Saturday, April 7, 2012

The good, the bad and... well, you know

The good new is that there were 120,000 net new jobs created in March, the numbers would be much better except for a continuing decline in construction, retail, temp and government employment. Manufacturing employment was up sharply, that's the only real bright spot. These are jobs that create more jobs, except for the new lower wage scale. Weekly unemployment claims remain on downward trend, and this is good also.

Construction is lagging because of a glut of existing houses a middle class that can no longer afford to buy a home on Republican wages. There is a coming decline in the retail sector, again from declining wages. Look for widespread retail sector bankruptcies as all the loans incurred before the crash end their 5-7 year maturity cycle. Corporate junk bonds are just as big a problem. The jobs number would look much better if the Red States weren't continuing their insanely cruel austerity measures designed to kill the economy.

Major corporations are talking openly about the new Hour Glass Market with product development and marketing strategies aimed at the rich at the top and the vast bulk of the population at the bottom. The tiny center of the glass is the soon to be non-existent middle-class. Of course in this plan, the flow of wealth defies gravity and moves steadily upward.

Don't let the right-wingers tell you that this is all "natural and unavoidable" or that nothing can be done.  The Revolutionary War was all about throwing the corporations off this continent. The Progressive Movement and the New Deal were all about taking power away from the people who are screwing you now.

None of this is happening by accident. The billionaires have spent billions over the last 60 years to re-write history, invent new economic theory and create public policy. They used to be treated like cranks, that crazy Reagan with his Voo Doo economics. Now they are treated as the "serious people" in the room and given great deference, of course they pay the people very well who show them this deference in the media. They also pay people with guns and badges to enforce this doctrine if proper deference is not shown to them in the streets.

I'm not even going to get into the "well, you know" aspects of all this.

Wednesday, April 4, 2012

High Noon

The US stock market fell hard at the opening bell and the corporate pundits were out immediately blaming it on the lower number of jobs created last month. With “only” 200,000 new jobs created they implied that the Obama economic recovery is falling flat. The first problem with this “news” was that the real numbers don’t come out until Friday, this was just an estimate from a private payroll service company that has become notorious for being wrong. 

The real reason the US markets were down, and they were following the world markets from overnight (US time), the fall was based on the Minutes from the last Federal Reserve meeting. A large majority of the board has decided that there will be no more quantitative easing purchases of paper assets, or what is effectively the wholesale printing of money for rich people and their big banks. 

This impacts markets worldwide as it impinges on the Carry Trade, this “trade” is where big money people hop around from country to country inflating the local markets by exploiting cheap dollar loans to buy up local paper. This practice makes a lot of money for the rich, that is if they get out before the bubble bursts. Don’t worry they mostly do, and besides they’re just gambling with other people’s money so don’t fear for them. 

Mitt Romney’s people make a lot of money doing this and if you’re been paying attention to what he’s been saying, this all “trickles down” onto the rest of us. Don’t mind the occasional total collapse of the world economy and the end of civilization as we know it. Mitt will be alright just the same. 

We maybe about to see the collapse of the oil bubble with the announcement that government audits show the total amount of oil in storage tanks exceeds the record set in 2001. Of course physical inventory has little to do with the price. What did you think, that “supply and demand” worked in the “free market” the way conservatives keep telling you? The reality is that they hoard the supply, and manipulate shortages of commodities to make money by overwhelming the market with truckloads of money. But it seems those truckloads of money will be staying at the Fed for now.

Of course there is the potential of Wall Street manipulating this into a total economic collapse, they make money on the way down too. In theory the Dodd - Frank Act allows the government to step into this mess and close down these pirate ship operations, that is if they threaten the US economy. The Republicans have been refusing to fund the agencies involved so it’s not clear they are up to the job, and Bush appointees on the various commissions have been obstructing in anyway they can.

I think you can tell from the rhetoric being exchanged between the President and the Romney campaign that some sort of showdown is in the works. Think of the Fed as the bartender in the old west movie. He just pulled the double barrel from under the bar, something is going to happen. Send the children and pets to the root cellar. 

Tuesday, April 3, 2012

Singing in the Rain

President Obama broke new ground today with the most forceful Progressive speech of his career. In fact he may have made history as the first President in the modern era to attack the core Republican economic gospel by name, known as Trickle Down Economics. Today we fondly refer to it as Reaganomics, named for its first successful proponent in the modern era.

Obama asserted that Republicans have always believed in this nonsense. He is mostly correct, it was common belief in the roaring 20s, but “government by and for the rich” did fall out of favor in the 30s. It made a brief comeback again after the 1947 Republican Congress threw out the New Deal over Truman’s vetoes. They quickly plunged the country into recession, and this resulted in the Democratic landslide of 1948. The Republicans didn’t hold the House again until 1994, that was when most people who saw the Great Depression start were dead.

Obama is not the first President to take on Reaganomics, that is if you count GHW Bush, but he wasn’t President at the time. He famously called it Voodoo Economics, and he was right of course. After Reagan beat him in the 1980 primaries, Bush decided that the average American was really as crazy as an outhouse rat and they would fall for the scam.

You see the bulk of Republican voters actually believed, and still believe that they live in the penthouse suite of the conservative high-rise outhouse. This insanity even spread to the so-called Reagan Democrats in the 80s. Mostly union workers, they started thinking of themselves as capitalists, and not the pee-ons that Reagan was about to make them into. Even today there are people who make less in a year than a Wall Street banker or corporate CEO makes in a minute, and yet they still believe they are part of the 0.01% that is actually benefiting from Trickle Down economics.

The real damage didn’t even come from Reagan slashing the 74% tax rate for multi-million dollar incomes to 28% that did the real damage, but the total decriminalization of looting and pillaging. It did help to promote mergers and acquisitions (that became legal under Reagan) to be able to pay a CEO more money than he could hope to in a lifetime, and pay little of it in taxes. The CEO would then eagerly promote the gutting of the very company he was supposed to be protecting.

Where were the shareholders while this went on? They were deceived into believing that they were making a killing on stock swaps that pumped up the market, stock that went to nothing in the Reagan market crash. Not to fear though, Reagan’s invention of the 401(k) pumped up the market again. That was until the bubble burst, and that little crash in 2008. The younger Bush wanted to pump the Social Security Trust Fund into the market too, he predicted a DOW of 40,000. What a crash that would have been.

Millions of small businesses have disappeared in the years since Reagan and his acolytes allowed the Walmart plague to spread across the country. Real union jobs that actually pay union scale are becoming non-existent. Millions of family farmers have lost their farms, soon Willie Nelson can give a Farm-Aid concert for all the farmers right on his bus. The wealth of most Americans is only in their homes, and 25% of them are worth less than they owe.

The average working man makes half of what he did pre-Reagan, if he has a job at all. The average 401(k) has only recouped 48% of its losses taken in 2008 despite the markets having recovered fully, and the next crash will be much worse. That’s only a fraction of what they’ve been doing to you, that’s the way Reaganomics works for the 99%. And if you complain, you’re told it’s just raining.