Friday, April 30, 2010
The ongoing oil disaster in the Gulf could become very, very bad--an "unchecked gusher" into the ocean. The story concerns the uncapped well that could release unprecedented unchecked oil into the water. This is a serious problem with NO easy solution...
Let us hope that all levels of government get their act together and respond efficiently and effectively to protect people and animals at risk on coasts...
The only reason inordinately expensive off-shore drilling is pursued is because alternative sources of oil are becoming scarce. Oil will become more expensive--that is a certainty. Yet our economy--including our food supplies--depend upon cheap oil.
Recently the U.S. military warned of oil shortages as early as 2015
Peak oil is here or past. Our lives will be changed by rising oil prices. Public dialogue and preparation needs to occur or we will have calamities in our near future...
The question is will we destroy our environment in a last binge of oil extraction or can we honestly and openly discuss the current situation and different trajectories moving forward...
Thursday, April 29, 2010
from the report:
"Americans have little to cheer about. Nearly everyone (92%) gives the national economy a negative rating. Closer to home, 85% say that jobs are hard to find in their community. A majority (54%) now says that someone in their household has been without a job or looking for work in the past year, compared with 39% in February 2009. And the proportion saying they got a pay raise or a better job in the past year fell from 41% in January 2008 to 24% currently."
The reader may ask why I focus on publishing and linking negative news stories. The answer to this question stems from the anger I feel about the looting of the nation and the populace by the financial institutions. The public appears sedated, unable to demand reform or even pay attention to what is going on. This lethargy and apathy must be transformed or Americans face a dire future. For these reasons my posts tend to be negative in orientation...
Tuesday, April 27, 2010
"In 2009, the number of billionaires increased from 793 to 1,011, and their aggregate wealth increased by a stunning 50% - their aggregate wealth increased by 50% during the most devastating economic crisis since the Great Depression. Their aggregate wealth increased from $2.4 trillion, to $3.6 trillion, during the most devastating economic crisis since the Great Depression. The economic top 1% of the population now controls an all time record 70% of all financial assets."
I love DeGraw's polemics but the best analysis of 2010 so far in my opinion goes to Henry Liu, for his essay now up at Global Research "Bailouts, Stimulus and Jobless Recovery"
Mybudget 360 has compiled some remarkable data:
"In 2009, the number of billionaires increased from 793 to 1,011, and their aggregate wealth increased by a stunning 50% - their aggregate wealth increased by 50% during the most devastating economic crisis since the Great Depression. Their aggregate wealth increased from $2.4 trillion, to $3.6 trillion, during the most devastating economic crisis since the Great Depression. The economic top 1% of the population now controls an all time record 70% of all financial assets..."
David DeGraw summarizes the effect of these trends in wealth distribution: "The inequality of wealth in the United States between the economic top half of one percent and the remaining 99.5% of the US population is now at an all-time high"
Saturday, April 24, 2010
Over the years I've met quite a few of this type of person--the Rand follower. They usually think they are smarter than they are and tend to border on the psychopathic personality. They typically are inordinately sexist and believe that any type of sentimental attachment signifies weakness. They have this arrogant demeanor that rankles. They really, truly believe they are superior.
These people disgust me; I can see right through them. I don't get too many of them as students because they typtically originate from a higher socio-economic class than the students I regularly encounter.
Taibbi's account of how Goldman employees align with this ideology is worth reading. Here is an excerpt:
"...Now here's the really weird thing. Confronted with the evidence of public outrage over these deals, the leaders of Goldman will often appear to be genuinely confused, scratching their heads and staring quizzically into the camera like they don't know what you're upset about. It's not an act. There have been a lot of greedy financiers and banks in history, but what makes Goldman stand out is its truly bizarre cultist/religious belief in the rightness of what it does...."
Friday, April 23, 2010
Previous posts have examined the growing scarcity of fresh water. The World Bank predicts that fresh water will be the "oil" of the 21st century.
Market Sketpics today has a good article examining depletion of the Ogallala aquifer in the U.S., which covers approximately 174,000 square miles. China also faces water pressures, as do many other countries in the world. However, little public dialogue exists about how to address looming shortages.
Recently the U.S. military warned of potential oil shortages by 2015. Peak oil doesn't mean there isn't oil left; rather, the argument has to do with the amount of energy required to extract oil relative to the amount of energy gained from the extraction. As oil becomes more expensive to extract, the relative gain in energy declines.
I have read many times that rising oil prices were the final catalyst for the unleashing the subprime defaults as lower-income borrowers struggled to pay for energy and make mortgage payments. Rising oil prices threaten any and all economic recoveries...
