Friday, May 18, 2012

We could be just like Greece

Initial jobless claims were unchanged for the week suggesting that jobs continue to be produced albeit at a slow pace. We have recovered more jobs than were lost in private sector from the Bush crash, even in “slow“ months Obama can take credit for half again what was Bush‘s average month before the crash. If you include the jobs Bush lost at the end (including the early months of Obama‘s term), Bush’s average month was zero new jobs created.

The problem is that Red States have laid off 700,000 teachers, social workers, cops, firefighters and bridge inspectors. This probably killed another two million more private sector jobs that would have produced supplies used by these government workers, or would have benefited from the workers’ spending. Trickle down from the top doesn’t work, but you can drain the economy from the bottom.

Amid much bluff and bluster, House Speaker Boner announced his plan to sink the economy by refusing to authorize any new government borrowing in September without a trillion in new cuts, and with no new taxes of course. If this were actually done it would kill a minimum of 1.8 million jobs just in time for the election.  Fortunately it’s just noise, the Treasury Dept. having seen this nonsense before, has laid plans to keep the government operating until the new Congress is sworn in 2013. Even if Boner hangs onto his seat, he will likely be watching Speaker Pelosi swing the gavel.

Obama’s Commerce Dept has announced a 31% tariff on Chinese solar panels based on a product dumping complaint. Obama put two major tariffs in place on tires and steel pipe three years ago. The American tire industry has built new plants and hired more workers as a result. There are potentially thousands of such tariff complaints to act on, but Obama had been halted in this activity by a right wing court ruling tying his hands.

With the election year underway, the Dems in Congress were able to shame enough Republicans into voting through a bill freeing up Obama to act on tariffs, and he is. The Bush Adm did not bring even one tariff action in eight years, no matter how egregious were the Chinese trade practices. The resulting tariff on tires under Obama was 99%, Republicans did nothing.

For those keeping score, Jamie Diamon’s gambling losses at JP Morgan Chase have gone past three billion USDs and counting. The Facebook IPO seems to have fizzled, with stock barely trading over the issue price. It was supposed to be a multi-billion dollar boondoggle for the fat cats that were allowed to buy 90% of the new stock at the issue price. Only 10% of the stock was actually offered to the common peasant during the IPO with the expectation that everybody would run out and buy when actual trading began, and pay double the price. So far people have been smarter than that.  

Conservatives are still screaming about the looming threat of inflation from government debt. The fact is that we still need to be worried about deflation. They always point to the Weimar Republic’s runaway inflation after WWI as the historical precedent, and how that allowed Hitler to come to power. The small problem with that version of “history”, is that Germany’s inflation came and went while Hitler was still practicing his speeches in a beer hall. It was the massive deflation of the early 30s that brought Hitler to power.

The fact is that our government can borrow money for 10 years at 2%, and Ten Year Inflation Indexed Bonds are selling at what amounts to a negative interest rate. They still scream that with all this debt we are becoming like Greece. The problem for Greece is that the IMF and the bankers are forcing deflation onto the Greek public (they call it austerity). Austerity is what the Republicans want to force the middle class here to swallow, then we would be just like Greece.

Monday, May 14, 2012

Weren't you paying attention?

If I gave you the impression last week that the Republicans were losing the battle for oligarchy, I apologize, they are far from defeated. That is if we let them get away with it. Their efforts to undermine the economy and destroy civilization continue full ahead. Over the weekend a quarter million people that were formerly receiving long term unemployment benefits were cast into poverty with little hope. The corporate media is reporting this as resulting from the declining unemployment rate in certain states, but really this comes from the Republicans in Congress insisting on the number of weeks of eligibility being reduced sharply while they complain about the lack of jobs under Obama.

Nearly half of these unfortunate souls live in California, a state that faces a ballooning crisis brought on by a right-wing scam that has allowed rich Californians to avoid paying taxes for the past 30 years. Only a super majority in the state legislature can fix the problem and so far Republicans have been able to hang onto a third of the seats to keep the fiscal treason going.

In the US Senate the routine renewal of the Import - Export Bank authorization bill has been held up by Republicans who are intent on crippling economy before the election. So egregious is this move to block a bill that even passed the Republican controlled House of Representatives, that Senate Majority Leader Harry Reid is reported to be “visibly agitated”, he is normally be so passive as to be mistaken for one of marble statues that line the Senate hallways.

If this bill doesn’t pass, at least 300,000 manufacturing jobs will disappear overnight with the end of the export/import bank loan guarantees at the end of May. The Import - Export Bank is a kind of subsidy for the big companies like Boeing and the major defense contractors, so it normally receives a rubber stamp. Republicans call it a waste of tax payer money, even though it is actually self funded by fees and no tax money is required.

Greece seems unable to form a new government following parliamentary elections because of the refusal to co-operate by socialists on the left and Nazis on the right. I didn’t mean figuratively “Nazis“, they call themselves Nazis. (what’s old is new again) This will force new elections and the likely emergence of a government that will leave the Euro behind. This is a dangerous road, but the only one that makes any sense.
Even in Germany, where they haven’t really suffered from the austerity insanity, the locals are starting to rebel with Chancellor Angela Merkel’s minority government losing a large number seats in local elections. They join the French people who realize that their nations are under threat from the bankers. Americans are much slower to catch on.

The big new talking point on the Sunday talking head shows is that Obama is mischaracterizing Republicans because they are really completely in favor of regulation and always have been. This comes in the wake of a multi-billion dollar loss in trading activity by JP Morgan Chase, the largest bank in the US. They were by the way risking depositors’ money while doing this, and this activity would be banned under the Dodd-Frank Act, if Republicans would allow it to go into effect.

The right-wing talking heads weren’t quite ready for this complete reversal of their stand on regulation. Up until Friday they didn’t want regulation of any kind, and they couldn’t keep straight that they shouldn‘t backup their new pro-regulation talking points by saying how bad regulation of any kind really is. If the banks don’t collapse this week, then by Sunday they’ll be back to the same crap. If the banks do collapse it will be Obama’s fault for not regulating them. Weren’t you paying attention?