Tuesday, July 7, 2009

It's later than you think...

Greetings good citizen,

As I waded through the ‘information wasteland’ today I was struck by the sheer volume of discord being spewed by the MSM and the general gloom emanating from the finance gurus who are sticking with their ‘wait and see’ stance.

Is it just me or are all of these financial wunderkind absolutely baffled by the crisis and totally unable to come up with a single solution?

As I stated unequivocally over a year ago, there is no way to solve this crisis via our current system…because this crisis is the ‘ultimate outcome’ of our predatory social model.

Which by itself neatly explains why nobody is saying a word about how to solve the crisis…because all of these people have a vested interest in maintaining the ‘status quo’, regardless of how devastating that ideology turns out to be.

Understand good citizen that the ‘normal’ way for an economic downturn to end is when investors decide it is time to build ‘new’ production facilities that put people back to work. ‘Ideally’ these new jobs will pay the workers enough so they can afford the products they produce.

Bizarrely, economists are quite content to let you think this is what’s going to happen this time as well, even though this has not been the case for the past twenty years.

This is why, on any given day, the ‘economic news’ is riveted to Wall Street and how the various markets are ‘performing’

Tonight’s footnote is how tonight’s offering is posted under its original title, which has since been modified without altering the link…

Wall Street Turns Mixed in Afternoon Trading

Published: July 6, 2009

Investors pulled away from stocks again as conflicting signs emerged about the direction the economy is taking.

Shares mostly fell Monday, led by energy and materials companies, as prices for oil and other commodities skidded. Shares found some support, however, from a report showing that activity in the services industry rose in June to its best level in nine month[s].

Investors are becoming more cautious in recent weeks following a strong rally that began in March, fearing that they might have been too optimistic about how soon the economy might recover from a recession that began in December 2007. [Given that virtually nothing has changed since 12/07, that ‘fear’ is well founded.]

Oil prices fell to five-week lows Monday on growing evidence of an extended recession that could mean demand for energy will remain weak for some time.

Crude fell $2.68 to settle at $64.05 a barrel in New York trading.

It was the fourth straight day of declines on Nymex and since the beginning of the month, crude prices have fallen about 8 percent. Just Prices fell as low as $63.40 Monday.

Natural gas prices plunged as well. [Careful with these reports good citizen, they’re talking ‘producer prices’ here, which aren’t what you get clobbered with.]

Major energy users, like industrial manufacturers, have been hit hard by the recession and unemployment data released last week in both the U.S. and Europe doused hopes for a quick recovery. [More on this ‘topic/phenomenon’ in the wrap up…]

“The recent evidence concerning the U.S. economy is terrible. The news regarding Europe seems no better,” said economist Philip Verleger. “This suggests oil use will continue to decline for another year.”

In other economic news, the Institute for Supply Management’s services index rose to 47 in June from 44 in May, beating the expectation of 45.5 from economists polled by Thomson Reuters.

The relatively good showing, however, was not enough to assuage growing doubts about the economy that worsened last week on disappointing reports on consumer confidence and deep job cuts for June.

“There is a sense that the fundamentals in the marketplace haven’t caught up with the technical rally that we got in March,” a trader with Strutland Equities, Dan Deming, said.

In afternoon trading, the Dow Jones industrial average and the broader Standard & Poor’s 500-stock index were flat. . The technology-heavy Nasdaq composite index fell 13 points, or 0.77 percent.

Oil fell $2.82 to $63.91 on the New York Mercantile Exchange.

The market has relatively few guideposts to give it direction this week ahead of second-quarter earnings reports, which get under way on Wednesday with the Dow component Alcoa but do not pick up speed until next week.

The drop in oil and other commodities hit energy and materials stocks. Exxon Mobil fell 80 cents, or 1.2 percent, to $67.71, and Occidental Petroleum fell $2.06, or 3.3 percent, to $61.22.

Alcoa fell 72 cents, or 7.3 percent, to $9.14, while Freeport-McMoRan Copper & Gold fell $3.92, or 7.9 percent, to $45.80.

Technology shares slid as investors moved into areas that could provide safety in a struggling economy. Oracle fell 45 cents, or 2.1 percent, to $20.59, while Apple fell $2.98, or 2.1 percent, to $137.04.

