Please Cut the Crap!

Cutting it Deep: Supply-Side is NOT Capitalism; Right Wingers HATE Capitalism!

Let's start by making something crystal clear; for all of their talk, the right wing is not a fan of capitalism.They like it when their heroes make a lot of money, but as organized crime, Enron and Jack Abramoff have proven over many years, it is possible to make a ton of money doing something that isn't capitalism.

I suppose we're supposed to be relieved by the current spike in the Dow Jones Industrial Average. It is a sign that the economy has bottomed out. But we can't allow ourselves to fall into this trap again, folks. The Dow going to 10.000 means diddly squat when it comes to the overall economy. And if we don't gain some perspective, and do so soon, we're in danger of allowing ourselves to be taken in by another bubble. A rising Dow should be seen as a warning sign, not as a hopeful sign. The stock market is no longer about capitalism, which is why the right wing loves it so much.

You see, capitalism is supposed to work this way:

Cutting the Crap: What's the Real Meaning of "Investment"?

I was listening to the radio yesterday morning, and heard a news break featuring a story about the record price of gold, including speculation that the price could go to $1100 an ounce before too long, and eventually hit $1500 per ounce.

 

Excuse me, folks, but this is exactly what got us into our current economic mess; the promise of huge returns on an investment, and the idea that you can simply buy something and make money on it.

 

Will we ever learn? How many times must we be made into suckers before we realize we're being taken for a ride by these people? You know who's going to make a shitload of money during this run up? The people who bought gold when it was $600 an ounce, and who are trying to get YOU to buy it as $1100 an ounce. Believe me; the price is far more likely to crash back down to $500 than to ever see $1500. But even if it does hit $1500, it will still go down to $500, eventually.

 

Why don’t people get this? If you really want to make some money, go SELL your old gold jewelry right now to pay the mortgage on the house you’re currently underwater in, or to pay for a few tanks of gasoline, made from oil that goes up and down constantly, based on the whims of "speculators."

 

This crap has to stop, folks.

The Absurdity of Preserving Profit in the Health Insurance Industry

You know, one component of the health insurance reform debate that has always puzzled me is this notion that somehow health insurance companies are entitled to make a profit for using your money to pay for your health care.  It's truly one of the strangest concepts I've ever heard of, and I think it's time we put that notion to rest, once and for all.

 

Did you know we're the only industrialized nation on the planet whose health care financing system is controlled by a for-profit health insurance industry? Yeah, that's right; and we're also the only industrialized nation in which health care makes up significantly more than 10% of its GDP (Health care accounts for  nearly 17% of our GDP), even though we're also the only country that doesn't cover virtually anyone living within its borders legally. (Fully one-fifth of our population has no coverage, or access to health care.)  Coincidence? Not even a little. If you think about what for-profit insurance companies do to maximize their profits, it actually makes perfect sense that our system is screwed. Health insurance, even when it works, doesn't actually provide a marketable service. Essentially, they take money from a bunch of people, who give it to them in good faith to pay for any health problems that might arise but they alone seem to decide what is necessary and what is not. And whatever they don't spend, they get to keep.

 

How is that fair? More importantly, I'd like for some wingnut to explain to me how that meets any sort of rational "free market" capitalistic model.

How The Neocons Screwed Us, And Why We Can't Let It Happen Again

I hope no one is betting the farm on Congress being able to tax AIG bonuses to get the money back. The Constitution kind of forbids that sort of thing, and for good reason.

Say the party in power was the Republican Party, and they proposed a bill that instituted a special tax for auto workers to pay for the bailout of General Motors?

Yeah, now THAT doesn’t seem fair, does it?

I know we’re pissed off, and I know we’re tired of this crap, but we have to keep our heads in this situation. This economy took neocons a long time to screw up, and there is no “magical formula” which will fix the whole mess in a couple of months. This situation is the end result of 28 years of supply-side economics, culminating in the “free market uber alles” of the last eight years, in which deregulation was championed, and the regulations Republicans couldn’t kill were routinely ignored by an administration that decided that, as long as it LOOKED like someone was making money, whatever “the market” did was perfectly okay.

If you want to know what brought our economy down, it’s actually relatively simple, even though it looks complicated.

Don't Let 'Em Fool Ya! The Neocons Screwed Our Economy

One of the more fascinating arguments used by right wingers to justify their continued belief in the ridiculous concept of supply-side economics, or "trickle-down" as they like to call it, is the truly hilarious argument that "private investment in markets created your job."

Yeah, I know. The concept is pretty laughable. The only thing that's been "trickling down" to the masses is the urine from the rich, who are pissing all over you as they laugh themselves silly.

But to a typical right winger, this is an airtight argument. And why wouldn't it be? I mean, if you’re somewhat addled, mentally speaking, then it makes sense to think that, if no one invests in a company, it might not be able to pay its bills, and it won't be able to make any money, right? Keep in mind, these are the same people who have argued for years that the best way to go after al Qaeda was apparently to lure them into Iraq, where we would be able to attack them with huge Halliburton and Blackwater contracts.

In basic capitalist economic theory, this is how investment is supposed to work:

Joe’s company invents a widget. Joe then forms a company, which manufactures widgets. If Joe’s company is able to demonstrate a market for widgets, by selling a warehouse full of them. In order to meet market demand, Joe sells stock in his company, and raises money to expand its widget factory, so that it can make and sell more widgets. As Joe sells more widgets, he pays the stockholders a portion of his profits, as a reward for their support during his expansion.

See, first comes the research, development and manufacturing, and then comes the investment, which should facilitate economic growth. That's how investment in this country actually worked for many, many years.

Then Ronald Reagan was elected, and the neocons hit the fan. Since then, the whole concept of investment has been bastardized, and the notion that “investment creates jobs” is now patently absurd.

Bank Execs Bonuses Should Go to Pay Their Bail

It’s time to speak up, folks.

And I’m not just talking about me, and other bloggers ranting about this; I’m talking about every single citizen writing their Congressperson, using an actual card or a letter and inundating their staffs with them. E-mail and phone calls are just not going to cut it for this one; they need to be overwhelmed.

I understand why banks need to be bailed out; I really do. The government didn’t do its Constitutionally-mandated job for eight years, and they were allowed to run amok and get as big as they wanted, as if there was no sheriff in town, because there was no sheriff in town. It was a crazy situation. Banks were engaging in risky behavior, and justifying it because crooks were allowed to work as mortgage brokers, and they felt as if they had to compete with the rest of the market. This is crap, but given the mentality of the time, it’s understandable. Again; there was no sheriff to keep order, and since banks have to answer to shareholders and others, they felt the need to compete in the marketplace, even when that marketplace is made of twigs and even when that marketplace is doomed to failure.

Pity The Rich People Who Lost Money in the Markets? They Can Kiss My Ass!

I’m tired of this crap.

Why do these right wing idiots and so many economic "experts" bitch so much about how those poor put-upon rich people are suffering far more than the rest of us due to the collapse of the markets? Do they even realize how stupid that sounds?

Here’s the deal, folks; The stock market was in a BUBBLE. The mortgage securities market caused housing values to BUBBLE. What that means is, most of the “gains” in those markets were only gains on paper, so few actual monetary losses actually occurred. The people I feel bad for are not the rich CEOs, who took a few million dollars worth of stock in their companies, and now those shares – which they got for free, by the way – are now worth half as much.I feel bad for the working people who were screwed by these creeps, and who put so much of their hard earned money “retirement accounts,” which gave these people seed money for their nefarious activities.

See, the fact that the market was in a BUBBLE means most of the market valuation of the last few years was bullshit. I don’t feel bad for Warren Buffet because he used to be worth $62 billion, and now he’s “only” worth $30 billion or something like that. But I was watching Real Time with Bill Maher the other night, and Erin Burnett of CNBC actually suggested that increasing taxes on the rich might be “unfair,” because they’ve lost the bulk of the $30 trillion in market value that’s been lost. Is she kidding with that shit?(I checked my podcast later, and sure enough; she said it. And you wonder why we have such little regard for economic "experts" these days.)

Making Money From the Messes They Made, When They Should be on the Way to Jail

This has to stop, folks.

Apparently, a couple of former executives at Countrywide have gone into business for themselves. Now, for those of you who have really short memories, Countrywide was pretty much at the epicenter of the mortgage meltdown, and had to go out of business because of the billions and billions of dollars in bad loans they made with their customers' money. In other words, they were irresponsible with others' money.

Can you guess what they're doing now?

This is from today's NYTimes.com.

Whether they deserve to be or not, Countrywide Financial and its top executives would be on most lists of those who share blame for the nation’s economic crisis. After all, the banking behemoth made risky loans to tens of thousands of Americans, helping set off a chain of events that has the economy staggering.

So it may come as a surprise that a dozen top Countrywide executives now stand to make millions from the home mortgage mess.

Stanford L. Kurland, Countrywide’s former president, and his team of former company executives have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.

(...)

PennyMac was born last spring after Mr. Kurland received a phone call from a childhood friend, Lawrence Fink, now the chief executive of BlackRock, which along with other investment groups is trying to figure out how to profit from the decline by buying up distressed loans at fire-sale prices. Mr. Fink lured him back in business, and BlackRock invested.

PennyMac, whose full legal name is the Private National Mortgage Acceptance Company, also received backing from Highfields Capital, a hedge fund based in Boston. Other investors include Atlantic Philanthropies, based in Bermuda and created by the billionaire former owner DFS Group, a chain of airport duty free shops. PennyMac makes its money by buying loans from struggling or failed financial institutions at such a huge discount that it stands to profit enormously, even if it offers to slash interest rates or make other loan modifications to entice borrowers into resuming payments.

Its biggest deal has been with the Federal Deposit Insurance Corporation, which it paid $43.2 million, or the equivalent of 38 cents on the dollar, for $560 million worth of mostly delinquent residential loans left over after the failure last year of the First National Bank of Nevada. Many of these loans resemble the kind that Countrywide once offered, with interest rates that can suddenly balloon.

Under the initial terms of the F.D.I.C. deal, PennyMac is entitled to keep 20 cents on every dollar it can collect from borrowers, with the federal government receiving the rest. Eventually that will rise to 40 cents.

Telephone operators at PennyMac’s offices — working in shifts — spend 15 hours a day trying to reach borrowers whose loans the company now controls. In many cases, they offer drastic cuts in the interest rate or other deals, which PennyMac can afford, given that it paid so little for the loans.

PennyMac hopes to achieve a profit of at least 20 percent annually, and it is actively courting other investors in an effort to build its portfolio, which now consists of $800 million in loans, to as much as $15 billion in the next 18 months, executives said. For the borrowers whose loans have ended up with PennyMac, it can translate into an extraordinary deal.

You know what? There was a time when financial people who were irresponsible with other people's money were shunned by society, or forced to pay restitution and banned from the industry, or even thrown in jail, if the negligence was bad enough.

David Gregory's Question Deserves an Answer

David Gregory's Latest Tweet:

Q for Obama on housing: does keeping people in their homes (who can't afford to be there) help the economy or is it only social policy?

deserves an answer...

With apologies to President Obama, I'm going to answer it, even though I am just a regular guy; not an economist, or even a genius.

Before the Republicans took over the economy, it was possible for a family to own a home with one income, and the economy boomed at almost all levels for the first 28 years after World War II. The economy started to hit the skids while Nixon was president, and we never really recovered, because Ronald Reagan threw the entire economy into supply-side nonsense. Bill Clinton had the economy on the right track in the 1990s, with the first real increases in wages since 1973, but Gramm-Leach-Bliley put the economy back on the skids.

The problems that President Obama and the Democratic Congress face were a long time in the making, and they stem from several decades of mismanagement, and an economic model that was unsustainable in the long run. If you look closely at the economy in the post-war period, it was marked by a constant investment in infrastructure, a strong manufacturing base, and an almost constant investment in technological development.

Republican Stupid Idea of the Day: Nationalize the Banks!

Was I dreaming?

Didn't the Republican noise machine spend the last few months of the presidential campaign trying to portray Barack Obama as a socialist?

So, what the hell is this? This is from Lindsay Graham yesterday, speaking on ABC's This Week:

"I would not take off the idea of nationalizing the banks" from the table, Graham, R-S.C., told George Stephanopoulos on ABC's "This Week" program

"This idea of nationalizing banks is not comfortable, but I think we have gotten so many toxic assets spread throughout the banking and financial community throughout the world that we're going to have to do something that no one ever envisioned a year ago, no one likes," Graham said. "But, to me, banking and housing are the root cause of this problem. And I'm very much afraid that any program to salvage the bank is going to require the government.."

The first question I have is, why the HELL are Republicans still all over the goddamn talking head shows, spouting their bullshit, while Democrats, who are in charge, are still standing on the sidelines, when it comes to the major media? 

It's a good question, but one I'll get into that in another post, though. Let's talk about this, the stupidest damned idea to EVER come down the pike from a Republican, and that's saying a hell of a lot.

Stimulate THIS, Republicans!

Look, Democratic Senators; it is this simple. The current incarnation of the Republican Party will only play ball when they lose enough fights, and realize they have no choice but to either help craft legislation, or get the hell out of the way while you do.

The people want and need a stimulus package, and they will get one. The most Republicans might be able to do is to delay it a bit, but they can’t stop it, so stop acting as if they can. If moderate Republicans make decent proposals that make sense, and could help move the economy along, you’d be crazy not to consider it. But stop listening to the bullying tactics and the promises to “not vote” for the package. They lost the last election, and they seem poised to lose the next few elections, and it really doesn’t matter what they like and don’t like.

And don’t worry about a filibuster. If they do filibuster this, they will be sorry. See, the unemployment figures are about to come out, and they’ll be the highest we’ve seen in many decades; possibly even higher than they were in 1982; the last time supply-side economics pushed us over a cliff. And if Republicans delay or kill a stimulus package that might work, or even if they vote against a stimulus package that ends up working, they will be screwed, and they know it.

Bipartisanship With Petulant Children; Is it Possible?

Look, I'm all for President Obama seeking support from Republicans.  After all, he is the president of all of the people, and Republicans are people, too. But for Chrissakes; at what point does he get that the leadership representing the Republican Party in Congress -- especially the Senate -- is made up mostly of people whose election hasn't come around yet, so they haven't had the opportunity to be tossed out on their asses. Yet. Moreover, they have no concept of what "bipartisanship" actually means, so you have to teach it to them. To them, bipartisanship means, "you do what we want." They sound very much like the biggest kids in fifth grade, who have gotten to ninth grade, but don't seem to realize all of the other kids are now bigger. 

 

When you listen to these morons, I swear to you they're living in a goddamn echo chamber or something. They seem to be sealed off from the real world somehow; to them, 2006 and 2008 never even happened.  First, the idiot Republicans in the House voted as a bloc AGAINST a stimulus package designed to relieve the current economic mess that THEY caused in the first place. And what did they choose to bitch about? I mean, besides the pennies the bill was scheduled to toss at contraceptive programs.

 

The DEFICIT!

