Friday, March 7, 2014

The Good Old Days, or what's a little panic among friends

Employers reported adding 175,000 jobs in February compared to 189,000 average over the past 12 months. December and January numbers were revised upward by 10,000 and 15,000 respectively. Considering the really awful winter weather over much of country these numbers are actually pretty good, and this could mean that forecasts of 4% growth in GDP this year may have some validity.

The fly in the economic growth ointment continues be stagnant wages and the continued outsourcing of good paying manufacturing jobs. The good news is that Janet Yellen who is the new Federal Reserve Chairman is not being swayed by calls to raise interest rates. The inflation hawks have been thoroughly discredited but that doesn't keep those with a conservative agenda from screaming that the currency is "BEING DE-BASED!"

The USD is just fine, but people who don't actually know anything about economics will tell you it you're going to be hauling your bread money in a wheelbarrow any day. And it's all Obama's fault because gasoline was only a $1.85 when Obama took office. Gas had risen steadily over the previous 8 years to $4.25/gallon, but that was during that non-existent period between the Clinton Adm when gas was a dollar, and his immediate successor Obama. The price fell sharply when Wall Street banks were forced to stop trading in commodities and it went up again once they were bailed out, and resumed stealing, I mean trading. Good capitalists, one and all.

Conservatives always cite the same two examples of hyper-inflation, post WWI Germany and Zimbabwe ten years ago, because there simply haven't been any other such extreme occurrences in modern times. Spain had the runaway inflation when they brought ship loads of gold back from the New World, largely destroying their economy. Contrary to what Libertarians claim, using gold won't protect you from economic disaster.

It's true that many third world countries have had problems with relatively high inflation though, but this is simply because the rich and powerful print money to buy up the foreign currency that comes into their country. They then deposit that in Swiss banks making their own money worthless in the process.

In a normal economy inflation is the signal that the economy is actually doing well, bank regulation and progressive tax rates work just fine to keep inflation at a manageable level. In the 'good old days' inflation was dealt with by having a 'bank panic', today we call that a depression. This typically resulted in a 90% drop in prices (deflation), and the rich would snatch up more property during each cycle. On the average prices remained the same, so these were the 'good old days' that Libertarians want us to return to. Great if you're super rich, not so great if you're everybody else.

Herbert Hoover's Sec of Treasury Andrew Melon described deflation as the period when "the wealth returns to its rightful owners". Melon was likely a Trillionaire in today's dollars owning hundreds of companies that he acquired by 'questionable means'. FDR tried to prosecute him for his direct participation in causing the Great Depression, but the evil old man died before he reached the dock.

Twitter @BruceEnberg - where we don't debase the currency or the truth.

Thursday, March 6, 2014

The underlying cause of oligarchy

Clinton had no hand in NAFTA, it was the creature of Bush the Elder and the Congress that authorized him to negotiate terms. Nor could Clinton stop it, his signature was not required, and he could not veto it. However, he did cheerlead the vote in Congress for it, he pretended to sign it even though it wasn't required that he do so. But, he wanted to score his $200m payoff for playing alone with the fascists that have captured Amerika. You can be a peasant under a feudal lord, or a plantation slave under the Neo-Confederacy, but you have already gave up your choice for that fate. You can, maybe, maybe still fight, while you still have breath.... Fight, fight, you have right on your side.... no, no, no... maybe....

Tuesday, March 4, 2014

The Chess Board, A-10 Warthog takes Russian Bear

While the Russian Army has vastly superior troop numbers, the Ukrainians retain  a disproportionate amount of armoured units. An invading Russian force would in theory face withering fire from Ukrainian anti-tank units. Then the problem would be the 100 to 1 advantage in air power that the Russians enjoy. This could be countered with superior NATO aircraft that is just across the border in Poland, thus resulting an a costly military defeat for Putin.  

This scenario isn't going to play out, the Russians aren't stupid. They don't want the Russian bear to be the new rug in the Oval Office. While the right portrays Obama as a feckless idiot, he has in fact used strategic force to great effect throughout his Presidency. The Russians aren't big followers of Fox News, they aren't kidding themselves about what Obama is willing to do. 

Knowing that he can't win an actual confrontation, Putin is showing the Flag and hoping for concessions, specifically he desperately wants to hang onto his warm water ports. He'll get that from Obama, and the Ukraine will become an independent democracy on track to join the EU. Putin will be posing shirtless by a week from Tuesday. Obama will still be the butt of Right Wing traitors's jokes despite his latest victory.