The market reached a plateau in mid-June, mainly holding on to the gains it notched this spring, but desperately needs more confirmation of an economic recovery before moving higher again. The upcoming earnings season and any forecasts companies make about the rest of the year are sure to answer questions about where the market goes next.

Overseas, Britain’s FTSE 100 fell 1 percent, Germany’s DAX index fell 1.2 percent, and France’s CAC-40 slid 1.1 percent. Japan’s Nikkei stock average fell 1.4 percent.

Just a bit more ‘parsing’ here good citizen, do you know the difference between ‘market fundamentals’ and a ‘technical rally’?

A ‘technical rally’ is ‘backwards looking’ as it only looks at how long the market has been in recession and compares that to the ‘duration' of past downturns…the rally that began in March wasn’t based on ‘real’ economic performance, it was based on ‘time’.

The market had sold off nearly 50% and we’d been in recession roughly 18 months, so it was ‘time’ to buy stocks again, even though market conditions have continued to deteriorate.

‘Market fundamentals’ or that steady drumbeat of bad news we’ve been hearing since March was misinterpreted by investors as the ‘death throes’ of the recession, those last few rattles before the market hit true bottom (which still hasn’t happened.)

Let’s put ‘curiosities’ aside and return to the subject of what will have to happen to return the economy to the path of prosperity.

Conservatives believe we could have full employment if there were no such thing as minimum wages…accompanied by a much weaker if not altogether non-existent social safety net. If the only choices were work or starve, we’d all work. (With the natural exception of those who didn’t need to because they already possess a sufficient ‘income stream.’)

Definitely (and intentionally) ‘overlooked’ here is the question of whether or not prices would fall to accommodate the workers unable to sell their labor for let’s call it (very charitably) the ‘prevailing wage’?

What we are faced with here good citizen is precisely the issue of what the economy would look like if ‘everyone’ were rich.

The closest any economist has come to putting a finger on our current situation is stating that our economy is ‘unbalanced’, without defining what, exactly, is out of balance.

This leaves us to fill in the blank.

What, precisely, is out of balance? How about wages and prices?

Isn’t the ‘bottom line’ of the housing crisis all about pricing a necessity well above what the average wage could support?

A situation made that much worse by the fact that rents move in ‘lockstep’ with mortgage expense. (The only way ‘renters’ were better off than owners is because renters couldn’t be ‘upside down’ in property they don’t own.)

The mystery of why Chinese workers aren’t starving to death on wages you certainly would be points to precisely this same phenomenon, it looks like we are being massively overcharged for food…and health care…and utilities.

The last thirty years could be best described as a massive ‘drought’ of domestic investment driven by the ‘global race to the bottom’.

What has ‘changed’ that will suddenly encourage investors to build new factories here in order to ‘stimulate’ the domestic economy?

What was that? That’s what I thought you said…nothing.

Anyone that has been paying even a little attention over the past thirty years has noticed two very bizarre phenomenon; corporations reported quarter after quarter of ‘record earnings’ while they closed domestic facilities AND handed out very stingy raises to the survivors, if they handed out pay increases at all.

For the past twenty years good citizen your ‘raise’ has been ‘you’re lucky you still have a job.’

Did I mention how ‘predatory’ the current system is?

Ever since society shifted from ‘self-sufficiency’ to what might be best defined as ‘economic serfdom’, the noose around the workers neck has been getting progressively tighter.

Sadly good citizen, the government lavishing trillions of YOUR dollars upon the totally worthless banking system does NOTHING to put a solid foundation back underneath our (primarily imported) economy.

They are essentially ‘rescuing’ the importers…at your expense.

Why can’t you buy food as cheaply as the people that make the ‘cheap goods’ the importers sell dearly here? Understand that the average US family spends more on food on a weekly basis than the average third world worker makes in a MONTH!

How the hell does that work? Worse, what does it say about the prospects of anything resembling an economic recovery EVER happening here?

The predatory few have hollowed out our economy and left behind a huge ‘surplus population’…how do you suppose the predators are going to deal with that situation, now that we can no longer afford to buy their cheap imports?

It’s later than you think and time is running out.

Thanks for letting me inside your head,


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