 

I kid you not! I almost fell out of my chair! Suddenly, John Boner (sp?), the House MINORITY Leader (I made the letters bigger so that he understands that's who he is now -- the MINORITY Leader), decided he finally gives a shit about the deficit, and perhaps we shouldn't add to it, because, well, it's pretty big. HIS PARTY is responsible for adding $10 trillion of the $11 trillion debt we find ourselves with, and they accumulated that debt at a time when they were declaring the economy was just humming along. Now, suddenly, after they tossed our tax money to their friends and supporters for the last eight years, they've decided we're borrowing too much, and we should really be a little more responsible with the people's money.

 

Bite me, Boner (sp?).

It's Time to Change Our Energy Mindset; Green Will Bring in the Green

One of the key aspects of the current stimulus package that is exciting is its investment in new energy production, that is more attuned to the needs of the average person and the planet, than anything we've seen before. It reflects a new reality, and it's about time.

 

The way we've designed our lives has necessitated the use of energy to fuel every aspect of  them. We have to heat and cool our homes, we have to travel and move goods around the country and around the world, and we depend greatly on electrical energy these days, to the point that electrical energy must be plentiful and dependable.  In other words, most of the world has chosen not to live like the Amish. Whether or not that is a wise choice is a matter of debate, but we are what we are.

 

One thing is not debatable, however. No matter how we as humans choose to live our lives, we still need the world around us in order to function. Therefore, we must balance our production and use f energy with the need for clean air, wholesome, nutritious food and a clean and plentiful supply of water. And as everything in nature works in harmony, we have to figure out a way to produce what we need, while disturbing as little of the natural world as possible. It doesn't matter if you "believe" in global warming or not, nor does it doesn't matter how many jobs, companies and countries are "dependent" on the extraction of fossil fuels for their economies. What I am talking about is the survival of the human race, and the planet as a whole.

 

Okay, that last part probably overstated things just a bit. We won't kill the planet; this planet is pretty resilient, and will probably survive whatever we can do to it. But the survival of the human species depends greatly upon the health of the planet. So, how do we reserve as many of the technological gains we have made in recent generations, and still preserve the natural worlld, so that we survive?

If we want to increase the chances of human survival, -- and we do -- and preserve the planet we love, then we have to change our approach to energy production. Production of energy must involve two concepts; first, we must stop using natural resources as if they belong to humans alone;. The world belongs to every plant and animal species here, as well. Therefore, we have to be more careful when extracting resources, and we must stop burning things to supply us with energy.

 

We must solve this energy crisis. But first, we have to recognize that there is a crisis. The fact is, we have been in an energy crisis since we first realized that we could burn oil and gas to make light. and run machinery. But the crisis has been most acute in the last 40 years, and it will not end until we create most of our energy naturally, without burning natural resources, and to make maximum use of every bit of energy we produce.They keys are natural energy production and conservation.

We Can't Fix the Economy Without Fixing Health Care

Here are a couple of questions to ponder…

If you’re an average American, you’re sitting in front of your computer reading this and simultaneously wondering if you’ll even have a job in a year or two. How does the prospect of health insurance premiums doubling by 2016 strike you?

And if you’re a business owner who’s now providing health insurance to his employees, how would you like to be paying double the current premiums by 2016?

I would also point out that this is a conservative estimate, made before the economy took a nosedive. Given some of the bills people are receiving in their mail these days, the problem may be more acute than we thought. On his program Wednesday, Ed Schultz told listeners that his health insurance had increased by  almost 20% over last year. At that rate, his insurance premiums would double by the time Obama's being inaugurated a second time.

A current report by the United States Public Interest Research Group estimates that, if something drastic isn’t done by the President and the current Congress, the cost of health insurance premiums will more than double betweeb 2006, when the average annual premium was $11,381, and 2016, when it estimates they will reach an estimated $24,281, even when adjusted for inflation.

Who the hell can afford that possibility, seriously?

How can a country that arguably has the best health care system in the world, and the best doctors in the world, be so absolutely boneheaded when it comes to financing the system? No one in their right mind would fund one industry using money from a competing industry, the mission of which is at absolute cross purposes with the industry needing the financing.

Think about it.

Banks Take US Tax Dollars, Use it to Hire Foreigners

Why do bankers hate America?

Check this out. Apparently, while they were heading for meltdown, and as they were laying off thousands of American workers and then demanding taxpayers bail them out, major US banks were apparently trolling for foreigners to fill high-paying jobs. What gives with this?

This is from the Associated Press Investigation: Banks sought foreign workers. Major U.S. banks sought government permission to bring thousands of foreign workers into the country for high-paying jobs even as the system was melting down last year and Americans were getting laid off, according to an Associated Press review of visa applications.

The dozen banks now receiving the biggest rescue packages, totaling more than $150 billion, requested visas for more than 21,800 foreign workers over the past six years for positions that included senior vice presidents, corporate lawyers, junior investment analysts and human resources specialists. The average annual salary for those jobs was $90,721, nearly twice the median income for all American households.

As the economic collapse worsened last year — with huge numbers of bank employees laid off — the numbers of visas sought by the dozen banks in AP's analysis increased by nearly one-third, from 3,258 in the 2007 budget year to 4,163 in fiscal 2008.

I have to admit, I didn't get this. I have been wracking my brain, trying to figure out why these banks would go to foreigners to fill positions that could easily be filled with recently laid-off Americans.

If they're looking for "cheap labor," then perhaps they would do well to just offer Americans the lower wage, and see who takes it. Ya think?

For their part, Republican Charles Grassley and Democrat Dick Durbin are equally pissed, and working on a bill that would force companies getting bailout money to consider American workers first.

Gee, thanks.

Grassley should look at himself if he wants to locate a culprit here. For a generation, his Republican Party has been facilitating the move of manufacturing and jobs overseas, and even paying companies to do it. When you call the warranty center of your local American company, and you speak to a perfectly nice person living in Mumbai, isn't that basically the same thing? Apparently, it's perfectly okay to hire foreigners to do jobs from other countries, but to come here and do them is suddenly wrong.

Oh, please cut the crap, Grassley!

Yeah, what the banks are doing is wrong. But it's only slightly more wrong than hiring foreigners in other countries to do jobs that people here are perfectly capable of doing. The only reason our workers are forced to "compete" with China is because the government, led by Republicans, has done nothing to protect them. We could make stuff to sell here. We can make cars that people want to buy, and we can make spatulas that sell for $1.50, instead of a dollar. It can be done, and done successfully.

The Republicans have raped our economy for years, and now, all of a sudden, one Republican senator is incensed, because a handful of $90K a year bank jobs are being given to "furr'ners."

Guess what, Senator; we've been bitching about the same thing for years; what made ya change your mind all of a sudden?

Hypocrisy, they name is Republican.

If We're Going to Bail Out the Big 3, It Must be Done Right...

The concept of an auto industry bailout is a tough one. My first instinct is to bail the Big Three automakers out, in order to curtail the possible employment ramifications if they're allowed to go under. Somewhere around three million workers depend on the US automakers for jobs, and at this point in the economy, losing all of those jobs could deal a spectacular blow to our economy; one that may take years to recover from.

 

But another part of me says, "let them fail." It's not like they'll actually immediately disappear. They'll have to go into bankruptcy, and a bankruptcy trustee can work with the companies to cut costs and make them solvent again. It's not like the three companies have no value; Americans will still have to buy cars, and a lot of people still want to buy American.

 

Then there is the fact that at least two of the companies, Ford and GM, have actually shown signs of awakening in the last couple of years, and they have been retooling for the future, which is very. very green. The current problems they're experiencing aren't entirely of their making. They've been hurt largely by the economy, high gas prices, the credit crunch, and the rising cost of health care.

 

There's another aspect to this, as well. One of the reasons our auto industry sucks so badly, and has sucked for so many years, is because there are the "Big Three." There has essentially been little or no real domestic competition in the industry for at least 25 years. Look more closely at the market; the foreign companies made mostly cars and a few trucks and SUVs, while the domestic car companies have sold mostly trucks and SUVs, but only a few cars.  When gasoline prices spiked -- which everyone knew would happen, and which will continue to happen repeatedly for the foreseeable future -- foreign automakers were prepared, and domestic automakers weren't, primarily because the foreign companies staked out one part of the market, and domestic companies staked out another. 

Buying Bad Mortgage Policy from McCain

I know what a lot of you think you heard from John McCain last night about the government buying bad mortgages and all that. And in a way, it kinda sorta sounded like an idea Barack Obama had earlier, and that Congress included in its final bailout package last week.

But I listened to it again, and it sounded different. So, I looked at the transcript, and what I figured out is that John McCain really doesn’t know what the hell he’s talking about, and cannot be trusted with the economy.

See, the idea that I thought McCain was discussing, and claiming as his own, was this idea that many have recommended (including me), in which people who are upside down on their mortgages can negotiate a new mortgage, reflecting the current, lower value of their home. The banks could be partially subsidized for any losses, and in almost no time, we’d all be back on our feet. People who were previously screwed would be made whole, and it would then be largely unnecessary to bail out the gamblers who pissed their money away by creating a phony market based on no actual value. In other words, he may be trying to paraphrase the plan Obama and the Democrats have been pushing all along.

But read carefully, because McCain actually stands this idea on its head.

The Financial Mess and a Solution We Can ALL Live With

I would probably be the first person to admit that I'm no economic expert, especially as it's defined these days. But then, whoever said economy was supposed to be as incredibly complicated as it's become?

 

Think about it. The way capitalism is supposed to work is, you make something or perform a service, and when you've delivered that product or performed that service, you get paid for it. Then, in order to make sure everything is open and fair, the government is supposed to enforce basic regulations. And you need those regulations because, while most people are actually quite fair and honest, there is always a segment of the population who will try to gain unfair advantage of people.

 

I even understand the introduction of credit and debt into the economy. The vast majority of people want to buy things, and can be trusted to pay for them over a reasonable period of time, along with a fair rate of interest going to the lender.There's absolutely nothing wrong with that.

 

So, how did we get to where we are today? Why do we keep having to bail out the economy, just to keep ourselves afloat?The answer is deceptively simple. For the last 30 or so years, the government has been in charge of a government that deregulates everything, and believes that any economic device the market creates that generates cash is perfectly okay, and should be operated without oversight.

This Isn't About Institutional Failure - It's About System Failure

And you wonder why I don't listen to so-called "financial experts"?

The following is from an "analysis" appearing in Time magazine yesterday, Let Risk-Taking Financial Institutions Fail.;

Do not be fooled. The $700 billion (ultimately $1 trillion or more) bailout is not predominantly for mortgages and homeowners. Instead, the bailout is for mortgage-backed securities. In fact, some versions of these instruments are imaginary derivatives. These claims overlap on the same types of mortgages. Many financial institutions wrote claims over the same mortgages, and these are the majority of claims that have "gone bad."

At this point, such claims have no bearing on the mortgage or housing crisis; they have bearing only on the holders of these securities themselves. These are ridiculously risky claims with little value for society. It is as if many financial institutions sold "earthquake insurance" on the same house: when the quake hits, all these claims become close to worthless — but the claims are simply bets disconnected from reality.

The only thing "disconnected from reality" is the above.

See, here's the problem. Money flows through the economy like water. While it sounds good to isolate parts of it from other parts, in practical application, that's a lot more difficult than it seems. That's precisely why we need regulation in the first place, and why regulatory bodies should be there to make sure no one is doing anything untoward with our money.

Oh HELL to the NO!

There seems to be so much worry among many in the electorate, and with good reason.

EVERYONE should see something incredibly fishy about a $700 billion bailout of an investment banking industry that must be completed before Congress goes to recess to run for another term.

Here are some things to think about, folks.

1. The Bush Administration is claiming they've been working on this bailout plan for months. If they thought this might happen months ago, then why is there suddenly the rush?
2. The investment banks that have gone down have obviously been going down for many months, if not years, and covering it up. Financial institutions don't simply go belly-up all of a sudden. Actions usually lead to such things.
3. If someone borrowed $1000 from you, and lost his wallet, would you lend that person another $1000, without making sure there is a likelihood that you'll get $2000 back?
4. We, the taxpayers, have already taken a huge hit from this. Hundreds of thousands of homes have been foreclosed upon, and all of our 401(k)s have been hit hard by this crisis. What logical sense does it make to hand these people even more money?

It Really Is the Economy, Stupid -- This Time, Let's REALLY Change It!

You know, one of the greatest frustrations in being somewhat liberal is the tendency for others of my ideological ilk to demonize individuals, and to focus on specific people as "the problem."

Our economy is damn close to a total meltdown, and we're closer to being a Third World country than at any time in our history. In a system that purports to be capitalist, we the taxpayer are now expected to bail out these "Captains of Industry" to the tune of $1 TRILLION, just to prevent the collapse of the economy.

Let me make something clear here, folks. This is not the fault of a few select individuals; it's about ideology. This election represents a turning point for this country. It's not about Republican vs. Democrat, it's not about Obama, or McCain, or Bush and Cheney, or Palin. This election is about repudiating an IDEOLOGY; an ideology that has kept us stagnate since the far right took over the government in 1981, that has managed to make the economy look better than it was with a series of bubbles and an unprecedented amount of debt, and which has pushed us to the brink of economic annihilation.

A good economy makes things and sells them for a profit. A good economy provides good jobs for as many people as possible, and pays them enough to create a good life. A good economy encourages entrepreneurship.

We do not have a good economy, and we haven't for at least 35 years. We started to recover in the right way under Bill Clinton, because he guided programs that propped up the bottom rungs of the economy, and he encouraged manufacturing and increased trade. But overall, our economy has been shipping most good jobs overseas, pay has been largely stagnant since the mid-1970s, and the level of actual entrepreneurship is so low as to be frightening. And has anyone even begun to comprehend the amount of debt we hold as taxpayers? We'd better start thinking about it, because that debt has to be paid back at some point. And the higher that debt goes, the harder and more expensive it will be to borrow money later. And since we're currently counting on borrowed money just to make ends meet in the current right wing economic environment, that will eventually cause us serious problems in the near future. 

And no matter what the people on the right tell you, make no mistake; it's not liberal policies, or free-spending liberalism, that is causing our economic problems.

The culprit is a right wing Republican ideology, which takes money from the poor and hands it to the rich. They still push the completely discredited concept of "trickle down economics," even though it's been nearly 30 years, and the only thing that's "trickled down" to the poor and working classes is the urine from the rich fat cats who have made out like bandits on your dime, and who are proceeding to piss all over you.

This election is about returning us to an economic model that worked, and abandoning the failed economic policies of a generation of right wing Republican theory that has proven itself to be both economically and morally bankrupt. Again; this isn't juast about a difference between Obama and McCain;this is about  complete change in mindset; to making people count again.

Obama and Frank Raines: The GOP Should Be More Worried

A new McCain campaign ad attempts to link Barack Obama and Franklin Raines. It goes so far as to suggest that Raines advises Obama.

Of course, Raines himself says that he has never advised the Obama campaign in any capacity, and the Obama campaign has reiterated that.

But there's another angle you should look at when considering this crap.

I don't mean the racial angle; that's easy. The McCain campaign obviously used Raines, because he's a "scary black man;" there's no denying that. You know William Jefferson will be brought up at some point, because it's all they have.

