Friday, April 5, 2013

But you can't swim across the ocean

The survey of employers done by the Bureau of Labor Statistics estimates that 88,000 private sector  jobs were added in March. Other than 12,000 Postal workers let go, no government job cuts showed up in the report. This is bad news, the economy took a serious hit without the sequester having any measurable effect so far. The only bright spot is that the January and February numbers were revised upward by 29,000 and 32,000 respectively to 148,000 and 268,000. Some blame the end of the 2% FICA tax holiday, but retail sales are actually up, even as 24,000 retail jobs were cut.

The corporate media claims to have White House sources telling them that Obama will propose cuts to Social Security and Medicare in his budget when it goes to Congress. On Medicare the 'cuts' involve making wealthy recipients pay higher premiums. Hmmm, how is that a cut? It's not really, but  it sure makes a good headline. For Social Security it appears that he will suggest reforms to the CPI used to determine benefits, which is something that actually needs to be done. If Obama goes with the 'chained CPI' that was proposed earlier, that would be bad.

Likely what is really going on here is that Obama is baiting the Republicans yet again. They constantly scream for cuts, but the bulk of Republican office holders (except for the crazy tea baggers) wouldn't do it in a million years. If Republicans refuse, this opens them up for being primaried by the tea baggers. Democrats can run against the cuts and remind older voters where these programs came from to begin with.

News from 'The Currency War' (tm), that's trademark rightwing blowhards who are sure the USD is near collapse. The Bank of Japan has reversed a decades old policy and is going to start printing Yen in a big way with the intention of doubling their money supply. They're going to buy up available bonds in the same way that the Federal Reserve has been doing with the USD denominated Treasury and mortgage bonds. The official reason is to move interest rates lower and hit a target goal of 2% inflation, just as the Fed is doing. The business page speculation is that they're just trying to devalue the Yen to compete the Germany's exports priced in the weak Euro.

The reality is that there is already an awful lot of Yen in circulation, but speculators still keep buying into Yen priced investments and getting a pretty good return. This does make the Yen overvalued, it is bad for exports and their economy is slowing. Basically the BOJ is trying to control the situation for the same reason the Fed is trying to do it here. What we really have is a problem of cash hoarding because of low or even non-existent taxes on the rich worldwide. If nothing is done to interrupt this kind of cycle you will eventually tip over into a deflationary spiral that's impossible to stop, just like the early 30s in the US.  Printing even more cash forces these people to actually do something with their money or watch inflation make it disappear. In theory this can work, but it's not a fool proof plan, nor does it fix the problem of all the rich people with hot money.

The European Central Bank is still obsessing with austerity as the cure for everything as if they were the proverbial lemmings heading for the cliff, even as more and more people are screaming 'stop'! The problem in Europe is that while they have a single currency they don't all share in the pain. In the US, Congress makes huge transfer payments to the Southern states that if left to their own resources would make the current situation in Greece look like paradise. Europe has to either start behaving like they have a Federal government, or end the Euro. They don't seem willing to do either, just as they aren't willing to admit austerity was a disaster.

Remember how you used to hear constantly from the right how the US was becoming Greece and that California was proof of that? Now that the Republican Party has been eliminated from state government the Democrats are running a budget surplus, funny how that works. California can even start building projects and do all the things that have been blocked by 40 years of Republican obstruction. It could become an example for the rest of the US economy. That is if we can do something about our own 'austerity lemmings'. and twitter @BruceEnberg

Thursday, April 4, 2013

Buffy closes the Hellmouth

Ever heard of 'The International Consortium of Investigative Journalists'? Using information that must have come from something akin to the 'Anonymous' hackers (or maybe the NSA) they have begun to reveal the rampant tax evasion of the wealthy. 

The first articles based on a cache of 2.5 million files were published Thursday (today), laying bare the secrets of more than 120,000 offshore entities, including your basic shell corporations and legal structures known as trusts,  that have been used to hide the finances of politicians (Mitt Romney?), crooks, drug smugglers, dictators and others from more than 170 nations.

Economists studying international banking reports have estimated the money involved in 'tax haven' banking at between 20 and 30 trillion dollars. This could be a low estimate according to the information coming out today.  

At least eleven Americans are already facing jail time for activities linked to this sort of shadow banking. It appears to be the tip of the iceberg, (as if you were surprised), but the demons of the night are being dragged out into the light of day, and they don't like that burning sensation. @BruceEnberg on

Monday, April 1, 2013


P2 is having a go at tweeting. Follow @BruceEnberg    At least I think that will work, I have gone around and around with the twitter computer. Any feedback would be appreciated.

Post cards from the tour bus to Armageddon

It looks like large bank depositors on Cyprus will pay a 60% penalty. If this only applied to the Russian mafia that were laundering money there, this would be great. It won't, and the locals are screwed.

Egypt is being dragged to the chopping block by the IMF who is demanding austerity and tax increases in return for some quick cash. The government of Egypt is choosing to hold out so far. Rumors of fuel and grain shortages are causing those who hold commodities to hoard them expecting the Egyption Pound to become worthless under the IMF assault. Their only hope is that they can get control of things by using electronic debt cards to track the flow of subsidized goods that are being diverted.

David Stockman who as budget director under Reagan presided over his 'Morning in America' trickle down economics scam, and later denounced the same, has penned a NY Times piece titled 'Sundown in America'. His contention is that the U.S. economy, fueled by “phony money” from the Federal Reserve’s quantitative easing policies, is headed for an inevitable crash, likely “within a few years”. He says a lot of things like that in the piece that I agree with, but his solutions are all attached to poison pills that leave Reagan's cronies still in charge.

Like for example, “When it bursts [the current banking bubble], there will be no new round of bailouts like the ones the banks got in 2008,” so says Stockman. But he also says there should not have been any 2008 bailout and the market left alone to burn itself out. Yeah, don't put out the stove fire at the orphanage, just let it burn itself out. He rails against Keynesian economics for being an utter failure as if we actually doing that. The Fed passing out money is not Keynesian economics. He complains about what a small percentage of Obama's stimulus that went to people who were actually hurt by the collapse as if that was proof Keynes was wrong. It's proof that Obama wasn't doing what Keynes proscribed and the opposite of what FDR did in the 30s.

Stockman goes on to blame all our real problems on FDR taking us off the gold standard in 1933. Huh? The 50 years of fantastic growth we had between FDR and when Reagan/Stockman dismantled the New Deal was what exactly? His answer is the rightwing talking point of 'it was WWII that ended the Depression', and Eisenhower's fiscal conservancy that produced the boom.

A small problem with that, the numbers and the facts have a liberal bias. The War effort was the New Deal tripled, with an overlay of 'central planning', government regulation, price controls and Keynes on steroids. The economy faltered after the War with the Republicans having a two year stranglehold on Congress, but Ike was a big fan of Keynes and spent on on roads, schools, hospitals and the GI bill in huge way. The government debt was far greater then compared to now, but high taxes on the rich stimulated the real economy by putting everybody to work.

Stockman takes a slap at LBJ's spending for 'guns and butter' on the way to accusing Nixon of something akin to treason for ending the international convertibility of the USD into gold in 1971. That was one of the few things Nixon did that he had little choice about, there would have been a run a US gold reserves with the price fixed so low compared to the number of dollars in circulation.

His article goes on and on with stuff like this, a lot of it's true, but most of his solutions are hog snot. It's mostly the libertarian view of things that government shouldn't do anything, laced with good ideas like public campaign financing and no revolving door from government to business. What's the point of 'good government' if it doesn't do anything? I guess I'll need to spend the next week tearing this apart line by line. Oh well, it's something to do.