Wednesday, April 21, 2010
Clean, fresh water is predicted to be the "gold" of the 21st century. The World Bank and IMF have for decades attempted to force developing nations receiving loans to "privatize" their water, which basically means that private interests get to "own" public goods.
In Bolivia a revolt was staged against the private exploitation of a national, natural public resource:
"Bolivian President Evo Morales calls Cochabamba the heart of Bolivia. It was here, 10 years ago this month, that, as one observer put it, “the first rebellion of the 21st century” took place. In what was dubbed the Water Wars, people from around Bolivia converged on Cochabamba to overturn the privatization of the public water system. As Jim Shultz, founder of the Cochabamba-based Democracy Center, told me, “People like a good David-and-Goliath story, and the water revolt is David not just beating one Goliath, but three. We call them the three Bs: Bechtel, Banzer and the Bank.” The World Bank, Shultz explained, coerced the Bolivian government, under President Hugo Banzer, who had ruled as a dictator in the 1970s, to privatize Cochabamba’s water system. The multinational corporation Bechtel, the sole bidder, took control of the public water system...."
Americans and others around the world should look to this type of revolt as inspiration for resisting the privatization and exploitation of public resources.
Kleptocracy is corporate looting aided and abetted by a corporate corrupted state. Kleptocracy is what we have.
Here is a quote from William Astore illustrating the kleptocratic nature of our system from Common Dreams:
"Wealth concentration is only one aspect of our increasingly kleptocratic system. War profiteering by corporations (however well disguised as heartfelt support for our heroic warfighters) is another. Meanwhile, retired senior military officers typically line up to cash in on the kleptocratic equivalent of welfare, peddling their "expertise" in return for impressive corporate and Pentagon payouts that supplement their six-figure pensions. Even that putative champion of the Carhartt-wearing common folk, Sarah Palin, pocketed a cool $12 million last year without putting the slightest dent in her populist bona fides..."
Citing Tony Judt's article at the New York Review of Books, Astore describes the concentration of wealth:
"In 2005, 21.2 percent of U.S. national income accrued to just 1 percent of earners. Contrast 1968, when the CEO of General Motors took home, in pay and benefits, about sixty-six times the amount paid to a typical GM worker. Today the CEO of Wal-Mart earns nine hundred times the wages of his average employee. Indeed, the wealth of the Wal-Mart founder's family in 2005 was estimated at about the same ($90 billion) as that of the bottom 40 percent of the U.S. population: 120 million people..."
Tuesday, April 20, 2010
In an interview found here (posted on April 19)
Tavakoli describes the prosecution as a "sham and disgrace." She argues that criminal charges should occur because these investment banks and commercial banks were fundamentally involved in criminal activities.
She states they were "supplying money for fraudulent lending and packaging fraudulent loans and basically covering it all by by then having another securitization that was more complicated to cover up the fact that the first one was fraudulent."
Sunday, April 18, 2010
MyBudget 360 has a great article about the class warfare within the U.S. Here is an excerpt:
"Going After Food Stamps and Unemployment Insurance
I’ve noticed this absurd trend that started in the last few weeks of going after food stamps and unemployment insurance. This is blatantly absurd and frankly, a disgrace. We spent $53 billion last year for food assistance to 40,000,000 American families. This works out to $1,325 per family for an entire year. We spent that much in one month with the Federal Reserve propping up the mortgage market. Unemployment insurance is keeping this recession from becoming the next depression and leading to a full blown revolution. Yet some people in the media have the gall behind their teleprompter and their comfy corporate media gig to try to eliminate these programs and talk them down..."
Friday, April 16, 2010
Charles Hugh Smith argues that the "orgy of speculation" has eroded the primary source of wealth inheritance among the middle class. Here are key points in his argument:
"The orgy of speculation, leverage and debt incentivized by the credit/housing bubble of 2000-2006 has, in the aftermath of the bubble's bursting, destroyed most of the nation's middle-class wealth."...
That leaves about $1 trillion--a mere 1.85% of the nation's total net worth-- of equity in the 51 million homes with mortgages.
"...That is staggering conclusion, for it suggests that the bottom 80% of the nation's households which own a home have virtually no inheritable wealth left in their homes. And without that equity, what foundation of wealth is left? Their 7% share of the nation's financial wealth? That is 7% of $45 trillion, or $3 trillion, including all stocks, bonds and securities in IRAs, 401K retirement funds, savings and other accounts.."
Thursday, April 15, 2010
"We’ve had an 80 percent stock market rally in one year and today, we are at the peak of foreclosure filings. That is, Americans getting kicked out of their homes because they are unable to pay their mortgages. So much for banks using that money to help people stay in their homes and keeping the credit markets open as they preached. JP Morgan announced stunning profits for the first quarter. How did they make their money?..."