No, Franklin Raines represents something that should remind you why you shouldn't vote for John McCain.

Franklin Raines represents, in many ways, the Republican style of doing business.

Let me note, first of all, that Frank Raines has never been convicted of a crime. The Office of Federal Housing Enterprise Oversight (OFHEO), which is supposed to provide oversight of Fannie Mae, has accused Raines of shifting Fannie's book losses for several years, in order to lessen the negative effect on Fannie's stock price, and so that he and several other senior officers could receive bonuses.

In other words, he overstated earnings back in the day. If you'll remember, before Enron collapsed, that was pretty much the order of the day in the deregulated world of high finance; a deregulated world created and nurtured by the Republican Party.

Franklin Raines' chairmanship of Fannie Mae was reprehensible, but it was in no way atypical. He cooked the books to keep the stock price high, and to get his bonus. Under the Republican deregulation scheme, such a thing was de rigeur.  If you reject what Fannie Mae did under Raines, then you have to reject the Republican Party's approach to economics, which is the cause of the problem.

I would also point out that, with the Bush Administration in charge of the investigation, Fannie Mae was fined almost $400 million, but the main officers who cooked the books for Fannie were only fined $3 million each. Not only that, but they were allowed to settle, without having to admit any wrongdoing. So much for law and order under Republican rule, huh?

When Did the United States Become a Nation of Pussies?

Today is the 39th anniversary of the day that American astronauts first set foot on the moon.

Think about that a moment. Within ten years, this great country was able to go from being unable to fire a rocket into space, to putting men into space, then creating a way for them to land on the moon, take off from the moon, and return home safely, six out of seven times.

Contrast that with today, 39 years later, when we're looking at taking 20 years to increase the average gas mileage of our cars to 34 miles per gallon, and lessening our use of "foreign oil."

When World War II was declared, a factory in Detroit that made Ford automobiles was retrofitted to manufacture helicopters for the war effort, and was able to do so in the space of eight weeks.

Contrast that with today, when all American car companies claim they can't compete in the global market, and they have to shut down for years, just to be able to make cars that people want to drive, cars they should have been making all along.

During World War II, our leadership was able to mobilize the entire country to defeat the Nazis and Japanese Imperial Forces, two of the most formidable powers in the history of world, and helped defeat them within four years.   

Contrast that with today, when our leadership expects us to cower in fear at rogue actors who might strap a bomb to their waist and blow up everyone within a short distance.

What have we become? We're afraid of everything these days. How have we gone from "The only thing we have to fear is fear itself," to the current attitude, whereby; we're afraid of terrorists, because they might want to "kill us for our freedoms;" we're afraid to switch to alternative fuels, because it might entail pumping something other than gas; we're afraid to try anything new, because it may not work?

When did the United States become a nation of pussies?

Double-Digit Inflation Confirmed

Even the over-weighting of computers and digital televisions (no, I'm not kidding!) can blunt the inflation numbers this time. This just in from the BLS:

On a seasonally adjusted basis the Consumer Price Index for
All Urban Consumers (CPI-U) rose 1.1 percent in June after
increasing 0.6 percent in May.  The index for all items less
food and energy increased 0.3 percent, following an increase
of 0.2 percent in May.

Do the math, ladies and germs, that translates to double-digit inflation. But the news is even worse than that.

Real average weekly earnings fell by 0.9 percent in June 2008. The change resulted from a 0.3 percent increase in average hourly earnings partially offset by a 1.2 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). Average weekly hours were unchanged. Real earnings were down 2.4 percent from a year ago.

What this means is simple. Even a government led by a douche who just yesterday stood behind a podium at a press conference and lied to the people he works for can't hide the numbers any longer. We're paying a hell of a lot more for stuff, and we're no longer even keeping up with inflation.

But the above is merely the e-mail news release from the BLS. Want to see something really funny? Read the entire news release. This is the main paragraph:

On a seasonally adjusted basis, the CPI-U advanced 1.1 percent in June, following a 0.6 percent increase in May. The index for energy rose sharply for the second straight month, increasing 6.6 percent in June following a 4.4 percent increase in May. The increase in the energy index ccounted for around two-thirds of the overall increase in the all items index in June. The index for petroleum-based energy advanced 10.0 percent and the index for energy services rose 1.5 percent. The food index rose 0.8 percent in June after rising 0.3 percent in May. The index for food at home went up 1.0 percent in June, with indexes for four of the six major grocery store food groups sharply accelerating. The index for all items less food and energy increased 0.3 percent in June, following a 0.1 percent rise in April and a 0.2 percent increase in May. Larger increases in the indexes for shelter and for tobacco and smoking products and an upturn in the apparel index contributed to the
larger increase.

Did you note that last part? Watch the pro-Bush media (Fixed Noise) spin the numbers all day, to make you think inflation isn't as bad as it is. They HAVE to lie, because they're desperate. Tobacco seems to be an odd thing to include in a Consumer Price Index, wouldn't you say?

I'll have more on this in coming days and weeks, but in the interim, for your homework, I want you to Google "hedonic analysis."

The Economic "Wizards" Behind the Curtain

Okay, I have to ask...

When do you get tired of this?

When do you get sick to death of a bunch of rich Republicans telling you how great the economy is, and showing you numbers that you know are bullshit, in order to convince you that you're crazy?

Look at the idiots in politics and the press who are trying to convince you that the economy isn't really all that bad. They're all millionaires many times over, aren't they?

To a man/woman, few have have had to go into a supermarket in many many years, to buy a week's groceries for the family on a budget, and had to cut corners on meals, because prices have gone up, or they have $20 less, because the price to fill up their old, but paid-for car has gone up that much in the last month.

How many of them, do you think, have had to purposely pay the rent late, because the late fee on that is a hell of a lot less than the late fees on the credit cards, if they're late?

How many of them have had to forego going to the doctor for an infected cut, because they lost a good job in the last eight years, and have been forced to take a job that pays far less and has no benefits?

How many of them have been forced to shop yard sales and swap meets in recent years, because they need a few extra dollars to pay a bill?

How many of them have been forced to suffer the humiliation of having to ask someone for assistance, whether it's the government or a family friend, just so that you could feed your kids, or pay the electric bill?

Rules Changing on Mortgages -- too little, too late?

This is why the Constitution REQUIRES Congress to regulate interstate commerce. I know the neocons running the government seem to have an aversion to  government regulation, but even 221 years ago, the framers had an inkling that stuff like this might happen.

From The New York Times: Fed to Clamp Down on Exotic and Subprime Loans

With no end in sight to the turbulence in the housing and financial markets, the chairman of the Federal Reserve said on Tuesday morning that it would issue new lending rules next week to restrict exotic mortgages and high-cost loans for people with weak credit.

The chairman, Ben S. Bernanke, also said that the Fed was considering extending its program of low-cost overnight loans to the nation’s largest investment banks into next year. The lending program, which is supposed to be temporary, began in March in response to liquidity problems on Wall Street during the near-collapse of Bear Stearns, which was sold to JPMorgan Chase to avert going into bankruptcy.

(...)

The Federal Reserve is expected to announce new mortgage lending rules at a meeting on Monday. It is not known whether the Fed will significantly change the proposal it made last December, which provoked more than 5,000 letters, including heavy criticism from the mortgage industry and other parts of the housing industry.

Industry lobbyists maintained that at a time of tight credit, tougher rules could make many mortgages more expensive by creating more paperwork and potentially exposing lenders to more lawsuits. They also complained that the restrictions were too broad and would restrain lenders from issuing otherwise creditworthy loans. Three of the industry’s most influential trade groups — the American Bankers Association, the Mortgage Bankers Association and the Independent Community Bankers of America — separately filed letters criticizing the proposals.

On the other hand, consumer groups complained that the proposed rules would not be strong enough. They maintained that any efforts to further weaken the proposal would render it all but useless.

See, the part of this that a lot of people seem to have a hard time understanding is that all of this could have been avoided in the first place, had the far right morons in Congress not written these types of mortgage instruments into the law in the first place.

It's Not Just About Foreclosures

I discuss politics with a lot of wingnuts, and I have yet to come across one who actually comprehends the scope of the current financial crisis to any degree at all. It simply stumps them. Invariably, their understanding of this crisis begins and ends with the fact that people who shouldn't have qualified to buy homes in the first place are now about to lose theirs.

But this crisis goes far beyond the people who are losing their homes. This crisis actually affects the entire economy, and will continue to do so for many years to come, especially if no one does anything about it. Throwing money into the situation relieves bank pain on the front end, but it does nothing to resolve the actual crisis.

Here is an example of what I mean, from this morning's New York Times:

Auto lenders and banks, closing their wallets, have prevented hundreds of thousands of consumers from obtaining the financing for a car. Home equity loans, which had been used in at least one of every nine deals, when lenders were more generous, are no longer a source of easy money for many prospective buyers. And used-car prices have fallen nearly 6 percent as repossessed cars and gas-guzzling trucks and S.U.V.’s flood auction lots.

Those forces, on top of the softening economy, are putting enormous pressure on the American auto industry as it faces what may be its worst year in more than a decade. About 15 million vehicles are expected to be sold in 2008, down from 16.2 million last year, as sales reach the lowest levels since 1995, according to the marketing firm J. D. Power & Associates.

The impact on the broader American economy could be profound. Not only is the car a consumer'€™s biggest purchase after the home, but the auto industry remains one of nation's most important economic engines. With less money available to bolster the industry'€™s growth, the businesses that support it are also facing the prospect of a sharp slowdown.

Government Lies: Inflation is all in Your Mind!

You know how you go to the gas pump, and every day the price is higher than the day before?

And when you go to the grocery store, the price of milk, bread and eggs is much higher than it was last month?

Well, you'll be happy to know that it's not actually happening. Your wallet isn't draining any faster than it was last month. You know how I know? Because the government says so.

I got this in my e-mail this morning, from the BLS:

Consumer Price Index:
On a seasonally adjusted basis the Consumer Price Index for  All Urban Consumers (CPI-U) rose 0.2 percent in April after  increasing 0.3 percent in March.  The index for all items  less food and energy increased 0.1 percent, following an  increase of 0.2 percent in March.

Don't you feel relieved? That means, if you spent $2000 on basic consumer goods in March, you paid $2004 in April. And we know it's true, right? The government would never lie to us, right?

But wait... there's more...

When you go to the press release, you're told the following:

On a seasonally adjusted basis, the CPI-U advanced 0.2 percent in April, following a 0.3 percent increase in March. The index for energy was virtually unchanged after advancing 1.9 percent in March. In April, the index for petroleum-based energy fell 1.6 percent, offsetting a 2.5 percent increase in the index for energy services. The food index rose 0.9 percent in April. The index for food at home increased 1.5 percent, reflecting substantial increases in all six major grocery store food groups. The index for all items less food and energy advanced 0.1 percent in April, following a 0.2 percent rise in March. Downturns in the indexes for public transportation, for household furnishings and operations, and for recreation, coupled with a larger decline in the index for lodging away from home, more than offset an upturn in the index for apparel.

During the first four months of 2008, the CPI-U rose at a 3.0 percent seasonally adjusted annual rate (SAAR). This compares with an increase of 4.1 percent for all of 2007. The deceleration thus far this year reflects smaller increases in the indexes for energy and for all items less food and energy. The index for energy advanced at a 6.3 percent SAAR in the first four months of 2008 compared with 17.4 percent in 2007. Petroleum-based energy costs decreased at a 0.7 percent annual rate while charges for energy services rose at a 17.7 percent annual rate. The food index has increased at a 6.9 percent SAAR thus far this year, following a 4.9 percent rise for all of 2007. Excluding food and energy, the CPI-U advanced at a 1.8 percent SAAR in the first four months, following a 2.4 percent rise for all of 2007.

Read that again, and feel free to laugh. Prices for everything you buy only went up 4% last year, and they're going up even less this year.

This is how the government comes up with its inflation figures; the figures it uses to determine how much to pay its employees, and how much they should be paying out in Social Security and other programs. They throw out these numbers, and they'll repeat them on the news as short headlines, but they won't actually ask any questions about what the numbers mean.

Think about that energy cost figure; The index for energy was unchanged why? Well, one reason could be that you're not heating your house for winter anymore. Therefore, the fact that gas went up 35 cents a gallon, or 12%, last month doesn't matter as much, because you're not burning as much gas or electricity to heat your home. Okay, that might be a fair assessment, at least until summer. But look more closely; the index for petroleum-based energy FELL 1.6%? Offsetting a 2.5% increase in the index for energy SERVICES? So, it wasn't the gas that was going up in price all month; it was the cost of providing it to you?

Do you get the impression that someone is pulling your leg? When did this get complicated? The gasoline I purchased in March at my local station was $3.29 in March, and it was $3.69 at the end of April. My gas and electric bill was $158 in March and $92 for April. all you have to do is figure out how much gas i purchase on average, and add it to my gas and electric bill and you get my personal energy "index" for the two months. It's not difficult. But they want it to be complicated, so that they can figure out a way to keep the number low, and hope you won't notice.

Take the last part of the paragraph above, and think hard. The price of groceries is up 1.5%, and the cost of energy, even with their convoluted methodology, is "unchanged." of course, we all spend more on food each month than energy, so the average should still be above 1%, right? Plus, if you look closely, they also mention a small uptick in clothing prices, something we all need pretty regularly, although I'm not sure we buy that stuff every month. Well, it's not that high, if you include downturns in indexes for public transportation (which I don't get; are some cities reducing fares or something?) household furnishings (because retailers are cutting prices to lure people into stores, perhaps?) and -- I laughed out loud at this one -- lodging away from home.

In other words, what the government is telling us is this; don't be whining about inflation, just because the cost of food, energy and clothing are climbing; the price of taking the bus is apparently down, as is the cost of a new couch and a night at a Hilton Hotel. Of course, you can't afford the gas to go to a hotel in the first place, but hey, they are lower, you cheapskate.

This is such a scam, folks. I'd love to blame Bush for this one, but they've been lying to us for quite some time. they fudge the inflation numbers, because government payments are indexed to it, and if they told us the truth, the deficit would have to be bigger.

See, this is why voters have to trust their instincts, and not what anyone in government tells them. People have good instincts; government's first instinct is to cover its butt. 

Economic Doldrums

Welcome to the 1970s.

I know, I know... a lot of people have been predicting a return to the Great Depression, thanks to Bush's Hoover-like economic stewardship, but I'm slightly more, um, optimistic. I think it's going to be more like the 1970s than the 1930s. And if Bush and Cheney want to heave a sigh of relief that the economy will be more like the 1970s than the 1930s, then they should thank the Lord for Franklin Delano Roosevelt.

What's happening right now, economically speaking, is really, really bad. it is likely we will lose our status as the greatest economic power in the world, and may even drop to third or fourth by the time this shakes out. The dollar is beyond shaky, and we're running out of ways to make money.

Here's the problem, in a nutshell; we've spent most of the last 30 years pretending to have a strong economy. Thanks to the neocons who have run the government since 1981, most of our economic "growth" has been through sleight of hand. We have essentially been creating money out of thin air, and then shifting it from one pocket to another, and convincing ourselves that we were rich. Our economy has been kept afloat through a series of bubbles, thanks to the neocons.

