Saturday, July 28, 2012

Should You Throw a Drowning Man a Bootstrap?

The Republicans have trotted out an old talking point that you don't hear them use much with their taxes so low, but they think that you peasants should pay all the taxes. So here goes, "Say I start a business and so does my friend. His business fails and I succeed. Why should I be penalized for my success by paying income taxes, while he pays none?" This almost sounds reasonable, and the knee jerk reaction is to try to justify taxes for all the good reasons we pay taxes. This is entirely wrong, that's what they want you to waste time on, while the basis of their argument continues to stand.

They are arguing from an entirely wrong premise (of course). To counter, begin by saying, "starting a business is in the public interest", they won't disagree, but they'll want to. Forcing them to agree with you will knock them back on their heels. Next say, "the reality is that both people who started businesses got massive tax breaks". They'll probably say 'nah ungh', you can elaborate about all the infrastructure business uses, and how they didn't have to pay for any of this before they started a new business. Keep at them, "Remember you didn't pay any taxes until you succeeded, you said so". 

The successful business has to pay the taxes because they won the competition of the marketplace. You can't expect the loser to buy breakfast for everybody, they lost. The rightie will probably try to pivot to, "if you tax business, they will just pass it onto the consumer". That's not really true, but don't bother to correct him. Tell him, "good, pass it on successful businessman. Then everybody pays the same, and isn't that what you were complaining about?"  You can expect much sputtering, they may even drown in their own drool. I wouldn't interfere, let them pull themselves up by their bootstraps.

Friday, July 27, 2012

Sometimes Giant Holes Just Happen

Last week there was a large spike in unemployment claims and it was proclaimed that OBAMA CAUSES THE END OF THE WORLD  by the right leaning corporate media, this week the number is down by even more and they are calling that an "unexplained aberration". The five week moving average continues coming down (that's a good thing). Weekly numbers often need to be corrected later because of delays in the states reporting data. If there was holiday that week you can count on it.

Mittens has been making much noise about Obama's foreign policy blunders. You know, like apologizing for America, except that never happened. Now we need to apologize to one of our allies for "some guy" (as described by the Mayor of London) that dug a huge PR hole, but he dig find $2 million in campaign contributions down at Barclay's Bank. The conservative British papers are running headlines like "Mitt the Twit", and that is the mildest comment they're making about him. What happens when Willard confronts China as he's promised to do? They aren't so easy going about being insulted the way our closest ally is. They don't have an "Anglo-Saxon heritage" in common with us, as if we did with Britain.

The massive thunderstorms that we've been having are so powerful that they're blasting holes through the ozone layer. Water vapor is being lifted in excess of 60,000 feet (something not thought possible), and the interaction with the pollution laced moisture is destroying ozone at a rate 100 times faster than it can be replenished. Researchers don't know yet how widespread the phenomena has become.

A new unofficial weather term has been created, the "heat dome". This is a phenomenon where a stable high altitude, high pressure, cloudless system presses down on the dry air beneath it trapping heat. It appears that a series of heat domes are responsible for the unprecedented melting of Greenland ice mass, nearly the entire surface has warmed above freezing in early summer. Normally this doesn't happen until the end of summer and doesn't last very long. This year it has happened so early that even ice at high altitude is melting. This event doesn't mean anything in itself, it happens about every 150 years, but we are experiencing such rare weather events on a daily basis. 

The British chose to honor their National Health Service as a major part of the Olympic opening ceremony. The NBC anchor did take note of the fact that the American audience wouldn't understand this, but other than alluding to the controversy about our health care system he didn't really explain it. A billion people were watching the TV coverage, the Americans would be the only people that needed to have it explained. Of course we will probably win more medals than any other country, well except maybe for Red China, and they're building their own national health service, and bullet trains, and a manned space program.... 

Mitt Romney says this is going to be the "American Century" after all. That is it will be under his watch. He's says he will bring back all the Neo-cons from the Bush Administration to make it happen. The same Neo-cons fired by Robert Gates when Pappy Bush sent him in to fill in the giant hole that W dug himself. A safer bet would be to learn Mandarin.

Wednesday, July 25, 2012

A good suit makes the man

Sandy Weill’s name may not be a household word, but it should be. If you want to blame just one man for the banks eating us all alive, he would be the one. As head of Citi-Group (or rather the bank that would become Citi-Group) he pushed through the repeal of the Glass-Steagall Act that had kept the banks in check for 2/3 of the 20th century. He and others of his ilk were able to sell the idea (or more accurately buy the belief from politicians, the media and so-called experts) that modern bankers knew what they were doing. After all there hadn’t been a banking collapse since the end of the Republican Hoover administration in 1933.

Once the merger of deposit banking, investment banking and insurance were merged, all bets were off, (or rather they were on, big time). Investment banking includes all manner of risky trading in derivatives, the sale of dodgy investment schemes, proprietary stock trading operations, and on and on.

These mega banks use market churning to run prices up and down, making money both ways. They drive up food prices by tying up supplies anytime there is anything like a shortage. In the developed countries we pay more for food when we don’t need to. In the countries where most people pay half their income for food, people starve.

Did you notice the price of gasoline in 2008? When the banks froze up and couldn’t dominate commodities trading, the price fell from $4.25 to a $1.75. The right wing constantly quacks that Obama doubled the price of gas the day he took office. No, the banks were bailed out by the Federal Reserve to the tune of $23 trillion in zero interest loans and the government backing for their junk paper, or what they chose to call toxic assets (as if they were somehow assets).