Weekly Initial Unemployment Claims Increase to 484,000
RealtyTrac: March Foreclosure Activity Highest on Record
Tuesday, April 13, 2010
The Arizona Legislature made sweeping changes to state teacher contracts earlier this year, removing seniority, salary and contract guarantees.
What are the consequences? We see in the notoriously unprofessional Cave Creek Unified School District the results of this law's passage.
Changes under House Bill 2011 mean that school districts will be prohibited from
using tenure or seniority as a factor in determining which teachers can be laid
off. Additionally, school districts no longer have to honor seniority when they
Facing budget cuts, Cave Creek Unified School District Administration decided without prior community consultation to cut one of its two middle-schools [while simultaneously opening a selective prep academy, which is another sickening story].
All of the teachers currently at the middle school selected for elimination--Desert Arroyo Middle School--have been informed that they are "surplus" even though many of these teachers have been with the district for many, many years and have advanced degrees and outstanding professional records. This school has an excellent reputation and has been recognized year-year-year as an outstanding school by the state.
The teachers at the other middle school (Sonoran Trails), tend to be more recently hired, but are not going to be considered for RIF-ing.
No even-handed, rationally-grounded, transparent evaluation of the merits of ALL middle school teachers is occurring.
This decision to prioritize one group of teachers, arbitrarily, over another defies reason.
This lack of reason is evident in the decision making about RIF-ing at another school in the district as well.
The elementary school, Black Mountain Elementary School, has removed from consideration for RIF-ing all teachers currently teaching multi-age classrooms, irrespective of their experience, teaching records, or advanced degrees and credentials.
Teachers who have been with the school for many years with master's degrees and proven records are being RIFed over (relatively) inexperienced, newly-hired teachers.
One teacher who has been RIFed has a master's degree, has taught multi-age, and is the only bilingual Spanish-speaking teacher at the school, which has a substantial recent-immigrant population of Spanish speaking kids. She alone is routinely assigned these kids because she can communicate with them and their parents. She is a proven teacher. Why is she being RIFed?
RIFed teachers have been informed that they will have to re-apply for any positions funding becomes available for, which means salaries are open for re-negotiation.
The Wagner Act of 1935 was passed with the intent of giving workers protections from arbitrary workplace power. Public employees were granted the right to unionize and to engage in collective bargaining in the 1950s for the same reasons.
The recession is given those who would like to wield arbitrary, prejudicial and self-interested power over workers free reign.
If workers do not unite and take a stand NOW we will return quickly to the 19th century workplace in which workers had absolutely no rights beyond the contracted wage, which often failed to provide basic subsistence.
IT IS TIME FOR TEACHERS IN ARIZONA, AND PARTICULARLY WITHIN THE CAVE CREEK SCHOOL DISTRICT, TO TAKE A UNIFIED STAND AGAINST ARBITRARY AND OPAQUE DECISION MAKING!!!!!
I was immediately suspicious. IMF policies in the developing world designed as "debt relief" are notorious for enforcing privatization schemes that loot the countries of their public holdings (such as water and other basic resources) and that require draconian domestic austerity (a.k.a. major cuts in social, health, and educational spending).
So, I looked up Felix Rohatyn and this is what Schiller Institute had to say about him:
"Rohatyn pulled a debt-recycling scheme from Schacht's bag of tricks [Hitler's financial czar, the Reichsbank president and later Nazi Economics Minister, Hjalmar Horace Greeley Schacht]. It took in the old debt, created new debt, and then backed it with income streams looted from New York City's operating budget; to pay for this, Rohatyn demanded the imposition of draconian levels of austerity and service cuts, and then sought a bankers' dictatorship—the now-infamous Municipal Assistance Corporation or “Big MAC,” and its Emergency Financial Control Board (EFCB), the latter having veto power over all city contracts and budgets for more than two decades..."
Majia here: It is precisely this type of austerity and dictatorial power that concerns me. See my next post on the abuse of power currently going on at the Cave Creek School District as an example of what can happen in the name of "budget cuts."
Monday, April 12, 2010
James Kwak discusses the intellectual "cover up" of the financial crisis. I recently received as a gift (great gift!) his book with Simon Johnson 13 Bankers, which is great so far. The financial interests want the crisis to be perceived as an unanticipated accident, which it was most certainly not. The crisis resulted from deliberate efforts to undo regulatory controls and outright fraud and deception!
Sunday, April 11, 2010
Manipulation of metals markets is discussed in the context of the whistle blower, Andrew Maguire, who may have been targeted for assassination for his testimony at the U.S. CFTC.
How long can this go on? Forever....?