The first bubble, which had been deflated for a bit, and then re-inflated to record levels by the Bushies was the government spending bubble, in which the economy was faltering, but by borrowing unprecedented amounts of money, the government made it look as if it was healthy.

Then came the tech bubble, in which new technology was seen as the economy's "savior," and irrationality took over for a while, until people figured out that a company whose only product is a browser that they have to give away for free can't possibly promise to make billions of dollars over the course of a few years, and that people weren't likely to buy trillions of cans of cat food via the Internet.

The next one was what is unfairly referred to as the "Enron Bubble," in which large corporations inflated their value, their profits, their assets, and anything else that would get people to buy their stock, so as to have enough money to actually run things. I know a lot of people (mostly neocons) blame the first Bush recession, and the stock market collapse on September 11, but that wasn't the cause. It happened because companies were forced, en masse, to restate their financial figures.

But the fourth bubble, which started off being referred to as a "mortgage crisis" is the most dangerous bubble yet. I know it's tempting to look at it as little more than a spate of foreclosures, but it goes far deeper than that. Combined with the continuing government spending bubble (otherwise known as "the deficit") will probably sink our economy for some time.

Here's the problem, if it's possible to put all of this into a nutshell.

It starts with the constant deregulation of banking and mortgage markets that happened over the last 30 years. One would think the Savings and Loan mess of the early 1980s would have taught us that regulation of commerce is a specific Congressional duty  set in Congressional stone, for a very good reason. Greed is hard-wired into some people, and the rest of us have to keep them on the straight and narrow.

Between deregulation, the creation of some ridiculous mortgage mechanisms, little or no oversight, and a neocon administration who could point to the number of homeowners and crow that the economy wasn't as bad as we thought, we created a situation ripe for fraud and abuse, and the crooks came running. 

Mortgage "brokers" would put ads everywhere, advertising something that should have been outrageous, like a $400,000 home for $600 a month, or some such nonsense. You've all seen them; they're all over the Internet, people leave flyers on your door saying "buy for less than you can rent!" -- these people were all over. And they preyed on people who didn't make enough money to actually qualify for a home. Not that it mattered, really. Potential buyers would fill out an application, knowing they would never be approved, but magically, they were approved. And they were approved because brokers would falsify the details of the application. The broker goes to the underwriter, gives them a line of crap, the underwriter goes to the bank, the bank approves the mortgage, and the broker takes his commission and runs. Then, after the mortgage is approved, it's sold and resold and re-resold, parts of it are sold off to different groups. Often, it's difficult to figure out who owns a mortgage, because it's been sold so many times.

You can see what this is so difficult to put into a nutshell.

For years, mortgage "brokers" were allowed to get away with this, because it meant tons of home sales, and with the stock market only doing so-so, and the tech and corporate crook bubbles having burst, there just were no more major investments that could make someone a whole lot of money in a really short time. All sorts of people became "brokers," and many of them sold homes to people who couldn't afford them, because no one was watching, and they could make good commissions by doing so. Everyone looked the other way, because it was so lucrative. Home builders sold their inventory in record time, banks wrote record numbers of mortgages; no one lost on such a situation. As home values artificially increased, even the states made a lot of money in property tax revenues. People who owned existing homes suddenly found themselves flush with equity, and took out cash loans against it, to consolidate bills, fix up their house, or take a great vacation. the entire economy benefited on the short term from this bubble.

The problem is, when a bubble like this one bursts, everyone loses. It's not possible for someone who spends more money than he has to be better off later, and that's the situation in which we find ourselves. There are still millions of mortgages in the hands of people who can't afford them, so the foreclosures won't abate for a few more years yet. But worse than that, home values are dropping like a rock, because so many homes shouldn't have been built and/or sold in the first place. This means a lot of homeowners with legitimate mortgages are suddenly finding themselves upside down. Plus, a whole lot of home equity loans are suddenly unsecured, which puts the banks who lent the money in a difficult situation. Suddenly, banks have a whole lot more unsecured credit than they normally have, which makes credit extremely tight, and causes interest rates to increase.

Bottom line; we have a glut of available homes on the market, with no one available to buy them, combined with a tight credit market, in which those who want to buy a lot of them can't get approval. We have condo buildings that are being forced into becoming apartment buildings. As homes are revalued, states and municipalities will have to make cuts, as revenues from property taxes decline. Add to that the still spiraling  federal budget deficit, and what we are facing is a precarious situation that can't simply be cured by throwing money at it.

And yet, the Bushies are throwing money at it, and leaving the clean up to the next president.

Thanks again, President Hoover-Bush.

 

Jack Cafferty Attacked for Telling the Truth!

I know this will seem very politically incorrect of me, but this type of story makes me laugh:  Protesters target CNN after Jack Cafferty's remarks on China - Los Angeles Times.

Throngs of Chinese Americans protested outside CNN's offices in Hollywood on Saturday morning, calling for the dismissal of commentator Jack Cafferty, whose recent remarks about Chinese goods and China inflamed a community already angry about international condemnations directed at the host country of the upcoming Olympic Games.

The protesters lined Sunset Boulevard from Cahuenga Boulevard to Wilcox Avenue chanting "Fire Cafferty" and "CNN liar" and singing the Chinese national anthem and other patriotic songs. They waved Chinese, American and Taiwanese flags and directed their anger at the news channel's dark glass tower.

Oh, my God! What could possibly cause so many Chinese-AMERICANS such grief that they would demand the firing of a guy who's one of the most honest commentators in the news media? The story continues...

On the April 9 airing of "The Situation Room," Cafferty said of America's relationship with China: "We continue to import their junk with the lead paint on them and the poisoned pet food and export . . . jobs to places where you can pay workers a dollar a month to turn out the stuff that we're buying from Wal-Mart. So I think our relationship with China has certainly changed. I think they're basically the same bunch of goons and thugs they've been for the last 50 years."

Yes, those were the remarks. Let's parse this a bit, shall we?

Do we import Chinese-made junk? Have you ever been inside a Wal-Mart, or any "dollar store" in the country? Yes, we do import a lot of crap from China, and most of it is of low quality, which is why it costs a dollar.

Have the Chinese been reckless with their quality control? Well, yes, of course they have. Lead paint on toys that children might put into their mouths; toys that turn into roofies if swallowed; pet food that killed many a pet (full disclosure; I can't prove it, but I'm pretty sure that's how my son's cat died last year.).

Do the Chinese take advantage of lower labor standards to put out their junk, and sell it to us by the boatload? Well, yeah. There are factories over there that serve as de facto slave quarters, for Chrissakes. And why should that surprise anyone? How the hell do you think they make a spatula that can be sold to you for a dollar, with everyone along the supply chain making money?

In other words, there is nothing untrue in what Jack Cafferty said, and these Chinese-Americans who are protesting have a lot of nerve, if nothing else. If they really want to protest something, how about protesting the shitty conditions under which the Chinese workers labor? How about demanding that the United States start demanding that the Chinese government stop cracking down on people who dare express themselves? If you don't like the truth, then change the truth of the situation. But don't blame Jack Cafferty.

We have shipped boatloads of jobs to China, China does make a lot of junk, and the government over there is oppressive, and they do act like a bunch of thugs. That's not an insult to "the Chinese," those are stone cold facts.

"It's really unacceptable," said John He, an organizer of the event. "It maliciously attacks all Chinese. This would not be accepted if it was directed at any other ethnic group."

This is how clueless some people are. Cafferty wasn't directing his remarks at people who are ethnically Chinese. The remarks clearly were directed at people now living in China, and who are flooding our market with shitty goods, made with something akin to slave labor. Get a clue, Johnny.

I dare you to protest me.

Watching the Recording Industry Kill Itself Slowly... with maximum bloodletting...

The music industry is killing itself, and the idiots running the record companies are too brainless to understand why.

Jammie Thomas is on trial for downloading and sharing 1702 songs. According to "the recording industry," the copyright violations by this 30 year old mother of two are worth millions.

You see, Ms. Thomas is on trial because she refused to allow the RIAA to extort money from her, as they have thousands of others.

From: Music Download Trial Begins in Minn..

But Richard Gabriel, lead attorney for some of the nation's largest record companies, sought to pick those ideas apart one by one by calling witnesses to document each step the record companies used to point the finger at Thomas.

What he will fail to point out is that this is happening to the recording industry, because they're too greedy to be believed. They used to have the market cornered on the manufacture and distribution of music, and because of technology, they no longer have that.

You see, it doesn't matter what he actually points out. See, she's not on trial for downloading the music, exactly. She's on trial for making the music on her computer available to others. I know that sounds odd, but these cowards know they can't test the "fair use" provision of the copyright laws. So they portray these people as "distributors" because the music on their computer is available to others, while they look for songs to download themselves. It's the 21st century equivalent of lending someone an album so he can make a tape of it, which probably happened a lot more than file sharing.

The Recording Industry Association of America, which is not a party to the lawsuit, says record companies have brought more than 26,000 actions against people alleging they shared files in violation of copyrights.

The action against Thomas is the first to get to trial because most defendants have settled by paying a few thousand dollars.

Jennifer Pariser, head of litigation and antipiracy at Sony BMG, portrayed the trial as a fight for survival.

"It is imperative for Sony BMG to combat this problem," Pariser testified Tuesday. "If we don't, we have no business anymore."

See what I mean? These people are too stupid to realize that their time has passed. Their problem is not "illegal downloading," anymore than it was people being able to make cassettes of music from the radio or records in the past. In the past, it was quite common for 4-5 people to pitch in and buy some albums, and make a tape for each of them, yet the RIAA didn't go after anyone then. They're only concerned because it's easier now. 

The recording industry model as it has existed for years is now dead, and they're too stupid to know it. Now, it is very possible for a band to make a recording, make copies of the CDs themselves and sell them at their own shows, in local shops, on the Internet, or many other places. As time goes on, record companies will become more and more marginal, unless they embrace the online model.

Most music lovers don't download from "filesharing" services very much. The quality of the music is spotty at best, and once in a while, some prankster attaches something to a song that messes with your computer. It is far more convenient for me to go to Rhapsody, pay them $10, and download and burn a CD-quality album, and rip it to my iPod. Then, when the iPod crashes, or I replace it, I can rip it again. I will eventually put all of my CDs on a large-capacity hard drive, because CDs are just too bulky to carry around. I, like most people, would rather pay for my music. But what record companies have to understand is, I will NOT pay $18-20 for a CD. And I especially will NOT pay that much for a CD I remember paying $5 for 25 years ago.

And here is another aspect of this that record companies have to understand. I can't tell you how many albums I did NOT buy, because there were only a couple of songs that I even liked. I would never pay for an entire CD of music, if I only liked one song. Now, I have a choice. I can take a song or two from several different CDs and make my own. I can also download and listen to a few of the other songs on the CD, and decide if I want to buy it. 128 kbps is not a high quality recording, and most downloads come with that bit rate. So, if I listen to a song, and I like it, I will buy the higher quality recording of that song.

Cheapskates who download all of their music aren't going to  buy CDs, record companies. And attacking this problem one mother of two with 1702 songs at a time is the functional equivalent of pissing in the ocean in Boston, and then flying to Europe to see the stream arrive on the other side.

The solution to this problem is to ditch the old model altogether. Trying to hang onto your "rights" to specific performances of music is the old model, and eventually won't make you any money. The new model could even make you more money, if you play it right.

Make it about the music and the musicians. Instead of selling music as a commodity, how about using your marketing expertise, and using the music to sell the artists. Artists are increasingly making their own recordings, but they need distribution help. Instead of signing musicians to contracts that amount to indentured servitude, how about offering them your marketing expertise, and selling THAT to them.

Seriously... imagine your industry can make its goods without plants, manufacturing or distribution. can you even envision not being able to make money in that environment?

In response to a question from Toder about whether the industry was making millions off all the settlements, Pariser said the campaign has actually lost money.

Thomas, who works for the Department of Natural Resources of the Mille Lacs Band of Ojibwe, is at risk for a judgment of more than $1.2 million if jurors found against her for all 1,702 songs. The recording association is seeking damages set under federal law of $750 to $30,000 for each copyright violation.

Besides Sony BMG, the companies that sued Thomas are Arista Records LLC, Interscope Records, UMG Recordings Inc., Capitol Records Inc. and Warner Bros. Records Inc.

Why doesn't this bother more people? Why isn't Congress investigating the collusion here? Why are so many huge companies allowed to pool their resources and go after this young mother of two? They're supposed to be competitors, yet it's the RIAA that is going after these people and extorting "settlements" from them. At what point does RICO kick in, anyway?

Summers Hedges on Recession Talk

Here's a guy who knows a thing or two about economy. Of course, he worked for Clinton, so wingnuts will dismiss him as a kook...

From: Ex-Treasury chief Summers warns on recession risks on Yahoo! News.

Former Treasury Secretary Lawrence Summers said on Sunday the risks of a recession are greater now than at anytime since the September 11 attacks due to real estate and mortgage market troubles.

"I do not think we yet would have a basis for making a prediction that there will be a recession," Summers said.

"But I would say that the risks of recession are now greater than they've been anytime since the period in the aftermath of 9/11," he said on ABC's "This Week."

Summers headed the Treasury Department from 1999 to 2001. He resigned last year as president of Harvard University. In October, he joined a Wall Street hedge fund group.

I disagree with him, though. We have a basis for thinking there will be a recession. First is the fact that millions of homes are over-valued, and must now be 'corrected.' Second, the greedheads are running out of scams with which to dupe the American people into pumping more fake money into the economy. Third, foreign countries are increasingly turning to the Euro, at a time when our government is running huge deficits.

I will not only predict, but I will guarantee... the next president will inherit a recession.

And that will be TWO Bush recessions. And don't blame the last one on 9/11, because that's not what caused it.

 

Large Webcasters Reach Deal Small Webcasters ok till 2010 on Royalty rates

Apparently, someone in the record industry has begun to figure out that cutting off their noses will only spite their faces.

From Billboard: Major Labels, Large Webcasters Reach Agreement Over Rates.

Major record labels and SoundExchange have just reached a deal with the large webcasting services over crucial terms covering royalty rates that webcasters must pay to stream sound recordings through 2010, Billboard.biz has learned.

Under the deal, reached during a confidential meeting held in New York today, large commercial webcasters ... will not have to pay more than $50,000 per service as a per-station or per-channel minimum royalty to webcast sound recordings, according to a source close to the negotiations.
(...)

Also, the large webcasters will not be required to implement any particular kind of technology to prevent the streamed music from being ripped, i.e. copied, by users, the source says. But the services have agreed to cooperate and discuss implementation of anti-stream ripping technology on their services with labels and artists.

(...)

No final agreement has been reached yet with small webcasters. SoundExchange sent a letter to them this week offering to carry forward old rates through 2010, which is the last year for which rates were set by the CRB under copyright regulations.

Think the record companies will ever get it? Digital technology WAS the best thing to ever happen to them. Instead of embracing it, they fought it, and now they're screwed. Musicians, for the most part, aren't harmed by file sharing; only record companies are. if record companies were smarter, they could turn this to their advantage. Instead, they keep giving in to their short-term greed.

