Thursday, August 8, 2013

What are Obama & Putin really tense about?

New unemployment claims were up slightly with today's release of numbers, but the moving average continues to fall, this indicates jobs are still being created. The problem is that these new jobs don't pay much. The bulk of jobs created since the Bush crash pay less than $14/hour. That's been pretty much the norm for second tier union jobs for many years, and the higher paid first tier workers are retiring. Non-union jobs get less of course, and increasingly employers are locking out union workers to push for even lower wages for the second tier.

That banking collapse we've been anticipating maybe precipitated by a USD collapse that may not be far off. Russia and China are making more noises about replacing the US dollar dominated Bretton Woods Agreement from 1944. The new international standard would be one based on a gold backed Yuan along with a basket of currencies that are also tied to gold. This was the basis of Bretton Woods until Nixon took the USD off gold to avoid a run on US reserves precipitated by an uncontrolled trade deficit.

You could argue that China would run into the same problem with gold, but China has strong government policies much as the US did in 1944. It was Republicans knocking holes in the New Deal for their own profit that allowed Nixon to take us off the gold standard. This led to even more problems which brought us Ronald Reagan, and the subsequent disaster we are living in today. China doesn't have this problem, their equivalent of Republicans don't exist, they shoot traitors.

China has already signed agreements with a number of large trading partners to use the Yuan without the USD as an intermediate currency. These include Australia, Britain, Brazil, Germany and Russia. Putin would really like to have a Ruble that's actually worth something, and not be dependent on the USD or the Euro. You have to think this is of some concern to Obama. The phony scandal over Snowden can't be what the kerfuffle is really about.

At some point the US dollar could start to be dumped by countries holding it as a reserve currency. Things could get real ugly, really fast, or maybe not. It could be an opportunity for real reform in the US..... excuse me, I was having a 'moment'.

The gold bugs are pushing this 'gold yuan' & possible dollar collapse as a reason to buy more of their gold. It's not likely to work out for anybody to do that. If gold really becomes the backer of international trade then the private ownership of gold will probably end as it did under FDR. Libertarians who think that President Paul will start issuing gold coins are seriously kidding themselves, but what's new about that?

Either there will be a Progressive 'revolt' as we had early in the last century, or the billionaires will consolidate power. The Libertarians who define themselves as rugged individualists, and by definition can't work together, will just continue to grumble while they turn in their gold. They'll take less than they paid for it on the fading hope of being able to buy food.

Elysium looks like a fun summer flick. It has a premise right out an Ayn Rand novel where the rich people all leave for a giant space station while the Earth becomes a planet wide slum. The Conservatives and Libertarians are freaked out about portraying that concept in real terms, they thought it was their little secret.

Twitter @BruceEnberg   Hey Libertarians, I'll trade you canned goods for gold, a pound of food for a pound gold.

Monday, August 5, 2013

Ronald Reagan, the bust

New unemployment claims fell last week to 326,000, a 5 1/2 year low. July's survey of employers showed 162,000 new jobs created, this is about three times the rate of population growth. The odd thing was that 92,000 of these jobs went people 55 and over, with only 15,000 going to prime age workers 25-54. This could be taken as a good sign since workers over 55 have been systematically passed over for jobs since the Bush Crash.

Recent college grads got the other 55,000 new jobs. Not that a college education is necessarily worth much in a post-industrial, post-middle class country like the US. Forty percent of the people who make less than $10/hour have some college education. Plenty of young lawyers and engineers work at Best Buy.

There has been a lot of back and forth about McDonald's terrible wages with strikes ongoing in several cities, not that it makes the Evening News. The right wing talking point is that the minimum wage is only paid for 'starter jobs' and if you don't get ahead it's your fault. Okay, go to college so you can work at Best Buy for the same wages that McDonald's pays.

Another Right Wing talking point is that if any of these big corporate employers had to pay a decent wage then everything would cost 'TEN TIMES AS MUCH'. This is the same Right Wing math that makes them think that they can beat the 190 million to one odds when they buy a lottery ticket.

Wages aren't a significant portion of retail cost of anything, even in a labor intensive fast food joint. If McDonald's doubled its wages, the price of food would increase 17%. That's right a $1 McDeath burger would cost a whopping $1.17. The full time worker, or the worker with several part time jobs who gets in 40 hours, would make an extra $290/week. That's 248 items on the $1.17 menu, or they could actually afford to shop at the Farmer's Market for decent food, and have money left. Funny how actual math gets you a completely different outcome than the Right Wing (invest in lottery tickets) math does.

The US manufacturing index jumped sharply driven by the automotive and building supply sectors. There has been so much good news (good in the sense we have become accustomed to the mediocre), so much good news that Fox Business News has been concentrating on the latest fake Benghazi story. They just don't have much else to talk about that doesn't make Obama look good, they were going on about the rebound in the price of gold, but that's back down again. The Right is fond of saying how Obama has been 'devaluing' the dollar because it will buy half as much gold as it would when he took office. With gold now down by a third, the USD will buy half again as much gold as it would two years ago, but Obama doesn't seem to get credit for that.

The Republicans continue their obsession with naming things for Ronald Reagan as if he wasn't the worst President of the 20th Century, George Bush could have displaced him, but the US is in a new century of Republican decline. They want to name the 200 mile Economic Exclusion Zone that extends out into 'international' waters for the President our long economic decline is also named for. How about putting up a bust of Ronald Reagan at the former site of each of the 250,000 factories that have disappeared since Reagan started undoing the New Deal. The busts would be cast in China of course.

In order to do something before leaving on a month long vacation, the Do Nothing Republican House attempted to pass the 40th repeal of ObamaCare. In the rush to get out the door they inadvertently repealed Ronald Reagan, and named a Post Office for 'ObamaCare'. Twitter @BruceEnberg  I'm here through the weekend, try the veal. And tip your server, the Federal Minimum Wage for restaurant workers is $2.13/hour.