The banks went right back to it, Democrats did pass Dodd-Frank which banned them from commodity trading, but Republicans have blocked it. The Volker Rule is supposed to reinstate the barrier between gambling and government insured deposits, but it’s more like a screen door.

The Consumer Financial Protection Bureau (CFPB) is having significant success, they are forcing Capital One to return $150 million they swindled from card holders. The CFPB made them to actually return the money and not simply issue some coupons, as has been the past result of the DOJ enforcement attempts. They also collected $60 million in fines that is more than the new agency’s entire budget.

The Libor scandal is just the latest revelation in market rigging. The big banks kept the interest rate they claimed to be paying to get money artificially low. This caused all of the banks to simply stop lending, as it was too risky for the return. This was what finally brought on the banking collapse. If they hadn’t been doing this, or at least not so greedily, they could have put off the collapse until Obama was President, which was certainly the plan. Now things aren’t going so well politically.

Sandy Weill is 79 and is Chairman Emeritus at Citi and suddenly he wants it all reversed and Glass-Steagall put back in place. Either he is looking to get a berth in one of the cooler outer circles, like Republican propagandist Lee Atwater who sought forgiveness on his death bed, or maybe Sandy just trying to deflect attention away from the billions he stole.

It’s possible that the bankesters are losing hope that they can win in November and are simple trying to recreate their image. Al Capone was extremely popular with people he wasn’t killing, know to be kind and generous. The difference is that Al made a popular product (mostly beer). The bankesters don’t produce anything, they are simply robbers. Both groups like nice suits and give to charity.

Sunday, July 22, 2012

It's all about the canned goods people

[expanded from yesterday] New Census data is coming out showing that poverty in America rose by 6/10th of a point to 15.7% nationwide in 2011. This is a dramatic increase given that the economy is in fact growing, it's supposed to work the other way. Don't the Republicans keep telling us that if the economy grows that it will then trickle down to eliminate poverty? Could Saint Reagan have been wrong? The righties will blame Obama's high taxes, except that in reality he cut taxes for the working class, and hasn't raised them on the rich.

The increase in poverty can of course be laid at the feet of Republicans. Laying off 1.1 million local government workers in the Red States had a lot to do with it, not just those jobs but just as many jobs in the private sector. Knocking the long term unemployed off of benefits at 55 weeks instead 99 weeks pushed several million people into immediate poverty. The only thing is that didn't happen until this year, and isn't counted in the Census data. There were plenty of 99ers who slipped away in 2011, however we don't even hear about those anymore.

The systematic conversion of the middle class into the working poor by corporate America has been done with the full blessings of the Republican party. They don't even pretend to support middle class wages anymore. Union workers are overpaid, teachers are overpaid, police pensions are too generous. There is no individual (save the mythical job creator) that deserves his pay in the Republican world. Middle-class Republicans are just too stupid to catch on that this means them, they think it's everybody but them, and that they gain from increased poverty.

The thing is, the official poverty level is entirely too low to mean anything. At $11,000 for an individual and $22,000 for a family of four, you aren't talking about enough to live on, and many millions aren't making even that much. The median family income has fallen to barely double the poverty rate. At $46,000 per year for a family this is poverty in any real sense of the word. Adjusted for inflation and productivity gains since 1981, the median family income should be $75,000 per year and should not require two people working full time to accomplish that.

Republicans don't like the idea of being forced to pay 7.25 an hour, even though that only comes to $15,000 per year, and that assumes that you can find a job that is full time. A family needs five of those jobs full time to achieve the pre-Reagan American standard of living. We're really back to the gilded age when unions were striking for the 10 hour day, six day week. Except that we have no unions now, not that represent the poor. Not that unions don't try, but they are simply being squeezed out, the Pinkertons only had clubs and shotguns to suppress workers. Today's union busting is a multi-billion dollar high tech industry, and getting fired in today's Republican world can mean never working again. Who will risk that? Besides, most Americans think the next lottery ticket is a winner, or god will bless them, guess which has worse odds. 

Increasingly the new poor are the children of the upper middle class. That $200,000 law degree has a 50% chance of resulting in a job at Best Buy. This is a permanent job among the working poor, new corporate lawyers are mostly located in India. Following the rules is not a guarantee of the American dream, it's the chance to play "flip that coin". Heads you're poor, tails you're almost as well off as your parents were. Which is a good thing if you are, you will probably need to support them. 

The slow motion train wreck in Europe has led to US Treasuries hitting a record low of 1.4365% for ten year US bonds trading on Asian markets overnight. Inflation indexed bonds are selling on the Treasury Dept auctions at negative interest rates. That means rich people are paying the government a lot of money to babysit their nest eggs. That lack of confidence in Obama that the Rich are supposed to have? Not so much when put into black numbers on white paper. Racism is for poor people. 

Nearly 90% of US corn crop is being impacted by the drought. It ranges from moderate damage to no crop at all in the heart of the corn belt. The actual impact on US food prices is really negligible, food is mostly everything but food in the US. It's processing, transportation, marketing, packaging, retail market up, you get the idea. Fox News would like you to believe something else, Obama has his Ag Sec out pounding the pavement to convince people not to allow price gouging to go unchallenged. Beef for example should be going down with the glut of livestock on the market. Even long term, higher prices allow cattle to be fed to higher less efficient weights (the last few pounds cost more), so there won't be any huge shortage in the future. That is, assuming it starts raining again someday. It's all about the canned goods people.