Here's one hint, RIAA; $18.99 for a Beatles CD at a music store? An album we bought on LP 35 years ago for $3.99? And you want to know why people download from peer to peer services? Get real.

There is No Such Thing as a "Free Market!"

You know, one of the greatest fictions perpetrated by the right wing over the years is the notion of a “free market.” The current incarnation of the Republican Party pretends to believe in this concept as much as they believe in God. Think that’s an exaggeration? Doesn’t “In the Free Market, all things are possible” sound like something they’d say?

The fact of the matter is, there is no such thing as a “free market” in a purely capitalist system. In a purely capitalist system, Joe Blow creates an item, manufactures it and sells it, and makes a profit. Someone else copies that product, makes it cheaper, and sells more. Another, third person, copies the same product, sells it cheaper still. The aim of everyone in a purely capitalist system, is to become the only one on the block, and to eliminate competition, in order to increase profits every year.

The Founding Fathers understood this, even more than 200 years ago, when capitalism in its current form was an experiment, which is why one of the main duties of the government is to “regulate commerce.”

Yes, you read that right. Not only is the right wing wrong when they claim the “free market” does everything right, when there is no such thing as a free market, but when they DE-regulate every damn thing they see, they are actually violating one of their primary imperatives under the Constitution.

And the reason the creators of the Constitution created the “commerce clause” in the first place was because they wanted to create a society wherein economic opportunity was a reality. The way a society moves forward is through increased opportunity for everyone. You see, an absolutely free market, if it were to exist, would actually eliminate opportunity, not enhance it.

All capitalist systems have always regulated their markets, because they have to. They've always done it. They provide prospective employees with public education; they regulate to make sure that companies with deep pockets can't under-price goods and drive everyone else out of business. They make sure that all businesses follow the same rules, and the rules are designed to create a level playing field; a playing field that is not only fair to all current participants, but which encourages and welcomes new participants. In all other capitalist countries except the  United States, health care is provided, because a healthy workforce is more productive, and also because it evens out the burden among all players.

We used to have a solid capitalist foundation, and the healthiest economy in the world, bar none. We are still a strong economy, but it's not because of anything we've done since we've been saddled with  "deregulation" fever, as the right wing has tried to create this fantasy "free market" they're so fired-up about. 

Those of us over 40 (which really isn't all that old) remember a time when we could walk around our neighborhoods and see small little mom and pop stores all over the place. Every neighborhood had its own character, and behind each one of those stores was just a regular person, trying to grab his share of the American dream. Now, almost all of those stores are gone; replaced by national chains, with low prices and quality to match. Our manufacturing base, which used to be the envy of the world, is now non-existent, and true entrepreneurship has been all but stifled. The only thing keeping us afloat is debt. we have become the best in the world at spending money we don't have.

A market is NEVER "free." Someone controls every market, no matter what it is. The difference between market economies is simply who controls the market. Think about it; is there a free market for oil? of course not; the base price is set by cartels, and passed on by oil companies, who also participate in the cartels. How about retail?  Perhaps you can come up with an  original product and build a store around it, or perhaps a service, but it'll be difficult if there are a couple of national chains around.

Wal-Mart is a product of this right wing thinking about "free markets," by the way. Before the right wing takeover of the economic engine, Wal-Mart could never have gotten away with their business model, which essentially consisted of building huge stores in rural areas, carrying tons of products, including a bunch of products they didn't normally carry, but that were unique to the area, selling the stuff at lower prices than were possible for small retailers, including many items at or below cost, then raising prices back up after they killed off all local retail. Witness the fact that Wal-Mart opened its first store in 1950; by 1962, there were 11 stores; 78 stores in 1974, 330 stores in 1980 and (are you ready for this?) 1114 stores by 1985. Five years of Reaganomics and deregulation, and Wal-Mart was able to wipe out the economic fortunes of hundreds of small towns with its predatory pricing practices.

That's what happens when the federal government cedes its solemn duty to regulate commerce to rich people, who only care about their bottom line. What has gotten better, economically speaking, during this era of "deregulation"? Let's see, you have to have two solid incomes just to buy a house these days. If you're average, you're in debt up to your eyeballs.

And you'd like to start your own business; what sort of business would you like to start? There aren't many left. perhaps a day care, for the millions of working couples who have no choice but to work 80 hours a week just to keep the bills paid. You can put tiny little classified ads into newspapers, and see how many people pay you for absolutely nothing, but in most cases, you'll be disappointed; if it was possible to make that much money doing that, then why are they selling books and CDs instead? if you're a good cook, you might be able to start a restaurant, but be prepared, because the chain restaurants have reduced the available supply of food, and also forced the price of real estate up, so the space will cost you. Of course, there's always multi-level marketing, but you'd better come up with a new one, because the top tiers of the existing ones are taken.

The "free market" is not something natural and organic. At its heart, capitalism is a great system, but unregulated capitalism is brutal. We need regulation to keep the market "free" to any great degree. If you want high wages in a market, you need regulation to keep them that way. And I'm not talking about the minimum wage, either. I'm talking about increased competition. What drives wages upward is competition for workers among many different businesses. We don't have that. Larger and larger segments of our economy are seeing stagnant wages because there is a glut of available workers. And the glut is caused by a lack of vocational choices for those available workers, and the fact that it's become increasingly difficult to start a new business. And it takes careful regulation to fashion a system that both protects existing businesses and creates opportunities for new businesses to start.

Has the government over-regulated at times? Absolutely. I remember one time, when I was looking over OSHA regulations that would have covered a certain workplace, and they had such specific regulations regarding certain aspects of the business that many of our tools would have had to be custom-made, rather than heading over to the local hardware store and buying a hammer, some nails and some wood. Many government regulations are absurd. But because some government regulations are absurd, it doesn't follow that all government regulations are absurd.

Likewise, can we get off this notion that everything the government does is wrong, and that privatizing everything is better for everyone. That's absurd. I think a decent case can be made for privatization of trash collection and that sort of thing. But where there is an immediate public health or safety concern, the government is accountable to the people, not a private corporation. Likewise, there are certain aspects of our daily lives that should not be subject to the whims of the market, and primary among those is health care. Every single industrialized nation in the world has a national health care financing system, and one by one, they are passing us with regard to the most important basic health statistics.

In fact, if you have ever seen someone denied a procedure by a health insurance company, then you see "privatization" at work. They're denying people health care because their first duty is to their shareholders. Likewise, the reason the Iraq war is costing us so much money is not because many tasks the military used to perform themselves are now being contracted to Halliburton and others. Again; think about it; it doesn't even make rational sense to think that privatization saves money. If you have to pay someone $10 an hour to perform a certain task, then paying a contractor $9.50 an hour in order to save money makes no rational sense to anyone but a right winger. You don't get better workers for less money, and when you add in the profit component, which must increase every year, according to capitalist dogma, it makes even less sense.
I would also point out that we are competing in a global market nowadays, so this whole "free market" riff is completely off the mark. Most of the countries we're competing against provide health insurance to everyone, thus eliminating one of the biggest expenses any business faces, whether small or large. Other countries also provide a lot more free education to their populace, thus creating a larger pool of employees from which to draw. Not only that, but most other countries enforce their antitrust laws much more forcefully than we have since the right wing takeover, which means that they have more competition, which means increased innovation. Of course, sometimes, innovation requires that someone step in an referee a squabble.

Want an example? I remember attending the Consumer Electronics Show in Las Vegas once, where I saw a demonstration of High Definition Television. It was amazing. The picture clarity was incredible. Can you guess the year? It was 1985, and it had already been introduced in Japan. The difference was, in Japan, the government forced the industry to choose a standard, or they would choose one for them. Here, different companies squabbled and complained for  many years, and the government stood back and watched. Now, this country is having to be rushed into a digital technology that we're largely not ready for. Tens of millions of people are going to be forced to buy a converter in order to watch tv in a year and a half, because the stupid government left decision-making up to private companies, who can only see their bottom line.
There you have it. Our economy largely consists of; a series of scams perpetrated by rich people to jump-start said economy through fraudulent means; a marketplace in dire need of governance and leadership, with a handful of rich private entities trying to fill the leadership void and their pockets at the same time; a usurious financial system that thrives on keeping as many people in as much debt as possible, and then rigs the bankruptcy laws to protect the people who made the bad loans; a government charged with "regulat(ing) Commerce with foreign Nations, and among the several States, and with the Indian Tribes" (that quote is directly from the US Constitution, by the way) that no longer sees such regulation as their job.

We are falling behind in the global economy, and we need leadership to get the ship righted again. That is the government's job, as spelled out in the country's guiding legal document.  We've tried capitalism with no regulation before, and it led to several depressions (and many other recessions) during the 19th Century, and the Great Depression in the 20th Century. Government guidance and regulation since the New Deal (which this is really about -- right wingers will do anything to dismantle the new Deal) have prevented another depression. People have been positively affected by the huge expansion of public schools, college aid programs, mortgage insurance programs, bank deposit insurance, Social Security, welfare and food stamps. Are there problems with these programs? Yes, of course, there are. They were created by humans. But read some history of the period before World War II, and compare it to the period after, and you'll see the difference.

But the right wing wants to take that away. They're using the specter of the absolutely fictitious "free market" to take it all away from you, and hand everything to people who give them money. They claim to be in favor of competition, but do anything they can to kill it. Think about this; There used to be one phone company, the courts split them into many, and opened up the long distance field to competition. Now, there are effectively two very large and one small phone company. Nearly half of the country;s commercial radio stations are owned by 6 companies, and one of them alone owns 9% of all radio stations, and controls more than half of several markets (and programs crap, for the most part, but that's another story). There used to be many competing retailers in every city; several local and one or two chains; now, there are all chains. Home Depot opens up, a dozen hardware stores are forced to close. Wal-Mart opens up, a dozen other stores are forced to close. There are only a few oil companies left, and there is no competition in that industry. Though your electricity necessarily has to come through your electric company, "deregulation" gives the illusion of competition where there is none.

Again, folks; there are no "free markets." Every market is run by someone. Get off this kick, and join the reality-based community. Demand that the Congress do its job. We are supposed to run the market, not a few select large corporations or individuals.

 

In Mortgage Meltdown, Missed Signs - New York Times

Okay, I have to ask...

How many more of these phony schemes do we allow before we finally get a clue and demand that the government re-regulate commerce, as they are required to as part of their constitutional duty?  A bunch of would-be criminals keep trying to find ways to lend money to people who can't afford to pay, take a cut of that money for themselves, and leave the rest of us holding the bag.

In the 80s, we had the junk bonds/ savings and loan scandals, in which our money was given to thieves, who "promised" to pay it back "someday." When it was discovered that   most of these "loans" would never be paid back, the federal government, through the Resolution Trust Company (you know, the taxpayers), bailed them out.

We recovered from that "smoke and mirrors" market by way of a couple of twin frauds in the 90s; the tech bubble, combined with fraudulent accounting practices on the part of huge corporations, as they attempted to find ways to make money appear out of thin air. During the tech bubble, anyone who put a dot-com after their name could count on all sorts of "venture capitalists" handing over gobs of cash, which they then pocketed, before putting the company out of business and starting another. My favorite had to be pets.com. Who could have ever imagined that people would actually prefer to buy pet food and pet toys at a store, rather than paying the same price online and being hit with a huge shipping and handling bill? From what I understand, gumandmints.com never got off the ground.

Of course, at the same time people were starting dot-coms that defied logic, other more traditional companies were screwing the market in another way, by lying about how much money they were actually making, in a lame attempt to boost the value of their stock. We found out that auditing companies were helping them defraud, and even taking a cut themselves.

After government regulated those two markets, the crooks had to think of another, in order to save themselves from the other frauds. You see, without a fraudulent major component, unencumbered markets just don't work. The Founding Fathers weren't stupid; there was a reason why the Constitution mandated government regulation. Without it, crooks rule the day. And in their quest to dominate the economy, what better market for crooks and charlatans to screw with than the real estate and mortgage markets, right? I was writing stuff like the below five years ago, and I'm no genius:

From: In Mortgage Meltdown, Missed Signs - New York Times.

As far back as 2001, advocates for low-income homeowners had argued that mortgage providers were making loans to borrowers without regard to their ability to repay. Many could not even scrape together the money for a down payment and were being approved with little or no documentation of their income or assets.

In December, the first subprime lenders started failing as more borrowers began falling behind on payments, often shortly after they received the loans. And in February, HSBC, the large British bank, set aside $1.76 billion because of problems in its American subprime lending business.

I predicted this a long time ago. Actually, such a prediction wasn't exactly a revelation. Look at what we had; we had lenders advertising impossible monthly payments on loan amounts the people couldn't afford. They infused the market with tons of buyers who couldn't afford what they were buying, thus forcing the prices up. Therefore, the size of these impossible mortgages kept getting larger and larger.

For the last 5-6 years (or more), we have had an artificially inflated real estate market, a lot of money being put into it that was backed by little more than a promise to pay by people who couldn't afford to pay it back (think back to junk bonds), and you had legitimate buyers suddenly finding themselves priced out of the market, because the money dried up, due not only to the number of mortgage holders who can't afford the payments, but also the overblown price of real estate overall. Couple that with the fact that many people have been using their homes as ATMs to pay for things they really can't afford, just because their home had suddenly doubled in value, due to the "smoke and mirrors" housing market.

Money isn't really an unlimited resource, no matter what the wingnuts say; it has to run out at some point, especially when there is so much pressure on it. Right now, we are heading into a major crisis, folks, and the government will once again have to bail out a market that crooks have completely defrauded. To not bail it out could result in major disaster. if the housing bubble is allowed to burst completely, it will no longer just be a reduction in home values, which is expected every once in a while. No, the problem is the sheer number of now-unsecured loans out there, at below-market interest rates, and a correction that will be historic in its proportion. Not only that, but one of the few actual engines of the economy -- credit -- will largely have to dry up for a while, as the market plays catch-up with itself.  And lest you think  this phenomenon will be limited to the real estate market, think again. The cash crunch will be felt in corporate America, as well,

Now, a lot of right wingers will make light of this, and offer the bromide "the market always corrects itself." But the fact of the matter is, the market NEVER corrects itself. The government usually corrects the market. Unfortunately, we have a guy in office who makes Herbert Hoover look competent, and the Keystone Kops supporting him are all "true believers," whose actual religion isn't "Christianity," but "marketism," in which the almighty "market" fixes all things financial.

In short, unless we can manage to impeach these bozos in time, and the time is growing short, we have 17 more months of the Fed throwing fake money at a problem, which will only serve to make the solution more difficult, and a lame duck who doesn't care what kind of mess he leaves for his successor.

This ride's gonna be bumpy, folks.

 

Starving the Beast Just Makes Us All Hungry

Okay, that's it. I've had it, and you should be sick of this crap, too.

As noted, President Bush decided to turn the tragedy in Minneapolis into a political hammer, and tried to beat Democrats in the head with it, by suggesting that Democrats want to tax you into the poorhouse, and that such "fiscal irresponsibility" is just wrong.

This is for the Bushies and every other wingnut out there!

You're DONE! NO MORE!

We've allowed the assholes to run this country into the ground for more than a quarter century and I, for one, am sick to death of it.