This is a fascinating article posted at Seekingalpha:
SEEKING ALPHA: "BMO Capital Markets' Oil and Gas Analyst Mark Leggett says he doesn't see natural gas replacing oil in the near term. In this exclusive interview with The Energy Report, Mark says that the infrastructure isn't in place to allow natural gas to become a tangible replacement for oil any time soon."
'ML: It's interesting to look at the hypothesis of using natural gas. It is becoming very visible, and a lot of respected people in industry are pointing that out. However, when you look at the ramifications of building out infrastructure in places like Pennsylvania, where there are no pipelines or gas plants, it takes a while to build those up. Then more importantly, the infrastructure needed to supply transportation throughout the United States is significant and it will take a long time for that to be put in place. So that day may come, but I don't think that date is visible at this point.'"
Hedges argues that economic dislocation produces a yearning for a strong, totalitarian leader who will set things right. Dislocation and impoverishment also produce scapegoating. Danger lurks in the looting of the populace.
"If we do not immediately reincorporate the unemployed and the poor back into the economy, giving them jobs and relief from crippling debt, then the nascent racism and violence that are leaping up around the edges of American society will become a full-blown conflagration..."
I fear he is correct.
Saturday, April 10, 2010
Washington's blog discusses the benefits of debt repudiation, particularly for public entities such as school districts and cities.
Many public entities were swindled into purchasing interest rate swaps and other complicated contracts as a way of hedging the interest on their public debt (i.e., public bonds).
Matt Taibbi's most recent article, "Looting Main Street" discusses how this type of swindle happened to public officials who were paid off by the investment banks.
URL: URL: http://www.rollingstone.com/politics/story/32906678/looting_main_street
Other accounts include less despicable public officials and pension fund officials who were simply lied to and misled by the investment banks, resulting in their purchase of structured investment vehicles that are now costing them dearly (e.g., they must pay exorbitant interest rates despite the currently nonexistent federal reserve prime lending rate.)
I believe that China late last year stated they would not recognize the obligations of some of the debt based garbage sold to them by the investment banks.
Debt repudiation is the only sane solution in my opinion for saving the populace from becoming debt peons to the investment banks
Wednesday, April 7, 2010
Tuesday, April 6, 2010
Three academic economists--Edward Harrison, Marshall Auerback and Mark Thoma--have recently reported on the same phenomenon that has been troubling me.
The "recession" has been declared "over" yet all the problems that produced it remain intact; indeed, these problems have been exacerbated by the consolidation of the too big to fail banks.
The unwillingness to break up these banks and regulate derivatives promise not-to-far-in -the future problems.
Edward Harrison remarks on some of these upcoming problems. I personally think the layoff of public employees is going to be the tipping factor that drives us back into recession because that will significantly erode demand and increase defaults. Indeed, Arizona's sales tax revenue for last month was 4% down year over year from 2009. 2009 was awfull! This further decline is ominous. Anyway, here are Harrison's remarks"
I expect the following to occur:
1.Public pressure to withdraw monetary and fiscal stimulus will work and stimulus will be reduced quicker than many anticipate – beginning sometime in early 2010. The Fed has already said it will stop buying mortgages in March and the Obama Administration is now focused on deficit reduction as evidenced by the paltry jobs bill just passed.
2.The fiscally weak state and local governments will therefore receive little aid from the federal government. This will result in budget cuts, tax increases, and layoffs by the end of Q2 2010.
3.At the same time, the inventory cycle’s impact on GDP growth will attenuate. By the second half of 2010, inventories will not add considerably to GDP.
4.Meanwhile, the reduction of Fed support for the mortgage market will reveal weaknesses there. Mortgage rates may increase, decreasing housing demand.
5.Employment will be weak in this environment, leading to another spate of defaults and foreclosures.
6.The foreclosures and weak housing demand will pressure house prices and weaken lender balance sheets, especially because of second-lien exposure. This will in turn reduce credit growth
Monday, April 5, 2010
A good analysis of the changing distribution of wealth to debt and the reasons driving this transformation...
Thursday, April 1, 2010
Washington's Blog has an important blog today. I completely agree with his analysis. Here is the conclusion:
Do you get it?
Instead of "blowing up or burning" over-the-counter CDS -
as nobel economist Myron Scholes urged - or making any other real changes which would help the economy and the consumer, the rule changes are mainly a p.r. effort by the derivatives industry itself (like the stress tests were a p.r stunt by the banking industry.) The "changes" will do virtually everything the derivatives industry asked for, including guaranteeing the big banks' profits in selling CDS by keeping out smaller competitors.
Regulation of over the counter CDS has already failed
In addition, he advocates the value of blogging to combat a complacent and corrupted press.