Markets opened ‘mixed’ this morning with the imaginary ‘cheaper there’ doing significantly better than the former bastion of manufacturing might, the West.
Who do we have to ‘thank’ for this catastrophic turn of events?
The ‘more for me’ capitalists, of course!
Naturally, THEY blame the failure of the ‘information economy’ to pick up the slack left by the older, production driven model!
But the ‘more for me’ crowd has always known that the Information Economy would leave A LOT of people on the outside looking in.
I mean, spying on the civilian population doesn’t generate wall to wall profits…(in case you were wondering what the ‘information economy’ actually involved.)
To put if bluntly, the Information Economy is tied directly to the ‘security state’…in a world woefully lacking in external enemies you don’t need to wonder too hard as to whom the ‘target’ of all of this watchfulness actually is.
It is YOU, good citizen!
Like the proverbial ‘frog in a pot’ they have put you on the stove to boil and they know they need to watch you because at some point you are bound to realize something is wrong and you’re likely to try to save your worthless ass…and that won’t do!
But (naturally) I digress.
Let us return to the matter at hand and that would be yesterday’s noted ‘acceleration’ of the destruction of our civilization, shall we?
We start with Today’s first disturbing headline
Check out the opening sentence!:
These are the best of times for the world’s most ravenous borrower, the United States of America.
A combination of unusual and unsustainable forces has pushed the cost of borrowing as low as it has ever been, so low that many investors effectively are paying to lend money to the government. [But not to worry, good citizen, it won’t last..despite it already being THREE YEARS!]
Investors buying five-year federal debt are accepting such low interest rates that inflation is on pace to reduce the value of their investments by more than 1 percent each year. Yet demand for United States Treasuries remains much greater than the supply. [Worse, good citizen, it is not so much that US Treasuries are such a ‘great investment’, it is obvious from this article they AREN’T, it is their ‘least worst’ status that makes them, er, ‘attractive’.]
The glut of cheap money has allowed the government to keep its annual deficits much smaller than it had expected, holding down the growth of the federal debt. [snip]
John Ryding, chief economist at RDQ Economics in New York, expects rates on 10-year Treasuries to reach 3.75 percent this year, up from about 2 percent now, as investors awaken from what he described as “extreme risk aversion.”
But he added that he didn’t understand why rates had remained low for this long.
Naturally, Mr. Ryding’s, er, ‘feigned puzzlement’ is right up there with ‘the check is in the mail and I love you!’
I mean seriously good citizen the very next article in the NY TIMES business section explains it all quite clearly!
A big drop in business spending on machinery and equipment helped pushed orders for long-lasting manufacturing goods down in January by the largest amount in three years.
Meanwhile, home prices fell in December for a fourth-consecutive month in most major American cities, as modest sales gains in the depressed housing market have yet to lift prices.
The Commerce Department said orders for durable goods — products that are expected to last at least three years — fell 4 percent in January compared with the month before.
Economics 101 good citizen, you don’t ‘borrow’ money if you can’t make a profit over and above the cost of borrowing it!
With a ‘tapped out’ customer base, why invest in new equipment, you don’t have enough (paying) customers to buy what you are producing now?
Most producers have idle equipment on their hands, sitting there becoming antiquated without ever being used! (so why buy new?)
Or we could return to one of my favorite ‘puzzles’…if you hit the lottery, what would YOU ‘do’ with the money?
Once upon a time is was as simple as a passbook savings account…now the ‘free 5%' doesn’t exist anymore!
Would you stick it in a bank vault as cash (and let inflation ‘steal it’?) This is the conundrum faced by today’s billionaires, paying the Treasury to ‘hold’ their money for them at least minimizes their losses.
Because there IS no place TO invest…which also explains why there are no JOBS in a world where CEO pay is tied to share prices (and the easiest way to pump up share price is by screwing the employees!)
Ironically, in this case causation and co-relation ARE related!
And what a wonderful world we have gained! One unfit to support any of us, made so, ironically enough, by those tasked with supporting us all!
Even a deaf-mute prosecutor could make an open and shut case with the facts already in evidence…
Thanks for letting me inside your head,
Gegner
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