Look, folks; we live in a capitalist democracy, which means that everything costs money. EVERYTHING!

That's a fact. I know a lot of people don't want to believe that, but there is no choice. We all pay for everything, and I mean everything. Well, that's not true; with the fiscally irresponsible Republican right in charge, we've passed along much of the cost of everything to future generations. That's right, you idiots; because of your goddamn obsession with tax cuts of every kind, your shaving 4.9 cents from the gas tax, just because Bill Clinton and the democrats passed it, is money that your kids will have to pay later.

For a generation now, since the day Ronald Reagan took office, this country has been taken over by an ideology obsessed with two things; government incompetence and taxes. They are dead certain that tax rates should approach zero; at least for the rich, and they are equally certain that everything the government touches turns to shit. What's worse is that they are bound and determined to prove this self-fulfilling prophecy beyond a shadow of a doubt, by cutting taxes on the rich, thus making them even more rich, while borrowing the rest of us into economic oblivion, and populating the government with incompetent dorks, to prove that government sucks.

If you want to know why our pets have been dying from tainted pet food, why the incidences of food-borne illnesses have been rising, why the victims of hurricanes and terrorist attacks can't get help, and why bridges collapse, look at the current incarnation of the Republican Party, and their Democratic enablers, who are afraid of being labeled "tax-and-spend liberals."

I hate to be the one to break it to this idiots, but "tax and spend" is exactly how things are supposed to work! The government has traditionally built infrastructure and the economy has benefited from it. It's always been that way, because that way makes the most sense. Why, you ask? Because of a little thing the right wing pays lip service, but little else, to; Accountability.

It's this simple, folks; government is accountable to us, while private industry is not. Since the right wing started this incessant drive toward "privatizing" every damn thing, we have seen a deterioration in service in damned near every sector. We contract out everything these days. There are no more city or state work crews out there building roads and bridges; instead, we farm out the work to  -- are you ready for this? -- the LOWEST BIDDER!  Then, the inspection process is done on the cheap, because there isn't enough money to do it right. Roads are inspected and graded far less often, and it's no longer a simple task to just send a construction crew out to replace the road or bridge; instead, you have to determine how much money you need, then petition the legislature for the money, then the legislature hems and haws and tries to figure out a way to fund it, then after they approve funding, the bidding process starts, and the job is offered to the lowest bidder. Not the people with the best design, or the capability of making a bridge that will last 100 years or more, regardless of the amount of traffic; but the one who can make it for less money. (Of course, they almost always go over-budget, but that's another subject.

Why are we such cheapskates?

It's because the ideology of the right wing is that government can only be "fiscally responsible" if you starve it financially. In other words, if you take away their tax money, the government will have to teach itself to do more with less. The problem is, we're not talking about buying dishes and pots and pans for the family here; we're talking about infrastructure, which everyone depends on every day. It's the government's goddamn JOB to inspect the food supply, to inspect the roads, bridges and tunnels; to make sure that advertised claims (you know, like "fair and balanced") are actually true. It's spelled out in the Constitution, and it was put there for a reason. The food supply is very essential for life, and safety of the roads, bridges and tunnels are essential for the economic well-being of the country, as well as essential for life.

The Republican Governor Pawlenty of Minnesota recently rejected a gasoline tax increase of ten cents to pay for roads and transit, because he and the rest of the current incarnation of the Republican Party are viscerally opposed to tax increases that a rich person might actually have to pay. To these bozos, raising such taxes is morally wrong somehow. Imagine; at a time when gasoline is already sitting at $3 per gallon, paying ten more cents per gallon in order to beef up the transit system, which  would alleviate the traffic problem somewhat, and making sure the roads you're driving on are safer. What the hell's wrong with people who would think that was a good idea? Are they nuts? I think we'd all agree that such money is far better off lining the pockets of oil barons, right?

The right wing has literally sold this country down the river, folks in the years since 1981, when Ronald Reagan first took office, and the wingnuts first tasted power. They've reduced taxes on the rich, raised taxes on the working and middle classes, and effectively reduced the tax base, by giving rich corporations tax incentives to move plants offshore.

You see, most people don't mind paying taxes, as long as they're getting a good value for their money. But "good value" isn't necessarily synonymous with "the cheapest," which is the right wing's biggest mistake.

Why are we trusting our infrastructure to "the LOWEST BIDDER"? If you live in the eastern part of the country, you have probably come across sidewalks, roads and bridges stamped "WPA." Where I am, there are sidewalks stamped "WPA" and "1934" all over the area. Except for a few areas of sidewalks where tree roots have raised the sidewalk and it needs replacement, all of this stuff is still intact. It was done with pride, and with less of a concern as to cost. Compare that with the constant, never-ending paving and resurfacing of city streets and highways that goes on these days.

It's our tax money; shouldn't we expect the best job, rather than the lowest bid? If a bridge is going to experience hundreds of thousands of cars and trucks over it every single day, shouldn't we be more concerned with making sure it's well-built and will last for 100 years, instead of simply looking to the lowest bidder?

And yet, that's the right wing Republican concern. It's the Wal-Mart mentality on a governmental scale. Think about it; there is nothing wrong with shopping at discount stores for everyday things that you only expect to keep for a short time. If you're cooking something, and you need a spatula and only have a dollar, you run there and pick one up. But you don't buy prosthetic limbs at Wal-Mart. You don't buy dentures at Wal-Mart. You wouldn't offer your local Wal-Mart employees $10,000 to build you a house, either.

And yet, that's exactly how the right approaches everything in government. They are paying people as little as they can get away with to build our "house," and we're surprised when we try to put up a picture and the south wall crumbles. We can no longer afford government on the cheap. We have to reset our priorities, and we have to commit to collecting the money to pay for those priorities. haven't you noticed how often the state repaves streets these days? Doesn't that strike you as penny-wise and pound foolish? Wouldn't it make more sense to build a road with materials that don't have to be replaced every few years? And if they're using such cheap materials on roads, what are they using on bridges and tunnels?

And it's not just roads. There are steam pipes bursting in New York. Have you noticed the number of sink holes appearing lately? The Boston "Big Dig" tunnel lost chunks of concrete. near where I live, a pedestrian tunnel that had been declared unsafe for pedestrians collapsed onto the Baltimore Beltway a few years ago, when a vehicle carrying a tractor hit it. In Washington, DC, there is the phenomenon of exploding manhole covers.

Our infrastructure is getting old, and it needs tending. But we cannot tend to it for free. We have to pay to upgrade. This is stuff we depend on, folks. Our entire economy depends on being able to move commerce from one end of the country to the other safely and securely, and the lives of our people are too precious to risk them on unsafe roads. And if I have to explain why food safety is important, you have to be a right winger. I'll explain why a bit later on.

Let me explode two myths here. The first one is that low taxes are good for the economy. The second one is that the government screws everything up, and the "free market" is the solution.

Let's start with taxes. Low tax rates are just as big of a disaster as high tax rates!

The greatest economic period in this nation is absolutely, inarguably the 25 years after World War II. Throughout most of that period, the top tax rate started at 90% and ended at 70%. Now, I know what you're thinking; that's too high! No one should have to pay that much in taxes! You're absolutely right; no one should lose 70% of their income. of course, no one DID have to pay that much in taxes! In fact, have you heard of the "Alternative Minimum Tax"? It was passed in 1969, because 155 of the richest families in the country paid zero tax.

Hmmm... How is it possible for the top tax rate to be 70%, yet the richest people in the country pay nothing?

Deductions. Those of you over 50 probably remember those, or at least remember your parents taking them.  The tax rate was one thing, but when you invested in the country's economic infrastructure, you got a break on your taxes. In other words, you had to pro-actively avoid high taxes by helping to grow the economy.

Now, let's use a little common sense, shall we?

Say you have two economies. In one, the tax rate is 70%, but with investment, the rate can be cut to 30%. In the other one, you pay 30% without doing anything. Which one of those two models is likely to feature the most investment?

In one model, the corporate tax rate is 35%, but can be cut to 15% with investments in domestic factories and jobs, while the second model gives them a tax rate of 15%, and allows them even more deductions for moving their operations overseas. Which of those two models is most likely to continue to grow the economy? This is not rocket science. This whole "trickle-down" theory is bullshit. Rich people will only risk their wealth if they are given an incentive to risk their wealth. They have to be coerced into investing in the economy. And they have to be coerced into investing in the infrastructure.

We have to raise more revenues, and the likeliest source of those revenues are those with the most money; imagine that.  And frankly, the rich should pay more. They benefit from government investment in the infrastructure as much as or more than anyone. The goods they sell travel over the same roads you, their employees, use to get to work. A good transit system gets their employees to work on time, and makes their goods move more smoothly on less-clogged roads. Their employees and assistants largely come from the public educational system. They eat the same foods that we do, they take the same medicines that we do, they depend on the same water and sewer systems that we do. They use the same court system that we do. In fact, it could be said that they get better emergency services than everyone else, but again; that's another column for another time.

The fact is, the rich actually derive more benefit from the tax system than everyone else, so it's difficult to make the case that they should pay less. It's time they paid their fair share. When they did pay their fair share, the country was much better off.

Now, about that second myth; that government screws up everything, and that the "free market" works better. It doesn't. The government may not be perfect -- in fact, it most certainly is not -- but it's actually better and more accountable than the private sector. If you don't believe me, think about this; the healthiest insured people in this country are on Medicare;  health insurance companies have created a bureaucratic morass that would put any government to shame. The only problem most seniors have is with their Part B carrier -- usually a private company. Medicare pays faster and more reliably than any private insurance company, and with less hassle. And is there ANY pension plan more reliable than Social Security? How many banks would be willing to lend your kids money for college if the government didn't guarantee the money? How many people would get mortgages for the home of their dreams without the government guaranteeing most of that money? Think FedEx or UPS could deliver a letter from New York to Alaska for 41 cents?

Again, during the greatest boom period in our history, the government led the way, not private companies! Private companies got us into the Great Depression, and government pulled us out. You see, private companies have no accountability to the public at large; their only obligation is to stockholders. But when the government does something wrong, you can write your Congressperson and at least have a fighting chance of seeing the problem fixed. "Privatization" is a joke, because there is no way the public can force a private company to do the right thing. Got it?

There is more to this, however. It's far more than a simple disagreement over the "free market." It's all about politics and "payback."

During the greatest boom period in our history, when we were as prosperous as any nation had ever been in human history, the Republican fought it every step of the way. They resented the New Deal, and they still resent the New Deal. They have always wanted to dismantle the New Deal, and since they have been in power, they have done a great deal of damage to it. Think about what they've done. They've tried to eliminate the minimum wage. They keep trying to dismantle wage and hour laws. They are trying to kill public works, by privatizing everything. And if you don't think they're trying to kill Social Security, you're not paying attention.

It's a simple fact that, when the Great Depression hit, and the Republican Party did nothing to combat it, it killed them for a generation. It's also a fact that the current incarnation of the Republican Party is led by people who still insist that the government programs that make up the New Deal's legacy are bad for us, and they want them gone.

The problem is, the government programs begun during the New Deal and expanded during the 1950s and 1960s DO WORK, and would work fine, if not for these idiots trying to kill them. And they are trying to kill them. It's NOT just a tragic coincidence that the bridge in Minneapolis collapsed; it's the result of a right wing ideological crusade to prove that government doesn't work by making sure that government doesn't work. George Bush is not the originator; he is simply the latest and most strident of a long line of Republican leaders who have tried like hell to move us back to a time before the New Deal, when the rich could do whatever they wanted, and when the country experienced a Depression (yes, I said Depression!) roughly every 20 years or so.

Now, their stated goal is to "starve" the beast, in order to make it more "fiscally responsible." But as usual, their stated goal is not their actual purpose. No, their purpose is to kill everything about the New Deal, and "prove" beyond a shadow of a doubt that government doesn't work, and the "free market" does. Bush's incompetence is purposeful; it's his ham-handed way of proving, once and for all, that government doesn't work, and that the New Deal has failed.

It's time we put an end to this crap. The New Deal worked, and its aftermath was the greatest boom period ever seen. We have to roll back tax rates to where they were before the country's economy started going south -- pre-1981 would be good. We have to stop doing everything on the cheap. We have to rebuild our infrastructure, but we have to do it with an eye on making the country better, not with an eye on fattening the bank accounts of a few hand-picked rich people. Corporations are not inherently evil, but they cannot be allowed to run the country, because they have no accountability to the people.

If we can find half a trillion dollars to spend in Iraq (so far), then we can certainly find the money to spend on rebuilding the things we need to rebuild to make this country strong again. We have to; we cannot continue to allow these anti-New Deal wingnuts to run us into the ground.

And Then the Bushies Lie About the Economy

This is just a crock in so many ways. But the rhetoric contained therein actually bolsters my argument, that our economy is built on a foundation of pudding; our 'prosperity" is all smoke and mirrors.

From: Reuters: Paulson says subprime woes contained

U.S. Treasury Secretary Henry Paulson said on Wednesday that the market impact of the U.S. subprime mortgage fallout is largely contained and that the global economy is as strong as it has been in decades.

First of all, no one's arguing that the GLOBAL economy isn't strong, to a certain extent. There are a lot of very strong economies out there, and two of them are poised to overtake us as the largest economy in the world within a decade or less. In fact, I'll vote for less. China and the European Union are growing very well, thank you very much.

It's the US economy that should worry us, mostly because we have to live under it.

And one of the reasons is that our economy since 1981 has been built largely on illusions; a series of scams and schemes, the latest of which is the 'subprime" mortgage scam. And it's not only not "contained," its effects are likely to be felt for a very long time to come.

In a nutshell, selling homes to people who couldn't afford to actually buy them, created a bubble; an artificial spike in home prices that created a lot of short-term profits for the people who perpetrated this scheme, but left a lot of people with overpriced homes. In other words, a lot of people are left with a lot of negative equity in their home, IF they can afford to keep it. Foreclosures are beginning to rise, and probably won't peak for a few years, and that will cause a glut of available housing.

Not only that, but mortgage companies only have so much money available to lend, and when they have a boatload of mortgages on homes that are worth far less than the value of the mortgage, it makes it very difficult to lend more money to qualified people.

Paulson may be trying to put lipstick on this pig, but it's still a pig.

European and Asian stocks tumbled on Wednesday following a sharp drop in U.S. shares on Tuesday, after American Home Mortgage Investment Corp. (AHM.N) said it may have to liquidate assets, fuelling worries over problems in the subprime mortgage market spilling over into other sectors.

This is the problem, folks, in a nutshell.

When the American economy sneezes, the rest of the world gets a cold. That is still true, but a lot of developing economies are getting sick of the frequency of the colds. The only American product in great supply these days is the dollar, and several of them are considering a switch to Euros. If that happens, then we will no longer be the 900-lb. gorilla in the world economy.

The recent volatility in global stock and currency markets reflected a repricing of risk and the unwinding of excesses in U.S. mortgage and leveraged buyout financing, Paulson said.

"There's a wake-up call, and there's an adjustment to this repricing of risk, but I see the underlying economy as being very healthy," he told reporters before leaving Beijing, where he pressed top officials to let the yuan strengthen more quickly.

