the United States of America says we are broke, he says it everyday on his way to a thousand dollar dinner. The poor, the weak, the sick, the children and the elderly must fend for themselves in this land that this evil man calls “exceptional”. It’s only exceptional for him and his cronies.

A new record number of people got Food Stamps in August, more than 46 million and the benefits are enough to feed a family and food banks can’t begin to serve the needy. The longest people have been on unemployment set a record during the first Reagan Recession of 1983 at 21 weeks, the current average is twice that. Reagan fixed his economic problems which were much less then (we still had a manufacturing base) with trillions in deficit spending (back when a trillion was real money) and he deregulated banking to pump out trillions in consumer credit. Don’t mind the Savings and Loan crash from deregulation.

Weekly unemployment checks average about $300 nationwide, the Congressional Budget Office has estimated that each $1 spent on unemployment benefits generates up to $1.90 in GDP growth. Still you are talking about the equivalent of a minimum wage job that in itself doesn’t produce anything. A modest increase in the minimum wage would have much more significant effects, especially when you consider that such an increase would combat the falling wage trend we have now.

When unemployment benefits expire around Christmas time, the Congress will decide to extend benefits for people out of work for less than 99 weeks or cast them into the gutter. This will be the first time the measure has come up with the House under the control of Republicans. The safe bet is those “out of work by no fault of their own” (to quote the benefit rules) will be heading for that slushy place beyond the curb. Even most Democrats aren’t considering any help for the millions already past 99 weeks of eligibility as they are treated like ghosts. They may haunt the Occupy Wall Street sites but Republicans don’t believe they really exist. Tell them “Boo”, everybody all at once. BOO!