Thursday, March 28, 2013

Good for the boot makers, but those are probably made in China

Initial unemployment claims were up last week, but not by so much as to cause any concern about the sequester cuts, well, so far... Durable goods orders were way up for last month, and other economic indicators also remain relatively strong. Consumer confidence was down, but that's just a poll of questionable value.

The S&P 500 just broke through the record high established before the Bush crash. Of course the market isn't indexed for inflation, so nobody has really made up the loss. In fact the average 401(k) has only made back half of its losses, the rest all went to pay that 150 billion in bonuses that Wall Street takes every year, no matter how bad the year has been for investors. Make money on the way up, make even more on the way down.

Republicans will tell you with a straight face that nobody should have a pension or Social Security because the market will 'make' everybody more money. A market by definition can't 'make' money, the only money coming in is from new suckers entering in on the Ponzi scheme. That's why they need the periodic crash to reset the numbers. Otherwise people would actually expect to take their money out again. If Mr Ponzi had built that feature into his scam he could have stayed out of prison.

Speaking of resetting the numbers, this was the first day that the people of Cyprus have had access to their bank accounts. Withdrawals are severely limited and nobody can take their money out of the country. If it only went that far, it wouldn't be such a big deal. 'Deflation', that bit of nasty that I keep warning about is going to take a huge bite out of the average Cypriot. Anything that they thought they owned will shortly not be worth very much. Good luck for any of them trying to eek out a living since there won't be much money in circulation to make the economy happen.

Now that money laundering for the Russians isn't a viable business model on Cyprus, they will need to depend on tourism, but they still have to accept Euros that they can't spend anywhere, good luck with that. Throw in grinding austerity and everybody is simply screwed.

If any of the countries like Cyprus, Greece, Spain, Italy, Ireland, well anybody but Germany had any sense they'd get off the Euro. Poland, which still has its own currency, and came through the recent slump in good shape, now wants to join the Euro. How can people be that dense? Maybe it's because rich people who own the media make money off these sort of currency traps.

So far Italy hasn't been able to form a government. Austerity was soundly defeated in the recent election with the left picking up a lot of seats in Parliament, but the hard right picked up seats too. Both parties promised an end to the austerity that was demanded by bankers. In Greece one of the up and comers is the Nazi Party, this is not a 'euphemism', they call themselves Nazis and use the symbols and rhetoric of Nazis. Greece is not the only place where this sort of thinking is catching on. Everybody wants 'the good old days', there's nothing like jack boots to put that extra skip in your step.

Monday, March 25, 2013

When a Euro is not a Euro, or a plug nickel either

Not all euros are created equal anymore. Cyprus has managed to reach a deal with the IMF and the European Central Bank to get a enough cash to keep going, provided that they 'tax' depositors with more than $130,000 in the bank to pay for it. One major bank will close, but the real kicker is that there will be capital transfer controls. If you have a euro and live in France, you can spend it anywhere. If you have a euro and live on Cyprus, you're just stuck with it.

It means a Cyprus euro isn't really a euro anymore. Okay, the island was running a massive money laundering operation for Russia crime lords (which is just about everybody in Russia with money), but the average Cypriot is going to pay a heavy price even if they don't have money taken out of their bank accounts. It's because their the money just isn't worth very much anymore, their real estate values will drop to nothing and good luck with making a buck of any kind. Sort of like living in a particular US state and being told your money will no longer be accepted in the other states. Confederate dollars anyone? Not quite the same thing, but bankers were behind that whole nastiness too.

The larger picture on this is that any country in the eurozone who starts to have problems with their economy is going to have bank runs. Once this happens anywhere, it's going to push the self-reinforcing spiral toward oblivion. The right is trumpeting that the Cyprus event will escalate into the USD collapse any day now (it's always 'the end of the world' any day now).
This is because Obama wants to take your cash, your guns, your bibles, your white women to ravage, and your sons to turn gay. "Pray to Jesus and buy our gold for your own salvation..." It doesn't seem to occur to them that gold would be even easier to confiscate, oh that's right, they sell gold.

The bad news is that the big money on the right continues to water down US banking regulations. The Dodd-Frank Act did in theory fix all these problems, but unfortunately this all depended on the 'interpretation' of the law by the commissions with authority to write regulations, and they have their own dictionaries. The sort of dictionary where Boehner (pronounced 'boner' in all earth languages) is pronounced 'Bayner'.The President has almost no authority over Federal Commissions, the idea being to isolate them from politics. This doesn't isolate them from people of immense wealth however. Congress has the oversight ability, but the Republicans control the House and disrupt the Senate. Elizabeth Warren is making waves on the Senate Banking Committee, but this isn't translating into any real control over these problems. 

There isn't any question about the possibility of another banking collapse, and that it will be far worse than the last one, the question is when it will happen. Almost certainly it will happen by 2016. The outcome of the chaos will depend on who wins the 2014 elections, not that the Dems winning will stop it from happening. Just whether civilization survives or not, and even the Dems are no guarentee of that.

Sunday, March 24, 2013

The mouse that roared

Apparently Cyprus stood up to the European bankers, at least to some degree. Reports are that bank deposits under 130,000 USD will not be tapped to pay for the crooked bankers. The question is what other sanctions will be placed on the tiny island. The IMF tried to simply take the whole works as they've done in the third world for the past 30 years. The euro is likely doomed, and good riddance.

The USD has been similarly abused by the banksters, so we are likely in for a wild ride at some point. These are those interesting times that the Chinese philosophers have always warned about.