On the yuan , Paulson said he had told the officials that allowing it to appreciate more quickly would help both the Chinese and world economies.

We're in economic trouble, folks, and the Bushies keep lying to make it better. It's not getting better.

Stock Market Tumbles, Dow Down 311 Points --- Sell or Ride It Out?

Gawd, I feel almost psychic. Read this carefully folks...

From: Stock Market Tumbles, Dow Down 311 Points --- Sell or Ride It Out?.

The joy and jubilation that just last week sent Wall Street to record highs vanished today as negative news about the housing market and rising oil prices hit home in a big way.

Adding to today's big sell off was a growing inaccessibility of credit.

See, THIS is what I'm talking about. There is so much money tied up in these bogus mortgage Ponzi schemes that people who legitimately want and need credit can't find anyone to lend them any money. This entire economy is all about credit and debt, folks, so if this keeps up for any length of time, we're in deep trouble.

Oh, and it WILL keep up... The Fed may throw some extra cash out there to tide us over, but they can't add much, because the Bushies are still running up $300 billion in deficits and foreign investment isn't what it was. I don' t know if you've been looking at the exchange rate, but the dollar isn't worth as much as it was...

It all pushed major markets to close down in the second-worst day of trading this year.

The Dow Jones Industrials Average plunged 311 points, a 2.2 percent decline. The NASDAQ closed down 1.8 percent and the Standard & Poor's 500 fell 2.3 percent as the market became very nervous.

Stocks only did worse this year back on Feb. 27, when the Dow closed down 416 points and the NASDAQ dropped more than 96 points.

Since then, the markets have had a steady climb up, with the Dow topping 13,000 in April and then briefly crossing 14,000 last week.

Even after today's dive, the Dow is still up more than 8 percent from the beginning of the year, when it stood at 12,480.69.

So does this mean that it's time to sell and limit losses?

Not at all, said Hugh Johnson, of Johnson Illington Advisors.

"The one mistake you make as an individual investor is get caught up in the day-to-day and hour-to-hour swings in the stock market. That's noise and it doesn't count," Johnson told ABC News. "It's important to recognize the underlying trend and they're still positive. But don't get caught up in the emotional signs of the market, because you will make mistakes."

This is true. Cashing out of the market now would be a huge mistake. We haven't hit the precipice yet. It's coming, but it won't come in the form of a stock market crash this time, like it did in 1929. This time, it will come because our bills have come due, and we'll have to print money to pay them. Watch the exchange rate, folks. A British Pound is now worth $2.04; two years ago, it was $1.75. When Bush took office, it was $1.48. That is not the direction it's supposed to go in, especially when the only thing we manufacture anymore is dollars.

Let me change that a bit. That would be a good thing if we were paying down our debt. In fact, it would be wonderful, because it would mean we were saving 25% or so. But we're still borrowing; we're still the largest debtor nation in the world. The only thing that's keeping us going is the fact that countries still want to invest in dollars.  Well, they did, anyway...

In the short-run, the real impact is going to be felt by those looking to buy a home.

Lenders have been tightening standards and raising rates as more and more people -- including now some with good credit -- start to miss their mortgage payments.

"The mortgage terms will not be as generous as they were in 2004 and 2005, when they weren't only generous but also encouraged speculation," Johnson said.

See, there's a big problem with this scenario that few are really thinking about, and that is that the inventory of homes is going to balloon, which means a serious price correction in the real estate market. People are going to lose their homes, and a whole bunch of people are going to find themselves in a negative equity situation.

This is where we find ourselves. They can't cheat in the stock market anymore (much) after Enron. They can't cheat in a housing market that will probably be depressed for a few years. Where are the greedheads going to skim money next?

Go see "Sicko," by Michael Moore, folks... there's a clue in there...

Hey YOU! Think this is a Great Economy? Are You HIGH?

by Milt Shook

Hey you!

 

Yeah, I'm talking to you!

 

How do you think the economy's doing? If you think it's going great, raise your hands!

 

Wow, that's a lot of hands… guess it's going really well, then, huh? I guess, because the government tell you how great it is every chance it gets, well, it must be just great. I mean the numbers they put out every month indicate that the economy's moving right along. I mean, all of that growth! And unemployment's still kind of low, right? And hey -- according to the Consumer Price Index, inflation's really not so bad, is it?

 

But wait -- isn't this the same government continues to tell you that Iraq and al Qaeda were in cahoots on 9/11? Aren't these the same people who told us that the war in Iraq would only cost a few billion dollars, take a month or two, and be entirely paid for with Iraqi oil money? Don't they tell us they don't torture anyone, while they're torturing people? Didn't they assure us that they would never spy on us without a warrant, while they were in the midst of a plan to spy on us without a warrant?

 

Yeah, but they're a bunch of greedheads, right? They love money! No way they would lie to us about how well the economy's doing, right?

 

Hell, yes they would.

 

Remember the economic doldrums we found ourselves in from about 1973 until about the mid-1990s? It's back with a vengeance. Forget the statistics, folks; use your instincts for once. How do you actually feel about the economy? Well, if you're feeling good about it, then you're buying into the bullshit. Stop it!

 

Take your head out of the statistics and ask yourself, what’s so great about it, anyway? They keep telling you everything's wonderful, but name one thing that's gotten better in the last six years, besides the size of the limits on your credit cards. Okay, maybe the security guard industry's doing well lately, but that's about it.

 

Now, let me start off by saying that, in pure dollar terms, we are still the 900-lb economic gorilla when it comes to Gross Domestic Product (GDP) But there is more smoke and mirrors there than you think. As taxpayers, we've saddled our children with more than $9 trillion in debt, and a trade deficit that won't be eliminated in their lifetimes, either. Not only that, but we're adding to the debt to the tune of almost a half trillion per year, when you include the hundreds of billions they're skimming off the Social Security surplus. Our annual expenditure for debt service is almost as high as our defense budget, which is ridiculous. It's not only the largest in the world; it exceeds the amount every other nation in the world spends, combined. And to buy what? It sure doesn't go to pay soldiers' salaries and benefits. It doesn't go to body armor, or to take care of soldiers when they come home. No, most of it goes to lining the pockets of defense contractors. Think I'm kidding? Think of all of the high tech gadgets the Pentagon brags about having, then ask yourself when any of it has been put to use in any useful defense capacity. How many stealth bombers are we using in Iraq? We apparently have the technology to be able to see a flea on a rock from outer space and pick him off with a laser, yet, we've been looking for a six-and-a-half-foot tall Arab carrying a dialysis machine through the Pakistani desert for six years now, and can't find him or his video studio.

 

Now, I'm not saying we should stop making stuff for the Pentagon. God forbid; that's about all we manufacture anymore. Our entire manufacturing base seems to be overpriced weapons systems, Japanese branded cars and a some computer components.  Aircraft industry giant Boeing's highly anticipated 787 wasn't even built here; parts of it were built all over the world, and they assembled them here. There is very little in our stores that is made here these days. I live in Maryland, and even a lot of the crab meat you buy here comes from overseas.

 

Our economy started to tank in the 1970s, when the first of the Republican breed was in charge, Richard Nixon. Nixon came from the Herbert Hoover school of economics, that says, if you leave it alone, the scab will heal itself.  When inflation started in earnest, in 1973, his approach was to freeze wages and prices for 90 days. I'd be willing to bet that any middle school kid can tell you why that's a stupid idea; when the freeze is lifted, the result is just a steeper price increase. Nixon's problem was that he didn't believe in regulation, if he thought it could be avoided, so instead, he chose manipulation. His "banking" program for gasoline prices kept prices artificially low, by giving oil companies subsidies for keeping the price under a dollar. Not only was it a stupid idea, but it only kept gasoline prices low. Oil prices went through the roof, and we the engine that drove that incredible inflationary period.

 

Under Nixon, we started closing plants here, and opening them up overseas, with the government's blessing. Whole sections of the country that had once been flush with well-paid factory jobs, became the "Rust Belt." Companies which had used American labor for incredible profits for many years after World War II, suddenly complained about having to pay them at all, and decided that their bottom line was more important than the country, and abandoned us for cheap labor elsewhere. That trend eased in the mid-1990s, when Bill Clinton actually made deals with trading partners, and factories began opening up a bit.

 

But except for that brief period, which coincided with the government's rare exercise of fiscal responsibility, the Wingnut era of economic stupidity has practically destroyed everything the GI Bill and the Marshall Plan built up in the 25 year period after World War II. We have been lulled into a false sense of economic security by a government that prints money as if it's just, well, paper, and which has supported an economic regimen that essentially consists of moving large amounts of money from one pocket to another. It's gone on for more than 30 years now, although the real stupidity didn't start until the 1980s, under that economic genius, Ronald Reagan.

 

Let's start out with one truism. Reagan did  not win election in 1980 because of his boffo economic plan. Jimmy Carter lost because he had the courage of his convictions and really did try to stop inflation, by tightening the money supply for a time. If that had continued, interest rates would have gone down, and inflation would have gone back to normal levels. Did you know that a bottle of Coke was a nickel in the 1930's and a dime in the early 1970's? A loaf of bread was a quarter during World War II and about 35 cents in 1969. In other words, for some reason, this country managed to function for many years without huge price increases. Now, they happen every year, regardless of whether they're necessary.

 

But Reagan started the downturn when he came into office with the intent of deregulating everything, and by regaling us with tales of "trickle-down," that wonderful, magical "theory" (read "bullshit story") that, when the rich had more money, they would invest more in those things that helped the poor. I challenge anyone to find me any time in human history when a majority of the rich voluntarily helped a majority of the poor. Sure, they'll buy more stock, and make investment that way, but as I pointed out; most of that money goes to building plants overseas. In the past, the rich were faced with a high starting tax rate, but could lower it by investing in infrastructure. Beginning with Reagan, they got that lower rate without doing a thing. Meanwhile, we keep saddling our children and grandchildren with more and more debt, pretty much guaranteeing high taxes during their adult lives.

 

Look around you; where have lower taxes, deregulation and  a near-unanimous refusal on the part of Congress to enforce the Sherman Act gotten us? Well, those policies have largely rendered entrepreneurship dead, unless you call placing tiny little classified ads in newspapers and getting people to buy copies of books on how to get rich entrepreneurship. Think about it; what type of business can you start these days that isn’t dominated by some huge multinational conglomerate? Forget just about any retail, except for high-end shops for rich people. In the last 40 years, we have gone from a nation of really nice shops that took on the identity of their neighborhood and their region, to a nation of strip malls and factory outlets, full of the same businesses over and over.

 

Have you been to Times Square recently? I was there a few months ago, and some idiot behind me was marveling about what a wonderful job former Mayor Rudy Giuliani did in "rehabilitating" the area. I was thinking, he had to be kidding, except that, when you think about it, Times Square has become what Americans are accustomed to. I will admit that it's probably better for tourists that the porn shops and nudie bars are gone. But there is almost nothing in the area that screams "New York," except the theaters. Who in their right mind goes to fricking New York City and then hankers for some Applebee's? (Yes, folks, there is an Applebee's, and a Bubba Gump Shrimp Company.) And the shopping is a joke! Most of the stores are simply bigger, gaudier versions of the same shops you can find in any suburban shopping mall in the country. That's right, the famous Times Square has been turned into a suburban shopping mall, and it's no longer possible for anyone to simply rent a little space and sell their wares, because the greedheads have driven the prices way out of anyone's range. You see, those big chains are American business in the 21st century; a bunch of look-alike stores selling the same Chinese-made garbage, which is cheap, but pretty much guaranteed to break if you actually use it.

 

Seriously, folks; we're in deep trouble, economically speaking, and it's only our incredible mountain of debt that has been hiding the truth. Like I said; most of our supposed "wealth creation" consists of moving money from one pocket to another. Enormous debt has been built into our culture; we actually think it's "normal." It's difficult to get a good job without a college degree, but the only way to pay for college degrees nowadays is through student loans, and lots of them. And not only does the average college student leave college with mounds of student loan debt, but the same banks that make tons of money from those guaranteed no-risk loans, also allow students to run up a huge amount of credit card debt before they've even received a pay check from the career they've trained for.

 

Our debt has given us the illusion that we are a thriving economy since the early 1980s. And why not? If I gave you an unlimited line of credit and said, "Buy anything you want, and as long as you just pay me the interest, you can carry the debt until I decide I need the money back," you could have a great time. You could borrow money to make more money, and buy yourself a whole lot of bling, a house, a few Ferraris -- no one would ever know that you're unemployed. But you wouldn't really be rich, and when I asked for all of that money back, you'd have a hell of a time paying it, wouldn't you?

 

Well, debt has been sinking this economy for more than 30 years. Because of Republican right wing economic policy, which takes a "social Darwinist" approach to economic policy, we are now looking, for the first time, at a generation that will do less well than their parents, in part because they will have to pay much higher taxes in order to retire the debt we are leaving for them. Because of their obsession with tax cuts as a panacea, their complete deregulation of everything, a completely unrealistic approach to "free market" economics that completely ignores the fact that there is no such thing, and their patronage of their rich friends, to the detriment of the grass roots, they have sold us down the river, and it's going to take us a while to get back upstream.

 

Taxes do have an effect on the economy, but not the effect the right would like you to believe. The tax code used to create incentives for investment. When the top tax rate was 70%, for example, no one actually paid 70%. If a person or a company helped build economic infrastructure, they got tax credits or tax deductions. In other words, if a company wanted to save money on taxes, it had to invest in the country. Now, they don’t pay very much tax, so there is no incentive to invest. And the result is what you see today; our infrastructure is falling apart; 80 year old steam pipes are bursting in Manhattan, factories are sitting idle, while its former workers are flipping burgers or encouraging people to "have a nice day" for $7 an hour. Taxes are no longer seen as an investment in the country; they're seen as punitive, they're avoided, and we're forced to borrow money just to keep things running.

 

Then there's the whole "deregulation" debacle which, combined with this whole half-assed "free market" concept, demonstrates just how stupid the right is, but how great they are at selling this snake oil. Folks, people who believe that a lack of regulation and a completely "free" market leads to economic prosperity must also believe that the Easter Bunny flies around collecting teeth and handing kids toys on Yom Kippur; it's absurd. There is a reason the Founding Fathers put commerce regulation right there in the Constitution. They put it there because they knew that capitalism is a brutal business; without regulation, opportunities dry up. And boy, were they ever on the money! What's happened since the government started giving up its regulatory duties is exactly as the founders predicted. Since the idiots on the right started handing everything over to the mystical, magical "market forces," you're seeing companies gobbling each other up, getting bigger and bigger, and elbowing every competitor out of the market. Every single "market" is on the verge being dominated by one company, and individual opportunity has been squelched. Sure, we get cheap prices on lower quality junk, but we also see a complete lack of customer service, and absolutely no sense of public interest or civic responsibility.

 

And can we please get off this whole "free market" nonsense? First of all, there is no such thing. Someone always runs the market. It's not "free" just because government doesn't regulate it sufficiently. When Wal-Mart puts a store into a small town and run everyone else out of business, that's not a "free market," and to think so is delusional. What's happened is, the people of the community have ceded the market to Wal-Mart, and they run it. When Home Depot or Lowe's moves into an area, and all of the hardware stores close within months, that's not a function of a "free market;" it's just the opposite. A "free market" is one in which any entrepreneur can open up and make or sell his wares. The government's job is to protect the actual free market with regulations, not allow businesses to kill opportunity. You can't open a business selling widgets, if one or more of the largest corporations in the world has exclusive contracts on widgets, and controls the US widget market. That's not a free market.

 

We are in deep trouble, and we're sealing our own fate by falling for this economic double-speak. I'm not one to long for the olden days; I like my HDTV and my laptop. But we have to return to the old economic model; you know, the one that worked; the one in which we invested in the future, and everyone had an opportunity to live the American dream. Not only are we not making anything, but now, the corporations who made their riches off of our sweat for so many years are increasingly moving offshore to avoid even the low taxes they're still required to pay. Pretty soon, we won't have anything left; no manufacturing, no corporations. At what point do we start investing in us again? Our economic infrastructure is already suffering; what will it be like in 20 years? How about 50 years?

 

There are a lot of warning signs, if you would bother to take your eyes off the latest LindsayBritney nonsense to look around and see them. They're not only warning signs, they're messages of dark foreboding.

 

We are completely dependent on oil, precisely because the oil companies want us to be, and the government to date has been more than willing to help us. Did you know, for example, that the first hybrid engine technology was patented in 1917? Did you know that the first electric cars were created at about the same time? In both cases, large behemoth corporations bought out the companies, and their technology, and buried it. That's what happens when you cede control of the economy to a few greedy bastards who care more for the bottom line than the future of the country.

 

Our largest industries are all about recycling money. The Federal Reserve prints more money, and companies vie for the right to siphon as much off as they can, without getting caught. There are only two solid investments in this country; the stock market and real estate, and if you'll notice, they both rarely go up at the same time. The exception was for the last few years of the Clinton Administration, when there was a flash of that entrepreneurial spirit once again, due to the creation of enterprise zones, and other creative investment ideas. But it didn't last long; as soon as the right took over again, we went right back into stupid-land. First, the Enron mess shined a light on just how crooked the pursuit of money is, especially when money is your only actual product.  So when the Enron mess screwed the economy, and the players in the stock market were forced to play fair and at least try to be truthful, the same con men then turned to real estate.

 

When they turned to real estate, they did the same thing they did in the pre-Enron market. They created mortgages which were little more than financial sleight of hand, and lo and behold! A whole bunch of people who couldn't afford to buy a house before, were suddenly able to buy a house! What a great thing, right? After all, home ownership is a cornerstone of the American Dream™, right?

 

Well, yes and no.

 

Working hard and making it to the point that you can buy a nice home that you can afford is actually a good thing, and it is something that people strive for. Habitat for Humanity helps people do just that; predatory lending practices most certainly do not. For the last 8-10 years or so, we have been subject to creative financing that should have sent up red flares. I'm no financial whiz, but you know, when someone advertises a $400,000 mortgage for $900 a month, or something like that, huge warning bells should go off in someone's head. It's Enron financing writ large on the housing industry.

 

And what a great time it was, too, huh? Real estate prices just shot through the roof, and a whole bunch of people made a lot of money because of that fact. Except that it was all fake. Housing prices didn't go up based on actual supply and demand; the houses were paid for by essentially moving money from one pocket to the other. Houses were being sold and mortgages were being written for people who couldn't pay for them. And now, we're at the precipice of a housing crash unlike anything we have ever seen, as people who have been carrying these fake mortgages are hit with the real mortgages that were deferred for a few years.  Meanwhile, the people who came up with these fake mortgages made out like bandits, quite literally, as they bought and sold homes with real mortgages to  people who could afford them, at the prices that they caused to be overinflated. Yep, that's right, folks. A whole lot of people either have lost, or are about to lose everything, and a whole bunch of other people have been making a lot of money from it. The current housing crisis is Enron II, and it's in its beginning stages; it's about to get worse.

 

This is the story of the right wing approach to economy, folks. Since Nixon took over, the economic fortunes of this country have tumbled, and it's time we start taking stock and taking steps to reversing the trend. An economy that runs on borrowed money is also living on borrowed time. And an economic model that stifles creativity and innovation is an economic model that can't recover when the inevitable bad times hit. What got us out of the Great Depression was World War II, but what got us into an unprecedented boom after World War II was an incredible amount of innovation. It used to be possible to open a small business on a shoestring, and make a good living; now, almost all of us are dependent on a job with one of the handful of huge corporations that still do business here. Entrepreneurship is dead, and because of our massive debt, we are largely a nation of wage slaves.

 

It's time we started demanding economic change. The government needs to get off its ass and do something about this, because we cannot live on borrowed money forever, and the money we had is drying up quickly. Large corporations are running this country, not us, and the politicians who are running things are largely employees of these companies. Everything is becoming homogenized to the point that every freeway exit on every Interstate in the entire country is the same, the stores in every shopping mall in the country are the same, and innovation is being stifled. We have a lot of problems in this country, not the least of which is global economic competition unlike any we've seen before, and we must prepare for it, but it's not possible to prepare for it in an economic climate that no longer feeds innovation. Most problems need creative solutions, but the only creativity allowed these days seems to involve ways to squeeze more money into the bottom line of a large company that already has plenty of money.

 

Loads of debt, limited income opportunities, legalized bribery and extortion, and a series of Ponzi schemes. That is what marks our economy nowadays, thanks to Reagan-Bush-Bush, and the right wing's obsession with "market forces."

 

Isn't it time the government did its goddamn job?

Ford Fakes $750M 2Q Profit - Pretends 37,000 Job Cuts are Revenue Increases...

See, this is the kind of crap I'm talking about, economically speaking. Check out the incredible financial doublespeak in this thing...

Link: Ford Posts $750M 2Q Profit: Financial News - Yahoo! Finance.

Ford Motor Co. surprised Wall Street Thursday with second-quarter earnings of $750 million, its first profitable quarter in two years.

The company also confirmed it is exploring the sale of its Jaguar and Land Rover subsidiaries and said its U.S. market share rose during the quarter.

The profit of 31 cents per share compares with a net loss of $317 million, or 17 cents per share, in the same quarter of last year.

The company attributed the gains to significant year-over-year improvement in all of its automotive operations, and to cost reductions -- including job cuts -- due to restructuring and positive special items that totaled $443 million. That includes a $206 million gain related to sale of its Aston Martin unit. Even its struggling North American division showed progress.

Ford has shed 27,000 hourly and about 10,000 salaried jobs since September 2006 through early retirement and buyout offers as it tries to shrink itself to match lower demand for its cars and trucks.

This is exactly what I mean by my post about the economy. It's all smoke and mirrors, folks. The profit numbers are supposed to make it look like Ford has turned the corner and golly gosh, it's just all gonna be okay...

But look more closely. The buyouts and early retirements happened previously. Because they post profits by quarter, lost in the rhetoric is the fact that they lost a bunch of money on the front end, and they've lost 37,000 workers. Apparently, there is no thought at Ford about possibly building more vehicles and increasing revenues, because 37,000 workers might come in handy for that, you know?

This is an example of the smoke and mirrors I'm talking about. American business isn't about building and selling more and competing, it's about lopping off expenses and claiming a better bottom line, when it's the TOP line that drives the economy.

Oh, well, they can always move to the South and make cars for Toyota and Honda, right? They're both doing fine here...

 

Who Didn't See This One Coming?

From Lender Sees Mortgage Woes for ‘Good’ Risks - New York Times.

Countrywide Financial, the nation’s largest mortgage lender, said yesterday that more borrowers with good credit were falling behind on their loans and that the housing market might not begin recovering until 2009 because of a decline in house prices that goes beyond anything experienced in decades.

The news from Countrywide, widely seen as a bellwether for the mortgage market, initiated a sell-off in the stock market, which is at its most volatile in more than a year. The Standard & Poor’s 500-stock index fell 30.53 points, or 2 percent, to 1,511.04, its biggest one-day drop in nearly five months. The dollar dropped to a new low against the euro, edging closer to $1.40 to 1 euro. Stocks opened sharply lower in Japan this morning.

The slumping housing market has become the biggest worry for the stock market, which just four days ago set records, because of its potential impact on the broader economy and financial system.

Can we please cut the crap?

Our economy has been running on fumes since 1981, when the right wing took over, and started cutting taxes and the government by and large started abandoning its constitutional duty to "regulate commerce."

Everything about American business now is about short-term profits; nothing else matters one little bit. You know why health insurance companies are able to screw the American people? Because they only view their profits through a quarterly or annual prism. See, when they refuse to cover someone, and that person gets care anyway, hospitals have to raise their prices to cover that loss. So, what does the insurance company do? Why, it raises premiums, of course, to cover the increase in hospital rates because they refuse to cover people who actually need health care. It looks great on the bottom line each quarter and per annum, but it creates a huge problem for the system over the long haul.

That's how almost all of our economy works these days, and the housing market is no different. (Coincidentally, I'm writing a large piece that will go up in the next day or so about this very thing.)

I often walk past the house I grew up in, and marvel at the fact that the house is now 56 years old, we moved out 30 years ago, and the place looks the same, except for the huge cherry tree in the back yard, which we planted when I was 9; it's huge now. What has changed, however, is the price. We sold it in 1977 for $42,900. When I moved back to the area in 1998, the house could be gotten for about $120,000, and as late as 2004, it could still be had for about $135,000. Then, suddenly, lenders developed "creative financing" schemes, in order to get people into homes who really couldn't afford to own a home, and the house sold in January 2005 for $225,000, and the house next door sold two months later for $275,000.

The problem is, many of these homes were purchased with paper money. Selling someone who makes $25,000 a home priced at $250,000 with no money down is a recipe for disaster, for two reasons. First of all, they're a foreclosure waiting to happen; it's almost inevitable. But worse, they cause home prices for everyone to become overinflated. The originators of these loan programs love it, because they own other properties, which they buy and sell for the inflated profits, and when the time comes to foreclose, it becomes someone else's problem.

But at some point, and that point came about a year ago, the bubble bursts, and suddenly, all of these foreclosures cause the market to be glutted, and there isn't enough money left for legitimate mortgage lenders like Countrywide to help out the folks who actually make enough money to own a decent house, because they've been forced to mortgage all of these overpriced and overvalued homes.

Folks, the whole ARM market was built upon Enron-style accounting. and the wingnut government loved the idea, because their patrons made billions in short-term profits, by screwing people.

Expect a recession starting about six months ago, folks.

RIAA Wants to Kill Itself... It's Getting Its Wish...

Will the recording industry ever actually get it? They are accelerating their own inevitable demise, and for some reason, these people are too stupid to understand why.

Link: Machinist: Tech Blog, Tech News, Technology Articles - Salon.

Late last week SoundExchange, the recording-industry group that collects royalties from Internet radio stations, agreed to limit one key part of the new fees that threatened to shut down a great many webcasters. But now it seems that SoundExchange's benevolence came at a price: in exchange for reducing fees, the recording industry wants webcasters to prevent listeners from copying the music they get through Internet radio -- despite the fact that such copying may be perfectly legal.

SoundExchange had previously asked radio stations for $500 for each channel of music that they send out to listeners, a fee that would have added up to more than a billion dollars for the industry. On Friday, the royalty group agreed to cap the amount at $50,000 per webcaster. The fee cap all but saved Internet radio from certain death.

As Ars Technica points out, though, SoundExchange says in a press release that it will only extend the deal to webcasters who "work to stop users from engaging in 'stream ripping' -- turning Internet radio performances into a digital music library."

The idiots in charge of the music industry have no clue as to why they're really going under; no clue at all.

You see, when it came to recording and selling product, the fine folks that comprise the RIAA were once the only game in town. You had to have a studio and a lot of high tech equipment to get a song to sound really good on tape, and then you had to have more really high tech equipment in order to process that sound into a marketable product. You needed a plant to make records, tapes or CDs, and you needed the distribution mechanism in place, as well.

Now, pretty much every city has a few studios, which an artist can rent for a few hours. The recording equipment available now is amazing, and anyone can put their music up on iTunes or eMusic, and sell it as they wish. They don't NEED the recording industry anymore. They can put up a table in the back of the hall at their concerts, sell a CD for $15, and the gross profit on that may be $7-8 or more, instead of $1-2. They can put their music up on a site for a paid download, and make a reasonable amount of money.

You see, the recording industry is taking on all of these Draconian measures, because they no longer have a Mafia-like hold over musicians. Musicians love music, and they love performing. That's where their hearts are, for the most part, and that's where the real money has always been. Artists have rarely become  rich, or even made a living, by selling records from record companies; they make a living by performing. And now, they can propagate their music, increase visibility and draw bigger crowds, without having to sign a lifelong contract with a record company.

The odd thing is, the recording industry doesn't have to go down in flames. It just has to accept its new role. They're no longer the only game in town. Stop the bullshit with the "theft" of music. People have always shared music with each other; it happens. CD sales aren't down because people are "stealing" music; they're down because you're putting out shit. That, and it is so much easier and cheaper to buy music online. Seriously,  how can any businessman worth his salt see his product on store shelves , selling for twice what someone can buy it for online, and then be shocked that it's not moving from the shelves. I mean , how dumb do you have to be to be selling CDs of albums that have been around for 30 years for $18, when they can be had online for $10-12? Not only that, but people can now just buy the songs they like. Imagine that, when we were young, and forced to buy an album with 12 songs for $6-7, when all we wanted was the third cut on the B side?

Let's get real. The RIAA has more of a hand in killing itself than music downloaders have in killing it. Their latest attempt to extort money from the consumer -- the attempted murder of Internet radio -- is just the latest in a series of attempts by the old Don to reassert the old ways, and the PR from this attempt has been so bad, they simply won't recover.

By the way, why in God's name is a government agency, the Copyright Royalty Board, setting their rates based on anything but a fair price for the commercial use of a copyrighted work? And why aren't musicians given the opportunity to opt out of the copyright scheme altogether? if I'm an indie musician, and I want my music played on a web radio station, why can't I waive any fees for the use of my work? And why isn't profit even a determining factor?

This is a prime example of effective lobbying negating even the most basic common sense, folks...

It's Not About Inflation, Stupids!!!

From WashingtonPost.com:

If investors and financial analysts could ride in the back seat of Ben S. Bernanke's 1998 Chrysler Sebring convertible, many would be whining that familiar summer refrain: "Are we there yet?"

They'd hope to hear from the Federal Reserve chairman that the nation's central bank has reached its goal of bringing inflation under control. For months, Wall Street has been begging for a signal that the Fed is done hiking interest rates to slow the economy, an inflation-fighting measure.

Can we please get off this bullshit story that the Federal Reserve raises and lowers interest rates based on the rate of inflation?

It has nothing to do with inflation; when the hell is someone going to be honest about this?

The reason rates are high is because the government is having to borrow so much money (you know; the deficit!!) in order to operate. They are borrowing in an increasingly competitive environment, and the interest rate must be high enough to attract lenders...

It USED to be about inflation. Now, it's about the deficit, folks... don't let them fool you...